ESC STRATEGIC FUNDS, INC.
Supplement dated October 27, 1998
to Prospectus dated July 17, 1998
Change of Nonfundamental Investment Policy and Change of Fund Name
The Board of Directors of ESC Strategic Funds, Inc. has approved
certain changes with respect to the ESC Strategic Growth Fund to clarify for
investors the investment strategy of that Fund. First, the Fund has adopted a
non-fundamental policy that, under normal market circumstances, at least 65% of
the value of the Fund's total assets will be invested in equity securities of
issuers with market capitalization of $1 billion or less, and as a matter of
operating policy, the Fund will invest primarily in companies with market
capitalization of $800 million or less at the time of investment. Reflecting
this policy, the Board has changed the Fund's name to ESC Strategic Small Cap II
Fund. The name change will take effect on January 1, 1999.
Amended Fund Expenses for Growth Fund and Value Fund
Fund expense information reflected on pages 6 and 7 of the Company's
prospectus dated July 17, 1998 for the Growth Fund and Value Fund has been
amended. The restated fund expenses relating to these two Funds is as follows:
<TABLE>
<CAPTION>
ESC Strategic ESC Strategic
Growth** Value Fund**
<S> <C> <C> <C> <C>
Class A Class D Class A Class D
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on Purchases (as a percentage
of offering price)....................................... 4.50% 1.50% 4.50% 1.50%
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)...................... None None None None
Deferred Sales Charge (as a percentage of redemption
proceeds)................................................ None None None None
Exchange Fees................................................ None None None None
Annual Fund Operating Expense
(as a percentage of average net assets annualized)
Management Fees**........................................ 0.75% 0.75% 0.75% 0.75%
12b-1 Fees*.............................................. 0.25% 0.75% 0.25% 0.75%
Other Expenses**......................................... 1.00% 1.00% 1.00% 1.00%
----- ----- ----- -----
Total Portfolio Operating Expenses........................... 2.00% 2.50% 2.00% 2.50%
===== ===== ===== =====
</TABLE>
[FN]
- ----------
* Under rules of the National Association of Securities Dealers, Inc.
the "NASD"), a 12b-1 fee may be treated as a sales charge for certain
purposes under those rules. Because the 12b-1 fee is an annual fee charged
against the assets of a Fund, long-term shareholders may pay more
initial sales charges than the economic equivalent of the maximum front-
end sales charge permitted by rules of the NASD. See "Management of the
Funds."
** Amounts shown for "Management Fees" reflect waivers of a portion of
the fees payable to the Adviser for the ESC Strategic Growth Fund and ESC
Strategic Value Fund. Without these waivers, the Funds' estimated
Management Fees would be 1.25% and 1.25% for the Growth and Value Funds,
respectively. The amounts shown for "Other Expenses" for the ESC Strategic
Value Fund reflect the waiver of all fees payable to the Administrator.
"Total Portfolio Operating Expenses" would be 2.50% for Class A shares of
the Growth Fund and 3.00% for Class D shares of the Growth Fund;. "Other
Expenses" and "Total Portfolio Operating Expenses," respectively, would be
1.15% and 2.65% for Class A shares of the Value Fund and 1.15% and 3.15%
for Class D shares of the Value Fund. Out of its Management Fees, the
Adviser pays the fees of the Managers.
</FN>
The purpose of this table is to assist the prospective investor in understanding
the various costs and expenses that a shareholder in the Funds will bear.
<PAGE>
Example: (1)
An investor would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
ESC Strategic ESC Strategic
Growth Value Fund
Class A Class D Class A Class D
1 year ............................ $ 64 $ 40 $ 64 $ 40
3 years............................ $105 $ 92 $105 $ 92
5 years............................ $148 $146 n/a n/a
10 years........................... $267 $294 n/a n/a
(1) This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return. Actual return may be greater or less than the
assumed amount.
