<PAGE>
SUPPLEMENT DATED APRIL 22, 1996
TO PROSPECTUS DATED OCTOBER 31, 1995
OF
SIERRA TRUST FUNDS
9301 CORBIN AVENUE, SUITE 333
P.O. BOX 1160
NORTHRIDGE, CALIFORNIA 91328-1160
This supplement consolidates and replaces supplements dated January 1, 1996,
March 1, 1996, and April 8, 1996, to the prospectus dated October 31, 1995, (the
"Prospectus") of the Sierra Trust Funds (the "Trust") relating to 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 Trust. The
Prospectus is hereby amended and supplemented by the following:
- -------------------------------------------------------------------------------
EFFECTIVE APRIL 8, 1996
Pursuant to the terms of an Investment Sub-Advisory Agreement (the "J.P. Morgan
Sub-Advisory Agreement") among the Trust, Sierra Investment Advisors
Corporation, the Trust's investment advisor (the "Advisor"), and J.P. Morgan
Investment Management Inc. ("J.P. Morgan"), the J.P. Morgan Sub-Advisory
Agreement and the role of J.P. Morgan as investment sub-advisor to the
INTERNATIONAL GROWTH FUND (the "Fund") will be terminated as of April 8, 1996.
The Trust and the Advisor will enter into an Investment Sub-Advisory Agreement
(the "Warburg Sub-Advisory Agreement"), subject to shareholder approval, with
Warburg, Pincus Counsellors, Inc. ("Warburg"), pursuant to which Warburg will
act as investment sub-advisor to the Fund, as of April 8, 1996. Besides the
change in the investment sub-advisor and new sub-advisory fees, there will be no
material differences between the J.P. Morgan Sub-Advisory Agreement and the
Warburg Sub-Advisory Agreement. No material changes in the investment objective
or policies of the Fund are anticipated. At a special meeting of shareholders
called by the Board of Trustees for June 21, 1996, the shareholders of the Fund
will vote concerning approval of the Warburg Sub-Advisory Agreement.
The "INVESTMENT MANAGEMENT" paragraph under the heading "INTERNATIONAL GROWTH
FUND" in the "THE FUNDS AT A GLANCE - THE EQUITY FUNDS" section on page 11 is
amended and restated as follows:
Warburg, Pincus Counsellors, Inc. ("Warburg") is the investment
Sub-Advisor of the Fund. Warburg is a professional investment
counselling firm which provides investment services to investment
endowment funds, foundations and other institutions and individuals. As
of February 29, 1996, Warburg managed approximately $13.5 billion of
assets, including approximately $7.5 billion of assets of twenty-six
mutual funds.
The last paragraph under the heading "INTERNATIONAL GROWTH FUND" in the "THE
FUNDS' INVESTMENTS AND RISK CONSIDERATIONS - INVESTMENT PRINCIPLES AND RISK
CONSIDERATIONS - THE EQUITY FUNDS" section on page 48 is deleted and replaced
with the following:
The investment decisions of the Fund are made by a committee. Richard
H. King is primarily responsible for making recommendations to the
committee. Richard King, Senior Managing Director, joined the firm to
found the department and has 28 years of investment experience. Prior
to joining Warburg, Mr. King was chief investment officer and a
director of Fiduciary Trust Company International S.A. in London
beginning in 1984.
The paragraph under the heading "ABOUT SIERRA TRUST FUNDS" in the "YOUR ACCOUNT"
section on page 72 is amended and restated by adding the following to the end of
the paragraph:
- Warburg, Pincus Counsellors, Inc.
The "SUB-ADVISORS" section under the headings "THE FUNDS IN DETAIL - SIERRA
ADVISORS, ITS AFFILIATES AND SERVICE PROVIDERS" on page 98 is amended by
inserting the following paragraph as the last paragraph:
WARBURG is located at 466 Lexington Avenue, New York, New York
10017-3147. Incorporated in 1970, Warburg is a wholly-owned subsidiary
of Warburg, Pincus Counsellors G.P. ("Counsellors G.P."), a New York
general partnership. E.M. Warburg, Pincus & Co., Inc. ("EMW") controls
Warburg through its ownership of a class of voting preferred stock of
Warburg. Lionel I. Pincus may be deemed a controlling person of EMW.
Counsellors G.P. has no business other than being a holding company of
Warburg and its subsidiaries.
The portion of the table that sets forth the sub-advisory fees paid to the
investment sub-advisor of the International Growth Fund, located under the
heading "MANAGEMENT FEE" in " BREAKDOWN OF FUND EXPENSES" section on page 101,
is deleted and replaced by the following:
As investment sub-advisor of the International Growth Fund, Warburg is
paid the following monthly fee under the Sub-Advisory Agreement for the
Fund at an annual rate of 0.50% of the average net assets of the Fund.
EFFECTIVE MARCH 1, 1996
1. In the "Expenses - Understanding Expenses" table on pages 12 and 13, the
maximum sales charge imposed on purchases (as a % of offering price) for Class A
Shares for the Growth and Income Fund, Growth Fund, Emerging Growth Fund and
International Growth Fund is changed from 4.50% to 5.75%. The initial sales
charge is reduced for purchases of $50,000 and over, decreasing to zero for
purchases of $1,000,000 and over for each Fund.
2. The second sentence in the paragraph with the heading "EMERGING GROWTH FUND"
on page 46 is deleted and replaced with the following sentence:
The Fund normally invests primarily in Equity Securities in companies
with market capitalization of less than $1.4 billion at the time of purchase.
3. The heading on the Class A shares sales charge table on page 80 is changed
to read:
FOR CLASS A SHARES OF NON-MONEY FUNDS OTHER THAN THE SHORT TERM GLOBAL
GOVERNMENT, SHORT TERM HIGH QUALITY BOND AND THE EQUITY FUNDS
4. The following additional Class A shares sales charge table is added after the
table on page 81:
FOR CLASS A SHARES OF THE EQUITY FUNDS
<TABLE>
<CAPTION>
Dealers'
As a % of As a % of Reallowance
Offering Price Net Asset as a % of
AMOUNT OF TRANSACTION Per Share Value Offering Price
- --------------------- ------------- --------- --------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.00%
$250,000 but less than $500,000 2.75% 2.83% 2.25%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 and over 0% 0% 0%
</TABLE>
5. The amount stated in the second paragraph of the left column on page 81 that
Sierra Services may pay investment dealers of record is changed from "up to
0.25% of the net asset value" to "up to 1.00% of the net asset value."
6. The following sentence is added before the last sentence of the first
paragraph in the left column on page 81:
Sierra Services intends to reallow the full applicable sales charge
related to purchases of Class A shares of the Equity Funds to GW Securities or
the Authorized Dealer that sells Equity Fund shares for the period from March 1,
1996 through May 31, 1996.
7. The second sentence in the first paragraph and the first and second sentences
in the second paragraph in the "Exchange Privileges and Restrictions - Class A
Shares" section on page 89 are deleted and replaced with the following
sentences:
Class A Shares of a Non-Money Fund may be exchanged for Class A Shares
of any of the other Funds of the Trust, including the Money Funds or the Sierra
Prime Income Fund, ("SPIF," and the foregoing Funds together, the "Eligible
Funds") without a sales charge at purchase. If shares of the Money Funds so
acquired are subsequently exchanged again for Class A Shares of a Non-Money Fund
or SPIF, no sales charge at purchase will be assessed. The availability of the
exchange privilege with respect to shares of SPIF is subject to the availability
of shares of SPIF for exchange purposes as stated in the prospectus and
statement of additional information ("SAI") of SPIF. Also, although shares of
SPIF may be exchanged for shares of the Funds, such exchanges of SPIF shares for
shares of the Funds are permitted approximately once every calendar quarter so
long as SPIF makes a repurchase offer for its shares in such quarter and so long
as the SPIF repurchase offer is sufficiently large to include the SPIF shares
tendered for exchange. See the prospectus and SAI of SPIF for additional
information regarding the exchange privilege applicable to SPIF shares and the
availability of such exchange privilege.
Class A Shares of a Money Fund may be exchanged for Class A Shares of
the other Money Funds without a sales charge at purchase. When Class A Shares of
the Money Funds are exchanged for Class A Shares of a Non-Money Fund or SPIF,
the initial sales charge applicable to such Non-Money Fund or SPIF will be
assessed unless the Class A Shares of the Money Funds given in exchange were
acquired through a previous exchange or series of exchanges for shares of a
Non-Money Fund or SPIF.
8. The last sentence in the third paragraph in the "Exchange Privileges and
Restrictions - Class A Shares" section on page 89 is deleted and replaced with
the following sentence:
The CDSCs applicable to Class A Shares will not be assessed on a
redemption that is a part of an exchange for Class A Shares of another Eligible
Fund, except that if the shares acquired in the exchange or a series of
exchanges were then redeemed within the CDSC period applicable to the shares
redeemed initially in the exchange or series of exchanges, the CDSC would be
assessed.
EFFECTIVE JANUARY 1, 1996
By deleting the eighth paragraph in "The Funds' Investments and Risk
Considerations - Investment Principles and Risk Considerations - The Bond Funds
- - Short Term Global Government Fund" section on page 38 and replacing it with
the following paragraph:
Adam M. Greshin is the lead portfolio manager for the Short Term Global
Government Fund. Mr. Greshin joined Scudder in 1986 as an international
bond analyst. Currently, he is Product Leader for Scudder's global and
international fixed-income investing. He was involved in the original
design of the Fund and has served as a member of the Fund's portfolio
management team since 1991. Mr. Greshin assumed responsibility for the
Fund's day-to-day management and investment strategies effective
November 1995.
By deleting the second paragraph in the section "Performance - Performance
Comparisons" on page 70 and replacing it with the following paragraph:
In addition, the Municipal Funds and the California Money Fund may
attempt to illustrate in advertising or sales literature the benefits
of tax-free investing. For example, Table 1 on the following page shows
California investors the approximate yield that a taxable investment
must earn at various sample income brackets to produce after-tax yields
equivalent to those of tax-exempt investments, such as the California
Municipal, California Insured Intermediate Municipal and California
Money Funds, yielding from 2.00% to 7.00%. Table 2 on the following
page shows taxpayers how to translate federal tax savings from
investments, such as the National Municipal Fund, into an equivalent
yield from a taxable investment. The yields, tax rates and income
brackets following are for illustration purposes only and are not
intended to represent current or future yields for the Funds, current
tax rates or income brackets. The yields, tax rates and income brackets
following may be higher or lower than the yields, tax rates and income
brackets shown. Calculations are computed in accordance with standard
SEC calculations of 30-day yield. The California marginal tax rates
presented assume payment of the highest California tax rate for the
particular federal marginal tax rate quoted. The income brackets and
tax rates presented are only samples since the Internal Revenue Service
("IRS") adjusts the brackets annually for inflation, and tax rates are
subject to change by legislation. Investors should consult their tax
adviser with specific reference to their own tax situation.
By deleting Table 1 in the section "Performance - Tax Equivalent Yields" on page
71 and replacing it with the following Table 1:
TABLE 1
<TABLE>
<CAPTION>
Combined
Federal and
Federal California California Tax-Exempt Yield
Sample 1995 Federal Marginal Marginal Marginal ----------------
Taxable Income Brackets Tax Rate+ Tax Rate* Tax Rate** 2.00% 2.50% 3.00% 3.50% 4.00%
----------------------- --------- ----------- ----------- -------------------------------------------
Single Return Joint Return Taxable Yield
------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$23,350 $0-$39,000 15% 6.00% 20.10% 2.50% 3.13% 3.75% 4.38% 5.01%
$23,350-$56,550 $39,000-$94,250 28% 9.30% 34.70% 3.06% 3.83% 4.59% 5.36% 6.13%
$56,550-$117,950 $94,250-$143,600 31% 9.30% 37.42% 3.20% 3.99% 4.79% 5.59% 6.39%
$117,950-$256,500 $143,600-$256,500 36% 9.30% 41.95% 3.44% 4.31% 5.17% 6.03% 6.89%
$256,500 and up $256,500 and up 39.6% 9.30% 45.22% 3.65% 4.56% 5.48% 6.39% 7.30%
<CAPTION>
Combined
Federal and
Federal California California Tax-Exempt Yield
Sample 1995 Federal Marginal Marginal Marginal ----------------
Taxable Income Brackets Tax Rate+ Tax Rate* Tax Rate** 4.50% 5.00% 5.50% 6.00% 6.50% 7.00%
----------------------- --------- --------- ---------- ----------------------------------------------------
Single Return Joint Return Taxable Yield
------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$23,350 $0-$39,000 15% 6.00% 20.10% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76%
$23,350-$56,550 $39,000-$94,250 28% 9.30% 34.70% 6.89% 7.66% 8.42% 9.19% 9.95% 10.72%
$56,550-$117,950 $94,250-$143,600 31% 9.30% 37.42% 7.19% 7.99% 8.79% 9.59% 10.39% 11.19%
$117,950-$256,500 $143,600-$256,500 36% 9.30% 41.95% 7.75% 8.61% 9.47% 10.34% 11.20% 12.06%
$256,500 and up $256,500 and up 39.6% 9.30% 45.22% 8.21% 9.13% 10.04% 10.95% 11.87% 12.78%
<FN>
- ------------------------
* California taxable income may differ due to differences in exemptions, itemized deductions and other items.
** Rates do not include the phase-out of personal exemptions or itemized deductions. Rates include the federal deduction of
state taxes paid.
+ Rates do not include the phase-out of personal exemptions or itemized deductions.
</TABLE>
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
IMCOMB(10M-4/96)
<PAGE>
SUPPLEMENT DATED APRIL 22, 1996
DATED OCTOBER 31, 1995
OF
SIERRA TRUST FUNDS
9301 CORBIN AVENUE, SUITE 333
P.O. BOX 1160
NORTHRIDGE, CALIFORNIA 91328-1160
This supplement consolidates and replaces supplements dated January 1, 1996,
March 1, 1996, and April 8, 1996, to the prospectus dated October 31, 1995, (the
"Prospectus") of the Sierra Trust Funds (the "Trust") relating to 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 Trust. The
Prospectus is hereby amended and supplemented by the following:
- -------------------------------------------------------------------------------
EFFECTIVE APRIL 8, 1996
Pursuant to the terms of an Investment Sub-Advisory Agreement (the "J.P. Morgan
Sub-Advisory Agreement") among the Trust, Sierra Investment Advisors
Corporation, the Trust's investment advisor (the "Advisor"), and J.P. Morgan
Investment Management Inc. ("J.P. Morgan"), the J.P. Morgan Sub-Advisory
Agreement and the role of J.P. Morgan as investment sub-advisor to the
INTERNATIONAL GROWTH FUND (the "Fund") will be terminated as of April 8, 1996.
The Trust and the Advisor will enter into an Investment Sub-Advisory Agreement
(the "Warburg Sub-Advisory Agreement"), subject to shareholder approval, with
Warburg, Pincus Counsellors, Inc. ("Warburg"), pursuant to which Warburg will
act as investment sub-advisor to the Fund, as of April 8, 1996. Besides the
change in the investment sub-advisor and new sub-advisory fees, there will be no
material differences between the J.P. Morgan Sub-Advisory Agreement and the
Warburg Sub-Advisory Agreement. No material changes in the investment objective
or policies of the Fund are anticipated. At a special meeting of shareholders
called by the Board of Trustees for June 21, 1996, the shareholders of the Fund
will vote concerning approval of the Warburg Sub-Advisory Agreement.
The "INVESTMENT MANAGEMENT" paragraph under the headings "THE SIERRA TRUST FUNDS
FAMILY AT A GLANCE - THE EQUITY FUNDS - INTERNATIONAL GROWTH FUND" on page 4 is
amended and restated as follows:
Warburg, Pincus Counsellors, Inc. ("Warburg") is the investment
Sub-Advisor of the Fund.
The last paragraph under the heading "INTERNATIONAL GROWTH FUND" in the "THE
FUNDS' INVESTMENTS AND RISK CONSIDERATIONS - INVESTMENT PRINCIPLES AND RISK
CONSIDERATIONS - THE EQUITY FUNDS" section on page 28 is deleted and replaced
with the following:
The investment decisions of the Fund are made by a committee. Richard
H. King is primarily responsible for making recommendations to the
committee. Richard King, Senior Managing Director, joined the firm to
found the department and has 28 years of investment experience. Prior
to joining Warburg, Mr. King was chief investment officer and a
director at Fiduciary Trust Company International S.A. in London
beginning in 1984.
The "SUB-ADVISORS" section under the headings "THE FUNDS IN DETAIL - SIERRA
ADVISORS, ITS AFFILIATES AND SERVICE PROVIDERS" on page 63 is amended by
inserting the following paragraph as the last paragraph:
WARBURG is located at 466 Lexington Avenue, New York, New York
10017-3147. Warburg is a professional investment counselling firm which
provides investment services to investment endowment funds, foundations
and other institutions and individuals. As of February 29, 1996,
Warburg managed approximately $13.5 billion of assets, including
approximately $7.5 billion of assets of twenty-six mutual funds.
Incorporated in 1970, Warburg is a wholly-owned subsidiary of Warburg,
Pincus Counsellors G.P. ("Counsellors G.P."), a New York general
partnership. E.M. Warburg, Pincus & Co., Inc. ("EMW") controls Warburg
through its ownership of a class of voting preferred stock of Warburg.
Lionel I. Pincus may be deemed a controlling person of EMW. Counsellors
G.P. has no business other than being a holding company of Warburg and
its subsidiaries.
The portion of the table that sets forth the sub-advisory fees paid to the
investment sub-advisor of the International Growth Fund, located under the
heading "MANAGEMENT FEE" in "BREAKDOWN OF FUND EXPENSES" section on page 67, is
deleted and replaced by the following:
As investment sub-advisor of the International Growth Fund, Warburg is
paid the following monthly fee under the Sub-Advisory Agreement for the
Fund at an annual rate of 0.50% of the average net assets of the Fund.
EFFECTIVE DATE MARCH 1, 1996
1. In the "SUMMARY OF SIERRA TRUST FUNDS EXPENSES" table on pages 5 and 6, the
maximum sales charge imposed on purchases (as a percentage of offering price)
for Class A Shares for the Growth and Income Fund, Growth Fund, Emerging Growth
Fund and International Growth Fund is changed from 4.50% to 5.75%. The initial
sales charge is reduced for purchases of $50,000 and over, decreasing to zero
for purchases of $1,000,000 and over for each Fund.
2. The second sentence in the paragraph with the heading "EMERGING GROWTH FUND"
on page 26 is deleted and replaced with the following sentence:
The Fund normally invests primarily in equity securities in companies
with market capitalization of less than $1.4 billion at the time of purchase.
3. The heading on the first Class A shares sales charge table on page 52 is
changed to read:
FOR CLASS A SHARES OF NON-MONEY FUNDS OTHER THAN THE SHORT TERM GLOBAL
GOVERNMENT, SHORT TERM HIGH QUALITY BOND AND THE EQUITY FUNDS
4. The following additional Class A shares sales charge table is added after the
second table on page 52:
FOR CLASS A SHARES OF THE EQUITY FUNDS
<TABLE>
<CAPTION>
Dealers'
As a % of As a % of Reallowance
Offering Price Net Asset as a % of
AMOUNT OF TRANSACTION Per Share Value Offering Price
- --------------------- ------------- --------- --------------
<C> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.00%
$250,000 but less than $500,000 2.75% 2.83% 2.25%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 and over 0% 0% 0%+
</TABLE>
5. The amount stated in the footnote to the two tables on page 52 that Sierra
Services may pay investment dealers of record is changed from "up to 0.25% of
the net asset value" to "up to 1.00% of the net asset value."
6. The following sentence is added before the last sentence of the last
paragraph on page 52:
Sierra Services intends to reallow the full applicable sales charge
related to purchases of Class A shares of the Equity Funds to GW Securities or
the Authorized Dealer that sells Equity Fund shares for the period from March 1,
1996 through May 31, 1996.
7. The following sentence is added after the second sentence in the first
paragraph in the "Exchange Privileges and Restrictions" section on page 57:
You may exchange at NAV shares of any class of a Fund for shares of the
same class of another Fund and for shares of the same class of the Sierra Prime
Income Fund ("SPIF," and the foregoing Funds together, the "Eligible Funds").
The availability of the exchange privilege with respect to shares of SPIF is
subject to the availability of shares of SPIF for exchange purposes as stated in
the prospectus and statement of additional information ("SAI") of SPIF. Also,
although shares of SPIF may be exchanged for shares of the Fund, such exchanges
of SPIF shares for shares of the Funds are permitted approximately once every
calendar quarter so long as SPIF makes a repurchase offer for its shares in such
quarter and so long as the SPIF repurchase offer is sufficiently large to
include SPIF shares tendered for exchange. See the prospectus and SAI of SPIF
for additional information regarding the exchange privilege applicable to SPIF
shares and the availability of such exchange privilege.
8. The first sentence in the first paragraph in the "Exchange Privileges and
Restrictions - Class A Shares" section on page 57 is deleted and replaced with
the following sentences:
You may exchange at NAV Class A Shares of any Eligible Fund, where
applicable sales charges have been paid, for Class A Shares of any Eligible
Fund. If shares of the Money Funds so acquired are subsequently exchanged again
for Class A Shares of a Non-Money Fund or SPIF, no sales charge at purchase will
be assessed. Class A Shares of a Money Fund may be exchanged for Class A Shares
of the other Money Funds without a sales charge at purchase. When Class A Shares
of the Money Funds are exchanged for Class A Shares of a Non-Money Fund or SPIF,
the initial sales charge applicable to such Non-Money Fund or SPIF will be
assessed unless the Class A Shares of the Money Funds given in exchange were
acquired through a previous exchange or series of exchanges for shares of a
Non-Money Fund or SPIF. No initial sales charge will be assessed, however, and
any applicable CDSC will not be imposed when Class A Shares of a Money Fund are
exchanged for Class A Shares of a Non-Money Fund where the purchase of shares of
the Non-Money Fund through the exchange is of any of the types described in
"Waivers of Class A Initial Sales Charges," or "Waivers of the Class A Shares
CDSCs."
9. The last sentence in the second paragraph in the "Exchange Privileges and
Restrictions - Class A Shares" section on page 57 is deleted and replaced with
the following sentence:
The CDSCs applicable to Class A Shares will not be assessed on a
redemption that is a part of an exchange for Class A Shares of another Eligible
Fund, except that if the shares acquired in the exchange or a series of
exchanges were then redeemed within the CDSC period applicable to the shares
redeemed initially in the exchange or series of exchanges, the CDSC would be
assessed.
EFFECTIVE JANUARY 1, 1996
By deleting the sixth paragraph in "The Funds' Investments and Risk
Considerations - Investment Principles and Risk Considerations - The Bond Funds
- - Short Term Global Government Fund" section on page 19 and replacing it with
the following paragraph:
Adam M. Greshin is the lead portfolio manager for the Short Term Global
Government Fund. Mr. Greshin joined Scudder in 1986 as an international
bond analyst. Currently, he is Product Leader for Scudder's global and
international fixed-income investing. He was involved in the original
design of the Fund and has served as a member of the Fund's portfolio
management team since 1991. Mr. Greshin assumed responsibility for the
Fund's day-to-day management and investment strategies effective
November 1995.
By deleting the second paragraph in the section "Performance Information -
Performance Comparisons" on page 46 and replacing it with the following
paragraph:
In addition, the Municipal Funds and the California Money Fund may
attempt to illustrate in advertising or sales literature the benefits
of tax-free investing. For example, Table 1 on the following page shows
California investors the approximate yield that a taxable investment
must earn at various sample income brackets to produce after-tax yields
equivalent to those of tax-exempt investments, such as the California
Municipal, California Insured Intermediate Municipal and California
Money Funds, yielding from 2.00% to 7.00%. Table 2 on the following
page shows taxpayers how to translate federal tax savings from
investments, such as the National Municipal Fund, into an equivalent
yield from a taxable investment. The yields, tax rates and income
brackets following are for illustration purposes only and are not
intended to represent current or future yields for the Funds, current
tax rates or income brackets. The yields, tax rates and income brackets
following may be higher or lower than the yields, tax rates and income
brackets shown. Calculations are computed in accordance with standard
SEC calculations of 30-day yield. The California marginal tax rates
presented assume payment of the highest California tax rate for the
particular federal marginal tax rate quoted. The income brackets and
tax rates presented are only samples since the Internal Revenue Service
("IRS") adjusts the brackets annually for inflation, and tax rates are
subject to change by legislation. Investors should consult their tax
adviser with specific reference to their own tax situation.
By deleting Table 1 in the section "Performance Information - Tax Equivalent
Yields" on page 47 and replacing it with the following Table 1:
TABLE 1
<TABLE>
<CAPTION>
Combined
Federal and
Federal California California Tax-Exempt Yield
Sample 1995 Federal Marginal Marginal Marginal ----------------
Taxable Income Brackets Tax Rate+ Tax Rate* Tax Rate** 2.00% 2.50% 3.00% 3.50% 4.00%
----------------------- --------- ----------- ----------- -------------------------------------------
Single Return Joint Return Taxable Yield
------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$23,350 $0-$39,000 15% 6.00% 20.10% 2.50% 3.13% 3.75% 4.38% 5.01%
$23,350-$56,550 $39,000-$94,250 28% 9.30% 34.70% 3.06% 3.83% 4.59% 5.36% 6.13%
$56,550-$117,950 $94,250-$143,600 31% 9.30% 37.42% 3.20% 3.99% 4.79% 5.59% 6.39%
$117,950-$256,500 $143,600-$256,500 36% 9.30% 41.95% 3.44% 4.31% 5.17% 6.03% 6.89%
$256,500 and up $256,500 and up 39.6% 9.30% 45.22% 3.65% 4.56% 5.48% 6.39% 7.30%
<CAPTION>
Combined
Federal and
Federal California California Tax-Exempt Yield
Sample 1995 Federal Marginal Marginal Marginal ----------------
Taxable Income Brackets Tax Rate+ Tax Rate* Tax Rate** 4.50% 5.00% 5.50% 6.00% 6.50% 7.00%
----------------------- --------- --------- ---------- -----------------------------------------------------
Single Return Joint Return Taxable Yield
------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$23,350 $0-$39,000 15% 6.00% 20.10% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76%
$23,350-$56,550 $39,000-$94,250 28% 9.30% 34.70% 6.89% 7.66% 8.42% 9.19% 9.95% 10.72%
$56,550-$117,950 $94,250-$143,600 31% 9.30% 37.42% 7.19% 7.99% 8.79% 9.59% 10.39% 11.19%
$117,950-$256,500 $143,600-$256,500 36% 9.30% 41.95% 7.75% 8.61% 9.47% 10.34% 11.20% 12.06%
$256,500 and up $256,500 and up 39.6% 9.30% 45.22% 8.21% 9.13% 10.04% 10.95% 11.87% 12.78%
<FN>
- --------------------
* California taxable income may differ due to differences in exemptions, itemized deductions and other items.
** Rates do not include the phase-out of personal exemptions or itemized deductions. Rates include the federal deduction of
state taxes paid.
+ Rates do not include the phase-out of personal exemptions or itemized deductions.
</TABLE>
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
ISCOMB(5M-4/96)
<PAGE>
SUPPLEMENT DATED APRIL 22, 1996
TO PROSPECTUS DATED OCTOBER 31, 1995
OF
SIERRA TRUST FUNDS
P.O. BOX 9702
PROVIDENCE, RHODE ISLAND 02940-9702
This supplement consolidates and replaces supplements dated January 1, 1996,
March 1, 1996, and April 8, 1996, to the prospectus dated October 31, 1995, (the
"Prospectus") of the Sierra Trust Funds (the "Trust") relating to 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 Trust. The
Prospectus is hereby amended and supplemented by the following:
- -------------------------------------------------------------------------------
EFFECTIVE APRIL 8, 1996
Pursuant to the terms of an Investment Sub-Advisory Agreement (the "J.P. Morgan
Sub-Advisory Agreement") among the Trust, Sierra Investment Advisors
Corporation, the Trust's investment advisor (the "Advisor"), and J.P. Morgan
Investment Management Inc. ("J.P. Morgan"), the J.P. Morgan Sub-Advisory
Agreement and the role of J.P. Morgan as investment sub-advisor to the
INTERNATIONAL GROWTH FUND (the "Fund") will be terminated as of April 8, 1996.
The Trust and the Advisor will enter into an Investment Sub-Advisory Agreement
(the "Warburg Sub-Advisory Agreement"), subject to shareholder approval, with
Warburg, Pincus Counsellors, Inc. ("Warburg"), pursuant to which Warburg will
act as investment sub-advisor to the Fund, as of April 8, 1996. Besides the
change in the investment sub-advisor and new sub-advisory fees, there will be no
material differences between the J.P. Morgan Sub-Advisory Agreement and the
Warburg Sub-Advisory Agreement. No material changes in the investment objective
or policies of the Fund are anticipated. At a special meeting of shareholders
called by the Board of Trustees for June 21, 1996, the shareholders of the Fund
will vote concerning approval of the Warburg Sub-Advisory Agreement.
The "INVESTMENT MANAGEMENT" paragraph under the heading "INTERNATIONAL GROWTH
FUND" in the "THE SIERRA TRUST FUNDS FAMILY AT A GLANCE - THE EQUITY FUNDS"
section on page 4 is amended and restated as follows:
Warburg, Pincus Counsellors, Inc. ("Warburg") is the investment
Sub-Advisor of the Fund.
The last paragraph under the heading "INTERNATIONAL GROWTH FUND" in the "THE
FUNDS' INVESTMENTS AND RISK CONSIDERATIONS - INVESTMENT PRINCIPLES AND RISK
CONSIDERATIONS - THE EQUITY FUNDS" section on page 27 is deleted and replaced
with the following:
The investment decisions of the Fund are made by a committee. Richard
H. King is primarily responsible for making recommendations to the
committee. Richard King, Senior Managing Director, joined the firm to
found the department and has 28 years of investment experience. Prior
to joining Warburg, Mr. King was chief investment officer and a
director at Fiduciary Trust Company International S.A. in London
beginning in 1984.
The "SUB-ADVISORS" section under the headings "THE FUNDS IN DETAIL - SIERRA
ADVISORS, ITS AFFILIATES AND SERVICE PROVIDERS" on page 63 is amended by
inserting the following paragraph as the last paragraph:
WARBURG is located at 466 Lexington Avenue, New York, New York
10017-3147. Warburg is a professional investment counselling firm which
provides investment services to investment endowment funds, foundations
and other institutions and individuals. As of February 29, 1996,
Warburg managed approximately $13.5 billion of assets, including
approximately $7.5 billion of assets of twenty-six mutual funds.
Incorporated in 1970, Warburg is a wholly-owned subsidiary of Warburg,
Pincus Counsellors G.P. ("Counsellors G.P."), a New York general
partnership. E.M. Warburg, Pincus & Co., Inc. ("EMW") controls Warburg
through its ownership of a class of voting preferred stock of Warburg.
Lionel I. Pincus may be deemed a controlling person of EMW. Counsellors
G.P. has no business other than being a holding company of Warburg and
its subsidiaries.
The portion of the table that sets forth the sub-advisory fees paid to the
investment sub-advisor of the International Growth Fund, located under the
heading "MANAGEMENT FEE" in "BREAKDOWN OF FUND EXPENSES" section on page 67, is
deleted and replaced by the following:
As investment sub-advisor of the International Growth Fund, Warburg is
paid the following monthly fee under the Sub-Advisory Agreement for the
Fund at an annual rate of 0.50% of the average net assets of the Fund.
EFFECTIVE MARCH 1, 1996
1. In the "SUMMARY OF SIERRA TRUST FUNDS EXPENSES" table on pages 5 and 6, the
maximum sales charge imposed on purchases (as a percentage of offering price)
for Class A Shares for the Growth and Income Fund, Growth Fund, Emerging Growth
Fund and International Growth Fund is changed from 4.50% to 5.75%. The initial
sales charge is reduced for purchases of $50,000 and over, decreasing to zero
for purchases of $1,000,000 and over for each Fund.
2. The second sentence in the paragraph with the heading "EMERGING GROWTH FUND"
on page 26 is deleted and replaced with the following sentence:
The Fund normally invests primarily in equity securities in companies
with market capitalization of less than $1.4 billion at the time of purchase.
3. The heading on the first Class A shares sales charge table on page 52 is
changed to read:
FOR CLASS A SHARES OF NON-MONEY FUNDS OTHER THAN THE SHORT TERM GLOBAL
GOVERNMENT, SHORT TERM HIGH QUALITY BOND AND THE EQUITY FUNDS
4. The following additional Class A shares sales charge table is added after the
second table on page 52:
FOR CLASS A SHARES OF THE EQUITY FUNDS
<TABLE>
<CAPTION>
Dealers'
As a % of As a % of Reallowance
Offering Price Net Asset as a % of
AMOUNT OF TRANSACTION Per Share Value Offering Price
- --------------------- -------------- --------- --------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.00%
$250,000 but less than $500,000 2.75% 2.83% 2.25%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 and over 0% 0% 0%+
</TABLE>
5. The following sentence is added before the last sentence of the last
paragraph on page 52:
Sierra Services intends to reallow the full applicable sales charge
related to purchases of Class A shares of the Equity Funds to the Authorized
Dealer that sells Equity Fund shares for the period from March 1, 1996 through
May 31, 1996.
EFFECTIVE JANUARY 1, 1996
By deleting the sixth paragraph in "The Funds' Investments and Risk
Considerations - Investment Principles and Risk Considerations - The Bond Funds
- - Short Term Global Government Fund" section on page 19 and replacing it with
the following paragraph:
Adam M. Greshin is the lead portfolio manager for the Short Term Global
Government Fund. Mr. Greshin joined Scudder in 1986 as an international
bond analyst. Currently, he is Product Leader for Scudder's global and
international fixed-income investing. He was involved in the original
design of the Fund and has served as a member of the Fund's portfolio
management team since 1991. Mr. Greshin assumed responsibility for the
Fund's day-to-day management and investment strategies effective
November 1995.
By deleting the second paragraph in the section "Performance Information -
Performance Comparisons" on page 46 and replacing it with the following
paragraph:
In addition, the Municipal Funds and the California Money Fund may
attempt to illustrate in advertising or sales literature the benefits
of tax-free investing. For example, Table 1 on the following page shows
California investors the approximate yield that a taxable investment
must earn at various sample income brackets to produce after-tax yields
equivalent to those of tax-exempt investments, such as the California
Municipal, California Insured Intermediate Municipal and California
Money Funds, yielding from 2.00% to 7.00%. Table 2 on the following
page shows taxpayers how to translate federal tax savings from
investments, such as the National Municipal Fund, into an equivalent
yield from a taxable investment. The yields, tax rates and income
brackets following are for illustration purposes only and are not
intended to represent current or future yields for the Funds, current
tax rates or income brackets. The yields, tax rates and income brackets
following may be higher or lower than the yields, tax rates and income
brackets shown. Calculations are computed in accordance with standard
SEC calculations of 30-day yield. The California marginal tax rates
presented assume payment of the highest California tax rate for the
particular federal marginal tax rate quoted. The income brackets and
tax rates presented are only samples since the Internal Revenue Service
("IRS") adjusts the brackets annually for inflation, and tax rates are
subject to change by legislation. Investors should consult their tax
adviser with specific reference to their own tax situation.
<PAGE>
By deleting Table 1 in the section "Performance Information - Tax Equivalent
Yields" on page 47 and replacing it with the following Table 1:
TABLE 1
<TABLE>
<CAPTION>
Combined
Federal and
Federal California California Tax-Exempt Yield
Sample 1995 Federal Marginal Marginal Marginal ----------------
Taxable Income Brackets Tax Rate+ Tax Rate* Tax Rate** 2.00% 2.50% 3.00% 3.50% 4.00%
----------------------- --------- ----------- ----------- -------------------------------------------
Single Return Joint Return Taxable Yield
------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$23,350 $0-$39,000 15% 6.00% 20.10% 2.50% 3.13% 3.75% 4.38% 5.01%
$23,350-$56,550 $39,000-$94,250 28% 9.30% 34.70% 3.06% 3.83% 4.59% 5.36% 6.13%
$56,550-$117,950 $94,250-$143,600 31% 9.30% 37.42% 3.20% 3.99% 4.79% 5.59% 6.39%
$117,950-$256,500 $143,600-$256,500 36% 9.30% 41.95% 3.44% 4.31% 5.17% 6.03% 6.89%
$256,500 and up $256,500 and up 39.6% 9.30% 45.22% 3.65% 4.56% 5.48% 6.39% 7.30%
<CAPTION>
Combined
Federal and
Federal California California Tax-Exempt Yield
Sample 1995 Federal Marginal Marginal Marginal ----------------
Taxable Income Brackets Tax Rate+ Tax Rate* Tax Rate** 4.50% 5.00% 5.50% 6.00% 6.50% 7.00%
----------------------- --------- --------- ---------- -----------------------------------------------------
Single Return Joint Return Taxable Yield
------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$23,350 $0-$39,000 15% 6.00% 20.10% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76%
$23,350-$56,550 $39,000-$94,250 28% 9.30% 34.70% 6.89% 7.66% 8.42% 9.19% 9.95% 10.72%
$56,550-$117,950 $94,250-$143,600 31% 9.30% 37.42% 7.19% 7.99% 8.79% 9.59% 10.39% 11.19%
$117,950-$256,500 $143,600-$256,500 36% 9.30% 41.95% 7.75% 8.61% 9.47% 10.34% 11.20% 12.06%
$256,500 and up $256,500 and up 39.6% 9.30% 45.22% 8.21% 9.13% 10.04% 10.95% 11.87% 12.78%
<FN>
- ------------------
* California taxable income may differ due to differences in exemptions, itemized deductions and other items.
** Rates do not include the phase-out of personal exemptions or itemized deductions. Rates include the federal deduction of
state taxes paid.
+ Rates do not include the phase-out of personal exemptions or itemized deductions.
</TABLE>
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
OMCOMB(10M-4/96)
<PAGE>
SUPPLEMENT DATED APRIL 22, 1996
TO PROSPECTUS DATED OCTOBER 31, 1995
OF
SIERRA TRUST FUNDS
P.O. BOX 9702
PROVIDENCE, RHODE ISLAND 02940-9702
This supplement consolidates and replaces supplements dated January 1, 1996,
March 1, 1996, and April 8, 1996, to the prospectus dated October 31, 1995, (the
"Prospectus") of the Sierra Trust Funds (the "Trust") relating to 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 Trust. The
Prospectus is hereby amended and supplemented by the following:
- -------------------------------------------------------------------------------
EFFECTIVE APRIL 8, 1996
Pursuant to the terms of an Investment Sub-Advisory Agreement (the "J.P. Morgan
Sub-Advisory Agreement") among the Trust, Sierra Investment Advisors
Corporation, the Trust's investment advisor (the "Advisor"), and J.P. Morgan
Investment Management Inc. ("J.P. Morgan"), the J.P. Morgan Sub-Advisory
Agreement and the role of J.P. Morgan as investment sub-advisor to the
INTERNATIONAL GROWTH FUND (the "Fund") will be terminated as of April 8, 1996.
The Trust and the Advisor will enter into an Investment Sub-Advisory Agreement
(the "Warburg Sub-Advisory Agreement"), subject to shareholder approval, with
Warburg, Pincus Counsellors, Inc. ("Warburg"), pursuant to which Warburg will
act as investment sub-advisor to the Fund, as of April 8, 1996. Besides the
change in the investment sub-advisor and new sub-advisory fees, there will be no
material differences between the J.P. Morgan Sub-Advisory Agreement and the
Warburg Sub-Advisory Agreement. No material changes in the investment objective
or policies of the Fund are anticipated. At a special meeting of shareholders
called by the Board of Trustees for June 21, 1996, the shareholders of the Fund
will vote concerning approval of the Warburg Sub-Advisory Agreement.
The "INVESTMENT MANAGEMENT" paragraph under the heading "INTERNATIONAL GROWTH
FUND" in the "THE SIERRA TRUST FUNDS FAMILY AT A GLANCE - THE EQUITY FUNDS"
section on page 4 is amended and restated as follows:
Warburg, Pincus Counsellors, Inc. ("Warburg") is the investment
Sub-Advisor of the Fund.
The last paragraph under the heading "INTERNATIONAL GROWTH FUND" in the "THE
FUNDS' INVESTMENTS AND RISK CONSIDERATIONS - INVESTMENT PRINCIPLES AND RISK
CONSIDERATIONS - THE EQUITY FUNDS" on page 28 is deleted and replaced with the
following:
The investment decisions of the Fund are made by a committee. Richard
H. King is primarily responsible for making recommendations to the
committee. Richard King, Senior Managing Director, joined the firm to
found the department and has 28 years of investment experience. Prior
to joining Warburg, Mr. King was chief investment officer and a
director at Fiduciary Trust Company International S.A. in London
beginning in 1984.
The "Sub-Advisors" section under the headings "THE FUNDS IN DETAIL - SIERRA
ADVISORS, ITS AFFILIATES AND SERVICE PROVIDERS" on page 64 is amended by
inserting the following paragraph as the last paragraph:
WARBURG is located at 466 Lexington Avenue, New York, New York
10017-3147. Warburg is a professional investment counselling firm which
provides investment services to investment endowment funds, foundations
and other institutions and individuals. As of February 29, 1996,
Warburg managed approximately $13.5 billion of assets, including
approximately $7.5 billion of assets of twenty-six mutual funds.
Incorporated in 1970, Warburg is a wholly-owned subsidiary of Warburg,
Pincus Counsellors G.P. ("Counsellors G.P."), a New York general
partnership. E.M. Warburg, Pincus & Co., Inc. ("EMW") controls Warburg
through its ownership of a class of voting preferred stock of Warburg.
Lionel I. Pincus may be deemed a controlling person of EMW. Counsellors
G.P. has no business other than being a holding company of Warburg and
its subsidiaries.
The portion of the table that sets forth the sub-advisory fees paid to the
investment sub-advisor of the International Growth Fund, located under the
heading "MANAGEMENT FEE" in "BREAKDOWN OF FUND EXPENSES" section on page 67, is
deleted and replaced by the following:
As investment sub-advisor of the International Growth Fund, Warburg is
paid the following monthly fees under the Sub-Advisory Agreement for
the Fund at an annual rate of 0.50% of the average net assets of the
Fund.
EFFECTIVE MARCH 1, 1996
1. In the "SUMMARY OF SIERRA TRUST FUNDS EXPENSES" table on pages 5 and 6, the
maximum sales charge imposed on purchases (as a percentage of offering price)
for Class A Shares for the Growth and Income Fund, Growth Fund, Emerging Growth
Fund and International Growth Fund is changed from 4.50% to 5.75%. The initial
sales charge is reduced for purchases of $50,000 and over, decreasing to zero
for purchases of $1,000,000 and over for each Fund.
2. The second sentence in the paragraph with the heading "EMERGING GROWTH FUND"
on page 26 is deleted and replaced with the following sentence:
The Fund normally invests primarily in equity securities in companies
with market capitalization of less than $1.4 billion at the time of purchase.
3. The heading on the first Class A shares sales charge table on page 52 is
changed to read:
FOR CLASS A SHARES OF NON-MONEY FUNDS OTHER THAN THE SHORT TERM GLOBAL
GOVERNMENT, SHORT TERM HIGH QUALITY BOND AND THE EQUITY FUNDS
4. The following additional Class A shares sales charge table is added after the
second table on page 52:
FOR CLASS A SHARES OF THE EQUITY FUNDS
<TABLE>
<CAPTION>
Dealers'
As a % of As a % of Reallowance
Offering Price Net Asset as a % of
AMOUNT OF TRANSACTION Per Share Value Offering Price
- --------------------- -------------- --------- --------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.00%
$250,000 but less than $500,000 2.75% 2.83% 2.25%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 and over 0% 0% 0%+
</TABLE>
5. The following sentence is added before the last sentence of the first
paragraph on page 53:
Sierra Services intends to reallow the full applicable sales charge
related to purchases of Class A shares of the Equity Funds to the Authorized
Dealer that sells Equity Fund shares for the period from March 1, 1996 through
May 31, 1996.
EFFECTIVE JANUARY 1, 1996
By deleting the sixth paragraph in "The Funds' Investments and Risk
Considerations - Investment Principles and Risk Considerations - The Bond Funds
- - Short Term Global Government Fund" section on page 19 and replacing it with
the following paragraph:
Adam M. Greshin is the lead portfolio manager for the Short Term Global
Government Fund. Mr. Greshin joined Scudder in 1986 as an international
bond analyst. Currently, he is Product Leader for Scudder's global and
international fixed-income investing. He was involved in the original
design of the Fund and has served as a member of the Fund's portfolio
management team since 1991. Mr. Greshin assumed responsibility for the
Fund's day-to-day management and investment strategies effective
November 1995.
By deleting the second paragraph in the section "Performance Information -
Performance Comparisons" on page 46 and replacing it with the following
paragraph:
In addition, the Municipal Funds and the California Money Fund may
attempt to illustrate in advertising or sales literature the benefits
of tax-free investing. For example, Table 1 on the following page shows
California investors the approximate yield that a taxable investment
must earn at various sample income brackets to produce after-tax yields
equivalent to those of tax-exempt investments, such as the California
Municipal, California Insured Intermediate Municipal and California
Money Funds, yielding from 2.00% to 7.00%. Table 2 on the following
page shows taxpayers how to translate federal tax savings from
investments, such as the National Municipal Fund, into an equivalent
yield from a taxable investment. The yields, tax rates and income
brackets following are for illustration purposes only and are not
intended to represent current or future yields for the Funds, current
tax rates or income brackets. The yields, tax rates and income brackets
following may be higher or lower than the yields, tax rates and income
brackets shown. Calculations are computed in accordance with standard
SEC calculations of 30-day yield. The California marginal tax rates
presented assume payment of the highest California tax rate for the
particular federal marginal tax rate quoted. The income brackets and
tax rates presented are only samples since the Internal Revenue Service
("IRS") adjusts the brackets annually for inflation, and tax rates are
subject to change by legislation. Investors should consult their tax
adviser with specific reference to their own tax situation.
<PAGE>
By deleting Table 1 in the section "Performance Information - Tax Equivalent
Yields" on page 47 and replacing it with the following Table 1:
TABLE 1
<TABLE>
<CAPTION>
Combined
Federal and
Federal California California Tax-Exempt Yield
Sample 1995 Federal Marginal Marginal Marginal ----------------
Taxable Income Brackets Tax Rate+ Tax Rate* Tax Rate** 2.00% 2.50% 3.00% 3.50% 4.00%
----------------------- --------- ----------- ----------- -------------------------------------------
Single Return Joint Return Taxable Yield
------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$23,350 $0-$39,000 15% 6.00% 20.10% 2.50% 3.13% 3.75% 4.38% 5.01%
$23,350-$56,550 $39,000-$94,250 28% 9.30% 34.70% 3.06% 3.83% 4.59% 5.36% 6.13%
$56,550-$117,950 $94,250-$143,600 31% 9.30% 37.42% 3.20% 3.99% 4.79% 5.59% 6.39%
$117,950-$256,500 $143,600-$256,500 36% 9.30% 41.95% 3.44% 4.31% 5.17% 6.03% 6.89%
$256,500 and up $256,500 and up 39.6% 9.30% 45.22% 3.65% 4.56% 5.48% 6.39% 7.30%
<CAPTION>
Combined
Federal and
Federal California California Tax-Exempt Yield
Sample 1995 Federal Marginal Marginal Marginal ----------------
Taxable Income Brackets Tax Rate+ Tax Rate* Tax Rate** 4.50% 5.00% 5.50% 6.00% 6.50% 7.00%
----------------------- --------- --------- ---------- -----------------------------------------------------
Single Return Joint Return Taxable Yield
------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$23,350 $0-$39,000 15% 6.00% 20.10% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76%
$23,350-$56,550 $39,000-$94,250 28% 9.30% 34.70% 6.89% 7.66% 8.42% 9.19% 9.95% 10.72%
$56,550-$117,950 $94,250-$143,600 31% 9.30% 37.42% 7.19% 7.99% 8.79% 9.59% 10.39% 11.19%
$117,950-$256,500 $143,600-$256,500 36% 9.30% 41.95% 7.75% 8.61% 9.47% 10.34% 11.20% 12.06%
$256,500 and up $256,500 and up 39.6% 9.30% 45.22% 8.21% 9.13% 10.04% 10.95% 11.87% 12.78%
<FN>
- --------------------
* California taxable income may differ due to differences in exemptions, itemized deductions and other
items.
** Rates do not include the phase-out of personal exemptions or itemized deductions. Rates include the
federal deduction of state taxes paid.
+ Rates do not include the phase-out of personal exemptions or itemized deductions.
</TABLE>
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
OSCOMB(10M-4/96)
<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 APRIL 22, 1996
TO PROSPECTUS DATED OCTOBER 31, 1995
OF
SIERRA TRUST FUNDS
9301 CORBIN AVENUE, SUITE 333
P.O. BOX 1160
NORTHRIDGE, CALIFORNIA 91328-1160
This supplement consolidates and replaces supplements dated January 1, 1996 and
March 1, 1996 to the prospectus dated October 31, 1995, (the "Prospectus") of
the Sierra Trust Funds (the "Trust") and further amends and supplements the
Prospectus relating to 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 Trust. The Prospectus is hereby amended and supplemented by
the following:
- -------------------------------------------------------------------------------
EFFECTIVE APRIL 8, 1996
Pursuant to the terms of an Investment Sub-Advisory Agreement (the "J.P. Morgan
Sub-Advisory Agreement") among the Trust, Sierra Investment Advisors
Corporation, the Trust's investment advisor (the "Advisor"), and J.P. Morgan
Investment Management Inc. ("J.P. Morgan"), the J.P. Morgan Sub-Advisory
Agreement and the role of J.P. Morgan as investment sub-advisor to the
INTERNATIONAL GROWTH FUND (the "Fund") will be terminated as of April 8, 1996.
The Trust and the Advisor will enter into an Investment Sub-Advisory Agreement
(the "Warburg Sub-Advisory Agreement"), subject to shareholder approval, with
Warburg, Pincus Counsellors, Inc. ("Warburg"), pursuant to which Warburg will
act as investment sub-advisor to the Fund, as of April 8, 1996. Besides the
change in the investment sub-advisor and new sub-advisory fees, there will be no
material differences between the J.P. Morgan Sub-Advisory Agreement and the
Warburg Sub-Advisory Agreement. No material changes in the investment objective
or policies of the Fund are anticipated. At a special meeting of shareholders
called by the Board of Trustees for June 21, 1996, the shareholders of the Fund
will vote concerning approval of the Warburg Sub-Advisory Agreement.
The "INVESTMENT MANAGEMENT" paragraph under the heading "INTERNATIONAL GROWTH
FUND" in the "THE FUNDS AT A GLANCE - THE EQUITY FUNDS" section on page 11 is
amended and restated as follows:
Warburg, Pincus Counsellors, Inc. ("Warburg") is the investment
Sub-Advisor of the Fund. Warburg is a professional investment
counselling firm which provides investment services to investment
endowment funds, foundations and other institutions and individuals. As
of February 29, 1996, Warburg managed approximately $13.5 billion of
assets, including approximately $7.5 billion of assets of twenty-six
mutual funds.
The last paragraph under the heading "INTERNATIONAL GROWTH FUND" in the "THE
FUNDS' INVESTMENTS AND RISK CONSIDERATIONS - INVESTMENT PRINCIPLES AND RISK
CONSIDERATIONS - THE EQUITY FUNDS" section on page 48 is deleted and replaced
with the following:
The investment decisions of the Fund are made by a committee. Richard
H. King is primarily responsible for making recommendations to the
committee. Richard King, Senior Managing Director, joined the firm to
found the department and has 28 years of investment experience. Prior
to joining Warburg, Mr. King was chief investment officer and a
director of Fiduciary Trust Company International S.A. in London
beginning in 1984.
The paragraph under the heading "ABOUT SIERRA TRUST FUNDS" in the "YOUR ACCOUNT"
section on page 72 is amended and restated by adding the following to the end of
the paragraph:
- Warburg, Pincus Counsellors, Inc.
The "SUB-ADVISORS" section under the headings "THE FUNDS IN DETAIL - SIERRA
ADVISORS, ITS AFFILIATES AND SERVICE PROVIDERS" on page 98 is amended by
inserting the following paragraph as the last paragraph:
WARBURG is located at 466 Lexington Avenue, New York, New York
10017-3147. Incorporated in 1970, Warburg is a wholly-owned subsidiary
of Warburg, Pincus Counsellors G.P. ("Counsellors G.P."), a New York
general partnership. E.M. Warburg, Pincus & Co., Inc. ("EMW") controls
Warburg through its ownership of a class of voting preferred stock of
Warburg. Lionel I. Pincus may be deemed a controlling person of EMW.
Counsellors G.P. has no business other than being a holding company of
Warburg and its subsidiaries.
The portion of the table that sets forth the sub-advisory fees paid to the
investment sub-advisor of the International Growth Fund, located under the
heading "MANAGEMENT FEE" in " BREAKDOWN OF FUND EXPENSES" section on page 101,
is deleted and replaced by the following:
As investment sub-advisor of the International Growth Fund, Warburg is
paid the following monthly fee under the Sub-Advisory Agreement for the
Fund at an annual rate of 0.50% of the average net assets of the Fund.
EFFECTIVE MARCH 1, 1996
1. In the "Expenses - Understanding Expenses" table on pages 12 and 13, the
maximum sales charge imposed on purchases (as a % of offering price) for Class A
Shares for the Growth and Income Fund, Growth Fund, Emerging Growth Fund and
International Growth Fund is changed from 4.50% to 5.75%. The initial sales
charge is reduced for purchases of $50,000 and over, decreasing to zero for
purchases of $1,000,000 and over for each Fund.
2. The second sentence in the paragraph with the heading "EMERGING GROWTH FUND"
on page 46 is deleted and replaced with the following sentence:
The Fund normally invests primarily in Equity Securities in companies
with market capitalization of less than $1.4 billion at the time of purchase.
3. The heading on the Class A shares sales charge table on page 80 is changed
to read:
FOR CLASS A SHARES OF NON-MONEY FUNDS OTHER THAN THE SHORT TERM GLOBAL
GOVERNMENT, SHORT TERM HIGH QUALITY BOND AND THE EQUITY FUNDS
4. The following additional Class A shares sales charge table is added after the
table on page 81:
FOR CLASS A SHARES OF THE EQUITY FUNDS
<TABLE>
<CAPTION>
Dealers'
As a % of As a % of Reallowance
Offering Price Net Asset as a % of
AMOUNT OF TRANSACTION Per Share Value Offering Price
- --------------------- ------------- --------- --------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.00%
$250,000 but less than $500,000 2.75% 2.83% 2.25%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 and over 0% 0% 0%
</TABLE>
5. The amount stated in the second paragraph of the left column on page 81 that
Sierra Services may pay investment dealers of record is changed from "up to
0.25% of the net asset value" to "up to 1.00% of the net asset value."
6. The following sentence is added before the last sentence of the first
paragraph in the left column on page 81:
Sierra Services intends to reallow the full applicable sales charge
related to purchases of Class A shares of the Equity Funds to GW Securities or
the Authorized Dealer that sells Equity Fund shares for the period from March 1,
1996 through May 31, 1996.
7. The second sentence in the first paragraph and the first and second sentences
in the second paragraph in the "Exchange Privileges and Restrictions - Class A
Shares" section on page 89 are deleted and replaced with the following
sentences:
Class A Shares of a Non-Money Fund may be exchanged for Class A Shares
of any of the other Funds of the Trust, including the Money Funds or the Sierra
Prime Income Fund, ("SPIF," and the foregoing Funds together, the "Eligible
Funds") without a sales charge at purchase. If shares of the Money Funds so
acquired are subsequently exchanged again for Class A Shares of a Non-Money Fund
or SPIF, no sales charge at purchase will be assessed. The availability of the
exchange privilege with respect to shares of SPIF is subject to the availability
of shares of SPIF for exchange purposes as stated in the prospectus and
statement of additional information ("SAI") of SPIF. Also, although shares of
SPIF may be exchanged for shares of the Funds, such exchanges of SPIF shares for
shares of the Funds are permitted approximately once every calendar quarter so
long as SPIF makes a repurchase offer for its shares in such quarter and so long
as the SPIF repurchase offer is sufficiently large to include the SPIF shares
tendered for exchange. See the prospectus and SAI of SPIF for additional
information regarding the exchange privilege applicable to SPIF shares and the
availability of such exchange privilege.
Class A Shares of a Money Fund may be exchanged for Class A Shares of
the other Money Funds without a sales charge at purchase. When Class A Shares of
the Money Funds are exchanged for Class A Shares of a Non-Money Fund or SPIF,
the initial sales charge applicable to such Non-Money Fund or SPIF will be
assessed unless the Class A Shares of the Money Funds given in exchange were
acquired through a previous exchange or series of exchanges for shares of a
Non-Money Fund or SPIF.
8. The last sentence in the third paragraph in the "Exchange Privileges and
Restrictions - Class A Shares" section on page 89 is deleted and replaced with
the following sentence:
The CDSCs applicable to Class A Shares will not be assessed on a
redemption that is a part of an exchange for Class A Shares of another Eligible
Fund, except that if the shares acquired in the exchange or a series of
exchanges were then redeemed within the CDSC period applicable to the shares
redeemed initially in the exchange or series of exchanges, the CDSC would be
assessed.
EFFECTIVE JANUARY 1, 1996
By deleting the eighth paragraph in "The Funds' Investments and Risk
Considerations - Investment Principles and Risk Considerations - The Bond Funds
- - Short Term Global Government Fund" section on page 38 and replacing it with
the following paragraph:
Adam M. Greshin is the lead portfolio manager for the Short Term Global
Government Fund. Mr. Greshin joined Scudder in 1986 as an international
bond analyst. Currently, he is Product Leader for Scudder's global and
international fixed-income investing. He was involved in the original
design of the Fund and has served as a member of the Fund's portfolio
management team since 1991. Mr. Greshin assumed responsibility for the
Fund's day-to-day management and investment strategies effective
November 1995.
By deleting the second paragraph in the section "Performance - Performance
Comparisons" on page 70 and replacing it with the following paragraph:
In addition, the Municipal Funds and the California Money Fund may
attempt to illustrate in advertising or sales literature the benefits
of tax-free investing. For example, Table 1 on the following page shows
California investors the approximate yield that a taxable investment
must earn at various sample income brackets to produce after-tax yields
equivalent to those of tax-exempt investments, such as the California
Municipal, California Insured Intermediate Municipal and California
Money Funds, yielding from 2.00% to 7.00%. Table 2 on the following
page shows taxpayers how to translate federal tax savings from
investments, such as the National Municipal Fund, into an equivalent
yield from a taxable investment. The yields, tax rates and income
brackets following are for illustration purposes only and are not
intended to represent current or future yields for the Funds, current
tax rates or income brackets. The yields, tax rates and income brackets
following may be higher or lower than the yields, tax rates and income
brackets shown. Calculations are computed in accordance with standard
SEC calculations of 30-day yield. The California marginal tax rates
presented assume payment of the highest California tax rate for the
particular federal marginal tax rate quoted. The income brackets and
tax rates presented are only samples since the Internal Revenue Service
("IRS") adjusts the brackets annually for inflation, and tax rates are
subject to change by legislation. Investors should consult their tax
adviser with specific reference to their own tax situation.
By deleting Table 1 in the section "Performance - Tax Equivalent Yields" on page
71 and replacing it with the following Table 1:
TABLE 1
<TABLE>
<CAPTION>
Combined
Federal and
Federal California California Tax-Exempt Yield
Sample 1995 Federal Marginal Marginal Marginal ----------------
Taxable Income Brackets Tax Rate+ Tax Rate* Tax Rate** 2.00% 2.50% 3.00% 3.50% 4.00%
----------------------- --------- ----------- ----------- -------------------------------------------
Single Return Joint Return Taxable Yield
------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$23,350 $0-$39,000 15% 6.00% 20.10% 2.50% 3.13% 3.75% 4.38% 5.01%
$23,350-$56,550 $39,000-$94,250 28% 9.30% 34.70% 3.06% 3.83% 4.59% 5.36% 6.13%
$56,550-$117,950 $94,250-$143,600 31% 9.30% 37.42% 3.20% 3.99% 4.79% 5.59% 6.39%
$117,950-$256,500 $143,600-$256,500 36% 9.30% 41.95% 3.44% 4.31% 5.17% 6.03% 6.89%
$256,500 and up $256,500 and up 39.6% 9.30% 45.22% 3.65% 4.56% 5.48% 6.39% 7.30%
<CAPTION>
Combined
Federal and
Federal California California Tax-Exempt Yield
Sample 1995 Federal Marginal Marginal Marginal ----------------
Taxable Income Brackets Tax Rate+ Tax Rate* Tax Rate** 4.50% 5.00% 5.50% 6.00% 6.50% 7.00%
----------------------- --------- --------- ---------- ----------------------------------------------------
Single Return Joint Return Taxable Yield
------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$23,350 $0-$39,000 15% 6.00% 20.10% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76%
$23,350-$56,550 $39,000-$94,250 28% 9.30% 34.70% 6.89% 7.66% 8.42% 9.19% 9.95% 10.72%
$56,550-$117,950 $94,250-$143,600 31% 9.30% 37.42% 7.19% 7.99% 8.79% 9.59% 10.39% 11.19%
$117,950-$256,500 $143,600-$256,500 36% 9.30% 41.95% 7.75% 8.61% 9.47% 10.34% 11.20% 12.06%
$256,500 and up $256,500 and up 39.6% 9.30% 45.22% 8.21% 9.13% 10.04% 10.95% 11.87% 12.78%
<FN>
- ------------------------
* California taxable income may differ due to differences in exemptions, itemized deductions and other items.
** Rates do not include the phase-out of personal exemptions or itemized deductions. Rates include the federal deduction of
state taxes paid.
+ Rates do not include the phase-out of personal exemptions or itemized deductions.
</TABLE>
PLEASE RETAIN THIS SUPPLEMENT
FOR FUTURE REFERENCE
IMCOMB(10M-4/96)
