STEPSTONE FUNDS, 497, 1996-04-02

STEPSTONE FUNDS
497, 1996-04-02

Previous: BLACKROCK STRATEGIC TERM TRUST INC, DEF 14A, 1996-04-02

Next: KEMPER TAX EX NAT TR SE A 73 KEM TX EX INC TR MUL ST SER 43, 485BPOS, 1996-04-02

<PAGE> 1

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

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 CONTAINED AND
READ IN CONJUNCTION WITH SUCH PROSPECTUS.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds and Bank of Tokyo-Mitsubishi Trust Company
will serve as SubAdvisor to the Blue Chip Growth and Emerging Growth Funds. In
connection with this merger, all references in this prospectus to Union Capital
Advisors as Advisor to the Trust are hereby replaced with Union Bank of
California, N.A. In addition, effective July 14, 1995, Clyde N. Powers no
longer serves as portfolio manager of the Growth Equity Fund nor as
co-portfolio manager of the Balanced Fund. Due to this change and the
aforementioned merger, 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, as predecessor
to 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 ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of
each Fund. On April 1, 1996, the former Union Bank merged with the
Bank of California, and the resulting bank changed its name to Union
Bank of California, N.A. Each of the former banks or its predecessor
bank had been in banking since the early 1900's, and each historically
has had significant investment functions within their Trust and
Investment Divisions. At the same time, the banks' asset management
divisions were combined to form Merus. Union Bank of California, N.A.
is a subsidiary of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

Richard Earnest, a Vice President and Chief Investment Officer 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 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, and has been with
the Advisor and its predecessor since 1985.

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

<PAGE> 2
------------------------------

Effective March, 1996, Harold C. Elliot no longer serves as portfolio manager
to the Blue Chip Growth Fund. As of this date, 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
merger, "The SubAdvisor" section on page 11 of the prospectus is replaced with
the following language:

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 Trust's shares are not
sponsored, endorsed or guaranteed by and do not constitute obligations
or deposits of the SubAdvisor and are not guaranteed by the FDIC or
any other governmental agency.

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, The Bank of Tokyo Trust Company,
as predecessor to the SubAdvisor, received .30% and .50% of the
average daily net assets of the Blue Chip Growth and Emerging Growth
Funds, respectively. In addition, Bank of Tokyo-Mitsubishi Trust
Company also serves as SubAdvisor to the Trust's Government Securities
and Convertible Securities Funds.

Bank of Tokyo-Mitsubishi Trust Company ("BOT-MTC"), 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. BOT-MTC was formed by
the merger on April 1, 1996 between 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, Limited. The Bank of Tokyo Trust Company was the
surviving entity, and changed its name to Bank of Tokyo-Mitsubishi
Trust Company. The parent companies merged on the same date. Prior
to the merger, the sub-advisory services were provided by The Bank of
Tokyo Trust Company. The 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, Bank of
Tokyo-Mitsubishi Trust Company also serves as SubAdvisor to the
Trust's Intermediate-Term Bond, 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.
Decisions are made by committee and no person has primary
responsibility for making recommendations to the committee.

Seth E. Shalov has served as the portfolio manager to the Emerging
Growth Fund since its inception. Mr. Shalov has served as the
SubAdvisor's Senior Portfolio Manager since October, 1988.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

-2-
<PAGE> 3
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

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.

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

Effective April 8, 1996, State Street Bank, 225 Franklin Street, Boston,
Massachusetts 02110, will serve as transfer agent for the Investment Class
Shares of the Balanced, Value Momentum and Growth Equity Funds.

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

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
<TABLE>
<CAPTION>
(As a percentage of offering price)
- ---------------------------------------------------------------------------------------------------------
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) 5%
return and (3) redemption at the end of each
time.

Balanced Fund . . . . . . . . . . . . . . . . . . . . $55 $77 $100 $167
Value Momentum Fund . . . . . . . . . . . . . . . . . $55 $77 $100 $167
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C> <C>
Growth Equity Fund . . . . . . . . . . . . . . . . . $55 $77 $100 $167
</TABLE>

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

Effective as of February 15, 1996, the sales charge normally imposed on
purchases of the Funds' Investment Class Shares in the amount of $1,000,000 or
more 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
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 COMMISSION AS PERCENTAGE
PERCENTAGE OF OFFERING APPROPRIATE PERCENTAGE OF OFFERING PRICE
AMOUNT OF PURCHASE PRICE OF NET AMOUNT INVESTED
- -----------------------------------------------------------------------------------------------------------
<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 charged if 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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds and Bank of Tokyo-Mitsubishi Trust Company
will serve as SubAdvisor to the Emerging Growth Fund. In connection with this
merger, all references in this prospectus to Union Capital Advisors as Advisor
to the Trust are hereby replaced with Union Bank of California, N.A. In
addition, effective July 14, 1995, Clyde N. Powers no longer serves as
portfolio manager of the Growth Equity Fund nor as co-portfolio manager of the
Balanced Fund. Due to this change and the aforementioned merger, the final
paragraph of "The Advisor" section on pages 9 and 10

-2-
<PAGE> 5
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, as predecessor
to 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.

"The SubAdvisor" section on pages 10 and 11 of the prospectus is replaced with
the following language:

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
Trust's shares are not sponsored, endorsed or guaranteed by and do not
constitute obligations or deposits of the SubAdvisor and are not
guaranteed by the FDIC or any other governmental agency.

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, The Bank of Tokyo Trust Company,
as predecessor to the SubAdvisor, received .50% of the average daily
net assets of the Emerging Growth Fund.

Bank of Tokyo-Mitsubishi Trust Company ("BOT-MTC"), 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. BOT-MTC was formed
by the merger on April 1, 1996 between 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, Limited. The Bank of Tokyo Trust Company was
the surviving entity, and changed its name to Bank of Tokyo-Mitsubishi
Trust Company. The parent companies merged on the same date. Prior
to the merger, the sub-advisory services were provided by The Bank of
Tokyo Trust Company. The Bank of Tokyo Trust Company was established
in 1955 and has provided trust services since that time and management
services since 1965.

-3-
<PAGE> 6
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, Bank of
Tokyo-Mitsubishi Trust Company also serves as SubAdvisor to the
Trust's Intermediate-Term Bond, 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 served as the
SubAdvisor's Senior Portfolio Manager since October, 1988.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

-4-
<PAGE> 7
STEPSTONE FUNDS

BLUE CHIP GROWTH FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT 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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds and Bank of Tokyo-Mitsubishi Trust Company
will serve as SubAdvisor to the Blue Chip Growth Fund. In connection with this
merger, all references in this prospectus to Union Capital Advisors as Advisor
to the Trust are hereby replaced with Union Bank of California, N.A. In
addition, 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, as predecessor to the Advisor, was paid an advisory
fee of .60% of the average daily net assets of the Fund.

Merus-UCA Capital Management ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of
the Fund. On April 1, 1996, the former Union Bank merged with the
Bank of California, and the resulting bank changed its name to Union
Bank of California, N.A. Each of the former banks or its predecessor
bank had been in banking since the early 1900's, and each historically
has had significant investment functions within their Trust and
Investment Divisions. At the same time, the banks' asset management
divisions were combined to form Merus. Union Bank of California, N.A.
is a subsidiary of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

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

Effective March, 1996, Harold C. Elliot no longer serves as portfolio manager
to the Blue Chip Growth Fund. As of this date, 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
merger, "The SubAdvisor" section on pages 6 and 7 of the prospectus is replaced
with the following language:

<PAGE> 8
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 Trust's shares are not sponsored, endorsed or guaranteed by and do
not constitute obligations or deposits of the SubAdvisor and are not
guaranteed by the FDIC or any other governmental agency.

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, as predecessor to
the SubAdvisor, received .30% of the average daily net assets of the
Fund.

Bank of Tokyo-Mitsubishi Trust Company ("BOT-MTC"), 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. BOT-MTC was formed by
the merger on April 1, 1996 between 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, Limited. The Bank of Tokyo Trust Company was the surviving
entity, and changed its name to Bank of Tokyo-Mitsubishi Trust
Company. The parent companies merged on the same date. Prior to the
merger, the sub-advisory services were provided by The Bank of Tokyo
Trust Company. The 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, Bank of
Tokyo-Mitsubishi Trust Company also serves as SubAdvisor to the
Trust's Government Securities, Convertible Securities and Emerging
Growth Funds.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

-2-
<PAGE> 9
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

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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds and Bank of Tokyo-Mitsubishi Trust Company
will serve as SubAdvisor to the Government Securities and Convertible
Securities Funds. In connection with this merger, all references in this
prospectus to Union Capital Advisors as Advisor to the Trust are hereby
replaced with Union Bank of California, N.A. In addition, 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, as predecessor
to 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.

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 since 1991. Mr.
Atkinson was a portfolio manager at The Boston Company from 1988 to
1990.

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

<PAGE> 10
Effective March, 1996, Harold C. Elliot no longer serves as portfolio manager
to the Convertible Securities Fund. As of this date, 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 merger, "The SubAdvisor" section on page 10 is replaced with the
following language:

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
Trust's shares are not sponsored, endorsed or guaranteed by and do not
constitute obligations or deposits of the SubAdvisor and are not
guaranteed by the FDIC or any other governmental agency.

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, The Bank of Tokyo
Trust Company, as predecessor to 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 ("BOT-MTC"), 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. BOT-MTC was formed by
the merger on April 1, 1996 between 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, Limited. The Bank of Tokyo Trust Company was the
surviving entity, and changed its name to Bank of Tokyo-Mitsubishi
Trust Company. The parent companies merged on the same date. Prior
to the merger, the sub-advisory services were provided by The Bank of
Tokyo Trust Company. The 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, Bank of Tokyo-Mitsubishi Trust Company 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 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. Decisions are made by committee and no person has
primary responsibility for making recommendations to the committee.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

-2-
<PAGE> 11
STEPSTONE FUNDS

INTERMEDIATE - TERM BOND FUND
GOVERNMENT SECURITIES FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT 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.

Effective April 8, 1996, State Street Bank, 225 Franklin Street, Boston,
Massachusetts 02110, will serve as transfer agent for the Investment Class
Shares of the Intermediate-Term Bond Fund.

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

Effective as of February 15, 1996, the sales charge normally imposed on
purchases of the Intermediate - Term Bond and Government Securities Funds'
Investment Class Shares in the amount of $1,000,000 or more 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 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 PERCENTAGE
AMOUNT OF PURCHASE OF OFFERING PRICE OF 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 charged if such
Investment Class shares are redeemed 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
a merger among Union Bank, the Trust's current investment advisor, The Bank of
California, N.A. and BanCal Tri-State Corporation which will take effect on or
about April 1, 1996. After the merger, the resulting entity, Union Bank of
California, N.A., will serve as Advisor to each of the Trust's Funds and Bank
of Tokyo-Mitsubishi Trust Company will serve as SubAdvisor to the Government
Securities Fund. In connection with this merger, all references in this
prospectus to Union Capital Advisors as Advisor to the Trust are hereby
replaced with Union Bank of California, N.A. In addition, 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:

<PAGE> 12
For the fiscal year ended January 31, 1996, Union Bank, as predecessor
to 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 ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of
each Fund. On April 1, 1996, the former Union Bank merged with the Bank
of California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

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 of the Advisor and its predecessor since 1991. Mr.
Atkinson was a portfolio manager at The Boston Company from 1988 to
1990.

"The SubAdvisor section on pages 8 and 9 of the prospectus is replaced with the
following language:

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 Trust's shares are
not sponsored, endorsed or guaranteed by and do not constitute
obligations or deposits of the SubAdvisor and are not guaranteed by the
FDIC or any other governmental agency.

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, The Bank of Tokyo Trust Company, as
predecessor to the SubAdvisor, received .20% of the average daily net
assets of the Government Securities Fund.

The Bank of Tokyo Trust Company was the surviving entity, and changed
its name to Bank of Tokyo-Mitsubishi Trust Company. The parent
companies merged on the same date. Prior to the merger, the subadvisory
services were provided by The Bank of Tokyo Trust Company. The 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,
Bank of Tokyo-Mitsubishi Trust Company also serves as SubAdvisor to the
Trust's Emerging Growth, Blue Chip Growth and Convertible Securities
Funds.

-2-
<PAGE> 13
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 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

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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation Bank which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds and Bank of Tokyo-Mitsubishi Trust Company
will serve as SubAdvisor to the Convertible Securities Fund. In connection
with this merger, all references in this prospectus to Union Capital Advisors
as Advisor to the Trust are hereby replaced with Union Bank of California, N.A.
In addition, 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, as predecessor
to the Advisor, received .60% of the average daily net assets of the
Fund.

Merus-UCA Capital Management ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of the
Fund. On April 1, 1996, the former Union Bank merged with the Bank of
California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

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

Effective March, 1996, Harold C. Elliot no longer serves as portfolio manager
to the Convertible Securities Fund. As of this date 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 merger, "The SubAdvisor" section on page 10 is replaced with the
following language:

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
<PAGE> 15
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 Trust's shares are not sponsored, endorsed
or guaranteed by and do not constitute obligations or deposits of the
SubAdvisor and are not guaranteed by the FDIC or any other governmental
agency.

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, as predecessor to the
SubAdvisor, received .30% of the average daily net assets of the Fund.

Bank of Tokyo-Mitsubishi Trust Company ("BOT-MTC"), 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. BOT-MTC was formed by
the merger on April 1, 1996 between 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, Limited. The Bank of Tokyo Trust Company was the surviving
entity, and changed its name to Bank of Tokyo-Mitsubishi Trust Company.
The parent companies merged on the same date. Prior to the merger, the
sub-advisory services were provided by The Bank of Tokyo Trust Company.
The 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,
Bank of Tokyo-Mitsubishi Trust Company 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.
Decisions are made by committee and no person has primary responsibility
for making recommendations to the committee.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

-2-
<PAGE> 16
STEPSTONE FUNDS

LIMITED MATURITY GOVERNMENT 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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds. In connection with this merger, all
references in this prospectus to Union Capital Advisors as Advisor to the Trust
are hereby replaced with Union Bank of California, N.A. In addition, 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, as predecessor
to the Advisor, was paid an advisory fee of .30% of the average daily
net assets of the Fund.

Merus-UCA Capital Management ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of the
Fund. On April 1, 1996, the former Union Bank merged with the Bank of
California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

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 since June, 1992. Prior to his employment with the
Advisor, he served as a portfolio manager at Patterson Capital from
November, 1991 to June, 1992 and at Pacific Century Advisor 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> 17
STEPSTONE FUNDS

LIMITED MATURITY GOVERNMENT FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT 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.

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

Effective April 8, 1996, State Street Bank, 225 Franklin Street, Boston,
Massachusetts 02110, will serve as transfer agent for the Investment Class
Shares of the Limited Maturity Government Fund.

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

Effective March 8, 1996 the Trust is reinstating the maximum sales charge of
1.25% on the sale of shares of Limited Maturity Government Fund (the "Fund"),
therefore the following should be read in conjunction with Shareholder
Transaction Expenses located on page 3 of the Prospectus:

<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchase . . . . . . . . . . . . . . . . .1.50%
</TABLE>

The following replaces the Example also located on page 3 of the Prospectus:
<TABLE>
<S> <C> <C> <C> <C>
1 yr 3 yrs 5 yrs 10 yrs
An investor would pay the following expenses on a
$1,000 investment assuming (1) imposition of the
maximum sales load; (2) 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 section of the
Prospectus entitled "Purchase and Redemption of Shares" located on page 9:

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
SALES CHARGE AS A APPROPRIATE PERCENTAGE COMMISSION AS
AMOUNT OF PERCENTAGE OF OFFERING OF NET AMOUNT PERCENTAGE OF OFFERING
PURCHASE PRICE 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%

*$1,000,000
and Over .00%* .00% .00%
</TABLE>
<PAGE> 18

- -----------------
*A contingent deferred sales charge of .30% will be charged if such investment
Class shares are redeemed 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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation

-2-
<PAGE> 19
which will take effect on or about April 1, 1996. After the merger, the
resulting entity, Union Bank of California, N.A., will serve as Advisor to each
of the Trust's Funds. In connection with this merger, all references in this
prospectus to Union Capital Advisors as Advisor to the Trust are hereby
replaced with Union Bank of California, N.A. In addition, 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, as predecessor
to the Advisor, was paid an advisory fee of .30% of the average daily
net assets of the Fund.

Merus-UCA Capital Management ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of the
Fund. On April 1, 1996, the former Union Bank merged with the Bank of
California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

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 since June, 1992. Prior to his employment with the
Advisor, he served as a portfolio manager at Patterson Capital from
November, 1991 to June, 1992 and at Pacific Century Advisor 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

-3-
<PAGE> 20
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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds. In connection with this merger, all
references in this prospectus to Union Capital Advisors as Advisor to the Trust
are hereby replaced with Union Bank of California, N.A. In addition, the final
paragraph of "The Advisor" section on page 9 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, as predecessor
to 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 ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of
each Fund. On April 1, 1996, the former Union Bank merged with the Bank
of California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

<PAGE> 21
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

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.

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

Effective April 8, 1996, State Street Bank, 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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds. In connection with this merger, all
references in this prospectus to Union Capital Advisors as Advisor to the Trust
are hereby replaced with Union Bank of California, N.A. In addition, the final
paragraph of "The Advisor" section on page 9 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, the Money Market, Treasury
Money Market and California Tax-Free Money Market Funds paid Union Bank,
as predecessor to the Advisor, a fee of .30%, .25% and .10% of their
average daily net assets.

Merus-UCA Capital Management ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of
each Fund. On April 1, 1996, the former Union Bank merged with the Bank
of California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

<PAGE> 22
STEPSTONE FUNDS

MONEY MARKET FUND
TREASURY MONEY MARKET FUND

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

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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds. In connection with this merger, all
references in this prospectus to Union Capital Advisors as Advisor to the Trust
are hereby replaced with Union Bank of California, N.A. In addition, the final
paragraph of "The Advisor" section on page 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, 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 ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of
each Fund. On April 1, 1996, the former Union Bank merged with the Bank
of California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

<PAGE> 23
STEPSTONE FUNDS

CALIFORNIA TAX-FREE BOND 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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds. In connection with this merger, all
references in this prospectus to Union Capital Advisors as Advisor to the Trust
are hereby replaced with Union Bank of California, N.A. In addition, the final
paragraph of "The Advisor" section on pages 7 and 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, as predecessor
to the Advisor, was paid an advisory fee of .03% of the average daily
net assets of the Fund.

Merus-UCA Capital Management ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of the
Fund. On April 1, 1996, the former Union Bank merged with the Bank of
California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

Robert Bigelow has served as team leader of the Fund since October,
1994. Prior to joining the Advisor 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> 24
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 April 8, 1996, State Street Bank, 225 Franklin Street, Boston,
Massachusetts 02110, will serve as transfer agent for the Investment Class
Shares of the California Tax-Free Bond Fund.

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

Effective as of February 15, 1996, the sales charge normally imposed on
purchases of the California Tax Free Bond Fund's Investment Class Shares in the
amount of $1,000,000 or more 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 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 charged if such
Investment Class shares are redeemed prior to one year from date of
purchase.

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

<PAGE> 25
references in this prospectus to Union Capital Advisors as Advisor to the Trust
are hereby replaced with Union Bank of California, N.A. In addition, the final
paragraph of "The Advisor" section on pages 7 and 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, as predecessor
to the Advisor, was paid an advisory fee of .03% of the average daily
net assets of the Fund.

Merus-UCA Capital Management ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of the
Fund. On April 1, 1996, the former Union Bank merged with the Bank of
California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

-2-
<PAGE> 26
STEPSTONE FUNDS

INTERNATIONAL EQUITY 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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds and Tokyo-Mitsubishi Asset Management
(U.K.) Limited will serve as SubAdvisor to the International Equity Fund. In
connection with this merger, all references in this prospectus to Union Capital
Advisors as Advisor to the Trust are hereby replaced with Union Bank of
California, N.A. In addition, 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, as predecessor to the
Advisor, was paid an advisory fee of .85% of the average daily net
assets of the Fund.

Merus-UCA Capital Management ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of the
Fund. On April 1, 1996, the former Union Bank merged with the Bank of
California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

The first sentence of the first paragraph of "The SubAdvisor" section on page 8
of the prospectus is replaced with the following sentence:

<PAGE> 27
The Advisor and Tokyo-Mitsubishi Asset Management (U.K.) Limited (the
"SubAdvisor") have entered into an investment subadvisory agreement
relating to the Fund (the "Investment SubAdvisory Agreement").

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.) Limited, 12-15 Finsbury Circus,
London EC2 M7BT operates as a subsidiary of Bank of Tokyo, Ltd., Tokyo.
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.) Limited 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 since 1990 and has served as senior equity investment
manager since June, 1992.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

-2-
<PAGE> 28
STEPSTONE FUNDS
INTERNATIONAL EQUITY FUND

SUPPLEMENT DATED APRIL 1, 1996 TO
INVESTMENT 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.

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

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 a merger among Union Bank, the Trust's current
investment advisor, The Bank of California, N.A. and BanCal Tri-State
Corporation which will take effect on or about April 1, 1996. After the
merger, the resulting entity, Union Bank of California, N.A., will serve as
Advisor to each of the Trust's Funds and Tokyo-Mitsubishi Asset Management
(U.K.) Limited will serve as SubAdvisor to the International Equity Fund. In
connection with this merger, all references in this prospectus to Union Capital
Advisors as Advisor to the Trust are hereby replaced with Union Bank of
California, N.A. In addition, 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 ("Merus"), 445 S. Figueroa Street, Los
Angeles, California 90071, which operates as a separate division of
Union Bank of California, N.A., manages the day-to-day operations of the
Fund. On April 1, 1996, the former Union Bank merged with the Bank of
California, and the resulting bank changed its name to Union Bank of
California, N.A. Each of the former banks or its predecessor bank had
been in banking since the early 1900's, and each historically has had
significant investment functions within their Trust and Investment
Divisions. At the same time, the banks' asset management divisions were
combined to form Merus. Union Bank of California, N.A. is a subsidiary
of Bank of Tokyo-Mitsubishi, Ltd., Tokyo.

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.) Limited (the
"SubAdvisor") have entered into an investment subadvisory agreement
relating to the Fund (the "Investment SubAdvisory Agreement").

The third, fourth and fifth paragraphs of "The SubAdvisor" section on page 7 of
the prospectus are replaced with the following three paragraphs:

<PAGE> 29
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.) Limited managed assets of $2.2
billion in individual portfolios and collective funds.

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

PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

-2-