STEPSTONE FUNDS, 497, 1996-04-22

STEPSTONE FUNDS
497, 1996-04-22

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<PAGE> 1
STEPSTONE FUNDS

MONEY MARKET FUND
TREASURY MONEY MARKET FUND
CALIFORNIA TAX-FREE MONEY MARKET FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INSTITUTIONAL CLASS PROSPECTUS
DATED JUNE 1, 1995

THIS SUPPLEMENT TO THE PROSPECTUS SUPERSEDES AND REPLACES ANY EXISTING
SUPPLEMENTS TO THE PROSPECTUS. THIS SUPPLEMENT PROVIDES NEW AND ADDITIONAL
INFORMATION BEYOND THAT CONTAINED IN THE PROSPECTUS AND SHOULD BE RETAINED AND
READ IN CONJUNCTION WITH SUCH PROSPECTUS.

------------------------------

For the fiscal year ended January 31, 1996, Union Bank, predecessor of
the Advisor, was paid an advisory fee of .30%, .25% and .10% of the
average daily net assets of the Money Market, Treasury Money Market and
California Tax-Free Money Market Funds, respectively.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union
Bank of California, N.A., manages the day-to-day operations of each
Fund. On April 1, 1996, Union Bank, the Trust's then- investment
advisor, combined with the Bank of California, N.A., and the resulting
bank changed its name to Union Bank of California, N.A.. At the same
time, the banks' investment management divisions were combined. Each of
Union Bank and The Bank of California, N.A. (or its predecessor bank)
has been in banking since the early 1900's, and historically, each has
had significant investment functions within its trust and investment
divisions. Union Bank of California, N.A., is a subsidiary of The Bank
of Tokyo-Mitsubishi, Ltd..

As of April 1, 1996, the Advisor managed approximately $12 billion in
individual portfolios and collective funds. The Advisor's clients range
from pension funds, national labor union plans and foundations to
personal investments and trust portfolios.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE> 2
STEPSTONE FUNDS

INTERMEDIATE-TERM BOND FUND
GOVERNMENT SECURITIES FUND
CONVERTIBLE SECURITIES FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INSTITUTIONAL CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

At a Special Meeting of Shareholders of Stepstone Funds (the "Trust") held on
March 7, 1996, Shareholders approved new investment advisory and subadvisory
agreements in connection with the proposed combination of Union Bank, the
Trust's current investment advisor, and The Bank of California, N.A., and
BanCal Tri-State Corporation. This combination took effect on April 1, 1996.
The resulting entity, Union Bank of California, N.A., now serves as Advisor to
each of the Trust's Funds. Bank of Tokyo-Mitsubishi Trust Company, which was
formed by the combination of Bank of Tokyo Trust Company and Mitsubishi Bank
Trust Company of New York on April 1, 1996, serves as SubAdvisor to the
Government Securities and Convertible Securities Funds. All references in this
prospectus to Union Bank and its investment management division, Union Capital
Advisors, are hereby replaced with Union Bank of California, N.A. and its
investment management division, MERUS-UCA Capital Management. Due to the
aforementioned combination, the final paragraph of "The Advisor" section on
pages 9 and 10 of the prospectus is deleted and the third, fourth, fifth and
sixth paragraphs are replaced with the following language:

For the fiscal year ended January 31, 1996, Union Bank, predecessor of
the Advisor, was paid an advisory fee of .50%, .50% and .60% of the
average daily net assets of the Intermediate-Term Bond Fund, Government
Securities Fund and Convertible Securities Fund, respectively.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union
Bank of California, N.A., manages the day-to-day operations of each
Fund. On April 1, 1996, Union Bank, the Trust's then- investment
advisor, combined with The Bank of California, N.A., and the resulting
bank changed its name to Union Bank of California, N.A.. At the same
time, the banks' investment management divisions were combined. Each of
Union Bank and The Bank of California, N.A. (or its predecessor bank)
has been in banking since the early 1900's, and historically, each has
had significant investment functions within its trust and investment
divisions. Union Bank of California, N.A., is a subsidiary of The Bank
of Tokyo-Mitsubishi, Ltd..

James V. Atkinson has served as team leader of the Intermediate-Term
Bond Fund since 1991. Mr. Atkinson is a Vice President of the Advisor
and has been with the Advisor and its predecessor, Union Bank, since
1991. Mr. Atkinson was a portfolio manager at The Boston Company from
1988 to 1990.

The Advisor and Bank of Tokyo-Mitsubishi Trust Company (the SubAdvisor")
have entered into an investment subadvisory agreement relating to the
Government Securities and Convertible Securities Funds (the "Investment
SubAdvisory Agreement"). Under the Investment SubAdvisory Agreement,
the SubAdvisor makes the day-to-day investment decisions for the assets
of the Government Securities and Convertible Securities Funds, subject
to the supervision of, and policies established by, the Advisor and the
Trustees of the Trust.

The SubAdvisor is entitled to a fee, which is calculated daily and paid
monthly out of the Advisor's fee, at an annual rate of .20% of the
average daily net assets of the Government Securities Fund and .30% of
the average daily net assets of the Convertible Securities Fund. For
the fiscal year ended January 31, 1996, Bank of Tokyo Trust Company,
predecessor of the SubAdvisor, received .20% and .30% of the average
daily net assets of the Government Securities Fund and the Convertible
Securities Fund, respectively.

Bank of Tokyo-Mitsubishi Trust Company (the "SubAdvisor"), headquartered
at 1251 Avenue of the Americas, New York, New York 10116, and with
offices at 100 Broadway, New York, New York 10005, operates as a
wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi, Ltd.. The
SubAdvisor was formed by the combination on April 1, 1996, of Bank of
Tokyo Trust Company, a wholly-owned subsidiary of The Bank of Tokyo,
Ltd., and Mitsubishi Bank Trust Company of New York, a wholly-owned
subsidiary of The Mitsubishi Bank, Ltd.. Bank of Tokyo Trust Company
was the surviving entity, and changed its name to Bank of
Tokyo-Mitsubishi Trust Company. Prior to the combination, sub- advisory
services were provided by Bank of Tokyo Trust Company. Bank of Tokyo
Trust Company was established in 1955, and has provided trust services
since that time and management services since 1965.

The SubAdvisor serves as portfolio manager to bank common funds,
employee benefit funds and personal trust accounts, managing assets in
money market, equity and fixed income portfolios. As of April 1, 1996,
Bank of Tokyo-Mitsubishi Trust Company managed $750 million in
individual portfolios and collective funds. In addition, the SubAdvisor
also serves as SubAdvisor to the Trust's Emerging Growth and Blue Chip
Growth Funds.

Stephen W. Blocklin has served as portfolio manager of the Government
Securities Fund since its inception. Mr. Blocklin has been a Vice
President with the SubAdvisor and its predecessor, Bank of Tokyo Trust
Company, since December, 1993. From September, 1988 to December, 1993,
he served as a senior fixed income fund manager in the institutional
investment management group at First Fidelity Bancorporation.

The day-to-day management of the Convertible Securities Fund's
investments is the responsibility of a team of investment professionals.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

- 2 -
<PAGE> 4
STEPSTONE FUNDS

BALANCED FUND
VALUE MOMENTUM FUND
GROWTH EQUITY FUND
EMERGING GROWTH FUND
BLUE CHIP GROWTH FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INSTITUTIONAL CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

At a Special Meeting of Shareholders of Stepstone Funds (the "Trust") held on
March 7, 1996, Shareholders approved new investment advisory and subadvisory
agreements in connection with the proposed combination of Union Bank, the
Trust's current investment advisor, and The Bank of California, N.A., and
BanCal Tri-State Corporation. This combination took effect on April 1, 1996.
The resulting entity, Union Bank of California, N.A., now serves as Advisor to
each of the Trust's Funds. Bank of Tokyo-Mitsubishi Trust Company, which was
formed by the combination of Bank of Tokyo Trust Company and Mitsubishi Bank
Trust Company of New York on April 1, 1996, serves as SubAdvisor to the Blue
Chip Growth and Emerging Growth Funds. All references in this prospectus to
Union Bank and its investment management division, Union Capital Advisors, are
hereby replaced with Union Bank of California, N.A. and its investment
management division, MERUS-UCA Capital Management. In addition, effective July
14, 1995, Clyde N. Powers no longer serves as portfolio manager of the Growth
Equity Fund, or as co-portfolio manager of the Balanced Fund. Due to this
change and the aforementioned combination, the final paragraph of "The Advisor"
section on page 10 of the prospectus is deleted and the third, fourth, fifth
and sixth paragraphs are replaced with the following language:

For the fiscal year ended January 31, 1996, Union Bank, predecessor of
the Advisor, was paid an advisory fee of .60% of the average daily net
assets of the Growth Equity, Value Momentum, Balanced, and Blue Chip
Growth Funds, and .80% of the average daily net assets of the Emerging
Growth Fund.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union
Bank of California, N.A., manages the day-to-day operations of each
Fund. On April 1, 1996, Union Bank, the Trust's then- investment
advisor, combined with The Bank of California, N.A., and the resulting
bank changed its name to Union Bank of California, N.A.. At the same
time, the banks' investment management divisions were combined. Each of
Union Bank and The Bank of California, N.A. (or its predecessor bank)
has been in banking since the early 1900's, and historically, each has
had significant investment functions within its trust and investment
division. Union Bank of California, N.A., is a subsidiary of The Bank
of Tokyo-Mitsubishi, Ltd..

Richard Earnest, a Vice President of the Advisor, has served as team
leader of the Value Momentum Fund since its inception, and has been with
the Advisor and its predecessor, Union Bank, since 1964. Carl J.
Colombo, a Vice President of the Advisor, has served as team leader of
the Balanced Fund since its inception, and as team leader of the Growth
Equity Fund since May, 1995. Mr. Colombo has been with the Advisor and
its predecessor, Union Bank, since 1985.

Effective March, 1996, Harold C. Elliot no longer serves as portfolio manager
to the Blue Chip Growth Fund. As of the date of this Supplement, the
day-to-day management of the Blue Chip Growth Fund's investments is the
responsibility of a committee of investment professionals. As a result of this
change and the aforementioned combination of Bank of Tokyo Trust Company with
Mitsubishi Bank Trust Company of New York on April 1, 1996, to form Bank of
Tokyo-Mitsubishi Trust Company, the disclosure set forth under the heading "The
SubAdvisor" on page 11 of the prospectus is replaced with the following:

The Advisor and Bank of Tokyo-Mitsubishi Trust Company (the
"SubAdvisor") have entered into an investment subadvisory agreement
relating to the Emerging Growth and Blue Chip Growth Funds (the
"Investment SubAdvisory Agreement"). Under the Investment SubAdvisory
Agreement, the SubAdvisor makes the day-to-day investment decisions for
the assets of the Emerging Growth and Blue Chip Growth Funds, subject to
the supervision of, and policies established by, the Advisor and the
Trustees of the Trust.

The SubAdvisor is entitled to a fee, which is calculated daily and paid
monthly out of the Advisor's fee, at an annual rate of .30% of the
average daily net assets of the Blue Chip Growth Fund and .50% of the
average daily net assets of the Emerging Growth Fund. For the fiscal
year ended January 31, 1996, Bank of Tokyo Trust Company, predecessor of
the SubAdvisor, received .30% and .50% of the average daily net assets
of the Blue Chip Growth and Emerging Growth Funds, respectively.

Bank of Tokyo-Mitsubishi Trust Company, headquartered at 1251 Avenue of
the Americas, New York, New York 10116, and with offices at 100
Broadway, New York, New York 10005, operates as a wholly-owned
subsidiary of The Bank of Tokyo-Mitsubishi, Ltd.. The SubAdvisor was
formed by the combination on April 1, 1996, of Bank of Tokyo Trust
Company, a wholly-owned subsidiary of The Bank of Tokyo, Ltd., and
Mitsubishi Bank Trust Company of New York, a wholly-owned subsidiary of
The Mitsubishi Bank, Ltd.. Bank of Tokyo Trust Company was the
surviving entity, and changed its name to Bank of Tokyo-Mitsubishi Trust
Company. Prior to the combination, sub-advisory services were provided
by Bank of Tokyo Trust Company. Bank of Tokyo Trust Company was
established in 1955, and has provided trust services since that time and
management services since 1965.

The SubAdvisor serves as portfolio manager to bank common funds,
employee benefit funds and personal trust accounts, managing assets in
money market, equity and fixed income portfolios. As of April 1, 1996,
the SubAdvisor managed $750 million in individual portfolios and
collective funds. In addition, the SubAdvisor also serves as SubAdvisor
to the Trust's Government Securities and Convertible Securities Funds.

The day-to-day management of the Blue Chip Growth Fund's investments is
the responsibility of a team of investment professionals.

Seth E. Shalov has served as the portfolio manager to the Emerging
Growth Fund since its inception. Mr. Shalov has been a Senior Portfolio
Manager with the SubAdvisor and its predecessor, Bank of Tokyo Trust
Company, since October, 1988.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

- 2 -
<PAGE> 6
STEPSTONE FUNDS

CALIFORNIA TAX-FREE BOND FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INSTITUTIONAL CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

For the fiscal year ended January 31, 1996, Union Bank, predecessor of
the Advisor, was paid an advisory fee of .03% of the average daily net
assets of the Fund.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union
Bank of California, N.A., manages the day-to-day operations of the Fund.
On April 1, 1996, Union Bank, the Trust's then- investment advisor,
combined with the Bank of California, and the resulting bank changed its
name to Union Bank of California, N.A.. At the same time, the banks'
investment management divisions were combined. Each of Union Bank and
The Bank of California, N.A. (or its predecessor bank) has been in
banking since the early 1900's, and historically, each has had
significant investment functions within their Trust and Investment
Divisions. Union Bank of California, N.A., is a subsidiary of The Bank
of Tokyo-Mitsubishi, Ltd..

Robert Bigelow has served as team leader of the Fund since October,
1994. Prior to joining the Advisor's predecessor, Union Bank, in June,
1994, Mr. Bigelow served as a portfolio manager at City National Bank
from January, 1986 to June, 1994.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE> 7
STEPSTONE FUNDS

LIMITED MATURITY GOVERNMENT FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INSTITUTIONAL CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

For the fiscal year ended January 31, 1996, Union Bank, predecessor of
the Advisor, was paid an advisory fee of .30% of the average daily net
assets of the Fund.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, as the investment management division of
Union Bank of California, N.A., manages the day-to-day operations of the
Fund. On April 1, 1996, Union Bank, the Trust's then-investment
advisor, combined with the Bank of California, N.A., and the resulting
bank changed its name to Union Bank of California, N.A.. At the same
time, the banks' investment management divisions were combined. Each of
Union Bank and The Bank of California, N.A. (or its predecessor bank)
has been in banking since the early 1900's, and historically, each has
had significant investment functions within its trust and investment
divisions. Union Bank of California, N.A., is a subsidiary of The Bank
of Tokyo- Mitsubishi, Ltd..

Martin Standish has served as team leader of the Fund since its
inception. Mr. Standish is a Vice President of the Advisor, and has
been with the Advisor and its predecessor, Union Bank, since June, 1992.
Prior to his employment with the Advisor and its predecessor, Mr.
Standish served as a portfolio manager at Patterson Capital from
November, 1991 to June, 1992 and at Pacific Century Advisors from
February, 1990 to November, 1991. He earned his M.B.A. at the
University of Texas at Dallas from 1989 to 1991, and has a B.S. in
Finance from Colorado State University.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

<PAGE> 8
STEPSTONE FUNDS

INTERNATIONAL EQUITY FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INSTITUTIONAL CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

At a Special Meeting of Shareholders of Stepstone Funds (the "Trust") held on
March 7, 1996, Shareholders approved new investment advisory and subadvisory
agreements in connection with the proposed combination of Union Bank, the
Trust's current investment advisor, The Bank of California, N.A., and BanCal
Tri-State Corporation. This combination took effect on April 1, 1996. The
resulting entity, Union Bank of California, N.A., now serves as Advisor to each
of the Trust's Funds. Tokyo-Mitsubishi Asset Management (U.K.), Ltd., which
was the name given the then-SubAdvisor to the Fund, Bank of Tokyo Asset
Management (U.K.), Ltd., upon the merger of its parent, The Bank of Tokyo,
Ltd., and The Mitsubishi Bank, Ltd. on April 1, 1996, serves as SubAdvisor to
the International Equity Fund. All references in this prospectus to Union Bank
and its investment management division, Union Capital Advisors, are hereby
replaced with Union Bank of California, N.A., and its investment management
division, MERUS-UCA Capital Management. Due to the aforementioned
combination, the final paragraph of "The Advisor" section on page 8 of the
prospectus is deleted and the second, third and fourth paragraphs are replaced
with the following language:

The Advisor is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .95% of the average daily net assets of
the Fund. Although the advisory fee paid by the Fund is higher than
advisory fees paid by other mutual funds, the Trust believes that the
fee is comparable to the advisory fee paid by many other mutual funds
with similar investment objectives and policies. The Advisor may from
time to time waive all or a portion of its fee in order to limit the
operating expenses of the Fund. Any such waiver is voluntary, and may
be terminated at any time in the Advisor's sole discretion. For the
fiscal year ended January 31, 1996, Union Bank, predecessor of the
Advisor, was paid an advisory fee of .85% of the average daily net
assets of the Fund.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union
Bank of California, N.A., manages the day-to-day operations of the Fund.
On April 1, 1996, Union Bank, the Trust's then- investment advisor,
combined with the Bank of California, N.A., and the resulting bank
changed its name to Union Bank of California, N.A.. At the same time,
the banks' investment management divisions were combined. Each of Union
Bank and The Bank of California, N.A. (or its predecessor bank) has
been in banking since the early 1900's, and historically, each has had
significant investment functions within its trust and investment
divisions. Union Bank of California, N.A., is a subsidiary of The Bank
of Tokyo-Mitsubishi, Ltd..

------------------------------
<PAGE> 9
As a result of the aforementioned name change, the first sentence of the first
paragraph of "The SubAdvisor" section on page 8 of the prospectus is replaced
with the following sentence:

The Advisor and Tokyo-Mitsubishi Asset Management (U.K.), Ltd. (the
"SubAdvisor"), have entered into an investment subadvisory agreement
relating to the Fund (the "Investment SubAdvisory Agreement").

In addition, the third, fourth and fifth paragraphs of "The SubAdvisor" section
on pages 8 and 9 of the prospectus are replaced with the following three
paragraphs:

Tokyo-Mitsubishi Asset Management (U.K.), Ltd., 12-15 Finsbury Circus,
London EC2 M7BT operates as a subsidiary of The Bank of Tokyo-
Mitsubishi, Ltd.. Established in 1989, the SubAdvisor provides active
global investment services for segregated funds and specialist fund
management.

Prior to February, 1995, the SubAdvisor had not previously served as the
investment advisor to mutual funds. As of April 1, 1996,
Tokyo-Mitsubishi Asset Management (U.K.), Ltd., managed assets of $2.2
billion in individual portfolios and collective funds.

Andrew Richmond has served as portfolio manager of the Fund since its
inception. Mr. Richmond has been with the SubAdvisor and its
predecessor, Bank of Tokyo Asset Management (U.K.), Ltd., since 1990,
and has served as senior equity investment manager since June, 1992.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

- 2 -
<PAGE> 10
STEPSTONE FUNDS

MONEY MARKET FUND
TREASURY MONEY MARKET FUND
CALIFORNIA TAX-FREE MONEY MARKET FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

Effective April 8, 1996, State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, will serve as transfer agent for the
Investment Class Shares of the Treasury Money Market, Money Market and
California Tax-Free Money Market Funds.

------------------------------

For the fiscal year ended January 31, 1996, the Money Market, Treasury
Money Market and California Tax-Free Money Market Funds paid Union Bank,
predecessor of the Advisor, a fee of .30%, .25% and .10% of their
average daily net assets.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE> 11
STEPSTONE FUNDS

INTERMEDIATE - TERM BOND FUND
GOVERNMENT SECURITIES FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

Effective as of February 15, 1996, the sales charge normally imposed on
purchases of $1,000,000 or more of Investment Class Shares of the
Intermediate-Term Bond and Government Securities Funds is waived. Such
purchases shall be subject to a 1.00% contingent deferred sales charge payable
to the Distributor, however, if such shares are redeemed prior to one year from
the date of purchase. Therefore, the sales charge table set forth in the
section entitled "PURCHASE AND REDEMPTION OF SHARES" found on page 10 of the
Prospectus is replaced with the following:

<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE AS COMMISSION AS
AS A PERCENTAGE APPROPRIATE PERCENTAGE OF PERCENTAGE
AMOUNT OF PURCHASE OF OFFERING PRICE NET AMOUNT INVESTED OF OFFERING PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 0- 24,999 . . . . . . . . . . . . . . . . . . . . . . . 3.00% 3.09% 2.70%

$ 25,000-$49,999 . . . . . . . . . . . . . . . . . . . . 2.50% 2.56% 2.25%

$ 50,000-$ 99,999 . . . . . . . . . . . . . . . . . . . . 2.00% 2.04% 1.80%

$100,000-$249,999 . . . . . . . . . . . . . . . . . . . . 1.50% 1.52% 1.35%

$250,000-$999,999 . . . . . . . . . . . . . . . . . . . . 1.00% 1.01% 0.90%

$1,000,000-and Over . . . . . . . . . . . . . . . . . . . 0.00%* 0.00% 0.00%
</TABLE>

* A contingent deferred sales charge of 1.00% will be assessed against any
proceeds of any redemption of such Investment Class shares prior to one
year from date of purchase.

------------------------------

At a Special Meeting of Shareholders held on March 7, 1996, Shareholders
approved new investment advisory and subadvisory agreements in connection with
the proposed combination of Union Bank, the Trust's current investment advisor,
and The Bank of California, N.A., and BanCal Tri-State Corporation. This
combination took effect on April 1, 1996. The resulting entity, Union Bank of
California, N.A., now serves as Advisor to each of the Trust's Funds. Bank of
Tokyo-Mitsubishi Trust Company, which was formed by the combination of Bank of
Tokyo Trust Company and Mitsubishi Bank Trust Company of New York on April 1,
1996, serves as SubAdvisor to the Government Securities Fund. All references
in this prospectus to Union Bank and its investment
<PAGE> 12
management division, Union Capital Advisors, are hereby replaced with Union
Bank of California, N.A. and its investment management division, MERUS-UCA
Capital Management. Due to this combination, the final paragraph of "The
Advisor" section on page 8 of the prospectus is deleted and the third, fourth,
fifth and sixth paragraphs are replaced with the following language:

For the fiscal year ended January 31, 1996, Union Bank, predecessor of the
Advisor, was paid an advisory fee of .50% of the average daily net assets
of the Intermediate-Term Bond and Government Securities Funds.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union
Bank of California, N.A., manages the day-to-day operations of each Fund.
On April 1, 1996, Union Bank, the Trust's then-investment advisor, combined
with The Bank of California, N.A., and the resulting bank changed its name
to Union Bank of California, N.A.. At the same time, the banks' investment
management divisions were combined. Each of Union Bank and The Bank of
California, N.A. (or its predecessor bank) has been in banking since the
early 1900's, and historically, each has had significant investment
functions within its trust and investment division. Union Bank of
California, N.A., is a subsidiary of The Bank of Tokyo-Mitsubishi, Ltd..

James V. Atkinson has served as team leader of the Intermediate-Term Bond
Fund since 1991. Mr. Atkinson is a Vice President of the Advisor and has
been with the Advisor and its predecessor, Union Bank, since 1991. Mr.
Atkinson was a portfolio manager at The Boston Company from 1988 to 1990.

------------------------------

As a result of the aforementioned combination of Bank of Tokyo Trust Company
with Mitsubishi Bank Trust Company of New York on April 1, 1996, to form Bank
of Tokyo-Mitsubishi Trust Company, the disclosure set forth under the heading
"The SubAdvisor" on pages 8 and 9 of the prospectus is replaced with the
following:

The Advisor and Bank of Tokyo-Mitsubishi Trust Company (the "SubAdvisor")
have entered into an investment subadvisory agreement relating to the
Government Securities Fund (the "Investment SubAdvisory Agreement"). Under
the Investment SubAdvisory Agreement, the SubAdvisor makes the day-to-day
investment decisions for the assets of the Government Securities Fund,
subject to the supervision of, and policies established by, the Advisor and
the Trustees of the Trust.

The SubAdvisor is entitled to a fee, which is calculated daily and paid
monthly out of the Advisor's fee, at an annual rate of .20% of the average
daily net assets of the Government Securities Fund. For the fiscal year
ended January 31, 1996, Bank of Tokyo Trust Company, predecessor of the
SubAdvisor, received .20% of the average daily net assets of the Government
Securities Fund.

Bank of Tokyo-Mitsubishi Trust Company, headquartered at 1251 Avenue of the
Americas, New York, New York 10116, and with offices at 100 Broadway, New
York, New York 10005, operates as a wholly-owned subsidiary of The Bank of
Tokyo-Mitsubishi, Ltd.. The SubAdvisor was formed by the combination on
April 1, 1996, of Bank of Tokyo Trust Company, a wholly-owned subsidiary of
The Bank of Tokyo, Ltd., and Mitsubishi Bank Trust Company of New York, a
wholly-owned subsidiary of The Mitsubishi Bank, Ltd.. Bank of Tokyo Trust
Company was the surviving entity, and changed its name to Bank of
Tokyo-Mitsubishi Trust Company. Prior to the combination, the subadvisory
services were provided by Bank of Tokyo Trust Company. Bank of Tokyo Trust
Company was established in 1955, and has provided trust services since that
time and management services since 1965.

- 2 -
<PAGE> 13
The SubAdvisor serves as portfolio manager to bank common funds, employee
benefit funds and personal trust accounts, managing assets in money market,
equity and fixed income portfolios. As of April 1, 1996, the SubAdvisor
managed $750 million in individual portfolios and collective funds. In
addition, the SubAdvisor also serves as SubAdvisor to the Trust's Emerging
Growth, Blue Chip Growth and Convertible Securities Funds.

Stephen W. Blocklin has served as portfolio manager of the Government
Securities Fund since its inception. Mr. Blocklin has been a Vice
President with the SubAdvisor and its predecessor, Bank of Tokyo Trust
Company, since December, 1993. From September, 1988 to December, 1993, he
served as a senior fixed income fund manager in the institutional
investment management group at First Fidelity Bancorporation.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

- 3 -
<PAGE> 14
STEPSTONE FUNDS

CONVERTIBLE SECURITIES FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

At a Special Meeting of Shareholders of Stepstone Funds (the "Trust") held on
March 7, 1996, Shareholders approved new investment advisory and subadvisory
agreements in connection with the proposed combination of Union Bank, the
Trust's current investment advisor, and The Bank of California, N.A., and
BanCal Tri-State Corporation. This combination took effect on April 1, 1996.
The resulting entity, Union Bank of California, N.A., now serves as Advisor to
each of the Trust's Funds. Bank of Tokyo-Mitsubishi Trust Company, which was
formed by the combination of Bank of Tokyo Trust Company and Mitsubishi Bank
Trust Company of New York on April 1, 1996, serves as SubAdvisor to the
Convertible Securities Fund. All references in this prospectus to Union Bank
and its investment management division, Union Capital Advisors, are hereby
replaced with Union Bank of California, N.A., and its investment management
division, MERUS-UCA Capital Management. Due to the aforementioned
combination, the final paragraph of "The Advisor" section on pages 6 and 7 of
the prospectus is deleted and the third, fourth and fifth paragraphs are
replaced with the following language:

For the fiscal year ended January 31, 1996, Union Bank, predecessor of the
Advisor, received .60% of the average daily net assets of the Fund.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union
Bank of California, N.A., manages the day-to-day operations of the Fund.
On April 1, 1996, Union Bank, the Trust's then-investment advisor, combined
with the Bank of California, N.A., and the resulting bank changed its name
to Union Bank of California, N.A.. At the same time, the banks' investment
management divisions were combined. Each of Union Bank and The Bank of
California, N.A. (or its predecessor bank) has been in banking since the
early 1900's, and historically, each has had significant investment
functions within its trust and investment divisions. Union Bank of
California, N.A., is a subsidiary of The Bank of Tokyo-Mitsubishi, Ltd..

------------------------------

Effective March, 1996, Harold C. Elliot no longer serves as portfolio manager
to the Convertible Securities Fund. As of the date of this supplement, the
day-to-day management of the Convertible Securities Fund's investments is the
responsibility of a committee of investment professionals. As a result of this
change and the aforementioned combination of Bank of Tokyo Trust Company with
Mitsubishi Bank Trust Company of New York on April 1, 1996, to form Bank of
Tokyo-Mitsubishi Trust Company, the disclosure set forth under the heading "The
SubAdvisor" section on page 10 is replaced with the following language:
<PAGE> 15
The Advisor and Bank of Tokyo-Mitsubishi Trust Company (the SubAdvisor")
have entered into an investment subadvisory agreement relating to the
Convertible Securities Fund (the "Investment SubAdvisory Agreement").
Under the Investment SubAdvisory Agreement, the SubAdvisor makes the
investment decisions for the assets of the Fund, subject to the supervision
of, and policies established by, the Advisor and the Trustees of the Trust.

The SubAdvisor is entitled to a fee, which is calculated daily and paid
monthly out of the Advisor's fee, at an annual rate of .30% of the average
daily net assets of the Fund. For the fiscal year ended January 31, 1996,
The Bank of Tokyo Trust Company, predecessor of the SubAdvisor, received
.30% of the average daily net assets of the Fund.

Bank of Tokyo-Mitsubishi Trust Company (the "SubAdvisor"), headquartered at
1251 Avenue of the Americas, New York, New York 10116, and with offices at
100 Broadway, New York, New York 10005, operates as a wholly-owned
subsidiary of The Bank of Tokyo-Mitsubishi, Ltd.. The SubAdvisor was
formed by the combination on April 1, 1996, of Bank of Tokyo Trust Company,
a wholly-owned subsidiary of The Bank of Tokyo, Ltd., and Mitsubishi Bank
Trust Company of New York, a wholly-owned subsidiary of The Mitsubishi
Bank, Ltd.. Bank of Tokyo Trust Company was the surviving entity, and
changed its name to Bank of Tokyo-Mitsubishi Trust Company. Prior to the
combination, sub-advisory services were provided by Bank of Tokyo Trust
Company. Bank of Tokyo Trust Company was established in 1955, and has
provided trust services since that time and management services since 1965.

The SubAdvisor serves portfolio manager to bank common funds, employee
benefit funds and personal trust accounts, managing assets in money market,
equity and fixed income portfolios. As of April 1, 1996, Bank of
Tokyo-Mitsubishi Trust Company managed $750 million in individual
portfolios and collective funds. In addition, the SubAdvisor also serves
as SubAdvisor to the Trust's Government Securities, Emerging Growth and
Blue Chip Growth Funds.

The day-to-day management of the Convertible Securities Fund's investments
is the responsibility of a team of investment professionals.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

- 2 -
<PAGE> 16
STEPSTONE FUNDS

BALANCED FUND
VALUE MOMENTUM FUND
GROWTH EQUITY FUND
EMERGING GROWTH FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

Effective October 1, 1995, the Balanced Fund, Value Momentum Fund, and Growth
Equity Fund (the "Funds") will begin to pay .25% in 12b-1 fees as permitted
under the Investment Class Plan. Therefore the Annual Operating Expenses table
for these Funds is hereby replaced with the following:

ANNUAL OPERATING EXPENSES
(As a percentage of offering price)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
VALUE GROWTH
BALANCED MOMENTUM EQUITY
FUND FUND FUND
<S> <C> <C> <C>
Advisory Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60% .60% .60%
12b-1 Fees (After Fee Waivers)(1). . . . . . . . . . . . . . . . . . . . . .25% .25% .25%
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20% .20% .20%
- ----------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (After Fee Waivers)(2). . . . . . . . . . . . . . 1.05% 1.05% 1.05%
============================================================================================================================
</TABLE>

(1) Absent fee waivers, 12b-1 Fees would be .40%.
(2) "Total Operating Expenses" for the Balanced Fund, Value Momentum Fund
and Growth Equity Fund have been restated to reflect current expenses
and the aforementioned fee waivers. Absent fee waivers, "Total
Operating Expenses" would be 1.20%, 1.20% and 1.20% for the Balanced
Fund, Value Momentum Fund and Growth Equity Fund.

<TABLE>
<CAPTION>
EXAMPLE:
- --------------------------------------------------------------------------------------------------------
1 YR. 3 YRS. 5 YRS. 10 YRS.
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following
expenses on a $1,000 investment assuming (1)
imposition of the maximum sales charge; (2) a 5%
annual return and (3) redemption at the end of
each time.

Balanced Fund . . . . . . . . . . . . . . . . . . . . $55 $77 $100 $167
</TABLE>
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C>
Value Momentum Fund . . . . . . . . . . . . . . . . . $55 $77 $100 $167

Growth Equity Fund . . . . . . . . . . . . . . . . . $55 $77 $100 $167
</TABLE>

------------------------------

Effective as of February 15, 1996, the sales charge normally imposed on
purchases of $1,000,000 or more of the Investment Class shares of the
Balanced, Value Momentum and Growth Equity Funds is waived. Such purchases
shall be subject to a 1.00% contingent deferred sales charge payable to the
Distributor, however, if such shares are redeemed prior to one year from the
date of purchase. Therefore, the sales charge table set forth in the section
entitled "PURCHASE AND REDEMPTION OF SHARES" found on page 12 of the Prospectus
is replaced with the following:

<TABLE>
<CAPTION>
SALES CHARGE AS A SALES CHARGE AS
PERCENTAGE OF OFFERING APPROPRIATE PERCENTAGE COMMISSION AS PERCENTAGE
AMOUNT OF PURCHASE PRICE OF NET AMOUNT INVESTED OF OFFERING PRICE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 0- 49,999 4.50% 4.71% 4.05%

$ 50,000- 99,999 4.00% 4.17% 3.60%

$ 100,000-249,999 3.50% 3.63% 3.15%

$ 250,000-499,999 2.50% 2.56% 2.25%

$ 500,000-999,999 1.50% 1.52% 1.35%

$1,000,000 and over 0.00%* 0.00% 0.00%
</TABLE>

*A contingent deferred sales charge of 1.00% will be assessed against any
proceeds of any redemption of such Investment Class shares are redeemed prior
to one year from date of purchase.

The first sentence of the section on page 13 entitled "PURCHASE AND REDEMPTION
OF SHARES-Other Circumstances" should be augmented to include the following:

(vii) sold to purchasers of Investment Class shares of the Growth Equity Fund
that are sponsors of other investment companies that are unit investment trusts
for deposit by such sponsors into such unit investment trusts, and to
purchasers of Investment Class shares of the Growth Equity Fund that are
holders of such unit investment trusts that invest distributions from such
investment trusts in Investment Class shares of the Growth Equity Fund.

------------------------------

- 2 -
<PAGE> 18
with Union Bank of California, N.A. and its investment management division,
MERUS-UCA Capital Management. In addition, effective July 14, 1995, Clyde N.
Powers no longer serves as portfolio manager of the Growth Equity Fund, or as
co-portfolio manager of the Balanced Fund. Due to this change and the
aforementioned combination, the final paragraph of "The Advisor" section on
pages 9 and 10 of the prospectus is deleted and the third, fourth, fifth and
sixth paragraphs are replaced with the following language:

For the fiscal year ended January 31, 1996, Union Bank, predecessor of the
Advisor, was paid an advisory fee of .60% of the average daily net assets of
the Growth Equity, Value Momentum and Balanced Funds, and .80% of the average
daily net assets of the Emerging Growth Fund.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union Bank
of California, N.A., manages the day-to-day operations of each Fund. On
April 1, 1996, Union Bank, the Trust's then-investment advisor, combined with
The Bank of California, N.A., and the resulting bank changed its name to
Union Bank of California, N.A.. At the same time, the banks' investment
management divisions were combined. Each of Union Bank and the Bank of
California, N.A. (or its predecessor bank) has been in banking since the
early 1900's, and historically, each has had significant investment functions
within its trust and investment divisions. Union Bank of California, N.A.,
is a subsidiary of The Bank of Tokyo-Mitsubishi, Ltd..

Richard Earnest, a Vice President of the Advisor, has served as team leader
of the Value Momentum Fund since its inception, and has been with the Advisor
and its predecessor, Union Bank, since 1964. Carl J. Colombo, a Vice
President of the Advisor, has served as team leader of the Balanced Fund
since its inception, and as team leader of the Growth Equity Fund since May,
1995. Mr. Colombo has been with the Advisor and its predecessor, Union Bank,
since 1985.

As of April 1, 1996, the Advisor managed approximately $12 billion in
individual portfolios and collective funds. The Advisor's clients range from
pension funds, national labor union plans and foundations to personal
investments and trust portfolios.

------------------------------

As a result of the aforementioned combination of Bank of Tokyo Trust Company
with Mitsubishi Bank Trust Company of New York on April 1, 1996, to form Bank
of Tokyo-Mitsubishi Trust Company, the disclosure set forth under the heading
"The SubAdvisor" on pages 10 and 11 of the prospectus is replaced with the
following:

The Advisor and Bank of Tokyo-Mitsubishi Trust Company (the "SubAdvisor") have
entered into an investment subadvisory agreement relating to the Emerging
Growth Fund (the "Investment SubAdvisory Agreement"). Under the Investment
SubAdvisory Agreement, the SubAdvisor makes the day-to-day investment decisions
for the assets of the Emerging Growth Fund, subject to the supervision of, and
policies established by, the Advisor and the Trustees of the Trust.

The SubAdvisor is entitled to a fee, which is calculated daily and paid
monthly out of the Advisor's fee, at an annual rate of .50% of the average
daily net assets of the Emerging Growth Fund. For the fiscal year ended
January 31, 1996, Bank of Tokyo Trust Company, predecessor of the SubAdvisor,
received .50% of the average daily net assets of the Emerging Growth Fund.

Bank of Tokyo-Mitsubishi Trust Company (the "SubAdvisor"), headquartered at
1251 Avenue of the Americas, New York, New York 10116, and with offices at
100 Broadway, New York, New York 10005, operates as a wholly-owned subsidiary
of The Bank of Tokyo-Mitsubishi, Ltd.. The SubAdvisor was formed by the
combination on April 1, 1996, of Bank of Tokyo Trust Company, a wholly-owned
subsidiary of The Bank of Tokyo, Ltd., and Mitsubishi Bank Trust Company of
New York, a wholly-owned subsidiary of The Mitsubishi Bank, Ltd.. Bank of
Tokyo Trust Company was the surviving entity, and changed its name to Bank of
Tokyo-

- 3 -
<PAGE> 19
Mitsubishi Trust Company. Prior to the combination, sub-advisory services were
provided by Bank of Tokyo Trust Company. Bank of Tokyo Trust Company was
established in 1955, and has provided trust services since that time and
management services since 1965.

The SubAdvisor serves as portfolio manager to bank common funds, employee
benefit funds and personal trust accounts, managing assets in money market,
equity and fixed income portfolios. As of April 1, 1996, the SubAdvisor
managed $750 million in individual portfolios and collective funds. In
addition, the SubAdvisor also serves as SubAdvisor to the Trust's Government
Securities and Convertible Securities Funds.

Seth E. Shalov has served as the portfolio manager to the Emerging Growth Fund
since its inception. Mr. Shalov has been a Senior Portfolio Manager with the
SubAdvisor and its predecessor, Bank of Tokyo Trust Company, since October,
1988.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

- 4 -
<PAGE> 20
STEPSTONE FUNDS

BLUE CHIP GROWTH FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

At a Special Meeting of Shareholders of Stepstone Funds (the "Trust") held on
March 7, 1996, Shareholders approved new investment advisory and subadvisory
agreements in connection with the proposed combination of Union Bank, the
Trust's current investment advisor, and The Bank of California, N.A., and
BanCal Tri-State Corporation. This combination took effect on April 1, 1996.
The resulting entity, Union Bank of California, N.A., now serves as Advisor to
each of the Trust's Funds. Bank of Tokyo-Mitsubishi Trust Company, which was
formed by the combination of Bank of Tokyo Trust Company and Mitsubishi Bank
Trust Company of New York on April 1, 1996, serves as SubAdvisor to the Blue
Chip Growth Fund. All references in this prospectus to Union Bank and its
investment management division, Union Capital Advisors, are hereby replaced
with Union Bank of California, N.A., and its investment management division,
MERUS-UCA Capital Management. Due to the aforementioned combination, the final
paragraph of "The Advisor" section on page 6 of the prospectus is deleted and
the second, third and fourth paragraphs are replaced with the following
language:

The Advisor is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .60% of the average daily net assets of
the Fund. The Advisor may from time to time waive all or a portion of
its fee in order to limit the operating expenses of the Fund. Any
such waiver is voluntary, and may be terminated at any time in the
Advisor's sole discretion. For the fiscal year ended January 31,
1996, Union Bank, predecessor of the Advisor, was paid an advisory fee
of .60% of the average daily net assets of the Fund.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of
Union Bank of California, N.A., manages the day-to-day operations of
the Fund. On April 1, 1996, Union Bank, the Trust's then- investment
advisor, combined with the Bank of California, N.A., and the resulting
bank changed its name to Union Bank of California, N.A.. At the same
time, the banks' investment management divisions were combined. Each
of Union Bank and The Bank of California, N.A. (or its predecessor
bank) has been in banking since the early 1900's, and historically,
each has had significant investment functions within its trust and
investment divisions. Union Bank of California, N.A., is a subsidiary
of The Bank of Tokyo-Mitsubishi, Ltd..

As of April 1, 1996, the Advisor managed approximately $12 billion in
individual portfolios and collective funds. The Advisor's clients
range from pension funds, national labor union plans and foundations
to personal investments and trust portfolios.

------------------------------

Effective March, 1996, Harold C. Elliot no longer serves as portfolio manager
to the Blue Chip Growth Fund. As of the date of this supplement, the
day-to-day management of the Blue Chip Growth Fund's investments is the
responsibility of a committee of investment professionals. As a result of this
change and the aforementioned
<PAGE> 21
combination of Bank of Tokyo Trust Company with Mitsubishi Bank Trust Company
of New York on April 1, 1996, to form Bank of Tokyo-Mitsubishi Trust Company,
the disclosure set forth under the heading "The SubAdvisor" on pages 6 and 7 of
the prospectus is replaced with the following:

The Advisor and Bank of Tokyo-Mitsubishi Trust Company (the
"SubAdvisor") have entered into an investment subadvisory agreement
relating to the Emerging Growth and Blue Chip Growth Funds (the
"Investment SubAdvisory Agreement"). Under the Investment SubAdvisory
Agreement, the SubAdvisor makes the day-to-day investment decisions
for the assets of the Fund, subject to the supervision of, and
policies established by, the Advisor and the Trustees of the Trust.

The SubAdvisor is entitled to a fee, which is calculated daily and
paid monthly out of the Advisor's fee, at an annual rate of .30% of
the average daily net assets of the Fund. For the fiscal year ended
January 31, 1996, Bank of Tokyo Trust Company, predecessor of the
SubAdvisor, received .30% of the average daily net assets of the Fund.

Bank of Tokyo-Mitsubishi Trust Company (the "SubAdvisor"),
headquartered at 1251 Avenue of the Americas, New York, New York
10116, and with offices at 100 Broadway, New York, New York 10005,
operates as a wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi,
Ltd.. The SubAdvisor was formed by the combination on April 1, 1996,
of The Bank of Tokyo Trust Company, a wholly-owned subsidiary of The
Bank of Tokyo, Ltd., and Mitsubishi Bank Trust Company of New York, a
wholly-owned subsidiary of The Mitsubishi Bank, Ltd.. Bank of Tokyo
Trust Company was the surviving entity, and changed its name to Bank
of Tokyo-Mitsubishi Trust Company. Prior to the combination,
sub-advisory services were provided by Bank of Tokyo Trust Company.
Bank of Tokyo Trust Company was established in 1955, and has provided
trust services since that time and management services since 1965.

The SubAdvisor serves as portfolio manager to bank common funds,
employee benefit funds and personal trust accounts, managing assets in
money market, equity and fixed income portfolios. As of April 1,
1996, the SubAdvisor managed $750 million in individual portfolios and
collective funds. In addition, the SubAdvisor also serves as
SubAdvisor to the Trust's Government Securities, Convertible
Securities and Emerging Growth Funds.

The day-to-day management of the Blue Chip Growth Fund's investments
is the responsibility of a team of investment professionals.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

- 2 -
<PAGE> 22
STEPSTONE FUNDS

CALIFORNIA TAX-FREE BOND FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT CLASS PROSPECTUS
DATED JUNE 1, 1995

THIS SUPPLEMENT PROVIDES NEW AND ADDITIONAL INFORMATION BEYOND THAT CONTAINED
IN THE PROSPECTUS AND SHOULD BE RETAINED AND READ IN CONJUNCTION WITH SUCH
PROSPECTUS.

------------------------------

Effective as of February 15, 1996, the sales charge normally imposed on
purchases of $1,000,000 or more of the Investment Class shares of the
California Tax Free Bond Fund is waived. Such purchases shall be subject to a
1.00% contingent deferred sales charge payable to the Distributor, however, if
such shares are redeemed prior to one year from the date of purchase.
Therefore, the sales charge table set forth in the section entitled "PURCHASE
AND REDEMPTION OF SHARES" found on page 9 of the Prospectus is replaced with
the following:

<TABLE>
<CAPTION>
SALES
SALES CHARGE AS APPROPRIATE COMMISSION
CHARGE PERCENTAGE AS
AS A PERCENTAGE OF NET PERCENTAGE
AMOUNT OF PURCHASE OF OFFERING PRICE AMOUNT INVESTED OF OFFERING PRICE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 0-99,999 . . . . . . . . . . . . . . . 3.00% 3.09% 2.70%

$ 100,000-$249,999 . . . . . . . . . . . . . . . 2.50% 2.56% 2.25%

$ 250,000-$499,999 . . . . . . . . . . . . . . . 2.00% 2.04% 1.80%

$ 500,000-$999,999 . . . . . . . . . . . . . . . 1.50% 1.52% 1.35%

$1,000,000-and Over . . . . . . . . . . . . . . . 0.00%* 0.00% 0.00%
</TABLE>

* A contingent deferred sales charge of 1.00% will be assessed against any
proceeds of any redemption of such Investment Class shares prior to one year
from date of purchase.

------------------------------

For the fiscal year ended January 31, 1996, Union Bank, predecessor of the
Advisor, was paid an advisory fee of .03% of the average daily net assets
of the Fund.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union
Bank of California, N.A., manages the day-to-day operations of the Fund.
On April 1, 1996, Union Bank, the Trust's then-investment advisor, combined
with the Bank of California, N.A., and the resulting bank changed its name
to Union Bank of California, N.A.. At the same time, the banks' investment
management divisions were combined. Each of Union Bank and The Bank of
California, N.A. (or its predecessor bank) has been in banking since the
early 1900's, and historically, each has had significant investment
functions within its trust and investment divisions. Union Bank of
California, N.A., is a subsidiary of The Bank of Tokyo-Mitsubishi, Ltd..

Robert Bigelow has served as team leader of the Fund since October, 1994.
Prior to joining the Advisor's predecessor, Union Bank, in June, 1994, Mr.
Bigelow served as a portfolio manager at City National Bank from January,
1986 to June, 1994.

------------------------------

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

- 2 -
<PAGE> 24
STEPSTONE FUNDS

LIMITED MATURITY GOVERNMENT FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT CLASS PROSPECTUS
DATED JUNE 1, 1995

------------------------------

Effective March 8, 1996 the Trust is reinstating the maximum sales charge of
1.50% on the sale of shares of Limited Maturity Government Fund (the "Fund"),
therefore the following should be read in conjunction with Shareholder
Transaction Expenses table located on page 3 of the Prospectus:

Maximum Sales Charge Imposed on Purchases . . . . . . . . . . . . 1.50%

The following replaces the Example located on page 3 of the Prospectus:
<TABLE>
<CAPTION>
1 yr. 3 yrs. 5 yrs. 10 yrs.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment assuming (1) imposition of the
maximum sales charge; (2) a 5% annual return and
(3) redemption at the end of each time period $20 $32 $44 $80
</TABLE>

------------------------------

The following information should be read in conjunction with the "Purchase and
Redemption of Shares" section located on page 9 of the Prospectus:

The following table shows the regular sales charge on Investment Class shares
to a "single purchaser" (described below) together with the dealer discount
paid to dealers and the agency commission paid to brokers (collectively the
"commission"):

<TABLE>
<CAPTION>
SALES CHARGE AS A SALES CHARGE AS COMMISSION AS PERCENTAGE
PERCENTAGE OF OFFERING APPROPRIATE PERCENTAGE OF OFFERING
AMOUNT OF PURCHASE PRICE OF NET AMOUNT INVESTED PRICE
------------------ ----- ---------------------- -----
<S> <C> <C> <C>
$0-$99,999 1.50% 1.52% 1.35%

$100,000-
$249,999 1.00% 1.01% .90%

$250,000-
$499,999 .75% .76% .675%

$500,000-
$999,999 .50% .50% .45%
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
SALES CHARGE AS A SALES CHARGE AS COMMISSION AS PERCENTAGE
PERCENTAGE OF OFFERING APPROPRIATE PERCENTAGE OF OFFERING
AMOUNT OF PURCHASE PRICE OF NET AMOUNT INVESTED PRICE
------------------ ----- ---------------------- -----
<S> <C> <C> <C>
*$1,000,000
and Over .00%* .00% .00%
</TABLE>
------------------------------

*A contingent deferred sales charge of .30% will be assessed against any
proceeds of any redemption of such investment Class shares prior to one year
from date of purchase.

The commissions shown in the table apply to sales through authorized dealers
and brokers. Under certain circumstances, the Distributor may use its own
funds to compensate financial institutions and intermediaries in amounts that
are additional to the commissions shown above. In addition, the Distributor
may, from time to time and at its own expense, provide promotional incentives
in the form of cash or other compensation to certain financial institutions and
intermediaries whose registered representatives have sold or are expected to
sell significant amounts of the Investment Class shares of the Fund. Such
other compensation may take the form of payments for travel expenses, including
lodging, incurred in connection with trips taken by qualifying registered
representatives to places within or without the United States. Under certain
circumstances, commissions up to the amount of the entire sales charge may be
reallowed to dealers of brokers, who might then be deemed to be "underwriters"
under the Securities Act of 1933. Commission rates may vary among the Funds.

In calculating the sales charge rates applicable to current purchases of a
Fund's shares, a "single purchaser" is entitled to cumulate current purchases
with the net purchases of previously purchased shares of the Fund and other of
the Trust's funds (the "Eligible Funds") which are sold subject to a comparable
sales charge.

The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Fund for their own account or for trust or
custodial accounts for their minor children, or (iii) a fiduciary purchasing
for any one trust, estate or fiduciary account, including employee benefit
plans created under Sections 401, 403(b) or 457 of the Internal Revenue Code of
1986, as amended (the "Code"), including related plans of the same employer.
To be entitled to reduced sales charge based upon shares already owned, the
Investor must ask the Distributor for such entitlement at the time of purchase
and provide the account number(s) of the investor, the investor and spouse, and
their minor children, and give the age of such children. The Fund may amend or
terminate this right of accumulation at any time as to subsequent purchases.

LETTER OF INTENT. By submitting a Letter of Intent (the "Letter") to the
Distributor, a "single purchaser" may purchase shares of the Fund and the other
Eligible Funds during a 13 month period at the reduced sales charge rates
applying to the aggregate amount of the intended purchases stated in the
Letter. The Letter may apply to purchases made up to 90 days before the date
of the Letter. To receive credit for such prior purchases and later purchases
benefitting from the Letter, the Shareholder must notify the Transfer Agent at
the time the Letter is submitted that there are prior purchases that may apply,
and, at the time of later purchases, notify the Transfer Agent that such
purchases are applicable under the Letter.

OTHER CIRCUMSTANCES. No sales charge is imposed on Investment Class shares of
the Fund: (i) issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Trust is a party; (ii) sold to
dealers or brokers that have a sales agreement with the Distributor, for their
own account or for retirement plans for their employees or sold to employees
(and their spouse) of dealers or brokers that certify to the Distributor at a
time of purchase that such purchase is for their own account (or for the
benefit of such employees' minor children); (iii) in aggregate purchases of $1
million or more by tax-exempt organizations enumerated in Section 501(c) of the
Code, or employee benefit plans created under Sections 401, 403(b) or 457 of
the Code; (iv) sold to employees and families of the Advisor and its
affiliates; or (v) all fiduciary accounts of the Advisor and its affiliates.

------------------------------

- 2 -
<PAGE> 26
At a Special Meeting of Shareholders of Stepstone Funds (the "Trust") held on
March 7, 1996, Shareholders approved new investment advisory and sub-advisory
agreements in connection with the proposed combination of Union Bank, the
Trust's current investment advisor, and The Bank of California, N.A., and
BanCal Tri-State Corporation. This combination took effect on April 1, 1996.
The resulting entity, Union Bank of California, N.A., now serves as Advisor to
each of the Trust's Funds. All references in this prospectus to Union Bank and
its investment management division, Union Capital Advisors, are hereby replaced
with Union Bank of California, N.A., and its investment management division,
MERUS-UCA Capital Management. Due to the aforementioned combination, the final
paragraph of "The Advisor" section on page 8 of the prospectus is deleted and
the third, fourth, fifth and sixth paragraphs are replaced with the following
language:

For the fiscal year ended January 31, 1996, Union Bank, predecessor of the
Advisor, was paid an advisory fee of .30% of the average daily net assets
of the Fund.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, 94111, the investment management division of Union Bank of
California, N.A., manages the day-to-day operations of the Fund. On April
1, 1996, Union Bank, the Trust's then-investment advisor, combined with the
Bank of California, N.A., and the resulting bank changed its name to Union
Bank of California, N.A.. At the same time, the banks' investment
management divisions were combined. Each of Union Bank and The Bank of
California, N.A. (or its predecessor bank) has been in banking since the
early 1900's, and historically, each has had significant investment
functions within its trust and investment divisions. Union Bank of
California, N.A., is a subsidiary of The Bank of Tokyo-Mitsubishi, Ltd..

Martin Standish has served as team leader of the Fund since its inception.
Mr. Standish is a Vice President of the Advisor, and has been with the
Advisor, and its predecessor, Union Bank, since June, 1992. Prior to his
employment with the Advisor and its predecessor, Mr. Standish served as a
portfolio manager at Patterson Capital from November, 1991 to June, 1992
and at Pacific Century Advisors from February, 1990 to November, 1991. He
earned his M.B.A. at the University of Texas at Dallas from 1989 to 1991
and has a B.S. in Finance from Colorado State University.

------------------------------

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- 3 -
<PAGE> 27
STEPSTONE FUNDS
INTERNATIONAL EQUITY FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT CLASS PROSPECTUS
DATED JUNE 1, 1995

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At a Special Meeting of Shareholders of Stepstone Funds (the "Trust") held on
March 7, 1996, Shareholders approved new investment advisory and subadvisory
agreements in connection with the proposed combination of Union Bank, the
Trust's current investment advisor, and The Bank of California, N.A., and
BanCal Tri-State Corporation. This combination took effect on April 1, 1996.
The resulting entity, Union Bank of California, N.A., now serves as Advisor to
each of the Trust's Funds, and Tokyo-Mitsubishi Asset Management (U.K.), Ltd.,
which was the name given to the then-SubAdvisor to the Fund, Bank of Tokyo
Asset Management (U.K.), Ltd., upon the merger of its parent, The Bank of
Tokyo, Ltd., and The Mitsubishi Bank, Ltd. on April 1, 1996, serves as
SubAdvisor to the International Equity Fund. All references in this prospectus
to Union Bank and its investment management division, Union Capital Advisors,
are hereby replaced with Union Bank of California, N.A. and its investment
management division, MERUS-UCA Capital Management. Due to this combination,
the final paragraph of "The Advisor" section on page 7 of the prospectus is
deleted and the third and fourth paragraphs are replaced with the following
language:

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union
Bank of California, N.A., manages the day-to-day operations of the Fund.
On April 1, 1996, Union Bank, the Trust's then-investment advisor, combined
with The Bank of California, N.A., and the resulting bank changed its name
to Union Bank of California, N.A.. At the same time, the banks' investment
management divisions were combined. Each of Union Bank and The Bank of
California, N.A. (or its predecessor bank) has been in banking since the
early 1900's, and historically, each has had significant investment
functions within its trust and investment division. Union Bank of
California, N.A., is a subsidiary of The Bank of Tokyo-Mitsubishi, Ltd..

------------------------------

As a result of the aforementioned name change, the first sentence of the first
paragraph of "The SubAdvisor" section on page 7 of the prospectus is replaced
with the following sentence:

The Advisor and Tokyo-Mitsubishi Asset Management (U.K.), Ltd. (the
"SubAdvisor"), have entered into an investment subadvisory agreement
relating to the Fund (the "Investment SubAdvisory Agreement").

In addition, the third, fourth and fifth paragraphs of "The SubAdvisor" section
on page 7 of the prospectus are replaced with the following three paragraphs:
<PAGE> 28
Tokyo-Mitsubishi Asset Management (U.K.), Ltd., 12-15 Finsbury Circus,
London EC2 M7BT operates as a subsidiary of The Bank of Tokyo- Mitsubishi,
Ltd.. Established in 1989, the SubAdvisor provides active global
investment services for segregated funds and specialist fund management.

Prior to February, 1995, the SubAdvisor had not previously served as the
investment advisor to mutual funds. As of April 1, 1996, Tokyo- Mitsubishi
Asset Management (U.K.), Ltd., managed assets of $2.2 billion in individual
portfolios and collective funds.

Andrew Richmond has served as portfolio manager of the Fund since its
inception. Mr. Richmond has been with the SubAdvisor and its predecessor,
Bank of Tokyo Asset Management (U.K.), Ltd., since 1990, and has served as
senior equity investment manager since June, 1992.

------------------------------

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- 2 -
<PAGE> 29
STEPSTONE FUNDS

MONEY MARKET FUND
TREASURY MONEY MARKET FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
CASH SWEEP CLASS PROSPECTUS
DATED JANUARY 14, 1996

------------------------------

For the fiscal year ended January 31, 1996, the Money Market and Treasury
Money Market Funds paid Union Bank, as predecessor to the Advisor, a fee of
.30% and .25% of their average daily net assets.

MERUS-UCA Capital Management (the "Advisor"), 475 Sansome Street, San
Francisco, California 94111, the investment management division of Union
Bank of California, N.A., manages the day-to-day operations of each Fund.
On April 1, 1996, Union Bank, the Trust's then-investment advisor, combined
with the Bank of California, N.A., and the resulting bank changed its name
to Union Bank of California, N.A.. At the same time, the banks' investment
management divisions were combined. Each of Union Bank and The Bank of
California, N.A. (or its predecessor bank) has been in banking since the
early 1900's, and historically, each has had significant investment
functions within its trust and investment divisions. Union Bank of
California, N.A., is a subsidiary of The Bank of Tokyo-Mitsubishi, Ltd..

------------------------------

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