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PUGET SOUND MARKET NEUTRAL PORTFOLIO
SUPPLEMENT DATED OCTOBER 30, 1998
TO PROSPECTUS DATED JUNE 16, 1998
Puget Sound Asset Management Co., LLC ("PSAM"), the adviser to Puget Sound
Market Neutral Portfolio (the "Fund"), has voluntarily agreed, effective October
1, 1998 and for an indefinite period, to reduce its advisory fees and pay other
Fund expenses to the extent necessary to limit total operating expenses of the
Fund's classes (exclusive of brokerage costs, interest, taxes, dividends payable
with respect to securities sold short and extraordinary expenses) to the annual
rate of 2.17% of the average daily net assets of the Fund's Institutional Shares
and 2.67% of the average daily net assets of the Fund's Investor Shares. The
amount of fees reduced and expenses paid by PSAM with respect to each class in
any fiscal year is referred to below as that class's "deferred amount." Each
class is obligated to pay PSAM such class's deferred amount in future years, if
any, when such class's expenses fall below the stated percentage rate, but only
to the extent that such payment would not cause such class's expenses in any
such future year to exceed the stated percentage rate, and provided that such
class is not obligated to pay the deferred amount for any fiscal year more than
two years after the end of the fiscal year in which they were incurred. This
agreement by PSAM to reduce its fees any pay other Fund expenses may be changed
or terminated by PSAM at any time. In addition, this voluntary arrangement
supplants PSAM's prior agreement to reduce its advisory fees from the annual
rate of 2.00% to the annual rate of 1.75% of the average daily net assets of the
Fund.
The Estimated Annual Fund Operating Expenses table in the section in the
Prospectus entitled "Summary of Expenses" (pg. 4) is replaced in its entirety
with the following:
<TABLE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
<CAPTION>
INSTITUTIONAL SHARES INVESTOR SHARES
<S> <C> <C>
Management Fees................... 2.00% 2.00%
12b-1 Fees (after fee
waiver)(1)...................... None 0.25%
Other Operating Expenses (after
expense reimbursements)(2)...... 0.17% 0.42%
Total Operating Expenses (after
fee waivers and expense
reimbursements)(2).............. 2.17% 2.67%
</TABLE>
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(1) The Trust's distributor has voluntarily agreed to reduce its fees to
the amount shown in the table above. Without such voluntary
reduction, the distributor would be entitled to receive 12b-1 fees
at an annual rate of 0.50% of the average daily net assets of the
Investor Shares. Because of the ongoing nature of the 12b-1 fees,
long-term shareholders of Investor Shares may pay more than the
economic equivalent of the maximum front-end sales charge permitted
by rules of the National Association of Securities Dealers, Inc.
(2) Other Operating Expenses and Total Operating Expenses do not include
dividend expenses incurred in connection with short sales, which are
included in and reduce the investment return of the Fund.
Other Operating Expenses are based on estimated amounts for the Fund's
first full fiscal year after giving effect to voluntary expense
limitations. PSAM, the Fund's investment adviser, has voluntarily agreed,
for an indefinite period, to limit the Total Operating Expenses of the
Fund's Institutional and Investor Shares to the percentages of net assets
shown above, subject to later reimbursement by such classes in certain
circumstances. Without this agreement and the voluntary fee reduction
described in footnote (1) above, estimated Other Operating Expenses and
Total Operating Expenses would be 3.16% and 5.16%, respectively, for the
Institutional Shares; and 3.16% and 5.66%, respectively, for the Investor
Shares.
