<PAGE> 1
STEPSTONE FUNDS
CALIFORNIA TAX FREE MONEY MARKET FUND
Institutional Class
SUPPLEMENT DATED AUGUST 27, 1996
TO THE PROSPECTUS DATED MAY 28, 1996.
THIS SUPPLEMENT TO THE PROSPECTUS CONTAINS NEW AND ADDITIONAL INFORMATION
BEYOND THAT CONTAINED IN THE PROSPECTUS AND SHOULD BE RETAINED AND READ IN
CONJUNCTION WITH SUCH PROSPECTUS.
Certain language was inadvertently deleted from the text of Investment
Limitation No. 2 on page 8 of the Stepstone California Tax Free Money Market
Fund Prospectus dated May 28, 1996. Investment Limitation No. 2 should read as
follows:
The California Tax Free Money Market Fund may not purchase securities
of any issuer (except securities issued or guaranteed by the United
States, its agencies or instrumentalities) and repurchase agreements
involving such securities if as a result more than 5% of the total
assets of the Fund would be invested in the securities of such issuer.
This limitation applies to 75% of the Fund's assets.
___________________________________________________________________
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
<PAGE> 2
STEPSTONE FUNDS
CALIFORNIA TAX FREE MONEY MARKET FUND
Investment Class
SUPPLEMENT DATED AUGUST 27, 1996
TO THE PROSPECTUS DATED MAY 28, 1996.
THIS SUPPLEMENT TO THE PROSPECTUS CONTAINS NEW AND ADDITIONAL INFORMATION
BEYOND THAT CONTAINED IN THE PROSPECTUS AND SHOULD BE RETAINED AND READ IN
CONJUNCTION WITH SUCH PROSPECTUS.
Certain language was inadvertently deleted from the text of Investment
Limitation No. 2 on page 8 of the Stepstone California Tax Free Money Market
Fund Prospectus dated May 28, 1996. Investment Limitation No. 2 should read as
follows:
The California Tax Free Money Market Fund may not purchase securities
of any issuer (except securities issued or guaranteed by the United
States, its agencies or instrumentalities) and repurchase agreements
involving such securities if as a result more than 5% of the total
assets of the Fund would be invested in the securities of such issuer.
This limitation applies to 75% of the Fund's assets.
___________________________________________________________________
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
