THE PREFERRED GROUP OF MUTUAL FUNDS
Prospectus Supplement dated March 30, 1998
to Prospectus dated November 1, 1997
1. PREFERRED SHORT-TERM GOVERNMENT SECURITIES FUND
Caterpillar Investment Management Ltd. ("CIML") proposes to terminate,
effective April 1, 1998, its subadvisory agreement with J.P. Morgan Investment
Management, Inc. with respect to the Preferred Short-Term Government Securities
Fund (the "Fund"). After termination of the subadvisory agreement, Robert H.
Schumacher, Senior Portfolio Manager at CIML, will have primary responsibility
for the day-to-day management of the Fund's portfolio. Mr. Schumacher has been
employed by CIML since January 1998. Prior to joining CIML, he was Vice
President at Arbor Research and Trading (from April 1997 to January 1998) and
Senior Vice President (from July 1990 to February 1997), Chief Fixed Income
Strategist (from January 1994 to February 1997) and Senior Portfolio Manager
(from July 1990 to January 1994) for Zurich-Kemper Investments.
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