<PAGE>
SUPPLEMENT DATED JULY 1, 1996
SIERRA TRUST FUNDS
The Prospectus, dated October 31, 1995, as supplemented to date, for the Class A
Shares and Class B Shares of the GLOBAL MONEY, U.S. GOVERNMENT MONEY, CALIFORNIA
MONEY, SHORT TERM HIGH QUALITY BOND, SHORT TERM GLOBAL GOVERNMENT, U.S.
GOVERNMENT, CORPORATE INCOME, CALIFORNIA MUNICIPAL, FLORIDA INSURED MUNICIPAL,
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL, NATIONAL MUNICIPAL, GROWTH AND
INCOME, GROWTH, EMERGING GROWTH AND INTERNATIONAL GROWTH FUNDS of the Sierra
Trust Funds (the "Trust") is amended and supplemented as follows:
THE TRUST'S NEW MAILING ADDRESS IS: P.O. BOX 5118, WESTBOROUGH, MASSACHUSETTS
01581-5118.
ADDITION OF CLASS I SHARES (NOT AVAILABLE FOR DIRECT PURCHASE BY INVESTORS)
Each investment fund of the Trust sold through this Prospectus has designated a
new class of shares as "Class I Shares." Initially, only Global Money Fund, U.S.
Government Money Fund, Short Term High Quality Bond Fund, Short Term Global
Government Fund, U.S. Government Fund, Corporate Income Fund, Growth and Income
Fund, Growth Fund, Emerging Growth Fund and International Growth Fund will offer
and sell Class I Shares, and sales will be restricted initially to the various
investment portfolios of Sierra Asset Management Portfolios ("SAM Portfolios"),
an open-end management investment company that is expected to begin operations
no later than July 31, 1996. Shares of SAM Portfolios are not offered through
this prospectus.
NO EXCHANGE PRIVILEGES TO SAM PORTFOLIOS
Initially, shareholders of the Trust will not be permitted to exchange their
---
shares for shares of the SAM Portfolios. In the future, such an exchange
privilege may be offered. However, when the SAM Portfolios begin operations, SAM
Portfolios' shareholders may exchange their Class A Shares and Class B Shares
for Class A Shares and Class B Shares, respectively, of the investment funds of
the Trust. More information regarding the exchange privilege for the SAM
Portfolios will be provided in the SAM Portfolios' Prospectus upon the
commencement of the offering and sale of shares of the SAM Portfolios.
PLEASE CALL 800-222-5852 IF YOU WOULD LIKE TO OBTAIN A PROSPECTUS FOR THE SHARES
OF THE SAM PORTFOLIOS.
<PAGE>
ADDITION OF EXPENSE INFORMATION FOR CLASS I SHARES
The following expense information for Class I Shares has been estimated based on
the operating expenses of the Class A Shares of each Fund:
<TABLE>
<CAPTION>
Management Fees
(after voluntary Total Fund
Transaction waivers or 12b-1 Other Operating
Fund Expenses reimbursements) Fees Expenses Expenses
---- -------- --------------- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Global Money Fund None 0.04% 0 0.36% .40%
Class I Shares
U.S. Government Money Fund None 0.04% 0 0.56% .60%
Class I Shares
California Money Fund None 0.14% 0 0.46% .60%
Class I Shares
Short Term High Quality Bond Fund None 0.04% 0 0.46% .50%
Class I Shares
Short Term Global Government Fund None 0.10% 0 0.50% .60%
Class I Shares
U.S. Government Fund None 0.19% 0 0.41% .60%
Class I Shares
Corporate Income Fund None 0.32% 0 0.43% .75%
Class I Shares
California Municipal Fund None 0.27% 0 0.43% .70%
Class I Shares
Florida Insured Municipal Fund None 0.04% 0 0.51% .55%
Class I Shares
California Insured Intermediate None 0.04% 0 0.56% .60%
Municipal Fund
Class I Shares
National Municipal Fund None 0.30% 0 0.45% .75%
Class I Shares
Growth and Income Fund None 0.78% 0 0.55% 1.33%
Class I Shares
Growth Fund None 0.93% 0 0.53% 1.46%
Class I Shares
Emerging Growth Fund None 0.88% 0 0.57% 1.45%
Class I Shares
International Growth Fund None 0.90% 0 0.68% 1.58%
Class I Shares
</TABLE>
<PAGE>
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of the time period.
Fund One Year Three Years
---- -------- -----------
Global Money Fund $ 4 $13
Class I Shares
U.S. Government Money Fund $ 6 $19
Class I Shares
California Money Fund $ 6 $19
Class I Shares
Short Term High Quality Bond Fund $ 5 $16
Class I Shares
Short Term Global Government Fund $ 6 $19
Class I Shares
U.S. Government Fund $ 6 $19
Class I Shares
Corporate Income Fund $ 8 $24
Class I Shares
California Municipal Fund $ 7 $22
Class I Shares
Florida Insured Municipal Fund $ 6 $18
Class I Shares
California Insured Intermediate Municipal Fund $ 6 $19
Class I Shares
National Municipal Fund $ 8 $24
Class I Shares
Growth and Income Fund $14 $42
Class I Shares
Growth Fund $15 $46
Class I Shares
Emerging Growth Fund $15 $46
Class I Shares
International Growth Fund $16 $50
Class I Shares
<PAGE>
ADDITION OF COMMERCIAL MORTGAGE-BACKED SECURITIES TO INVESTMENTS OF U.S.
GOVERNMENT FUND
In the section "THE FUNDS' INVESTMENTS AND RISK CONSIDERATIONS" under the
heading "U.S. Government Fund," in the first paragraph, the fifth sentence (that
begins "Depending on market conditions, . . .") is deleted and replaced with the
following:
Depending on market conditions, the Fund's portfolio will consist of various
types of U.S. Government Securities in varying proportions; it may invest up to
35% of its total assets in (i) the types of securities in which the Corporate
Income Fund may invest except as otherwise prohibited in the Prospectus and SAI,
including corporate bonds, preferred stock, convertible corporate bonds,
convertible preferred stock, government stripped mortgage-backed securities,
asset-backed securities, and interests in lease obligations; and (ii) commercial
mortgage-backed securities, which are mortgage-backed securities that are issued
by a nongovernmental entity, such as a trust, and include collateralized
mortgage obligations and real estate mortgage investment conduits that are rated
in one of the top two rating categories.
Commercial mortgage-backed securities generally are structured with one or more
types of credit enhancement and are not guaranteed by a governmental agency or
instrumentality.
CHANGE IN SUPERVISION OF PORTFOLIO MANAGEMENT COMMITTEE FOR U.S. GOVERNMENT FUND
In the section "THE FUNDS' INVESTMENTS AND RISK CONSIDERATIONS" under the
heading "U.S. Government Fund," the last paragraph is deleted and amended with
the following:
The day-to-day management of the Fund's portfolio is the responsibility of a
committee composed of individuals who are officers of BlackRock. This committee
has managed the Fund since December, 1994, and is supervised by Keith Anderson
and Andrew J. Phillips. Mr. Anderson, a Managing Director of BlackRock, has been
co-head of the Portfolio Management Group since 1988. Mr. Phillips has been a
portfolio manager of BlackRock since 1991 and a Vice President of BlackRock
since 1993.
CHANGES TO SECURITIES AND INVESTMENT PRACTICES
In the section "SECURITIES AND INVESTMENT PRACTICES" under the heading
"Mortgage-Backed Securities" after the last sentence of the first paragraph the
following is added:
In addition, the U.S. Government Fund may invest in commercial Mortgage-Backed
Securities, which are similar to the above Mortgage-Backed Securities, except
they are issued by non-governmental entities and are created by pooling together
commercial and multifamily mortgage loans into trusts that are structured into
different classes or series based upon the prioritization of cash flows.
Commercial Mortgage-Backed Securities include Collateralized Mortgage
Obligations and real estate mortgage investment conduits ("REMICs"). While
commercial Mortgage-Backed Securities are generally structured with one or more
types of credit enhancement, they typically lack a guarantee by an entity having
the credit status of a governmental agency or instrumentality.
In the section "SECURITIES AND INVESTMENT PRACTICES" under the heading "Options
on Foreign Currencies," the first sentence is deleted and replaced with the
following:
All of the Funds except the U.S. Government Fund, the Municipal Funds and the
Money Funds may purchase and write put and call options on foreign currencies
for the purpose of hedging against declines in U.S. Dollar value on foreign
currency-denominated portfolio securities and against increases in the U.S.
Dollar cost of such securities to be acquired.
CHANGE IN INVESTING BY WIRE
In the section "How to Invest in the Funds" under the headings "By Wire" the
text following number two is deleted and restated as follows:
2. Instruct your bank to wire Federal Funds exactly as follows:
Boston Safe Deposit Trust
Westborough, MA
ABA #011-001234
For credit to: Sierra Trust Funds
Account #132012
(Fund Name and Class of Shares)
(Customer's Name)
(Customer's Social Security Number)
PURCHASES THROUGH INSTITUTIONS
In the section "YOUR ACCOUNT" under the heading "Waivers of the Sales Charges
for Class A and Class B Shares" the semicolon before the number (6) is deleted
and is replaced by the following text:
(investors may be charged an additional service or transaction fee by the
Authorized Dealer or Banks);
CHANGE IN APPLICATION OF CLASS A SHARES CDSCS
In the section "YOUR ACCOUNT" under the heading "Application of Class A Shares
CDSCs," the second sentence is deleted.
CHANGES IN WAIVERS OF THE SALES CHARGES FOR CLASS A AND CLASS B SHARES
In the section "YOUR ACCOUNT" under the heading "Waivers of the Sales Charges
for Class A and Class B Shares," the first sentence of the second paragraph is
amended and restated as follows:
Additional groups of investors that are not subject to an initial sales charge
on purchases of Class A Shares through an Authorized Dealer include either (a)
investors purchasing Class A Shares of a Fund through an employee benefit trust
created pursuant to a 401(k) Plan that has invested in the aggregate more than
$1 million in the Funds, or (b) investors purchasing Class A Shares of a Fund
through a 403(b) Plan that has more than $1 million in the Funds.
In the section "YOUR ACCOUNT" under the heading "Waivers of the Sales Charges
for Class A and Class B Shares," in the third paragraph the "and" is deleted
before the Roman numeral (vi) and the following is added at the end of the first
sentence"; and (vii) by a 401(k) Plan participant so long as the shares were
purchased through the 401(k) Plan and the 401(k) Plan continues in effect with
investments in Class A Shares of the Fund."
CHANGE IN TRANSFER AGENT RESPONSIBILITIES
In the section "THE FUNDS IN DETAIL -- SIERRA ADVISORS, ITS AFFILIATES AND
SERVICE PROVIDERS -- Administrator" the immediate heading should read
Administrator, Custodian and Transfer Agent and the last five sentences (that
begin "In additional to such services...") are deleted and replaced with the
following sentences:
Sierra Administration is entitled to a monthly fee at an annual rate of 0.35% of
each Non-Money Fund's average daily net assets and at an annual rate of 0.30% of
each Money Fund's average daily net assets. First Data Investor Services Group,
Inc. ("First Data"), a subsidiary of First Data Corp., serves as
sub-administrator and transfer agent of the Trust. First Data is located at One
Exchange Place, 53 State Street, Boston, Massachusetts 02109-2873. Sierra
Administration pays First Data for its services as sub-administrator and
transfer agent. Sierra Administration pays Boston Safe Deposit and Trust Co.
("Boston Safe"), One Boston Place, Boston, MA 02108, for its services as
custodian of the Trust. The Trust pays First Data certain transfer agent's and
sub-administrator's out-of-pocket expenses and pays Boston Safe certain
custodial transaction charges.
In the section "THE FUNDS IN DETAIL -- SIERRA ADVISORS, ITS AFFILIATES AND
SERVICE PROVIDERS -- Custodian and Transfer Agent" the heading and text is
deleted.
CREDIT AGREEMENT WITH DEUTSCHE BANK, AG, NEW YORK BRANCH
Under a credit agreement by and between the Trust and Deutsche Bank, AG, New
York ("Deutsche Bank") certain investment funds of the Trust may borrow money
from Deutsche Bank pursuant to a line of credit in compliance with its
investment objective, policies and limitations as set forth in the Prospectus
and Statement of Additional Information of the Trust.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
IM:100M
<PAGE>
SUPPLEMENT DATED JULY 1, 1996
SIERRA TRUST FUNDS
The Prospectus, dated October 31, 1995, as supplemented to date, for the Class A
Shares and Class S Shares of the GLOBAL MONEY, U.S. GOVERNMENT MONEY, CALIFORNIA
MONEY, SHORT TERM HIGH QUALITY BOND, SHORT TERM GLOBAL GOVERNMENT, U.S.
GOVERNMENT, CORPORATE INCOME, CALIFORNIA MUNICIPAL, FLORIDA INSURED MUNICIPAL,
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL, NATIONAL MUNICIPAL, GROWTH AND
INCOME, GROWTH, EMERGING GROWTH AND INTERNATIONAL GROWTH FUNDS of the Sierra
Trust Funds (the "Trust") is amended and supplemented as follows:
THE TRUST'S NEW MAILING ADDRESS IS: P.O. BOX 5118, WESTBOROUGH, MASSACHUSETTS
01581-5118.
CHANGE IN SUMMARY OF SIERRA TRUST FUNDS EXPENSES
In the section "SUMMARY OF SIERRA TRUST FUNDS EXPENSES" under the heading
"Example," the information regarding Class S Shares of Short Term High Quality
Bond Fund and Short Term Global Government Fund should be revised as follows:
Class S Shares
(Assuming a complete
redemption at end of Short Term High Short Term Global
period) .. Quality Bond Fund Government Fund
----------------- ------------------
1 Year $ 65 $ 66
3 Years 77 80
5 Years 102 107
10 Years 179 190
ADDITION OF CLASS I SHARES (NOT AVAILABLE FOR DIRECT PURCHASE BY INVESTORS)
Each investment fund of the Trust sold through this Prospectus has designated a
new class of shares as "Class I Shares." Initially, only Global Money Fund, U.S.
Government Money Fund, Short Term High Quality Bond Fund, Short Term Global
Government Fund, U.S. Government Fund, Corporate Income Fund, Growth and Income
Fund, Growth Fund, Emerging Growth Fund and International Growth Fund will offer
and sell Class I Shares, and sales will be restricted initially to the various
investment portfolios of Sierra Asset Management Portfolios ("SAM Portfolios"),
an open-end management investment company that is expected to begin operations
no later than July 31, 1996. Shares of SAM Portfolios are not offered through
this prospectus.
NO EXCHANGE PRIVILEGES TO SAM PORTFOLIOS
Initially, shareholders of the Trust will not be permitted to exchange their
---
shares for shares of the SAM Portfolios. In the future, such an exchange
privilege may be offered. However, when the SAM Portfolios begin operations, SAM
Portfolios' shareholders may exchange their Class A Shares and Class B Shares
for Class A Shares and Class S Shares, respectively, of the investment funds of
the Trust. More information regarding the exchange privilege for the SAM
Portfolios will be provided in the SAM Portfolios' Prospectus upon the
commencement of the offering and sale of shares of the SAM Portfolios.
PLEASE CALL 800-222-5852 IF YOU WOULD LIKE TO OBTAIN A PROSPECTUS FOR THE SHARES
OF THE SAM PORTFOLIOS.
<PAGE>
ADDITION OF EXPENSE INFORMATION FOR CLASS I SHARES
The following expense information has been estimated based on the operating
expenses of the Class A Shares of each Fund:
<TABLE>
<CAPTION>
Management Fees
(after voluntary Total Fund
Transaction waivers or 12b-1 Other Operating
Fund Expenses reimbursements) Fees Expenses Expenses
---- -------- --------------- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Global Money Fund None 0.04% 0 0.36% .40%
Class I Shares
U.S. Government Money Fund
Class I Shares None 0.04% 0 0.56% .60%
California Money Fund None 0.14% 0 0.46% .60%
Class I Shares
Short Term High Quality Bond Fund None 0.04% 0 0.46% .50%
Class I Shares
Short Term Global Government Fund None 0.10% 0 0.50% .60%
Class I Shares
U.S. Government Fund None 0.19% 0 0.41% .60%
Class I Shares
Corporate Income Fund None 0.32% 0 0.43% .75%
Class I Shares
California Municipal Fund None 0.27% 0 0.43% .70%
Class I Shares
Florida Insured Municipal Fund None 0.04% 0 0.51% .55%
Class I Shares
California Insured Intermediate None 0.04% 0 0.56% .60%
Municipal Fund
Class I Shares
National Municipal Fund None 0.30% 0 0.45% .75%
Class I Shares
Growth and Income Fund None 0.78% 0 0.55% 1.33%
Class I Shares
Growth Fund None 0.93% 0 0.53% 1.46%
Class I Shares
Emerging Growth Fund None 0.88% 0 0.57% 1.45%
Class I Shares
International Growth Fund None 0.90% 0 0.68% 1.58%
Class I Shares
</TABLE>
<PAGE>
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of the time period.
Fund One Year Three Years
---- -------- -----------
Global Money Fund $ 4 $13
Class I Shares
U.S. Government Money Fund $ 6 $19
Class I Shares
California Money Fund $ 6 $19
Class I Shares
Short Term High Quality Bond Fund $ 5 $16
Class I Shares
Short Term Global Government Fund $ 6 $19
Class I Shares
U.S. Government Fund $ 6 $19
Class I Shares
Corporate Income Fund $ 8 $24
Class I Shares
California Municipal Fund $ 7 $22
Class I Shares
Florida Insured Municipal Fund $ 6 $18
Class I Shares
California Insured Intermediate Municipal Fund $ 6 $19
Class I Shares
National Municipal Fund $ 8 $24
Class I Shares
Growth and Income Fund $14 $42
Class I Shares
Growth Fund $15 $46
Class I Shares
Emerging Growth Fund $15 $46
Class I Shares
International Growth Fund $16 $50
Class I Shares
<PAGE>
ADDITION OF COMMERCIAL MORTGAGE-BACKED SECURITIES TO INVESTMENTS OF U.S.
GOVERNMENT FUND
In the section "THE FUNDS' INVESTMENTS AND RISK CONSIDERATIONS" under the
heading "U.S. Government Fund," in the first paragraph, the fifth sentence (that
begins "Depending on market conditions, . . .") is deleted and replaced with the
following:
Depending on market conditions, the Fund's portfolio will consist of various
types of U.S. Government Securities in varying proportions; it may invest up to
35% of its total assets in (i) the types of securities in which the Corporate
Income Fund may invest except as otherwise prohibited in the Prospectus and SAI,
including corporate bonds, preferred stock, convertible corporate bonds,
convertible preferred stock, government stripped mortgage-backed securities,
asset-backed securities, and interests in lease obligations; and (ii) commercial
mortgage-backed securities, which are mortgage-backed securities that are issued
by a nongovernmental entity, such as a trust, and include collateralized
mortgage obligations and real estate mortgage investment conduits that are rated
in one of the top two rating categories.
Commercial mortgage-backed securities generally are structured with one or more
types of credit enhancement and are not guaranteed by a governmental agency or
instrumentality.
CHANGE IN SUPERVISION OF PORTFOLIO MANAGEMENT COMMITTEE FOR U.S. GOVERNMENT FUND
In the section "THE FUNDS' INVESTMENTS AND RISK CONSIDERATIONS" under the
heading "U.S. Government Fund," the last paragraph is deleted and amended with
the following:
The day-to-day management of the Fund's portfolio is the responsibility of a
committee composed of individuals who are officers of BlackRock. This committee
has managed the Fund since December, 1994, and is supervised by Keith Anderson
and Andrew J. Phillips. Mr. Anderson, a Managing Director of BlackRock, has been
co-head of the Portfolio Management Group since 1988. Mr. Phillips has been a
portfolio manager of BlackRock since 1991 and a Vice President of BlackRock
since 1993.
CHANGES TO SECURITIES AND INVESTMENT PRACTICES
In the section "Securities and Investment Practices" under the heading
"Mortgage-Backed Securities" after the last sentence of the first paragraph the
following is added:
In addition, the U.S. Government Fund may invest in commercial Mortgage-Backed
Securities, which are similar to the above Mortgage-Backed Securities, except
they are issued by non-governmental entities and are created by pooling together
commercial and multifamily mortgage loans into trusts that are structured into
different classes or series based upon the prioritization of cash flows.
Commercial Mortgage-Backed Securities include Collateralized Mortgage
Obligations and real estate mortgage investment conduits ("REMICs"). While
commercial Mortgage-Backed Securities are generally structured with one or more
types of credit enhancement, they typically lack a guarantee by an entity having
the credit status of a governmental agency or instrumentality.
In the section "Securities and Investment Practices" under the heading "Options
on Foreign Currencies," the first sentence is deleted and replaced with the
following:
All of the Funds except the U.S. Government Fund, the Municipal Funds and the
Money Funds may purchase and write put and call options on foreign currencies
for the purpose of hedging against declines in U.S. Dollar value on foreign
currency-denominated portfolio securities and against increases in the U.S.
Dollar cost of such securities to be acquired.
CHANGE IN INVESTING BY WIRE
In the section "How to Invest in a SAM Account" under the headings "By Wire" and
"Additional Investments" the text is deleted and restated as follows:
2. Instruct your bank to wire Federal Funds exactly as follows:
Boston Safe Deposit Trust
Westborough, MA
ABA #011-001234
For credit to: Sierra Trust Funds
Account #132012
(Fund Name and Class of Shares)
(Customer's Name)
(Customer's Social Security Number)
PURCHASE THROUGH INSTITUTIONS
In the section "YOUR ACCOUNT" under the heading "Waivers of Class A Initial
Sales Charges" the semicolon before the number (6) is deleted and replaced by
the following text:
(investors may be charged an additional service or transaction fee by the
Authorized Dealer or Banks);
CHANGE IN APPLICATION OF CLASS A SHARES CDSCS
In the section "YOUR ACCOUNT" under the heading "Application of Class A Shares
CDSCs," the second sentence is deleted.
CHANGES IN WAIVERS OF CLASS A SALES CHARGES
In the section "YOUR ACCOUNT" under the heading "Waivers of Class A Initial
Sales Charges," the first sentence of the second paragraph is amended and
restated as follows:
Additional groups of investors that are not subject to an initial sales charge
on purchases of Class A Shares through an Authorized Dealer include either (a)
investors purchasing Class A Shares of a Fund through an employee benefit trust
created pursuant to a 401(k) Plan that has invested in the aggregate more than
$1 million in the Funds, or (b) investors purchasing Class A Shares of a Fund
through a 403(b) Plan that has more than $1 million in the Funds.
In the section "YOUR ACCOUNT" under the heading "Waivers of the Class A Shares
CDSCs", the "and" is deleted before the Roman numeral (vi) and the following is
added at the end of the first sentence"; and (vii) by a 401(k) Plan participant
so long as the shares were purchased through the 401(k) Plan and the 401(k) Plan
continues in effect with investments in Class A Shares of the Fund."
CHANGE IN TRANSFER AGENT RESPONSIBILITIES
In the section "The Funds In Detail -- Sierra Advisors, Its Affiliates and
Service Providers -- Administrator, Transfer Agent and Custodian" the fifth and
seventh sentences (that begin "Sierra Administration also serves as . . .") are
deleted and the seventh sentence is replaced with the following:
First Data Investor Services Group, Inc. ("First Data"), a subsidiary of First
Data Corp., serves as sub-administrator and transfer agent of the Trust. First
Data is located at One Exchange Place, 53 State Street, Boston, Massachusetts
02109-2873.
All references to the "sub-transfer agent" are deleted and replaced with the
"transfer agent."
CREDIT AGREEMENT WITH DEUTSCHE BANK, AG, NEW YORK BRANCH
Under a credit agreement by and between the Trust and Deutsche Bank, AG, New
York ("Deutsche Bank") certain investment funds of the Trust may borrow money
from Deutsche Bank pursuant to a line of credit in compliance with its
investment objective, policies and limitations as set forth in the Prospectus
and Statement of Additional Information of the Trust.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
IS:18M
<PAGE>
SUPPLEMENT DATED JULY 1, 1996
SIERRA TRUST FUNDS
P.O. BOX 9702
PROVIDENCE, RHODE ISLAND 02940-9702
The Prospectus, dated October 31, 1995, as supplemented to date, for the Class A
Shares and Class B Shares of the GLOBAL MONEY, U.S. GOVERNMENT MONEY, CALIFORNIA
MONEY, SHORT TERM HIGH QUALITY BOND, SHORT TERM GLOBAL GOVERNMENT, U.S.
GOVERNMENT, CORPORATE INCOME, CALIFORNIA MUNICIPAL, FLORIDA INSURED MUNICIPAL,
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL, NATIONAL MUNICIPAL, GROWTH AND
INCOME, GROWTH, EMERGING GROWTH AND INTERNATIONAL GROWTH FUNDS of the Sierra
Trust Funds (the "Trust") is amended and supplemented as follows:
ADDITION OF CLASS I SHARES (NOT AVAILABLE FOR DIRECT PURCHASE BY INVESTORS)
Each investment fund of the Trust sold through this Prospectus has designated a
new class of shares as "Class I Shares." Initially, only Global Money Fund, U.S.
Government Money Fund, Short Term High Quality Bond Fund, Short Term Global
Government Fund, U.S. Government Fund, Corporate Income Fund, Growth and Income
Fund, Growth Fund, Emerging Growth Fund and International Growth Fund will offer
and sell Class I Shares, and sales will be restricted initially to the various
investment portfolios of Sierra Asset Management Portfolios ("SAM Portfolios"),
an open-end management investment company that is expected to begin operations
no later than July 31, 1996. Shares of SAM Portfolios are not offered through
this prospectus.
NO EXCHANGE PRIVILEGES TO SAM PORTFOLIOS
Initially, shareholders of the Trust will not be permitted to exchange their
---
shares for shares of the SAM Portfolios. In the future, such an exchange
privilege may be offered. However, when the SAM Portfolios begin operations, SAM
Portfolios' shareholders may exchange their Class A Shares and Class B Shares
for Class A Shares and Class B Shares, respectively, of the investment funds of
the Trust. More information regarding the exchange privilege for the SAM
Portfolios will be provided in the SAM Portfolios' Prospectus upon the
commencement of the offering and sale of shares of the SAM Portfolios.
PLEASE CALL 800-222-5852 IF YOU WOULD LIKE TO OBTAIN A PROSPECTUS FOR THE SHARES
OF THE SAM PORTFOLIOS.
<PAGE>
ADDITION OF EXPENSE INFORMATION FOR CLASS I SHARES
The following expense information for Class I Shares has been estimated based on
the operating expenses of the Class A Shares of each Fund:
<TABLE>
<CAPTION>
Management Fees
(after voluntary Total Fund
Transaction waivers or 12b-1 Other Operating
Fund Expenses reimbursements) Fees Expenses Expenses
---- -------- --------------- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Global Money Fund None 0.04% 0 0.36% .40%
Class I Shares
U.S. Government Money Fund None 0.04% 0 0.56% .60%
Class I Shares
California Money Fund None 0.14% 0 0.46% .60%
Class I Shares
Short Term High Quality Bond Fund None 0.04% 0 0.46% .50%
Class I Shares
Short Term Global Government Fund None 0.10% 0 0.50% .60%
Class I Shares
U.S. Government Fund None 0.19% 0 0.41% .60%
Class I Shares
Corporate Income Fund None 0.32% 0 0.43% .75%
Class I Shares
California Municipal Fund None 0.27% 0 0.43% .70%
Class I Shares
Florida Insured Municipal Fund None 0.04% 0 0.51% .55%
Class I Shares
California Insured Intermediate None 0.04% 0 0.56% .60%
Municipal Fund
Class I Shares
National Municipal Fund None 0.30% 0 0.45% .75%
Class I Shares
Growth and Income Fund None 0.78% 0 0.55% 1.33%
Class I Shares
Growth Fund None 0.93% 0 0.53% 1.46%
Class I Shares
Emerging Growth Fund None 0.88% 0 0.57% 1.45%
Class I Shares
International Growth Fund None 0.90% 0 0.68% 1.58%
Class I Shares
</TABLE>
<PAGE>
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of the time period.
Fund One Year Three Years
---- -------- -----------
Global Money Fund $ 4 $13
Class I Shares
U.S. Government Money Fund $ 6 $19
Class I Shares
California Money Fund $ 6 $19
Class I Shares
Short Term High Quality Bond Fund $ 5 $16
Class I Shares
Short Term Global Government Fund $ 6 $19
Class I Shares
U.S. Government Fund $ 6 $19
Class I Shares
Corporate Income Fund $ 8 $24
Class I Shares
California Municipal Fund $ 7 $22
Class I Shares
Florida Insured Municipal Fund $ 6 $18
Class I Shares
California Insured Intermediate Municipal Fund $ 6 $19
Class I Shares
National Municipal Fund $ 8 $24
Class I Shares
Growth and Income Fund $14 $42
Class I Shares
Growth Fund $15 $46
Class I Shares
Emerging Growth Fund $15 $46
Class I Shares
International Growth Fund $16 $50
Class I Shares
<PAGE>
ADDITION OF COMMERCIAL MORTGAGE-BACKED SECURITIES TO INVESTMENTS OF U.S.
GOVERNMENT FUND
In the section "THE FUNDS' INVESTMENTS AND RISK CONSIDERATIONS" under the
heading "U.S. Government Fund," in the first paragraph, the fifth sentence (that
begins "Depending on market conditions, . . .") is deleted and replaced with the
following:
Depending on market conditions, the Fund's portfolio will consist of various
types of U.S. Government Securities in varying proportions; it may invest up to
35% of its total assets in (i) the types of securities in which the Corporate
Income Fund may invest except as otherwise prohibited in the Prospectus and SAI,
including corporate bonds, preferred stock, convertible corporate bonds,
convertible preferred stock, government stripped mortgage-backed securities,
asset-backed securities, and interests in lease obligations; and (ii) commercial
mortgage-backed securities, which are mortgage-backed securities that are issued
by a nongovernmental entity, such as a trust, and include collateralized
mortgage obligations and real estate mortgage investment conduits that are rated
in one of the top two rating categories.
Commercial mortgage-backed securities generally are structured with one or more
types of credit enhancement and are not guaranteed by a governmental agency or
instrumentality.
CHANGE IN SUPERVISION OF PORTFOLIO MANAGEMENT COMMITTEE FOR U.S. GOVERNMENT FUND
In the section "THE FUNDS' INVESTMENTS AND RISK CONSIDERATIONS" under the
heading "U.S. Government Fund," delete the last paragraph and replace it with
the following:
The day-to-day management of the Fund's portfolio is the responsibility of a
committee composed of individuals who are officers of BlackRock. This committee
has managed the Fund since December, 1994, and is supervised by Keith Anderson
and Andrew J. Phillips. Mr. Anderson, a Managing Director of BlackRock, has been
co-head of the Portfolio Management Group since 1988. Mr. Phillips has been a
portfolio manager of BlackRock since 1991 and a Vice President of BlackRock
since 1993.
CHANGES TO SECURITIES AND INVESTMENT PRACTICES
In the section "Securities and Investment Practices" under the heading
"Mortgage-Backed Securities," after the last sentence of the first paragraph the
following is added:
In addition, the U.S. Government Fund may invest in commercial Mortgage-Backed
Securities, which are similar to the above Mortgage-Backed Securities, except
they are issued by non-governmental entities and are created by pooling together
commercial and multifamily mortgage loans into trusts that are structured into
different classes or series based upon the prioritization of cash flows.
Commercial Mortgage-Backed Securities include Collateralized Mortgage
Obligations and real estate mortgage investment conduits ("REMICs"). While
commercial Mortgage-Backed Securities are generally structured with one or more
types of credit enhancement, they typically lack a guarantee by an entity having
the credit status of a governmental agency or instrumentality.
In the section "Securities and Investment Practices" under the heading "Options
on Foreign Currencies," the first sentence is deleted and replaced with the
following:
All of the Funds except the U.S. Government Fund, the Municipal Funds and the
Money Funds may purchase and write put and call options on foreign currencies
for the purpose of hedging against declines in U.S. Dollar value on foreign
currency-denominated portfolio securities and against increases in the U.S.
Dollar cost of such securities to be acquired.
CHANGE IN APPLICATION OF CLASS A CDSC
In the section "YOUR ACCOUNT" under the heading "Initial Sales Charge
Alternative: Class A Shares," the fourth and fifth sentence, dealing with
written directions from the dealer of record regarding application of the Class
A CDSC, are deleted, AS ARE ALL OTHER REFERENCES TO THE CLASS A CDSC BEING
WAIVED BY THE DEALER OF RECORD.
In the section "YOUR ACCOUNT" under the heading "Application of Class A Shares
CDSCs" the phrase at the end of the first sentence of the second paragraph, "or
(ii) by a plan participant within two years of the plan participant's purchase
of such Class A Shares" is amended by adding the words "in a 403(b) Plan" after
the word "participant".
PURCHASES THROUGH INSTITUTIONS
In the section "YOUR ACCOUNT" under the heading "Waivers of Class A Initial
Sales Charges" the following text is added at the end of the paragraph:
(investors may be charged an additional service or transaction fee by the
Authorized Dealer or Banks);
CHANGES IN WAIVERS OF CLASS A INITIAL SALES CHARGES
In the section "YOUR ACCOUNT" under the heading "Waivers of Class A Initial
Sales Charges," the first sentence of the second paragraph is amended and
restated as follows:
Additional groups of investors that are not subject to an initial sales charge
on purchases of Class A Shares through an Authorized Dealer include either (a)
investors purchasing Class A Shares of a Fund through an employee benefit trust
created pursuant to a 401(k) Plan that has invested in the aggregate more than
$1 million in the Funds, or (b) investors purchasing Class A Shares of a Fund
through a 403(b) Plan that has more than $1 million in the Funds.
CHANGE IN TRANSFER AGENT RESPONSIBILITIES
In the section "The Funds In Detail -- Sierra Advisors, Its Affiliates and
Service Providers -- Administrator, Transfer Agent and Custodian" the fifth and
seventh sentences (that begin "Sierra Administration also serves as. . .") are
deleted and the seventh sentence is replaced with the following:
First Data Investor Services Group, Inc. ("First Data"), a subsidiary of First
Data Corp., serves as sub-administrator and transfer agent of the Trust. First
Data is located at One Exchange Place, 53 State Street, Boston, Massachusetts
02109-2873.
All references to the "sub-transfer agent" are deleted and replaced with the
"transfer agent."
CREDIT AGREEMENT WITH DEUTSCHE BANK, AG, NEW YORK BRANCH
Under a credit agreement by and between the Trust and Deutsche Bank, AG, New
York ("Deutsche Bank") certain investment funds of the Trust may borrow money
from Deutsche Bank pursuant to a line of credit in compliance with its
investment objective, policies and limitations as set forth in the Prospectus
and Statement of Additional Information of the Trust.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
OM:5M
<PAGE>
SUPPLEMENT DATED JULY 1, 1996
SIERRA TRUST FUNDS
P.O. BOX 9702
PROVIDENCE, RHODE ISLAND 02940-9702
The Prospectus, dated October 31, 1995, as supplemented to date, for the Class A
Shares and Class S Shares of the GLOBAL MONEY, U.S. GOVERNMENT MONEY, CALIFORNIA
MONEY, SHORT TERM HIGH QUALITY BOND, SHORT TERM GLOBAL GOVERNMENT, U.S.
GOVERNMENT, CORPORATE INCOME, CALIFORNIA MUNICIPAL, FLORIDA INSURED MUNICIPAL,
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL, NATIONAL MUNICIPAL, GROWTH AND
INCOME, GROWTH, EMERGING GROWTH AND INTERNATIONAL GROWTH FUNDS of the Sierra
Trust Funds (the "Trust") is amended and supplemented as follows:
CHANGE IN SUMMARY OF SIERRA TRUST FUNDS EXPENSES
In the section "SUMMARY OF SIERRA TRUST FUNDS EXPENSES" under the heading
"Example," the information regarding Class S Shares of Short Term High Quality
Bond Fund and Short Term Global Government Fund should be revised as follows:
Class S Shares
(Assuming a complete
redemption at end of Short Term High Short Term Global
period) .. Quality Bond Fund Government Fund
----------------- ------------------
1 Year $ 65 $ 66
3 Years 77 80
5 Years 102 107
10 Years 179 190
ADDITION OF CLASS I SHARES (NOT AVAILABLE FOR DIRECT PURCHASE BY INVESTORS)
Each investment fund of the Trust sold through this Prospectus has designated a
new class of shares as "Class I Shares." Initially, only Global Money Fund, U.S.
Government Money Fund, Short Term High Quality Bond Fund, Short Term Global
Government Fund, U.S. Government Fund, Corporate Income Fund, Growth and Income
Fund, Growth Fund, Emerging Growth Fund and International Growth Fund will offer
and sell Class I Shares, and sales will be restricted initially to the various
investment portfolios of Sierra Asset Management Portfolios ("SAM Portfolios"),
an open-end management investment company that is expected to begin operations
no later than July 31, 1996. Shares of SAM Portfolios are not offered through
this prospectus.
NO EXCHANGE PRIVILEGES TO SAM PORTFOLIOS
Initially, shareholders of the Trust will not be permitted to exchange their
---
shares for shares of the SAM Portfolios. In the future, such an exchange
privilege may be offered. However, when the SAM Portfolios begin operations, SAM
Portfolios' shareholders may exchange their Class A Shares and Class B Shares
for Class A Shares and Class S Shares, respectively, of the investment funds of
the Trust. More information regarding the exchange privilege for the SAM
Portfolios will be provided in the SAM Portfolios' Prospectus upon the
commencement of the offering and sale of shares of the SAM Portfolios.
PLEASE CALL 800-222-5852 IF YOU WOULD LIKE TO OBTAIN A PROSPECTUS FOR THE SHARES
OF THE SAM PORTFOLIOS.
<PAGE>
ADDITION OF EXPENSE INFORMATION FOR CLASS I SHARES
The following expense information for Class I Shares has been estimated based on
the operating expenses of the Class A Shares of each Fund:
<TABLE>
<CAPTION>
Management Fees
(after voluntary Total Fund
Transaction waivers or 12b-1 Other Operating
Fund Expenses reimbursements) Fees Expenses Expenses
---- -------- --------------- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Global Money Fund None 0.04% 0 0.36% .40%
Class I Shares
U.S. Government Money Fund
Class I Shares None 0.04% 0 0.56% .60%
California Money Fund None 0.14% 0 0.46% .60%
Class I Shares
Short Term High Quality Bond Fund None 0.04% 0 0.46% .50%
Class I Shares
Short Term Global Government Fund None 0.10% 0 0.50% .60%
Class I Shares
U.S. Government Fund None 0.19% 0 0.41% .60%
Class I Shares
Corporate Income Fund None 0.32% 0 0.43% .75%
Class I Shares
California Municipal Fund None 0.27% 0 0.43% .70%
Class I Shares
Florida Insured Municipal Fund None 0.04% 0 0.51% .55%
Class I Shares
California Insured Intermediate None 0.04% 0 0.56% .60%
Municipal Fund
Class I Shares
National Municipal Fund None 0.30% 0 0.45% .75%
Class I Shares
Growth and Income Fund None 0.78% 0 0.55% 1.33%
Class I Shares
Growth Fund None 0.93% 0 0.53% 1.46%
Class I Shares
Emerging Growth Fund None 0.88% 0 0.57% 1.45%
Class I Shares
International Growth Fund None 0.90% 0 0.68% 1.58%
Class I Shares
</TABLE>
<PAGE>
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of the time period.
Fund One Year Three Years
---- -------- -----------
Global Money Fund $ 4 $13
Class I Shares
U.S. Government Money Fund $ 6 $19
Class I Shares
California Money Fund $ 6 $19
Class I Shares
Short Term High Quality Bond Fund $ 5 $16
Class I Shares
Short Term Global Government Fund $ 6 $19
Class I Shares
U.S. Government Fund $ 6 $19
Class I Shares
Corporate Income Fund $ 8 $24
Class I Shares
California Municipal Fund $ 7 $22
Class I Shares
Florida Insured Municipal Fund $ 6 $18
Class I Shares
California Insured Intermediate Municipal Fund $ 6 $19
Class I Shares
National Municipal Fund $ 8 $24
Class I Shares
Growth and Income Fund $14 $42
Class I Shares
Growth Fund $15 $46
Class I Shares
Emerging Growth Fund $15 $46
Class I Shares
International Growth Fund $16 $50
Class I Shares
<PAGE>
ADDITION OF COMMERCIAL MORTGAGE-BACKED SECURITIES TO INVESTMENTS OF U.S.
GOVERNMENT FUND
In the section "THE FUNDS' INVESTMENTS AND RISK CONSIDERATIONS" under the
heading "U.S. Government Fund," in the first paragraph, the fifth sentence (that
begins "Depending on market conditions, . . .") is deleted and replaced with the
following:
Depending on market conditions, the Fund's portfolio will consist of various
types of U.S. Government Securities in varying proportions; it may invest up to
35% of its total assets in (i) the types of securities in which the Corporate
Income Fund may invest except as otherwise prohibited in the Prospectus and SAI,
including corporate bonds, preferred stock, convertible corporate bonds,
convertible preferred stock, government stripped mortgage-backed securities,
asset-backed securities, and interests in lease obligations; and (ii) commercial
mortgage-backed securities, which are mortgage-backed securities that are issued
by a nongovernmental entity, such as a trust, and include collateralized
mortgage obligations and real estate mortgage investment conduits that are rated
in one of the top two rating categories.
Commercial mortgage-backed securities generally are structured with one or more
types of credit enhancement and are not guaranteed by a governmental agency or
instrumentality.
CHANGE IN SUPERVISION OF PORTFOLIO MANAGEMENT COMMITTEE FOR U.S. GOVERNMENT FUND
In the section "THE FUNDS' INVESTMENTS AND RISK CONSIDERATIONS" under the
heading "U.S. Government Fund," delete the last paragraph and replace it with
the following:
The day-to-day management of the Fund's portfolio is the responsibility of a
committee composed of individuals who are officers of BlackRock. This committee
has managed the Fund since December, 1994, and is supervised by Keith Anderson
and Andrew J. Phillips. Mr. Anderson, a Managing Director of BlackRock, has been
co-head of the Portfolio Management Group since 1988. Mr. Phillips has been a
portfolio manager of BlackRock since 1991 and a Vice President of BlackRock
since 1993.
CHANGES TO SECURITIES AND INVESTMENT PRACTICES
In the section "Securities and Investment Practices" under the heading
"Mortgage-Backed Securities," after the last sentence of the first paragraph the
following is added:
In addition, the U.S. Government Fund may invest in commercial Mortgage-Backed
Securities, which are similar to the above Mortgage-Backed Securities, except
they are issued by non-governmental entities and are created by pooling together
commercial and multifamily mortgage loans into trusts that are structured into
different classes or series based upon the prioritization of cash flows.
Commercial Mortgage-Backed Securities include Collateralized Mortgage
Obligations and real estate mortgage investment conduits ("REMICs"). While
commercial Mortgage-Backed Securities are generally structured with one or more
types of credit enhancement, they typically lack a guarantee by an entity having
the credit status of a governmental agency or instrumentality.
In the section "Securities and Investment Practices" under the heading "Options
on Foreign Currencies," the first sentence is deleted and replaced with the
following:
All of the Funds except the U.S. Government Fund, the Municipal Funds and the
Money Funds may purchase and write put and call options on foreign currencies
for the purpose of hedging against declines in U.S. Dollar value on foreign
currency-denominated portfolio securities and against increases in the U.S.
Dollar cost of such securities to be acquired.
<PAGE>
CHANGE IN APPLICATION OF CLASS A CDSC
In the section "YOUR ACCOUNT" under the heading "Initial Sales Charge
Alternative: Class A Shares," the fourth and fifth sentences, dealing with
written directions from the dealer of record regarding application of the Class
A CDSC, are deleted, AS ARE ALL OTHER REFERENCES TO THE CLASS A CDSC BEING
WAIVED BY THE DEALER OF RECORD.
In the section "YOUR ACCOUNT" under the heading "Application of Class A Shares
CDSCs" the phrase at the end of the first sentence of the second paragraph, "or
(ii) by a plan participant within two years of the plan participant's purchase
of such Class A Shares" is amended by adding the words "in a 403(b) Plan" after
the word "participant".
PURCHASES THROUGH INSTITUTIONS
In the section "YOUR ACCOUNT" under the heading "Waivers of Class A Initial
Sales Charges" the following text is added at the end of the paragraph:
(investors may be charged an additional service or transaction fee by the
Authorized Dealer or Banks);
CHANGES IN WAIVERS OF CLASS A INITIAL SALES CHARGES
In the section "YOUR ACCOUNT" under the heading "Waivers of Class A Initial
Sales Charges," the first sentence of the second paragraph is amended and
restated as follows:
Additional groups of investors that are not subject to an initial sales charge
on purchases of Class A Shares through an Authorized Dealer include either (a)
investors purchasing Class A Shares of a Fund through an employee benefit trust
created pursuant to a 401(k) Plan that has invested in the aggregate more than
$1 million in the Funds, or (b) investors purchasing Class A Shares of a Fund
through a 403(b) Plan that has more than $1 million in the Funds.
CHANGE IN TRANSFER AGENT RESPONSIBILITIES
In the section "The Funds In Detail -- Sierra Advisors, Its Affiliates and
Service Providers -- Administrator, Transfer Agent and Custodian" the fifth and
seventh sentences (that begin "Sierra Administration also serves as. . .") are
deleted and the seventh sentence is replaced with the following:
First Data Investor Services Group, Inc. ("First Data"), a subsidiary of First
Data Corp., serves as sub-administrator and transfer agent of the Trust. First
Data is located at One Exchange Place, 53 State Street, Boston, Massachusetts
02109-2873.
All references to the "sub-transfer agent" are deleted and replaced with the
"transfer agent."
CREDIT AGREEMENT WITH DEUTSCHE BANK, AG, NEW YORK BRANCH
Under a credit agreement by and between the Trust and Deutsche Bank, AG, New
York ("Deutsche Bank") certain investment funds of the Trust may borrow money
from Deutsche Bank pursuant to a line of credit in compliance with its
investment objective, policies and limitations as set forth in the Prospectus
and Statement of Additional Information of the Trust.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
OS:12M
<PAGE>
The following is a fair and accurate English translation of a Spanish language
Prospectus Supplement to be used for Sierra Trust Funds.
By: /s/ Keith B. Pipes
----------------------
Keith B. Pipes
Executive Vice President,
Treasurer and Secretary,
Sierra Trust Funds
SUPPLEMENT DATED JULY 1, 1996
SIERRA TRUST FUNDS
The Prospectus, dated October 31, 1995, as supplemented to date, for the Class A
Shares and Class B Shares of the GLOBAL MONEY, U.S. GOVERNMENT MONEY, CALIFORNIA
MONEY, SHORT TERM HIGH QUALITY BOND, SHORT TERM GLOBAL GOVERNMENT, U.S.
GOVERNMENT, CORPORATE INCOME, CALIFORNIA MUNICIPAL, FLORIDA INSURED MUNICIPAL,
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL, NATIONAL MUNICIPAL, GROWTH AND
INCOME, GROWTH, EMERGING GROWTH AND INTERNATIONAL GROWTH FUNDS of the Sierra
Trust Funds (the "Trust") is amended and supplemented as follows:
THE TRUST'S NEW MAILING ADDRESS IS: P.O. BOX 5118, WESTBOROUGH, MASSACHUSETTS
01581-5118.
ADDITION OF CLASS I SHARES (NOT AVAILABLE FOR DIRECT PURCHASE BY INVESTORS)
Each investment fund of the Trust sold through this Prospectus has designated a
new class of shares as "Class I Shares." Initially, only Global Money Fund, U.S.
Government Money Fund, Short Term High Quality Bond Fund, Short Term Global
Government Fund, U.S. Government Fund, Corporate Income Fund, Growth and Income
Fund, Growth Fund, Emerging Growth Fund and International Growth Fund will offer
and sell Class I Shares, and sales will be restricted initially to the various
investment portfolios of Sierra Asset Management Portfolios ("SAM Portfolios"),
an open-end management investment company that is expected to begin operations
no later than July 31, 1996. Shares of SAM Portfolios are not offered through
this prospectus.
NO EXCHANGE PRIVILEGES TO SAM PORTFOLIOS
Initially, shareholders of the Trust will not be permitted to exchange their
---
shares for shares of the SAM Portfolios. In the future, such an exchange
privilege may be offered. However, when the SAM Portfolios begin operations, SAM
Portfolios' shareholders may exchange their Class A Shares and Class B Shares
for Class A Shares and Class B Shares, respectively, of the investment funds of
the Trust. More information regarding the exchange privilege for the SAM
Portfolios will be provided in the SAM Portfolios' Prospectus upon the
commencement of the offering and sale of shares of the SAM Portfolios.
PLEASE CALL 800-222-5852 IF YOU WOULD LIKE TO OBTAIN A PROSPECTUS FOR THE SHARES
OF THE SAM PORTFOLIOS.
<PAGE>
ADDITION OF EXPENSE INFORMATION FOR CLASS I SHARES
The following expense information for Class I Shares has been estimated based on
the operating expenses of the Class A Shares of each Fund:
<TABLE>
<CAPTION>
Management Fees
(after voluntary Total Fund
Transaction waivers or 12b-1 Other Operating
Fund Expenses reimbursements) Fees Expenses Expenses
---- -------- --------------- ----- -------- --------
<S> <C> <C> <C> <C> <C>
Global Money Fund None 0.04% 0 0.36% .40%
Class I Shares
U.S. Government Money Fund None 0.04% 0 0.56% .60%
Class I Shares
California Money Fund None 0.14% 0 0.46% .60%
Class I Shares
Short Term High Quality Bond Fund None 0.04% 0 0.46% .50%
Class I Shares
Short Term Global Government Fund None 0.10% 0 0.50% .60%
Class I Shares
U.S. Government Fund None 0.19% 0 0.41% .60%
Class I Shares
Corporate Income Fund None 0.32% 0 0.43% .75%
Class I Shares
California Municipal Fund None 0.27% 0 0.43% .70%
Class I Shares
Florida Insured Municipal Fund None 0.04% 0 0.51% .55%
Class I Shares
California Insured Intermediate None 0.04% 0 0.56% .60%
Municipal Fund
Class I Shares
National Municipal Fund None 0.30% 0 0.45% .75%
Class I Shares
Growth and Income Fund None 0.78% 0 0.55% 1.33%
Class I Shares
Growth Fund None 0.93% 0 0.53% 1.46%
Class I Shares
Emerging Growth Fund None 0.88% 0 0.57% 1.45%
Class I Shares
International Growth Fund None 0.90% 0 0.68% 1.58%
Class I Shares
</TABLE>
<PAGE>
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of the time period.
Fund One Year Three Years
---- -------- -----------
Global Money Fund $ 4 $13
Class I Shares
U.S. Government Money Fund $ 6 $19
Class I Shares
California Money Fund $ 6 $19
Class I Shares
Short Term High Quality Bond Fund $ 5 $16
Class I Shares
Short Term Global Government Fund $ 6 $19
Class I Shares
U.S. Government Fund $ 6 $19
Class I Shares
Corporate Income Fund $ 8 $24
Class I Shares
California Municipal Fund $ 7 $22
Class I Shares
Florida Insured Municipal Fund $ 6 $18
Class I Shares
California Insured Intermediate Municipal Fund $ 6 $19
Class I Shares
National Municipal Fund $ 8 $24
Class I Shares
Growth and Income Fund $14 $42
Class I Shares
Growth Fund $15 $46
Class I Shares
Emerging Growth Fund $15 $46
Class I Shares
International Growth Fund $16 $50
Class I Shares
<PAGE>
ADDITION OF COMMERCIAL MORTGAGE-BACKED SECURITIES TO INVESTMENTS OF U.S.
GOVERNMENT FUND
In the section "THE FUNDS' INVESTMENTS AND RISK CONSIDERATIONS" under the
heading "U.S. Government Fund," in the first paragraph, the fifth sentence (that
begins "Depending on market conditions, . . .") is deleted and replaced with the
following:
Depending on market conditions, the Fund's portfolio will consist of various
types of U.S. Government Securities in varying proportions; it may invest up to
35% of its total assets in (i) the types of securities in which the Corporate
Income Fund may invest except as otherwise prohibited in the Prospectus and SAI,
including corporate bonds, preferred stock, convertible corporate bonds,
convertible preferred stock, government stripped mortgage-backed securities,
asset-backed securities, and interests in lease obligations; and (ii) commercial
mortgage-backed securities, which are mortgage-backed securities that are issued
by a nongovernmental entity, such as a trust, and include collateralized
mortgage obligations and real estate mortgage investment conduits that are rated
in one of the top two rating categories.
Commercial mortgage-backed securities generally are structured with one or more
types of credit enhancement and are not guaranteed by a governmental agency or
instrumentality.
CHANGE IN SUPERVISION OF PORTFOLIO MANAGEMENT COMMITTEE FOR U.S. GOVERNMENT FUND
In the section "THE FUNDS' INVESTMENTS AND RISK CONSIDERATIONS" under the
heading "U.S. Government Fund," the last paragraph is deleted and amended with
the following:
The day-to-day management of the Fund's portfolio is the responsibility of a
committee composed of individuals who are officers of BlackRock. This committee
has managed the Fund since December, 1994, and is supervised by Keith Anderson
and Andrew J. Phillips. Mr. Anderson, a Managing Director of BlackRock, has been
co-head of the Portfolio Management Group since 1988. Mr. Phillips has been a
portfolio manager of BlackRock since 1991 and a Vice President of BlackRock
since 1993.
CHANGES TO SECURITIES AND INVESTMENT PRACTICES
In the section "SECURITIES AND INVESTMENT PRACTICES" under the heading
"Mortgage-Backed Securities" after the last sentence of the first paragraph the
following is added:
In addition, the U.S. Government Fund may invest in commercial Mortgage-Backed
Securities, which are similar to the above Mortgage-Backed Securities, except
they are issued by non-governmental entities and are created by pooling together
commercial and multifamily mortgage loans into trusts that are structured into
different classes or series based upon the prioritization of cash flows.
Commercial Mortgage-Backed Securities include Collateralized Mortgage
Obligations and real estate mortgage investment conduits ("REMICs"). While
commercial Mortgage-Backed Securities are generally structured with one or more
types of credit enhancement, they typically lack a guarantee by an entity having
the credit status of a governmental agency or instrumentality.
In the section "SECURITIES AND INVESTMENT PRACTICES" under the heading "Options
on Foreign Currencies," the first sentence is deleted and replaced with the
following:
All of the Funds except the U.S. Government Fund, the Municipal Funds and the
Money Funds may purchase and write put and call options on foreign currencies
for the purpose of hedging against declines in U.S. Dollar value on foreign
currency-denominated portfolio securities and against increases in the U.S.
Dollar cost of such securities to be acquired.
CHANGE IN INVESTING BY WIRE
In the section "How to Invest in the Funds" under the headings "By Wire" the
text following number two is deleted and restated as follows:
2. Instruct your bank to wire Federal Funds exactly as follows:
Boston Safe Deposit Trust
Westborough, MA
ABA #011-001234
For credit to: Sierra Trust Funds
Account #132012
(Fund Name and Class of Shares)
(Customer's Name)
(Customer's Social Security Number)
PURCHASES THROUGH INSTITUTIONS
In the section "YOUR ACCOUNT" under the heading "Waivers of the Sales Charges
for Class A and Class B Shares" the semicolon before the number (6) is deleted
and is replaced by the following text:
(investors may be charged an additional service or transaction fee by the
Authorized Dealer or Banks);
CHANGE IN APPLICATION OF CLASS A SHARES CDSCS
In the section "YOUR ACCOUNT" under the heading "Application of Class A Shares
CDSCs," the second sentence is deleted.
CHANGES IN WAIVERS OF THE SALES CHARGES FOR CLASS A AND CLASS B SHARES
In the section "YOUR ACCOUNT" under the heading "Waivers of the Sales Charges
for Class A and Class B Shares," the first sentence of the second paragraph is
amended and restated as follows:
Additional groups of investors that are not subject to an initial sales charge
on purchases of Class A Shares through an Authorized Dealer include either (a)
investors purchasing Class A Shares of a Fund through an employee benefit trust
created pursuant to a 401(k) Plan that has invested in the aggregate more than
$1 million in the Funds, or (b) investors purchasing Class A Shares of a Fund
through a 403(b) Plan that has more than $1 million in the Funds.
In the section "YOUR ACCOUNT" under the heading "Waivers of the Sales Charges
for Class A and Class B Shares," in the third paragraph the "and" is deleted
before the Roman numeral (vi) and the following is added at the end of the first
sentence"; and (vii) by a 401(k) Plan participant so long as the shares were
purchased through the 401(k) Plan and the 401(k) Plan continues in effect with
investments in Class A Shares of the Fund."
CHANGE IN TRANSFER AGENT RESPONSIBILITIES
In the section "THE FUNDS IN DETAIL -- SIERRA ADVISORS, ITS AFFILIATES AND
SERVICE PROVIDERS -- Administrator" the immediate heading should read
Administrator, Custodian and Transfer Agent and the last five sentences (that
begin "In additional to such services...") are deleted and replaced with the
following sentences:
Sierra Administration is entitled to a monthly fee at an annual rate of 0.35% of
each Non-Money Fund's average daily net assets and at an annual rate of 0.30% of
each Money Fund's average daily net assets. First Data Investor Services Group,
Inc. ("First Data"), a subsidiary of First Data Corp., serves as
sub-administrator and transfer agent of the Trust. First Data is located at One
Exchange Place, 53 State Street, Boston, Massachusetts 02109-2873. Sierra
Administration pays First Data for its services as sub-administrator and
transfer agent. Sierra Administration pays Boston Safe Deposit and Trust Co.
("Boston Safe"), One Boston Place, Boston, MA 02108, for its services as
custodian of the Trust. The Trust pays First Data certain transfer agent's and
sub-administrator's out-of-pocket expenses and pays Boston Safe certain
custodial transaction charges.
In the section "THE FUNDS IN DETAIL -- SIERRA ADVISORS, ITS AFFILIATES AND
SERVICE PROVIDERS -- Custodian and Transfer Agent" the heading and text is
deleted.
CREDIT AGREEMENT WITH DEUTSCHE BANK, AG, NEW YORK BRANCH
Under a credit agreement by and between the Trust and Deutsche Bank, AG, New
York ("Deutsche Bank") certain investment funds of the Trust may borrow money
from Deutsche Bank pursuant to a line of credit in compliance with its
investment objective, policies and limitations as set forth in the Prospectus
and Statement of Additional Information of the Trust.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
IM:100M
<PAGE>
SUPPLEMENT DATED JULY 1, 1996
TO PROSPECTUS DATED MARCH 20, 1995
OF
SIERRA TRUST FUNDS
TARGET MATURITY 2002 FUND
The Prospectus, dated March 20, 1995 (the "Prospectus") of the Sierra Trust
Funds (the "Trust") relating to the shares of the TARGET MATURITY 2002 FUND (the
"Fund") of the Trust is hereby amended and supplemented by the following.
THE TRUST'S NEW MAILING ADDRESS IS: P.O. BOX 5118, WESTBOROUGH, MASSACHUSETTS
01581-5118.
NO EXCHANGE PRIVILEGES TO SAM PORTFOLIOS
The Sierra Asset Management Portfolios ("SAM Portfolios"), an open-end
management investment company that is expected to begin operations no later than
July 31, 1996, will offer Class A and Class B Shares of its portfolios that
provide asset allocation strategies to investors. Initially, shareholders of the
Fund will not be permitted to exchange their shares for shares of the SAM
Portfolios. In the future, such exchange privilege may be offered. However, when
the SAM Portfolios begin operations, SAM Portfolios' shareholders may exchange
their Class A Shares for Class A Shares of the Fund. More information regarding
the exchange privilege for the SAM Portfolios will be provided in the SAM
Portfolios' Prospectus upon the commencement of the offering and sale of shares
of the SAM Portfolios.
PLEASE CALL 800-222-5852 IF YOU WOULD LIKE TO OBTAIN A PROSPECTUS FOR THE SHARES
OF THE SAM PORTFOLIOS.
CHANGES IN WAIVERS OF CLASS A INITIAL SALES CHARGES
In the section "YOUR ACCOUNT" under the heading "Waivers of Class A Initial
Sales Charges," the first sentence of the second paragraph is amended and
restated as follows:
Additional groups of investors that are not subject to an initial sales charge
on purchases of Class A Shares through an Authorized Dealer include either (a)
investors purchasing Class A Shares of the Fund through an employee benefit
trust created pursuant to a 401(k) Plan that has invested in the aggregate more
than $1 million in the Fund, or (b) investors purchasing Class A Shares of the
Fund through a 403(b) Plan that has more than $1 million in the Fund.
CHANGE IN APPLICATION OF CLASS A SHARES CDSC
In the section "YOUR ACCOUNT" under the heading "Application of Class A Shares
CDSC," the first sentence is deleted.
In the same paragraph, the "and" is deleted before Roman numeral (v) and the
following is added at the end of the sentence" ; and (vi) by a 401(k) Plan
participant so long as the shares were purchased through the 401(k) Plan and the
401(k) Plan continues in effect with investments in Class A Shares of the Fund."
CHANGES IN INVESTING BY WIRE
In the section "How to Invest in Class A Shares of the Fund" under the hearing
"By Wire" the text following number two is deleted and restated as follows:
2. Instruct your bank to wire Federal Funds exactly as follows:
Boston Safe Deposit Trust
Westborough, MA
ABA #011-001234
For credit to: Sierra Trust Funds
Account #132012
Target Maturity Fund
(Customer's Name)
(Customer's Social Security Number)
CHANGE IN TRANSFER AGENT RESPONSIBILITIES
In the section "THE FUND IN DETAIL -- Sierra Advisors, Its Affiliates and
Service Providers -- Administrator, Transfer Agent and Custodian" the fifth
sentence (that begins "Sierra Administration also serves as. . .") and the
seventh sentence are both deleted and the seventh sentence is replaced with the
following:
First Data Investor Services Group, Inc. ("First Data"), a subsidiary of First
Data Corp., serves as sub-administrator and transfer agent of the Trust. First
Data is located at One Exchange Place, 53 State Street, Boston, Massachusetts
02109-2873.
All references to the "sub-transfer agent" are deleted and replaced with the
"transfer agent."
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
