CLASS C
SHARES
PROSPECTUS
DATED DECEMBER 29, 2023
THE
SARATOGA ADVANTAGE TRUST
The SARATOGA
ADVANTAGE TRUST (the “Trust”) is an open-end, management investment company
comprised of mutual fund portfolios each with its own distinctive investment
objectives and policies, 17 of which are described herein.
The
Portfolios are managed by Saratoga Capital Management, LLC (the
“Manager”). Each Portfolio, except for the Investment Quality Bond
Portfolio, Municipal Bond Portfolio, U.S. Government Money Market Portfolio,
Conservative Balanced Allocation Portfolio, Moderately Conservative Balanced
Allocation Portfolio, Moderate Balanced Allocation Portfolio, Moderately
Aggressive Balanced Allocation Portfolio and Aggressive Balanced Allocation
Portfolio is advised by an Investment Adviser selected and supervised by the
Manager.
The Trust is
designed to help investors to implement an asset allocation strategy to meet
their individual needs as well as select individual investments within each
asset category among the myriad of choices available. The Trust makes available
assistance to help certain investors identify their risk tolerance and
investment objectives through use of an investor questionnaire, and to select an
appropriate model allocation of assets among the Portfolios. As further
assistance, the Trust makes available to certain investors the option of
automatic reallocation or rebalancing of their selected model. The Trust also
provides, on a periodic basis, a report to the investor containing an analysis
and evaluation of the investor’s account.
The
Securities And Exchange Commission Has Not Approved Or Disapproved These
Securities Or Passed Upon The Adequacy Of This Prospectus. Any Representation To
The Contrary Is A Criminal Offense.
PORTFOLIO |
TICKER |
|
PORTFOLIO |
TICKER |
Conservative
Balanced Allocation |
SUMCX |
|
Large
Capitalization Growth |
SLGCX |
Moderately
Conservative Balanced Allocation |
SBCCX |
|
Mid
Capitalization |
SPMCX |
Moderate
Balanced Allocation |
SBMCX |
|
Small
Capitalization |
SSCCX |
Moderately
Aggressive Balanced Allocation |
SAMCX |
|
International
Equity |
SIECX |
Aggressive
Balanced Allocation |
SABCX |
|
Health
& Biotechnology |
SHPCX |
U.S.
Government Money Market |
SZCXX |
|
Technology
& Communications |
STPCX |
Investment
Quality Bond |
SQBCX |
|
Financial
Services |
SFPCX |
Municipal
Bond |
SMBCX |
|
Energy
& Basic Materials |
SEPCX |
Large
Capitalization Value |
SLVCX |
|
|
|
Table of
Contents
PORTFOLIO
SUMMARY: CONSERVATIVE BALANCED ALLOCATION
PORTFOLIO
Investment
Objective:
The
Conservative Balanced Allocation Portfolio seeks total return consisting of
capital appreciation and income.
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
Conservative
Balanced Allocation Portfolio |
Shareholder
Fees (fees paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
Annual
Portfolio Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment) |
|
|
Management
Fees |
|
0.90% |
Distribution
and/or Service Rule 12b-1 Fees |
|
1.00% |
Other
Expenses |
|
1.17% |
Acquired
Fund Fees and Expenses (1) |
|
0.60% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
3.67% |
Expense
Waiver/Reimbursement |
|
(1.08)% |
Total
Annual Portfolio Operating Expenses (after Expense Waiver/Reimbursement)
(2) |
|
2.59% |
Example.
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. This example
also assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same and reflect the contractual expense waiver in
place for the first year. Although your actual costs may be higher or lower,
based on these assumptions, your costs, if you held or sold your shares, at the
end of each period would be:
IF
YOU SOLD YOUR SHARES
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$362 |
|
$1,024 |
|
$1,806 |
|
$3,854 |
IF
YOU HELD YOUR SHARES
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$262 |
|
$1,024 |
|
$1,806 |
|
$3,854 |
The above
Example reflects applicable contractual fee waiver/expense reimbursement
arrangements for the duration of the arrangements
only.
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in Total Annual Portfolio
Operating Expenses or in the example, affect the Portfolio’s performance. During
the most recent fiscal year, the Portfolio’s portfolio turnover rate was 50% of the
average value of its portfolio.
Principal
Investment Strategies:
The
Portfolio is a “fund of funds.” The Portfolio’s main investment strategy is to
invest in other Saratoga Advantage Trust mutual funds (the “Saratoga Funds”)
and/or unaffiliated registered investment companies and exchange-traded funds
(“ETFs”) (together with the Saratoga Funds, the “Underlying Funds”).
The
Portfolio’s manager, Saratoga Capital Management, LLC (the “Manager”) allocates
the Portfolio’s investments in Underlying Funds based on a propriety asset
allocation model developed by the Manager (the “Saratoga Strategic Horizon Asset
Reallocation Program® model” or the “SaratogaSHARP®
model”). Consistent with the SaratogaSHARP® model, the Manager
allocates the Portfolio’s investments based on an analysis of capital markets
that includes an examination of current economic conditions, historical asset
class behavior and current market assumptions. In constructing the Portfolio,
the Manager typically allocates assets among asset classes in the following
investment categories: core equity, fixed income, money market and alternative
investments. The target allocations are: approximately 5%-65% of the Portfolio’s
assets to core equity investments; 8%-75% to fixed income investments; 10%-75%
to money market investments; and 2%-30% to alternative investments. The Manager
does not currently intend to allocate any of the Portfolio’s assets to sector
equity investments; however, it may do so in the future. The Portfolio will
invest in equity, fixed income and alternative instruments through its
investments in the Underlying Funds. The Manager regularly evaluates how
individual economic sectors and statistics are affecting the general economy and
markets in order to develop the asset allocation parameters. Accordingly, asset
allocation parameters may vary widely over time in response to changing market
and/or economic conditions.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investments
in Mutual Funds Risk. The Portfolio invests in Underlying Funds as a primary
strategy, so the Portfolio’s investment performance and risks are directly
related to the performance and risks of the Underlying Funds. Shareholders will
indirectly bear the expenses charged by the Underlying Funds. Because the
Manager or its affiliates provide services to and receive fees, including
supervision fees, from some of the Saratoga Funds, the Portfolio’s investments
in some of the Underlying Funds benefit the Manager and/or its affiliates. In
addition, the Portfolio may hold a significant percentage of the shares of an
Underlying Fund. As a result, the Portfolio’s investments in an Underlying Fund
may create a conflict of
interest.
Exchange-Traded
Funds (ETF) Risk. Shares of ETFs have many of the same risks as direct
investments in common stocks or bonds. ETFs are typically open-end investment
companies, which may seek to track the performance of a specific index or be
actively managed. In addition, their market value is expected to rise and fall
as the value of the underlying index or other assets rises and falls. The market
value of their shares may differ from the net asset value (“NAV”) of the
particular fund. As a shareholder in an ETF (as with other investment
companies), the Portfolio would bear its ratable share of that entity’s expenses
in addition to its own fees and expenses. In addition, investments in an ETF are
subject to, among other risks, the risk that the ETF’s shares may trade at a
discount or premium relative to the NAV of the shares, especially during periods
of market volatility or stress, causing investors to pay significantly more or
less than the value of the ETF’s underlying portfolio, and the listing exchange
may halt trading of the ETF’s shares. ETFs also involve the risk that an active
trading market for an ETF’s shares may not develop or be maintained. In
addition, ETFs that track particular indices may be unable to match the
performance of such underlying indices due to the temporary unavailability of
certain index securities in the secondary market or other factors, such as
discrepancies with respect to the weighting of
securities.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. Certain Underlying Funds invest in equity securities (such as common
stock) that are more volatile and carry more risks than other forms of
investment. In general, stock values fluctuate in response to activities
specific to the company as well as general market, economic and political
conditions. Stock prices can fluctuate widely in response to these
factors.
Common
stockholders are subordinate to debt or preferred stockholders in a company’s
capital structure in terms of priority to corporate income and liquidation
payments and, therefore, will be subject to greater credit risk than preferred
stock or debt instruments.
Foreign
Securities Risk. Certain Underlying Funds invest in foreign securities. An
Underlying Fund’s investments in foreign securities (including depositary
receipts) involve risks in addition to the risks associated with domestic
securities. One additional risk is currency risk. While the price of Underlying
Fund shares is quoted in U.S. dollars, an Underlying Fund generally converts
U.S. dollars to a foreign market’s local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security’s local price remains
unchanged.
Foreign
securities also have risks related to economic and political developments
abroad, including expropriations, confiscatory taxation, exchange control
regulation, limitations on the use or transfer of Underlying Fund assets and any
effects of foreign social, economic or political instability. In particular,
adverse political or economic developments in a geographic region or a
particular country in which an Underlying Fund invests could cause a substantial
decline in the value of its portfolio securities. Certain foreign markets may
rely heavily on particular industries or foreign capital and are more vulnerable
to diplomatic developments, the imposition of economic sanctions against a
particular country or countries, organizations, entities and/or individuals,
changes in international trading patterns, trade barriers and other
protectionist or retaliatory measures. Economic sanctions could, among other
things, effectively restrict or eliminate an Underlying Fund’s ability to
purchase or sell securities or groups of securities for a substantial period of
time. The severity of sanctions and related measures, such as retaliatory
actions, vary in scope and are unpredictable. The imposition of sanctions could
cause a decline in the value and/or liquidity of securities issued by the
sanctioned country or companies located in or economically tied to the
sanctioned country, significantly delay or prevent the settlement of securities
transactions, and significantly impact the Portfolio’s liquidity and
performance. International trade barriers or economic sanctions against foreign
countries, organizations, entities and/or individuals, may adversely affect an
Underlying Fund’s foreign holdings or exposures. Investments in foreign markets
may also be adversely affected by governmental actions such as the imposition of
capital controls, nationalization of companies or industries, expropriation of
assets, or the imposition of punitive taxes. Governmental actions can have a
significant effect on the economic conditions in foreign countries, which also
may adversely affect the value and liquidity of an Underlying Fund’s
investments. For example, the governments of certain countries may prohibit or
impose substantial restrictions on foreign investing in their capital markets or
in certain sectors or industries. In addition, a foreign government may limit or
cause delay in the convertibility or repatriation of its currency which would
adversely affect the U.S. dollar value and/or liquidity of investments
denominated in that currency. Any of these actions could severely affect
security prices, impair an Underlying Fund’s ability to purchase or sell foreign
securities or transfer an Underlying Fund’s assets back into the U.S., or
otherwise adversely affect the Underlying Fund’s
operations.
Certain
foreign investments may become less liquid in response to market developments or
adverse investor perceptions, or become illiquid after purchase by an Underlying
Fund, particularly during periods of market turmoil. Certain foreign investments
may become illiquid when, for instance, there are few, if any, interested buyers
and sellers or when dealers are unwilling to make a market for certain
securities. When an Underlying Fund holds illiquid investments, its portfolio
may be harder to value, especially in changing markets. Foreign companies, in
general, are not subject to the regulatory requirements of U.S. companies and
may have less stringent investor protections and disclosure standards and, as
such, there may be less publicly available information about these companies.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. In addition, in
the event of a default of any foreign debt obligations, it may be more difficult
for an Underlying Fund to obtain or enforce a judgment against the issuers of
the securities. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their U.S.
counterparts. Finally, differences in clearance and settlement procedures in
foreign markets may cause delays in settlements of an Underlying Fund’s trades
effected in those markets.
Depositary
receipts involve substantially identical risks associated with direct
investments in foreign securities. Issuers of the foreign security represented
by a depositary receipt, particularly unsponsored or unregistered depositary
receipts, may not be obligated to disclose material information in the U.S. or
to pass through to holders of such receipts voting rights with respect to the
deposited securities.
Compared to
the U.S. and other developed countries, developing or emerging countries may
have relatively unstable governments, economies based on only a few industries
and securities markets that trade a small number of securities. Prices of these
securities tend to be especially volatile and, in the past, securities in these
countries have been characterized by greater potential loss (as well as gain)
than securities of companies located in developed
countries.
Fixed-Income
Securities Risk. Certain Underlying Funds invest in fixed-income securities. All
fixed-income securities are subject to two types of risk: credit risk and
interest rate risk. Credit risk refers to the possibility that the issuer of a
security will be unable to make interest payments and/or repay the principal on
its debt. Interest rate risk refers to fluctuations in the value of a
fixed-income security resulting from changes in the general level of interest
rates.
When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. (Zero coupon securities are
typically subject to greater price fluctuations than comparable securities that
pay current interest.) Long-term fixed-income securities will rise and fall in
response to interest rate changes to a greater extent than short-term
securities. The Portfolio may face a heightened level of interest rate risk due
to certain changes in monetary policy, such as certain types of interest rate
changes by the Federal Reserve.
Certain
Underlying Funds may invest in securities issued or guaranteed by the U.S.
government or its agencies and instrumentalities (such as securities issued by
the Government National Mortgage Association (Ginnie Mae), the Federal National
Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation
(Freddie Mac)). Securities, such as those issued or guaranteed by Ginnie Mae or
the U.S. Treasury, that are backed by the full faith and credit of the United
States are guaranteed only as to the timely payment of interest and principal
when held to maturity. Notwithstanding that these securities are backed by the
full faith and credit of the United States, circumstances could arise that would
prevent the payment of principal and interest. Securities issued by U.S.
government-related organizations, such as Fannie Mae and Freddie Mac, are not
backed by the full faith and credit of the U.S. government and no assurance can
be given that the U.S. government will provide financial support. Therefore,
U.S. government-related organizations may not have the funds to meet their
payment obligations in the future.
Alternative
Investment Risk. Alternative investment strategies, which may include, but are
not limited to, investing in or having exposure to real estate, commodities,
foreign currency, natural resources, MLP and other non-traditional investments,
or following event-driven, macro, long-short, market neutral, merger arbitrage,
or other tactical investment strategies, may involve complex security types or
transactions and/or focus on narrow segments of the market, which may increase
and/or magnify the overall risks and volatility associated with these
strategies.
Mortgage-Backed
Securities and Prepayment Risk. Certain Underlying Funds invest in
mortgage-backed securities. Mortgage-backed securities, such as mortgage
pass-through securities, have different risk characteristics than traditional
debt securities. For example, principal is paid back over the life of the
security rather than at maturity. Although the value of fixed-income securities
generally increases during periods of falling interest rates and decreases
during periods of rising interest rates, this is not always the case with
mortgage-backed securities. This is due to the fact that the borrower’s payments
may be prepaid at any time as well as other factors. Generally, prepayments will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. The rate of prepayments also may be influenced by
economic and other factors. Prepayment risk includes the possibility that
securities with stated interest rates may have the principal prepaid earlier
than expected, which may occur when interest rates decline. Prepayment may
expose an Underlying Fund, and thus the Portfolio, to a lower rate of return
upon reinvestment of
principal.
Investments
in mortgage-backed securities are made based upon, among other things,
expectations regarding the rate of prepayments on the underlying loans. Rates of
prepayment faster or slower than expected by the Manager could reduce an
Underlying Fund’s yield, increase the volatility of the Underlying Fund and/or
cause a decline in net asset value. Mortgage-backed securities are also subject
to extension risk, which is the risk that the issuer of such a security pays
back the principal of an obligation later than expected, which may occur when
interest rates rise. This may have an adverse effect on returns, as the value of
the security decreases when principal payments are made later than expected. In
addition, an Underlying Fund may be prevented from investing proceeds it would
otherwise have received at a given time at the higher prevailing interest rates.
Certain mortgage-backed securities may be more volatile and less liquid than
other traditional types of debt securities. In addition, an unexpectedly high
rate of defaults on the mortgages held by a mortgage pool may adversely affect
the value of a mortgage-backed security and could result in losses to an
Underlying Fund. The risk of such defaults is generally higher in the case of
mortgage pools that include subprime mortgages. The risks associated with
mortgage-backed securities typically become elevated during periods of
distressed economic, market, health and labor conditions. In particular,
increased levels of unemployment, delays and delinquencies in payments of
mortgage and rent obligations, and uncertainty regarding the effects and extent
of government intervention with respect to mortgage payments and other economic
matters may adversely affect the Portfolio’s investments in mortgage-backed
securities.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Manager believes is
representative of its full value or that it may even go down in
price.
Convertible
Securities Risk. Certain Underlying Funds invest in convertible securities. An
Underlying Fund’s investments in convertible securities subject the Underlying
Fund to the risks associated with both fixed-income securities and common
stocks. To the extent that a convertible security’s investment value is greater
than its conversion value, its price will be likely to increase when interest
rates fall and decrease when interest rates rise, as with a fixed-income
security. If the conversion value exceeds the investment value, the price of the
convertible security will tend to fluctuate directly with the price of the
underlying equity
security.
Preferred
Stock Risk. Certain Underlying Funds invest in preferred stock. Preferred stocks
involve credit risk and certain other risks. Certain preferred stocks contain
provisions that allow an issuer under certain conditions to skip distributions
(in the case of “non-cumulative” preferred stocks) or defer distributions (in
the case of “cumulative” preferred stocks). If an Underlying Fund owns a
preferred stock on which distributions are deferred, the Underlying Fund may
nevertheless be required to report income for tax purposes while it is not
receiving distributions on that security. Preferred stocks are subordinated to
bonds and other debt instruments in a company’s capital structure in terms of
priority to corporate income and liquidation payments, and therefore will be
subject to greater credit risk than those debt
instruments.
Warrants
Risk. Certain Underlying Funds invest in warrants. The holder of a warrant has
the right to purchase a given number of shares of a particular issuer at a
specified price until expiration of the warrant. Such investments can provide a
greater potential for profit or loss than an equivalent investment in the
underlying security. Prices of warrants do not necessarily move in tandem with
the prices of the underlying securities, and are speculative investments.
Warrants pay no dividends and confer no rights other than a purchase option. If
a warrant is not exercised by the date of its expiration, an Underlying Fund
will lose its entire investment in such
warrant.
Liquidity
Risk. The Portfolio and/or an Underlying Fund may hold illiquid securities that
it is unable to sell at the preferred time or price and could lose its entire
investment in such securities. Investments with an active trading market or that
the Manager otherwise deems liquid could become illiquid before the Portfolio
can exit its positions. The liquidity of the Portfolio’s assets may change over
time.
Small and
Medium Capitalization Companies Risk. An Underlying Fund may invest in small and
medium capitalization companies. Investing in medium and small capitalization
companies may involve more risk than is usually associated with investing in
larger, more established companies. There is typically less publicly available
information concerning small and medium capitalization companies than for
larger, more established companies. Some small and medium capitalization
companies have limited product lines, distribution channels and financial and
managerial resources and tend to concentrate on fewer geographical markets than
do larger companies. Also, because small and medium capitalization companies
normally have fewer shares outstanding than larger companies and trade less
frequently, it may be more difficult for the Portfolio to buy and sell
significant amounts of shares without an unfavorable impact on prevailing market
prices.
Derivatives
Risk. Certain Underlying Funds may invest in derivatives. A derivative is an
investment whose value depends on (or is derived from) the value of an
underlying asset (including an underlying security), reference rate or index.
Derivatives may be used as a substitute for purchasing the underlying asset or
as a hedge to reduce exposure to risks. The derivatives in which the Portfolio
or an Underlying Fund may invest include options, futures and swaps. Derivatives
may be volatile and some derivatives have the potential for loss that is greater
than the Underlying Fund’s initial investment. Many derivatives are entered into
over-the-counter or OTC (not on an exchange or contract market) and may be more
difficult to purchase, sell or value than more traditional investments, such as
stocks or bonds, because there may be fewer purchasers or sellers of the
derivative instrument or the derivative instrument may require participants
entering into offsetting transactions rather than making or taking delivery. An
Underlying Fund may also lose money on a derivative if the counterparty (issuer)
fails to pay the amount due. If a counterparty to an OTC derivative were to
default on its obligations, the Underlying Fund’s contractual remedies against
such counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Underlying Fund’s rights as a creditor (e.g., the Underlying Fund may
not receive the amount of payments that it is contractually entitled to
receive).
An
Underlying Fund may also lose money on a derivative if the underlying asset on
which the derivative is based, or the derivative itself, does not perform as an
Adviser anticipated. The Underlying Fund may incur higher taxes as a result of
its investing in derivatives. Changes in the value of a derivative may not
correlate perfectly with, and may be more sensitive to market events than, the
underlying asset. Changes in regulation relating to a mutual fund’s use of
derivatives and related instruments could potentially limit or impact an
Underlying Fund’s ability to invest in derivatives, limit the Underlying Fund’s
ability to employ certain strategies that use derivatives and/or adversely
affect the value of derivatives and the Underlying Fund’s
performance.
Compared to
other types of investments, derivatives may be less tax efficient. The use of
certain derivatives may cause the Underlying Fund, and thus the Portfolio, to
realize higher amounts of ordinary income or short-term capital gains,
distributions from which are taxable to individual shareholders at ordinary
income tax rates rather than at the more favorable tax rates for long-term
capital gain. In addition, changes in government regulation of derivative
instruments could affect the character, timing and amount of the Underlying
Fund’s taxable income or gains, and may limit or prevent the Underlying Fund,
and thus the Portfolio, from using certain types of derivative instruments as a
part of its investment strategy, which could make the investment strategy more
costly to implement or require the Portfolio to change its investment strategy.
An Underlying Fund’s use of derivatives also may be limited by the requirements
for taxation of the Underlying Fund as a regulated investment
company.
Management
Risk. The performance of the Portfolio also will depend on whether the Manager
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1 year and since inception periods of the Portfolio
compare with those of a broad measure of market performance, as well as with an
index of funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the future.
The returns in the table assume you sold your shares at the end of each
period and include the effect of Class A shares maximum applicable front-end
sales charge. Of course, if you did not sell your shares at the end of the
period, your return would be higher. You may obtain the Portfolio’s updated
performance information by calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEAR
Years |
Returns |
2019 |
13.55% |
2020 |
6.29% |
2021 |
9.35% |
2022 |
-9.62% |
During the
periods shown in the bar chart, the
highest return for a calendar quarter was 8.70% (quarter
ended June 30, 2020) and the
lowest return for a calendar quarter was -10.94% (quarter
ended March 31,
2020). For the
period January 1, 2023 through September 30,
2023, the
return for the Portfolio’s Class C shares was 2.68%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
Since
Inception* |
Conservative
Balanced Allocation Portfolio: |
|
|
|
|
Return
Before Taxes |
|
-10.62% |
|
2.59% |
Return
After Taxes on Distributions |
|
-11.55% |
|
1.66% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-5.61% |
|
1.85% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
Morningstar
Moderately Conservative Target Risk TR |
|
-13.85% |
|
2.66% |
Morningstar
US Fund Moderately Conservative Allocation Category |
|
-13.34% |
|
2.10% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant periods.
Manager:
Saratoga Capital Management, LLC serves as the Portfolio’s
Manager.
Portfolio
Managers: The following individuals serve as the Portfolio’s portfolio
managers:
Portfolio
Manager |
|
Primary
Title |
Stephen
Ventimiglia |
|
Vice
Chairman, Chief Investment Officer and Chief Economist of Saratoga Capital
Management, LLC, and has managed the Portfolio since its
inception. |
Bruce
E. Ventimiglia |
|
Chairman,
President and Chief Executive Officer of Saratoga Capital Management, LLC,
and has managed the Portfolio since its inception. |
Jonathan
W. Ventimiglia |
|
Chief
Financial Officer and Chief Compliance Officer of Saratoga Capital
Management, LLC, and has managed the Portfolio since its
inception. |
Purchase
and Sale of Portfolio Shares: There is generally a $2,500 minimum initial
investment for the Portfolio. The minimum subsequent investment in the Trust is
$100. There is no minimum subsequent investment for the Portfolio. There is no
minimum initial investment and no minimum subsequent investment for employee
benefit plans, mutual fund platform programs, supermarket programs, associations
and individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange is open. Redemption
requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: Dividends and capital gain distributions you receive from the
Portfolio, whether you reinvest your distributions in additional Portfolio
shares or receive them in cash, are taxable to you at either ordinary income or
capital gain tax rates unless you are investing through a tax-free plan, in
which case your distributions generally will be taxed when withdrawn from the
tax deferred account.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase
Portfolio shares through a broker-dealer or other financial intermediary (such
as a bank), the Manager and/or the Portfolio’s distributor may pay the
intermediary for the sale of Portfolio shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Portfolio over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
PORTFOLIO
SUMMARY: MODERATELY CONSERVATIVE BALANCED ALLOCATION
PORTFOLIO
Investment
Objective:
The
Moderately Conservative Balanced Allocation Portfolio seeks total return
consisting of capital appreciation and income.
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
Moderately
Conservative Balanced Allocation Portfolio |
Shareholder
Fees (fees paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
Annual
Portfolio Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment) |
|
|
Management
Fees |
|
0.90% |
Distribution
and/or Service Rule 12b-1 Fees |
|
1.00% |
Other
Expenses |
|
2.19% |
Acquired
Fund Fees and Expenses (1) |
|
0.80% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
4.89% |
Expense
Waiver/Reimbursement |
|
(2.10)% |
Total
Annual Portfolio Operating Expenses (after Expense Waiver/Reimbursement)
(2) |
|
2.79% |
Example.
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. This example
also assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same and reflect the contractual expense waiver in
place for the first year. Although your actual costs may be higher or lower,
based on these assumptions, your costs, if you held or sold your shares, at the
end of each period would be:
IF
YOU SOLD YOUR SHARES
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$382 |
|
$1,283 |
|
$2,286 |
|
$4,803 |
IF
YOU HELD YOUR SHARES
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$282 |
|
$1,283 |
|
$2,286 |
|
$4,803 |
The above
Example reflects applicable contractual fee waiver/expense reimbursement
arrangements for the duration of the arrangements
only.
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in Total Annual Portfolio
Operating Expenses or in the example, affect the Portfolio’s performance. During
the most recent fiscal year, the Portfolio’s portfolio turnover rate was 87% of the
average value of its portfolio.
Principal
Investment Strategies:
The
Portfolio is a “fund of funds.” The Portfolio’s main investment strategy is to
invest in other Saratoga Advantage Trust mutual funds (the “Saratoga Funds”)
and/or unaffiliated registered investment companies and exchange-traded funds
(“ETFs”) (together with the Saratoga Funds, the “Underlying Funds”).
The
Portfolio’s manager, Saratoga Capital Management, LLC (the “Manager”) allocates
the Portfolio’s investments in Underlying Funds based on a propriety asset
allocation model developed by the Manager (the “Saratoga Strategic Horizon Asset
Reallocation Program® model” or the “SaratogaSHARP®
model”). Consistent with the SaratogaSHARP® model, the Manager
allocates the Portfolio’s investments based on an analysis of capital markets
that includes an examination of current economic conditions, historical asset
class behavior and current market assumptions. In constructing the Portfolio,
the Manager typically allocates assets among asset classes in the following
investment categories: core equity, fixed income, money market and alternative
investments. The target allocations are: approximately 10%-75% of the
Portfolio’s assets to core equity investments; 7%-70% to fixed income
investments; 8.5%-70% to money market investments; and 2.5%-32.5% to alternative
investments. The Manager does not currently intend to allocate any of the
Portfolio’s assets to sector equity investments; however, it may do so in the
future. The Portfolio will invest in equity, fixed income and alternative
instruments through its investments in the Underlying Funds. The Manager
regularly evaluates how individual economic sectors and statistics are affecting
the general economy and markets in order to develop the asset allocation
parameters. Accordingly, asset allocation parameters may vary widely over time
in response to changing market and/or economic
conditions.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investments
in Mutual Funds Risk. The Portfolio invests in Underlying Funds as a primary
strategy, so the Portfolio’s investment performance and risks are directly
related to the performance and risks of the Underlying Funds. Shareholders will
indirectly bear the expenses charged by the Underlying Funds. Because the
Manager or its affiliates provide services to and receive fees, including
supervision fees, from some of the Saratoga Funds, the Portfolio’s investments
in some of the Underlying Funds benefit the Manager and/or its affiliates. In
addition, the Portfolio may hold a significant percentage of the shares of an
Underlying Fund. As a result, the Portfolio’s investments in an Underlying Fund
may create a conflict of
interest.
Exchange-Traded
Funds (ETF) Risk. Shares of ETFs have many of the same risks as direct
investments in common stocks or bonds. ETFs are typically open-end investment
companies, which may seek to track the performance of a specific index or be
actively managed. In addition, their market value is expected to rise and fall
as the value of the underlying index or other assets rises and falls. The market
value of their shares may differ from the net asset value (“NAV”) of the
particular fund. As a shareholder in an ETF (as with other investment
companies), the Portfolio would bear its ratable share of that entity’s expenses
in addition to its own fees and expenses. In addition, investments in an ETF are
subject to, among other risks, the risk that the ETF’s shares may trade at a
discount or premium relative to the NAV of the shares, especially during periods
of market volatility or stress, causing investors to pay significantly more or
less than the value of the ETF’s underlying portfolio, and the listing exchange
may halt trading of the ETF’s shares. ETFs also involve the risk that an active
trading market for an ETF’s shares may not develop or be maintained. In
addition, ETFs that track particular indices may be unable to match the
performance of such underlying indices due to the temporary unavailability of
certain index securities in the secondary market or other factors, such as
discrepancies with respect to the weighting of
securities.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. Certain Underlying Funds invest in equity securities (such as common
stock) that are more volatile and carry more risks than other forms of
investment. In general, stock values fluctuate in response to activities
specific to the company as well as general market, economic and political
conditions. Stock prices can fluctuate widely in response to these
factors.
Common
stockholders are subordinate to debt or preferred stockholders in a company’s
capital structure in terms of priority to corporate income and liquidation
payments and, therefore, will be subject to greater credit risk than preferred
stock or debt instruments.
Foreign
Securities Risk. Certain Underlying Funds invest in foreign securities. An
Underlying Fund’s investments in foreign securities (including depositary
receipts) involve risks in addition to the risks associated with domestic
securities. One additional risk is currency risk. While the price of Underlying
Fund shares is quoted in U.S. dollars, an Underlying Fund generally converts
U.S. dollars to a foreign market’s local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security’s local price remains
unchanged.
Foreign
securities also have risks related to economic and political developments
abroad, including expropriations, confiscatory taxation, exchange control
regulation, limitations on the use or transfer of Underlying Fund assets and any
effects of foreign social, economic or political instability. In particular,
adverse political or economic developments in a geographic region or a
particular country in which an Underlying Fund invests could cause a substantial
decline in the value of its portfolio securities. Certain foreign markets may
rely heavily on particular industries or foreign capital and are more vulnerable
to diplomatic developments, the imposition of economic sanctions against a
particular country or countries, organizations, entities and/or individuals,
changes in international trading patterns, trade barriers and other
protectionist or retaliatory measures. Economic sanctions could, among other
things, effectively restrict or eliminate an Underlying Fund’s ability to
purchase or sell securities or groups of securities for a substantial period of
time. The severity of sanctions and related measures, such as retaliatory
actions, vary in scope and are unpredictable. The imposition of sanctions could
cause a decline in the value and/or liquidity of securities issued by the
sanctioned country or companies located in or economically tied to the
sanctioned country, significantly delay or prevent the settlement of securities
transactions, and significantly impact the Portfolio’s liquidity and
performance. International trade barriers or economic sanctions against foreign
countries, organizations, entities and/or individuals, may adversely affect an
Underlying Fund’s foreign holdings or exposures. Investments in foreign markets
may also be adversely affected by governmental actions such as the imposition of
capital controls, nationalization of companies or industries, expropriation of
assets, or the imposition of punitive taxes. Governmental actions can have a
significant effect on the economic conditions in foreign countries, which also
may adversely affect the value and liquidity of an Underlying Fund’s
investments. For example, the governments of certain countries may prohibit or
impose substantial restrictions on foreign investing in their capital markets or
in certain sectors or industries. In addition, a foreign government may limit or
cause delay in the convertibility or repatriation of its currency which would
adversely affect the U.S. dollar value and/or liquidity of investments
denominated in that currency. Any of these actions could severely affect
security prices, impair an Underlying Fund’s ability to purchase or sell foreign
securities or transfer an Underlying Fund’s assets back into the U.S., or
otherwise adversely affect the Underlying Fund’s
operations.
Certain
foreign investments may become less liquid in response to market developments or
adverse investor perceptions, or become illiquid after purchase by an Underlying
Fund, particularly during periods of market turmoil. Certain foreign investments
may become illiquid when, for instance, there are few, if any, interested buyers
and sellers or when dealers are unwilling to make a market for certain
securities. When an Underlying Fund holds illiquid investments, its portfolio
may be harder to value, especially in changing markets. Foreign companies, in
general, are not subject to the regulatory requirements of U.S. companies and
may have less stringent investor protections and disclosure standards and, as
such, there may be less publicly available information about these companies.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. In addition, in
the event of a default of any foreign debt obligations, it may be more difficult
for an Underlying Fund to obtain or enforce a judgment against the issuers of
the securities. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their U.S.
counterparts. Finally, differences in clearance and settlement procedures in
foreign markets may cause delays in settlements of an Underlying Fund’s trades
effected in those markets.
Depositary
receipts involve substantially identical risks associated with direct
investments in foreign securities. Issuers of the foreign security represented
by a depositary receipt, particularly unsponsored or unregistered depositary
receipts, may not be obligated to disclose material information in the U.S. or
to pass through to holders of such receipts voting rights with respect to the
deposited securities.
Compared to
the U.S. and other developed countries, developing or emerging countries may
have relatively unstable governments, economies based on only a few industries
and securities markets that trade a small number of securities. Prices of these
securities tend to be especially volatile and, in the past, securities in these
countries have been characterized by greater potential loss (as well as gain)
than securities of companies located in developed
countries.
Fixed-Income
Securities Risk. Certain Underlying Funds invest in fixed-income securities. All
fixed-income securities are subject to two types of risk: credit risk and
interest rate risk. Credit risk refers to the possibility that the issuer of a
security will be unable to make interest payments and/or repay the principal on
its debt. Interest rate risk refers to fluctuations in the value of a
fixed-income security resulting from changes in the general level of interest
rates.
When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. (Zero coupon securities are
typically subject to greater price fluctuations than comparable securities that
pay current interest.) Long-term fixed-income securities will rise and fall in
response to interest rate changes to a greater extent than short-term
securities. The Portfolio may face a heightened level of interest rate risk due
to certain changes in monetary policy, such as certain types of interest rate
changes by the Federal Reserve.
Certain
Underlying Funds may invest in securities issued or guaranteed by the U.S.
government or its agencies and instrumentalities (such as securities issued by
the Government National Mortgage Association (Ginnie Mae), the Federal National
Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation
(Freddie Mac)). Securities, such as those issued or guaranteed by Ginnie Mae or
the U.S. Treasury, that are backed by the full faith and credit of the United
States are guaranteed only as to the timely payment of interest and principal
when held to maturity. Notwithstanding that these securities are backed by the
full faith and credit of the United States, circumstances could arise that would
prevent the payment of principal and interest. Securities issued by U.S.
government-related organizations, such as Fannie Mae and Freddie Mac, are not
backed by the full faith and credit of the U.S. government and no assurance can
be given that the U.S. government will provide financial support. Therefore,
U.S. government-related organizations may not have the funds to meet their
payment obligations in the future.
Alternative
Investment Risk. Alternative investment strategies, which may include, but are
not limited to, investing in or having exposure to real estate, commodities,
foreign currency, natural resources, MLP and other non-traditional investments,
or following event-driven, macro, long-short, market neutral, merger arbitrage,
or other tactical investment strategies, may involve complex security types or
transactions and/or focus on narrow segments of the market, which may increase
and/or magnify the overall risks and volatility associated with these
strategies.
Mortgage-Backed
Securities and Prepayment Risk. Certain Underlying Funds invest in
mortgage-backed securities. Mortgage-backed securities, such as mortgage
pass-through securities, have different risk characteristics than traditional
debt securities. For example, principal is paid back over the life of the
security rather than at maturity. Although the value of fixed-income securities
generally increases during periods of falling interest rates and decreases
during periods of rising interest rates, this is not always the case with
mortgage-backed securities. This is due to the fact that the borrower’s payments
may be prepaid at any time as well as other factors. Generally, prepayments will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. The rate of prepayments also may be influenced by
economic and other factors. Prepayment risk includes the possibility that
securities with stated interest rates may have the principal prepaid earlier
than expected, which may occur when interest rates decline. Prepayment may
expose an Underlying Fund, and thus the Portfolio, to a lower rate of return
upon reinvestment of
principal.
Investments
in mortgage-backed securities are made based upon, among other things,
expectations regarding the rate of prepayments on the underlying loans. Rates of
prepayment faster or slower than expected by the Manager could reduce an
Underlying Fund’s yield, increase the volatility of the Underlying Fund and/or
cause a decline in net asset value. Mortgage-backed securities are also subject
to extension risk, which is the risk that the issuer of such a security pays
back the principal of an obligation later than expected, which may occur when
interest rates rise. This may have an adverse effect on returns, as the value of
the security decreases when principal payments are made later than expected. In
addition, an Underlying Fund may be prevented from investing proceeds it would
otherwise have received at a given time at the higher prevailing interest rates.
Certain mortgage-backed securities may be more volatile and less liquid than
other traditional types of debt securities. In addition, an unexpectedly high
rate of defaults on the mortgages held by a mortgage pool may adversely affect
the value of a mortgage-backed security and could result in losses to an
Underlying Fund. The risk of such defaults is generally higher in the case of
mortgage pools that include subprime mortgages. The risks associated with
mortgage-backed securities typically become elevated during periods of
distressed economic, market, health and labor conditions. In particular,
increased levels of unemployment, delays and delinquencies in payments of
mortgage and rent obligations, and uncertainty regarding the effects and extent
of government intervention with respect to mortgage payments and other economic
matters may adversely affect the Portfolio’s investments in mortgage-backed
securities.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Manager believes is
representative of its full value or that it may even go down in
price.
Convertible
Securities Risk. Certain Underlying Funds invest in convertible securities. An
Underlying Fund’s investments in convertible securities subject the Underlying
Fund to the risks associated with both fixed-income securities and common
stocks. To the extent that a convertible security’s investment value is greater
than its conversion value, its price will be likely to increase when interest
rates fall and decrease when interest rates rise, as with a fixed-income
security. If the conversion value exceeds the investment value, the price of the
convertible security will tend to fluctuate directly with the price of the
underlying equity
security.
Preferred
Stock Risk. Certain Underlying Funds invest in preferred stock. Preferred stocks
involve credit risk and certain other risks. Certain preferred stocks contain
provisions that allow an issuer under certain conditions to skip distributions
(in the case of “non-cumulative” preferred stocks) or defer distributions (in
the case of “cumulative” preferred stocks). If an Underlying Fund owns a
preferred stock on which distributions are deferred, the Underlying Fund may
nevertheless be required to report income for tax purposes while it is not
receiving distributions on that security. Preferred stocks are subordinated to
bonds and other debt instruments in a company’s capital structure in terms of
priority to corporate income and liquidation payments, and therefore will be
subject to greater credit risk than those debt
instruments.
Warrants
Risk. Certain Underlying Funds invest in warrants. The holder of a warrant has
the right to purchase a given number of shares of a particular issuer at a
specified price until expiration of the warrant. Such investments can provide a
greater potential for profit or loss than an equivalent investment in the
underlying security. Prices of warrants do not necessarily move in tandem with
the prices of the underlying securities, and are speculative investments.
Warrants pay no dividends and confer no rights other than a purchase option. If
a warrant is not exercised by the date of its expiration, an Underlying Fund
will lose its entire investment in such
warrant.
Liquidity
Risk. The Portfolio and/or an Underlying Fund may hold illiquid securities that
it is unable to sell at the preferred time or price and could lose its entire
investment in such securities. Investments with an active trading market or that
the Manager otherwise deems liquid could become illiquid before the Portfolio
can exit its positions. The liquidity of the Portfolio’s assets may change over
time.
Small and
Medium Capitalization Companies Risk. An Underlying Fund may invest in small and
medium capitalization companies. Investing in medium and small capitalization
companies may involve more risk than is usually associated with investing in
larger, more established companies. There is typically less publicly available
information concerning small and medium capitalization companies than for
larger, more established companies. Some small and medium capitalization
companies have limited product lines, distribution channels and financial and
managerial resources and tend to concentrate on fewer geographical markets than
do larger companies. Also, because small and medium capitalization companies
normally have fewer shares outstanding than larger companies and trade less
frequently, it may be more difficult for the Portfolio to buy and sell
significant amounts of shares without an unfavorable impact on prevailing market
prices.
Derivatives
Risk. Certain Underlying Funds may invest in derivatives. A derivative is an
investment whose value depends on (or is derived from) the value of an
underlying asset (including an underlying security), reference rate or index.
Derivatives may be used as a substitute for purchasing the underlying asset or
as a hedge to reduce exposure to risks. The derivatives in which the Portfolio
or an Underlying Fund may invest include options, futures and swaps. Derivatives
may be volatile and some derivatives have the potential for loss that is greater
than the Underlying Fund’s initial investment. Many derivatives are entered into
over-the-counter or OTC (not on an exchange or contract market) and may be more
difficult to purchase, sell or value than more traditional investments, such as
stocks or bonds, because there may be fewer purchasers or sellers of the
derivative instrument or the derivative instrument may require participants
entering into offsetting transactions rather than making or taking delivery. An
Underlying Fund may also lose money on a derivative if the counterparty (issuer)
fails to pay the amount due. If a counterparty to an OTC derivative were to
default on its obligations, the Underlying Fund’s contractual remedies against
such counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Underlying Fund’s rights as a creditor (e.g., the Underlying Fund may
not receive the amount of payments that it is contractually entitled to
receive).
An
Underlying Fund may also lose money on a derivative if the underlying asset on
which the derivative is based, or the derivative itself, does not perform as an
Adviser anticipated. The Underlying Fund may incur higher taxes as a result of
its investing in derivatives. Changes in the value of a derivative may not
correlate perfectly with, and may be more sensitive to market events than, the
underlying asset. Changes in regulation relating to a mutual fund’s use of
derivatives and related instruments could potentially limit or impact an
Underlying Fund’s ability to invest in derivatives, limit the Underlying Fund’s
ability to employ certain strategies that use derivatives and/or adversely
affect the value of derivatives and the Underlying Fund’s
performance.
Compared to
other types of investments, derivatives may be less tax efficient. The use of
certain derivatives may cause the Underlying Fund, and thus the Portfolio, to
realize higher amounts of ordinary income or short-term capital gains,
distributions from which are taxable to individual shareholders at ordinary
income tax rates rather than at the more favorable tax rates for long-term
capital gain. In addition, changes in government regulation of derivative
instruments could affect the character, timing and amount of the Underlying
Fund’s taxable income or gains, and may limit or prevent the Underlying Fund,
and thus the Portfolio, from using certain types of derivative instruments as a
part of its investment strategy, which could make the investment strategy more
costly to implement or require the Portfolio to change its investment strategy.
An Underlying Fund’s use of derivatives also may be limited by the requirements
for taxation of the Underlying Fund as a regulated investment
company.
Management
Risk. The performance of the Portfolio also will depend on whether the Manager
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1 year and since inception periods of the Portfolio
compare with those of a broad measure of market performance, as well as with an
index of funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the
future. The returns in the table assume you sold your
shares at the end of each period and include the effect of Class A shares
maximum applicable front-end sales charge. Of course, if you did not sell your
shares at the end of the period, your return would be higher. You may obtain the
Portfolio’s updated performance information by calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEAR
Years |
Returns |
2019 |
16.05% |
2020 |
8.03% |
2021 |
10.60% |
2022 |
-10.67% |
During the
periods shown in the bar chart, the
highest return for a calendar quarter was 11.16% (quarter
ended June 30, 2020) and the
lowest return for a calendar quarter was -14.13% (quarter
ended March 31,
2020). For the
period January 1, 2023 through September 30,
2023, the
return for the Portfolio’s Class C shares was 3.59%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
Since
Inception* |
Moderately
Conservative Balanced Allocation Portfolio: |
|
|
|
|
Return
Before Taxes |
|
-11.67% |
|
2.80% |
Return
After Taxes on Distributions |
|
-13.22% |
|
1.43% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-5.77% |
|
2.00% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
Morningstar
Moderate Target Risk TR |
|
-14.77% |
|
3.47% |
Morningstar
US Fund Moderate Allocation Category |
|
-13.84% |
|
4.15% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC serves as the Portfolio’s
Manager.
Portfolio
Managers: The following individuals serve as the Portfolio’s portfolio
managers:
Portfolio
Manager |
|
Primary
Title |
Stephen
Ventimiglia |
|
Vice
Chairman, Chief Investment Officer and Chief Economist of Saratoga Capital
Management, LLC, and has managed the Portfolio since its
inception. |
Bruce
E. Ventimiglia |
|
Chairman,
President and Chief Executive Officer of Saratoga Capital Management, LLC,
and has managed the Portfolio since its inception. |
Jonathan
W. Ventimiglia |
|
Chief
Financial Officer and Chief Compliance Officer of Saratoga Capital
Management, LLC, and has managed the Portfolio since its
inception. |
Purchase
and Sale of Portfolio Shares: There is generally a $2,500 minimum initial
investment for the Portfolio. The minimum subsequent investment in the Trust is
$100. There is no minimum subsequent investment for the Portfolio. There is no
minimum initial investment and no minimum subsequent investment for employee
benefit plans, mutual fund platform programs, supermarket programs, associations
and individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange is open. Redemption
requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: Dividends and capital gain distributions you receive from the
Portfolio, whether you reinvest your distributions in additional Portfolio
shares or receive them in cash, are taxable to you at either ordinary income or
capital gain tax rates unless you are investing through a tax-free plan, in
which case your distributions generally will be taxed when withdrawn from the
tax deferred account.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase
Portfolio shares through a broker-dealer or other financial intermediary (such
as a bank), the Manager and/or the Portfolio’s distributor may pay the
intermediary for the sale of Portfolio shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Portfolio over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
PORTFOLIO
SUMMARY: MODERATE BALANCED ALLOCATION PORTFOLIO
Investment
Objective:
The
Moderate Balanced Allocation Portfolio seeks total return consisting of capital
appreciation and income.
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
Moderate
Balanced Allocation Portfolio |
Shareholder
Fees (fees paid directly
from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
Annual
Portfolio Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment) |
|
|
Management
Fees |
|
0.90% |
Distribution
and/or Service Rule 12b-1 Fees |
|
1.00% |
Other
Expenses |
|
1.40% |
Acquired
Fund Fees and Expenses (1) |
|
0.93% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
4.23% |
Expense
Waiver/Reimbursement |
|
(1.31)% |
Total
Annual Portfolio Operating Expenses (after Expense Waiver/Reimbursement)
(2) |
|
2.92% |
Example.
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. This example
also assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same and reflect the contractual expense waiver in
place for the first year. Although your actual costs may be higher or lower,
based on these assumptions, your costs, if you held or sold your shares, at the
end of each period would be:
IF
YOU SOLD YOUR SHARES
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$395 |
|
$1,165 |
|
$2,049 |
|
$4,319 |
IF
YOU HELD YOUR SHARES
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$295 |
|
$1,165 |
|
$2,049 |
|
$4,319 |
The above
Example reflects applicable contractual fee waiver/expense reimbursement
arrangements for the duration of the arrangements only.
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in Total Annual Portfolio
Operating Expenses or in the example, affect the Portfolio’s performance. During
the most recent fiscal year, the Portfolio’s portfolio turnover rate was 41% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio is a “fund of funds.” The Portfolio’s main investment strategy is to
invest in other Saratoga Advantage Trust mutual funds (the “Saratoga Funds”)
and/or unaffiliated registered investment companies and exchange-traded funds
(“ETFs”) (together with the Saratoga Funds, the “Underlying Funds”).
The
Portfolio’s manager, Saratoga Capital Management, LLC (the “Manager”) allocates
the Portfolio’s investments in Underlying Funds based on a propriety asset
allocation model developed by the Manager (the “Saratoga Strategic Horizon Asset
Reallocation Program® model” or the “SaratogaSHARP®
model”). Consistent with the SaratogaSHARP® model, the Manager
allocates the Portfolio’s investments based on an analysis of capital markets
that includes an examination of current economic conditions, historical asset
class behavior and current market assumptions. In constructing the Portfolio,
the Manager typically allocates assets among asset classes in the following
investment categories: core equity, sector equity, fixed income, money market
and alternative investments. The target allocations are: approximately 20%-82.5%
of the Portfolio’s assets to core equity investments; 2.5%-25% to sector equity
investments; 6%-65% to fixed income investments; 7%-65% to money market
investments; and 3%-35% to alternative investments. The Portfolio will invest in
equity, fixed income and alternative instruments through its investments in the
Underlying Funds. The Manager regularly evaluates how individual economic
sectors and statistics are affecting the general economy and markets in order to
develop the asset allocation parameters. Accordingly, asset allocation
parameters may vary widely over time in response to changing market and/or
economic conditions.
The sectors
in which the Portfolio typically invests include: health and biotechnology,
technology and communications, financial services, energy and basic materials
and global real estate.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investments
in Mutual Funds Risk. The Portfolio invests in Underlying Funds as a primary
strategy, so the Portfolio’s investment performance and risks are directly
related to the performance and risks of the Underlying Funds. Shareholders will
indirectly bear the expenses charged by the Underlying Funds. Because the
Manager or its affiliates provide services to and receive fees, including
supervision fees, from some of the Saratoga Funds, the Portfolio’s investments
in some of the Underlying Funds benefit the Manager and/or its affiliates. In
addition, the Portfolio may hold a significant percentage of the shares of an
Underlying Fund. As a result, the Portfolio’s investments in an Underlying Fund
may create a conflict of
interest.
Exchange-Traded
Funds (ETF) Risk. Shares of ETFs have many of the same risks as direct
investments in common stocks or bonds. ETFs are typically open-end investment
companies, which may seek to track the performance of a specific index or be
actively managed. In addition, their market value is expected to rise and fall
as the value of the underlying index or other assets rises and falls. The market
value of their shares may differ from the net asset value (“NAV”) of the
particular fund. As a shareholder in an ETF (as with other investment
companies), the Portfolio would bear its ratable share of that entity’s expenses
in addition to its own fees and expenses. In addition, investments in an ETF are
subject to, among other risks, the risk that the ETF’s shares may trade at a
discount or premium relative to the NAV of the shares, especially during periods
of market volatility or stress, causing investors to pay significantly more or
less than the value of the ETF’s underlying portfolio, and the listing exchange
may halt trading of the ETF’s shares. ETFs also involve the risk that an active
trading market for an ETF’s shares may not develop or be maintained. In
addition, ETFs that track particular indices may be unable to match the
performance of such underlying indices due to the temporary unavailability of
certain index securities in the secondary market or other factors, such as
discrepancies with respect to the weighting of
securities.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. Certain Underlying Funds invest in equity securities (such as common
stock) that are more volatile and carry more risks than other forms of
investment. In general, stock values fluctuate in response to activities
specific to the company as well as general market, economic and political
conditions.
Stock prices
can fluctuate widely in response to these factors. Common stockholders are
subordinate to debt or preferred stockholders in a company’s capital structure
in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Foreign
Securities Risk. Certain Underlying Funds invest in foreign securities. An
Underlying Fund’s investments in foreign securities (including depositary
receipts) involve risks in addition to the risks associated with domestic
securities. One additional risk is currency risk. While the price of Underlying
Fund shares is quoted in U.S. dollars, an Underlying Fund generally converts
U.S. dollars to a foreign market’s local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security’s local price remains
unchanged.
Foreign
securities also have risks related to economic and political developments
abroad, including expropriations, confiscatory taxation, exchange control
regulation, limitations on the use or transfer of Underlying Fund assets and any
effects of foreign social, economic or political instability. In particular,
adverse political or economic developments in a geographic region or a
particular country in which an Underlying Fund invests could cause a substantial
decline in the value of its portfolio securities. Certain foreign markets may
rely heavily on particular industries or foreign capital and are more vulnerable
to diplomatic developments, the imposition of economic sanctions against a
particular country or countries, organizations, entities and/or individuals,
changes in international trading patterns, trade barriers and other
protectionist or retaliatory measures. Economic sanctions could, among other
things, effectively restrict or eliminate an Underlying Fund’s ability to
purchase or sell securities or groups of securities for a substantial period of
time. The severity of sanctions and related measures, such as retaliatory
actions, vary in scope and are unpredictable. The imposition of sanctions could
cause a decline in the value and/or liquidity of securities issued by the
sanctioned country or companies located in or economically tied to the
sanctioned country, significantly delay or prevent the settlement of securities
transactions, and significantly impact the Portfolio’s liquidity and
performance. International trade barriers or economic sanctions against foreign
countries, organizations, entities and/or individuals, may adversely affect an
Underlying Fund’s foreign holdings or exposures. Investments in foreign markets
may also be adversely affected by governmental actions such as the imposition of
capital controls, nationalization of companies or industries, expropriation of
assets, or the imposition of punitive taxes. Governmental actions can have a
significant effect on the economic conditions in foreign countries, which also
may adversely affect the value and liquidity of an Underlying Fund’s
investments. For example, the governments of certain countries may prohibit or
impose substantial restrictions on foreign investing in their capital markets or
in certain sectors or industries. In addition, a foreign government may limit or
cause delay in the convertibility or repatriation of its currency which would
adversely affect the U.S. dollar value and/or liquidity of investments
denominated in that currency. Any of these actions could severely affect
security prices, impair an Underlying Fund’s ability to purchase or sell foreign
securities or transfer an Underlying Fund’s assets back into the U.S., or
otherwise adversely affect the Underlying Fund’s
operations.
Certain
foreign investments may become less liquid in response to market developments or
adverse investor perceptions, or become illiquid after purchase by an Underlying
Fund, particularly during periods of market turmoil. Certain foreign investments
may become illiquid when, for instance, there are few, if any, interested buyers
and sellers or when dealers are unwilling to make a market for certain
securities. When an Underlying Fund holds illiquid investments, its portfolio
may be harder to value, especially in changing markets. Foreign companies, in
general, are not subject to the regulatory requirements of U.S. companies and
may have less stringent investor protections and disclosure standards and, as
such, there may be less publicly available information about these companies.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. In addition, in
the event of a default of any foreign debt obligations, it may be more difficult
for an Underlying Fund to obtain or enforce a judgment against the issuers of
the securities. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their U.S.
counterparts. Finally, differences in clearance and settlement procedures in
foreign markets may cause delays in settlements of an Underlying Fund’s trades
effected in those markets.
Depositary
receipts involve substantially identical risks associated with direct
investments in foreign securities. Issuers of the foreign security represented
by a depositary receipt, particularly unsponsored or unregistered depositary
receipts, may not be obligated to disclose material information in the U.S. or
to pass through to holders of such receipts voting rights with respect to the
deposited securities.
Compared to
the U.S. and other developed countries, developing or emerging countries may
have relatively unstable governments, economies based on only a few industries
and securities markets that trade a small number of securities. Prices of these
securities tend to be especially volatile and, in the past, securities in these
countries have been characterized by greater potential loss (as well as gain)
than securities of companies located in developed
countries.
Fixed-Income
Securities Risk. Certain Underlying Funds invest in fixed-income securities. All
fixed-income securities are subject to two types of risk: credit risk and
interest rate risk. Credit risk refers to the possibility that the issuer of a
security will be unable to make interest payments and/or repay the principal on
its debt. Interest rate risk refers to fluctuations in the value of a
fixed-income security resulting from changes in the general level of interest
rates.
When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. (Zero coupon securities are
typically subject to greater price fluctuations than comparable securities that
pay current interest.) Long-term fixed-income securities will rise and fall in
response to interest rate changes to a greater extent than short-term
securities. The Portfolio may face a heightened level of interest rate risk due
to certain changes in monetary policy, such as certain types of interest rate
changes by the Federal Reserve.
Certain
Underlying Funds may invest in securities issued or guaranteed by the U.S.
government or its agencies and instrumentalities (such as securities issued by
the Government National Mortgage Association (Ginnie Mae), the Federal National
Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation
(Freddie Mac)). Securities, such as those issued or guaranteed by Ginnie Mae or
the U.S. Treasury, that are backed by the full faith and credit of the United
States are guaranteed only as to the timely payment of interest and principal
when held to maturity. Notwithstanding that these securities are backed by the
full faith and credit of the United States, circumstances could arise that would
prevent the payment of principal and interest. Securities issued by U.S.
government-related organizations, such as Fannie Mae and Freddie Mac, are not
backed by the full faith and credit of the U.S. government and no assurance can
be given that the U.S. government will provide financial support. Therefore,
U.S. government-related organizations may not have the funds to meet their
payment obligations in the future.
Alternative
Investment Risk. Alternative investment strategies, which may include, but are
not limited to, investing in or having exposure to real estate, commodities,
foreign currency, natural resources, MLP and other non-traditional investments,
or following event-driven, macro, long-short, market neutral, merger arbitrage,
or other tactical investment strategies, may involve complex security types or
transactions and/or focus on narrow segments of the market, which may increase
and/or magnify the overall risks and volatility associated with these
strategies.
Mortgage-Backed
Securities and Prepayment Risk. Certain Underlying Funds invest in
mortgage-backed securities. Mortgage-backed securities, such as mortgage
pass-through securities, have different risk characteristics than traditional
debt securities. For example, principal is paid back over the life of the
security rather than at maturity. Although the value of fixed-income securities
generally increases during periods of falling interest rates and decreases
during periods of rising interest rates, this is not always the case with
mortgage-backed securities. This is due to the fact that the borrower’s payments
may be prepaid at any time as well as other factors. Generally, prepayments will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. The rate of prepayments also may be influenced by
economic and other factors. Prepayment risk includes the possibility that
securities with stated interest rates may have the principal prepaid earlier
than expected, which may occur when interest rates decline. Prepayment may
expose an Underlying Fund, and thus the Portfolio, to a lower rate of return
upon reinvestment of
principal.
Investments
in mortgage-backed securities are made based upon, among other things,
expectations regarding the rate of prepayments on the underlying loans. Rates of
prepayment faster or slower than expected by the Manager could reduce an
Underlying Fund’s yield, increase the volatility of the Underlying Fund and/or
cause a decline in net asset value. Mortgage-backed securities are also subject
to extension risk, which is the risk that the issuer of such a security pays
back the principal of an obligation later than expected, which may occur when
interest rates rise. This may have an adverse effect on returns, as the value of
the security decreases when principal payments are made later than expected. In
addition, an Underlying Fund may be prevented from investing proceeds it would
otherwise have received at a given time at the higher prevailing interest rates.
Certain mortgage-backed securities may be more volatile and less liquid than
other traditional types of debt securities. In addition, an unexpectedly high
rate of defaults on the mortgages held by a mortgage pool may adversely affect
the value of a mortgage-backed security and could result in losses to an
Underlying Fund. The risk of such defaults is generally higher in the case of
mortgage pools that include subprime mortgages. The risks associated with
mortgage-backed securities typically become elevated during periods of
distressed economic, market, health and labor conditions. In particular,
increased levels of unemployment, delays and delinquencies in payments of
mortgage and rent obligations, and uncertainty regarding the effects and extent
of government intervention with respect to mortgage payments and other economic
matters may adversely affect the Portfolio’s investments in mortgage-backed
securities.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Manager believes is
representative of its full value or that it may even go down in
price.
Convertible
Securities Risk. Certain Underlying Funds invest in convertible securities. An
Underlying Fund’s investments in convertible securities subject the Underlying
Fund to the risks associated with both fixed-income securities and common
stocks. To the extent that a convertible security’s investment value is greater
than its conversion value, its price will be likely to increase when interest
rates fall and decrease when interest rates rise, as with a fixed-income
security. If the conversion value exceeds the investment value, the price of the
convertible security will tend to fluctuate directly with the price of the
underlying equity
security.
Preferred
Stock Risk. Certain Underlying Funds invest in preferred stock. Preferred stocks
involve credit risk and certain other risks. Certain preferred stocks contain
provisions that allow an issuer under certain conditions to skip distributions
(in the case of “non-cumulative” preferred stocks) or defer distributions (in
the case of “cumulative” preferred stocks). If an Underlying Fund owns a
preferred stock on which distributions are deferred, the Underlying Fund may
nevertheless be required to report income for tax purposes while it is not
receiving distributions on that security. Preferred stocks are subordinated to
bonds and other debt instruments in a company’s capital structure in terms of
priority to corporate income and liquidation payments, and therefore will be
subject to greater credit risk than those debt
instruments.
Warrants
Risk. Certain Underlying Funds invest in warrants. The holder of a warrant has
the right to purchase a given number of shares of a particular issuer at a
specified price until expiration of the warrant. Such investments can provide a
greater potential for profit or loss than an equivalent investment in the
underlying security. Prices of warrants do not necessarily move in tandem with
the prices of the underlying securities, and are speculative investments.
Warrants pay no dividends and confer no rights other than a purchase option. If
a warrant is not exercised by the date of its expiration, an Underlying Fund
will lose its entire investment in such
warrant.
Liquidity
Risk. The Portfolio and/or an Underlying Fund may hold illiquid securities that
it is unable to sell at the preferred time or price and could lose its entire
investment in such securities. Investments with an active trading market or that
the Manager otherwise deems liquid could become illiquid before the Portfolio
can exit its positions. The liquidity of the Portfolio’s assets may change over
time.
Small and
Medium Capitalization Companies Risk. An Underlying Fund may invest in small and
medium capitalization companies. Investing in medium and small capitalization
companies may involve more risk than is usually associated with investing in
larger, more established companies. There is typically less publicly available
information concerning small and medium capitalization companies than for
larger, more established companies. Some small and medium capitalization
companies have limited product lines, distribution channels and financial and
managerial resources and tend to concentrate on fewer geographical markets than
do larger companies. Also, because small and medium capitalization companies
normally have fewer shares outstanding than larger companies and trade less
frequently, it may be more difficult for the Portfolio to buy and sell
significant amounts of shares without an unfavorable impact on prevailing market
prices.
Sector
Concentration Risk. Sector concentration risk is the possibility that securities
within the same sector will decline in price due to sector-specific market or
economic developments. To the extent the
Portfolio invests more heavily in particular sectors of the economy, its
performance will be especially sensitive to developments that significantly
affect those sectors. Additionally, some sectors (for example, the
financial services and energy sectors, among others) could be subject to greater
government regulation than other sectors. Therefore, changes in regulatory
policies for those sectors may have a material effect on the value of securities
issued by companies in those
sectors.
Derivatives
Risk. Certain Underlying Funds may invest in derivatives. A derivative is an
investment whose value depends on (or is derived from) the value of an
underlying asset (including an underlying security), reference rate or index.
Derivatives may be used as a substitute for purchasing the underlying asset or
as a hedge to reduce exposure to risks. The derivatives in which the Portfolio
or an Underlying Fund may invest include options, futures and swaps. Derivatives
may be volatile and some derivatives have the potential for loss that is greater
than the Underlying Fund’s initial investment. Many derivatives are entered into
over-the-counter or OTC (not on an exchange or contract market) and may be more
difficult to purchase, sell or value than more traditional investments, such as
stocks or bonds, because there may be fewer purchasers or sellers of the
derivative instrument or the derivative instrument may require participants
entering into offsetting transactions rather than making or taking delivery. An
Underlying Fund may also lose money on a derivative if the counterparty (issuer)
fails to pay the amount due. If a counterparty to an OTC derivative were to
default on its obligations, the Underlying Fund’s contractual remedies against
such counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Underlying Fund’s rights as a creditor (e.g., the Underlying Fund may
not receive the amount of payments that it is contractually entitled to
receive).
An
Underlying Fund may also lose money on a derivative if the underlying asset on
which the derivative is based, or the derivative itself, does not perform as an
Adviser anticipated. The Underlying Fund may incur higher taxes as a result of
its investing in derivatives. Changes in the value of a derivative may not
correlate perfectly with, and may be more sensitive to market events than, the
underlying asset. Changes in regulation relating to a mutual fund’s use of
derivatives and related instruments could potentially limit or impact an
Underlying Fund’s ability to invest in derivatives, limit the Underlying Fund’s
ability to employ certain strategies that use derivatives and/or adversely
affect the value of derivatives and the Underlying Fund’s
performance.
Compared to
other types of investments, derivatives may be less tax efficient. The use of
certain derivatives may cause the Underlying Fund, and thus the Portfolio, to
realize higher amounts of ordinary income or short-term capital gains,
distributions from which are taxable to individual shareholders at ordinary
income tax rates rather than at the more favorable tax rates for long-term
capital gain. In addition, changes in government regulation of derivative
instruments could affect the character, timing and amount of the Underlying
Fund’s taxable income or gains, and may limit or prevent the Underlying Fund,
and thus the Portfolio, from using certain types of derivative instruments as a
part of its investment strategy, which could make the investment strategy more
costly to implement or require the Portfolio to change its investment strategy.
An Underlying Fund’s use of derivatives also may be limited by the requirements
for taxation of the Underlying Fund as a regulated investment
company.
Management
Risk. The performance of the Portfolio also will depend on whether the Manager
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1 year and since inception periods of the Portfolio
compare with those of a broad measure of market performance, as well as with an
index of funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the
future. The returns in the table assume you sold your
shares at the end of each period and include the effect of Class A shares
maximum applicable front-end sales charge. Of course, if you did not sell your
shares at the end of the period, your return would be higher. You may obtain the
Portfolio’s updated performance information by calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEAR
Years |
Returns |
2019 |
16.38% |
2020 |
8.81% |
2021 |
12.30% |
2022 |
-11.26% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 12.18% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -14.71% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was 3.85%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
Since
Inception* |
Moderate
Balanced Allocation Portfolio: |
|
|
|
|
Return
Before Taxes |
|
-12.26% |
|
3.54% |
Return
After Taxes on Distributions |
|
-13.44% |
|
2.43% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-6.39% |
|
2.56% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
Morningstar
Moderate Target Risk TR |
|
-14.77% |
|
3.53% |
Morningstar
US Fund Moderate Allocation Category |
|
-13.84% |
|
4.14% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC serves as the Portfolio’s
Manager.
Portfolio
Managers: The following individuals serve as the Portfolio’s portfolio
managers:
Portfolio
Manager |
|
Primary
Title |
Stephen
Ventimiglia |
|
Vice
Chairman, Chief Investment Officer and Chief Economist of Saratoga Capital
Management, LLC, and has managed the Portfolio since its
inception. |
Bruce
E. Ventimiglia |
|
Chairman,
President and Chief Executive Officer of Saratoga Capital Management, LLC,
and has managed the Portfolio since its inception. |
Jonathan
W. Ventimiglia |
|
Chief
Financial Officer and Chief Compliance Officer of Saratoga Capital
Management, LLC, and has managed the Portfolio since its
inception. |
Purchase
and Sale of Portfolio Shares: There is generally a $2,500 minimum initial
investment for the Portfolio. The minimum subsequent investment in the Trust is
$100. There is no minimum subsequent investment for the Portfolio. There is no
minimum initial investment and no minimum subsequent investment for employee
benefit plans, mutual fund platform programs, supermarket programs, associations
and individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange is open. Redemption
requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: Dividends and capital gain distributions you receive from the
Portfolio, whether you reinvest your distributions in additional Portfolio
shares or receive them in cash, are taxable to you at either ordinary income or
capital gain tax rates unless you are investing through a tax-free plan, in
which case your distributions generally will be taxed when withdrawn from the
tax deferred account.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase
Portfolio shares through a broker-dealer or other financial intermediary (such
as a bank), the Manager and/or the Portfolio’s distributor may pay the
intermediary for the sale of Portfolio shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Portfolio over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
PORTFOLIO
SUMMARY: MODERATELY AGGRESSIVE BALANCED ALLOCATION
PORTFOLIO
Investment
Objective:
The
Moderately Aggressive Balanced Allocation Portfolio seeks total return
consisting of capital appreciation and income.
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
Moderately
Aggressive Balanced Allocation Portfolio |
Shareholder
Fees (fees paid directly
from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
Annual
Portfolio Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment) |
|
|
Management
Fees |
|
0.90% |
Distribution
and/or Service Rule 12b-1 Fees |
|
1.00% |
Other
Expenses |
|
1.66% |
Acquired
Fund Fees and Expenses (1) |
|
0.97% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
4.53% |
Expense
Waiver/Reimbursement |
|
(1.57)% |
Total
Annual Portfolio Operating Expenses (after Expense Waiver/Reimbursement)
(2) |
|
2.96% |
Example.
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. This example
also assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same and reflect the contractual expense waiver in
place for the first year. Although your actual costs may be higher or lower,
based on these assumptions, your costs, if you held or sold your shares, at the
end of each period would be:
IF
YOU SOLD YOUR SHARES
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$399 |
|
$1,228 |
|
$2,165 |
|
$4,548 |
IF
YOU HELD YOUR SHARES
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$299 |
|
$1,228 |
|
$2,165 |
|
$4,548 |
The above
Example reflects applicable contractual fee waiver/expense reimbursement
arrangements for the duration of the arrangements only.
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in Total Annual Portfolio
Operating Expenses or in the example, affect the Portfolio’s performance. During
the most recent fiscal year, the Portfolio’s portfolio turnover rate was 34% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio is a “fund of funds.” The Portfolio’s main investment strategy is to
invest in other Saratoga Advantage Trust mutual funds (the “Saratoga Funds”)
and/or unaffiliated registered investment companies and exchange-traded funds
(“ETFs”) (together with the Saratoga Funds, the “Underlying Funds”).
The
Portfolio’s manager, Saratoga Capital Management, LLC (the “Manager”) allocates
the Portfolio’s investments in Underlying Funds based on a propriety asset
allocation model developed by the Manager (the “Saratoga Strategic Horizon Asset
Reallocation Program® model” or the “SaratogaSHARP®
model”). Consistent with the SaratogaSHARP® model, the Manager
allocates the Portfolio’s investments based on an analysis of capital markets
that includes an examination of current economic conditions, historical asset
class behavior and current market assumptions. In constructing the Portfolio,
the Manager typically allocates assets among asset classes in the following
investment categories: core equity, sector equity, fixed income, money market
and alternative investments. The target allocations are: approximately 30%-90%
of the Portfolio’s assets to core equity investments; 5%-27.5% to sector equity
investments; 3%-60% to fixed income investments; 5%-60% to money market
investments; and 3.5%-37.5% to alternative investments. The Portfolio will
invest in equity, fixed income and alternative instruments through its
investments in the Underlying Funds. The Manager regularly evaluates how
individual economic sectors and statistics are affecting the general economy and
markets in order to develop the asset allocation parameters. Accordingly, asset
allocation parameters may vary widely over time in response to changing market
and/or economic conditions.
The sectors
in which the Portfolio typically invests include: health and biotechnology,
technology and communications, financial services, energy and basic materials
and global real estate.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investments
in Mutual Funds Risk. The Portfolio invests in Underlying Funds as a primary
strategy, so the Portfolio’s investment performance and risks are directly
related to the performance and risks of the Underlying Funds. Shareholders will
indirectly bear the expenses charged by the Underlying Funds. Because the
Manager or its affiliates provide services to and receive fees, including
supervision fees, from some of the Saratoga Funds, the Portfolio’s investments
in some of the Underlying Funds benefit the Manager and/or its affiliates. In
addition, the Portfolio may hold a significant percentage of the shares of an
Underlying Fund. As a result, the Portfolio’s investments in an Underlying Fund
may create a conflict of
interest.
Exchange-Traded
Funds (ETF) Risk. Shares of ETFs have many of the same risks as direct
investments in common stocks or bonds. ETFs are typically open-end investment
companies, which may seek to track the performance of a specific index or be
actively managed. In addition, their market value is expected to rise and fall
as the value of the underlying index or other assets rises and falls. The market
value of their shares may differ from the net asset value (“NAV”) of the
particular fund. As a shareholder in an ETF (as with other investment
companies), the Portfolio would bear its ratable share of that entity’s expenses
in addition to its own fees and expenses. In addition, investments in an ETF are
subject to, among other risks, the risk that the ETF’s shares may trade at a
discount or premium relative to the NAV of the shares, especially during periods
of market volatility or stress, causing investors to pay significantly more or
less than the value of the ETF’s underlying portfolio, and the listing exchange
may halt trading of the ETF’s shares. ETFs also involve the risk that an active
trading market for an ETF’s shares may not develop or be maintained. In
addition, ETFs that track particular indices may be unable to match the
performance of such underlying indices due to the temporary unavailability of
certain index securities in the secondary market or other factors, such as
discrepancies with respect to the weighting of
securities.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. Certain Underlying Funds invest in equity securities (such as common
stock) that are more volatile and carry more risks than other forms of
investment. In general, stock values fluctuate in response to activities
specific to the company as well as general market, economic and political
conditions.
Stock prices
can fluctuate widely in response to these factors. Common stockholders are
subordinate to debt or preferred stockholders in a company’s capital structure
in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Foreign
Securities Risk. Certain Underlying Funds invest in foreign securities. An
Underlying Fund’s investments in foreign securities (including depositary
receipts) involve risks in addition to the risks associated with domestic
securities. One additional risk is currency risk. While the price of Underlying
Fund shares is quoted in U.S. dollars, an Underlying Fund generally converts
U.S. dollars to a foreign market’s local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security’s local price remains
unchanged.
Foreign
securities also have risks related to economic and political developments
abroad, including expropriations, confiscatory taxation, exchange control
regulation, limitations on the use or transfer of Underlying Fund assets and any
effects of foreign social, economic or political instability. In particular,
adverse political or economic developments in a geographic region or a
particular country in which an Underlying Fund invests could cause a substantial
decline in the value of its portfolio securities. Certain foreign markets may
rely heavily on particular industries or foreign capital and are more vulnerable
to diplomatic developments, the imposition of economic sanctions against a
particular country or countries, organizations, entities and/or individuals,
changes in international trading patterns, trade barriers and other
protectionist or retaliatory measures. Economic sanctions could, among other
things, effectively restrict or eliminate an Underlying Fund’s ability to
purchase or sell securities or groups of securities for a substantial period of
time. The severity of sanctions and related measures, such as retaliatory
actions, vary in scope and are unpredictable. The imposition of sanctions could
cause a decline in the value and/or liquidity of securities issued by the
sanctioned country or companies located in or economically tied to the
sanctioned country, significantly delay or prevent the settlement of securities
transactions, and significantly impact the Portfolio’s liquidity and
performance. International trade barriers or economic sanctions against foreign
countries, organizations, entities and/or individuals, may adversely affect an
Underlying Fund’s foreign holdings or exposures. Investments in foreign markets
may also be adversely affected by governmental actions such as the imposition of
capital controls, nationalization of companies or industries, expropriation of
assets, or the imposition of punitive taxes. Governmental actions can have a
significant effect on the economic conditions in foreign countries, which also
may adversely affect the value and liquidity of an Underlying Fund’s
investments. For example, the governments of certain countries may prohibit or
impose substantial restrictions on foreign investing in their capital markets or
in certain sectors or industries. In addition, a foreign government may limit or
cause delay in the convertibility or repatriation of its currency which would
adversely affect the U.S. dollar value and/or liquidity of investments
denominated in that currency. Any of these actions could severely affect
security prices, impair an Underlying Fund’s ability to purchase or sell foreign
securities or transfer an Underlying Fund’s assets back into the U.S., or
otherwise adversely affect the Underlying Fund’s
operations.
Certain
foreign investments may become less liquid in response to market developments or
adverse investor perceptions, or become illiquid after purchase by an Underlying
Fund, particularly during periods of market turmoil. Certain foreign investments
may become illiquid when, for instance, there are few, if any, interested buyers
and sellers or when dealers are unwilling to make a market for certain
securities. When an Underlying Fund holds illiquid investments, its portfolio
may be harder to value, especially in changing markets. Foreign companies, in
general, are not subject to the regulatory requirements of U.S. companies and
may have less stringent investor protections and disclosure standards and, as
such, there may be less publicly available information about these companies.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. In addition, in
the event of a default of any foreign debt obligations, it may be more difficult
for an Underlying Fund to obtain or enforce a judgment against the issuers of
the securities. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their U.S.
counterparts. Finally, differences in clearance and settlement procedures in
foreign markets may cause delays in settlements of an Underlying Fund’s trades
effected in those markets.
Depositary
receipts involve substantially identical risks associated with direct
investments in foreign securities. Issuers of the foreign security represented
by a depositary receipt, particularly unsponsored or unregistered depositary
receipts, may not be obligated to disclose material information in the U.S. or
to pass through to holders of such receipts voting rights with respect to the
deposited securities.
Compared to
the U.S. and other developed countries, developing or emerging countries may
have relatively unstable governments, economies based on only a few industries
and securities markets that trade a small number of securities. Prices of these
securities tend to be especially volatile and, in the past, securities in these
countries have been characterized by greater potential loss (as well as gain)
than securities of companies located in developed
countries.
Fixed-Income
Securities Risk. Certain Underlying Funds invest in fixed-income securities. All
fixed-income securities are subject to two types of risk: credit risk and
interest rate risk. Credit risk refers to the possibility that the issuer of a
security will be unable to make interest payments and/or repay the principal on
its debt.
Interest
rate risk refers to fluctuations in the value of a fixed-income security
resulting from changes in the general level of interest
rates.
When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. (Zero coupon securities are
typically subject to greater price fluctuations than comparable securities that
pay current interest.) Long-term fixed-income securities will rise and fall in
response to interest rate changes to a greater extent than short-term
securities. The Portfolio may face a heightened level of interest rate risk due
to certain changes in monetary policy, such as certain types of interest rate
changes by the Federal Reserve.
Certain
Underlying Funds may invest in securities issued or guaranteed by the U.S.
government or its agencies and instrumentalities (such as securities issued by
the Government National Mortgage Association (Ginnie Mae), the Federal National
Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation
(Freddie Mac)). Securities, such as those issued or guaranteed by Ginnie Mae or
the U.S. Treasury, that are backed by the full faith and credit of the United
States are guaranteed only as to the timely payment of interest and principal
when held to maturity. Notwithstanding that these securities are backed by the
full faith and credit of the United States, circumstances could arise that would
prevent the payment of principal and interest. Securities issued by U.S.
government-related organizations, such as Fannie Mae and Freddie Mac, are not
backed by the full faith and credit of the U.S. government and no assurance can
be given that the U.S. government will provide financial support. Therefore,
U.S. government-related organizations may not have the funds to meet their
payment obligations in the future.
Alternative
Investment Risk. Alternative investment strategies, which may include, but are
not limited to, investing in or having exposure to real estate, commodities,
foreign currency, natural resources, MLP and other non-traditional investments,
or following event-driven, macro, long-short, market neutral, merger arbitrage,
or other tactical investment strategies, may involve complex security types or
transactions and/or focus on narrow segments of the market, which may increase
and/or magnify the overall risks and volatility associated with these
strategies.
Mortgage-Backed
Securities and Prepayment Risk. Certain Underlying Funds invest in
mortgage-backed securities. Mortgage-backed securities, such as mortgage
pass-through securities, have different risk characteristics than traditional
debt securities. For example, principal is paid back over the life of the
security rather than at maturity. Although the value of fixed-income securities
generally increases during periods of falling interest rates and decreases
during periods of rising interest rates, this is not always the case with
mortgage-backed securities. This is due to the fact that the borrower’s payments
may be prepaid at any time as well as other factors. Generally, prepayments will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. The rate of prepayments also may be influenced by
economic and other factors. Prepayment risk includes the possibility that
securities with stated interest rates may have the principal prepaid earlier
than expected, which may occur when interest rates decline. Prepayment may
expose an Underlying Fund, and thus the Portfolio, to a lower rate of return
upon reinvestment of
principal.
Investments
in mortgage-backed securities are made based upon, among other things,
expectations regarding the rate of prepayments on the underlying loans. Rates of
prepayment faster or slower than expected by the Manager could reduce an
Underlying Fund’s yield, increase the volatility of the Underlying Fund and/or
cause a decline in net asset value. Mortgage-backed securities are also subject
to extension risk, which is the risk that the issuer of such a security pays
back the principal of an obligation later than expected, which may occur when
interest rates rise. This may have an adverse effect on returns, as the value of
the security decreases when principal payments are made later than expected. In
addition, an Underlying Fund may be prevented from investing proceeds it would
otherwise have received at a given time at the higher prevailing interest rates.
Certain mortgage-backed securities may be more volatile and less liquid than
other traditional types of debt securities. In addition, an unexpectedly high
rate of defaults on the mortgages held by a mortgage pool may adversely affect
the value of a mortgage-backed security and could result in losses to an
Underlying Fund. The risk of such defaults is generally higher in the case of
mortgage pools that include subprime mortgages. The risks associated with
mortgage-backed securities typically become elevated during periods of
distressed economic, market, health and labor conditions. In particular,
increased levels of unemployment, delays and delinquencies in payments of
mortgage and rent obligations, and uncertainty regarding the effects and extent
of government intervention with respect to mortgage payments and other economic
matters may adversely affect the Portfolio’s investments in mortgage-backed
securities.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Manager believes is
representative of its full value or that it may even go down in
price.
Convertible
Securities Risk. Certain Underlying Funds invest in convertible securities. An
Underlying Fund’s investments in convertible securities subject the Underlying
Fund to the risks associated with both fixed-income securities and common
stocks. To the extent that a convertible security’s investment value is greater
than its conversion value, its price will be likely to increase when interest
rates fall and decrease when interest rates rise, as with a fixed-income
security. If the conversion value exceeds the investment value, the price of the
convertible security will tend to fluctuate directly with the price of the
underlying equity
security.
Preferred
Stock Risk. Certain Underlying Funds invest in preferred stock. Preferred stocks
involve credit risk and certain other risks. Certain preferred stocks contain
provisions that allow an issuer under certain conditions to skip distributions
(in the case of “non-cumulative” preferred stocks) or defer distributions (in
the case of “cumulative” preferred stocks). If an Underlying Fund owns a
preferred stock on which distributions are deferred, the Underlying Fund may
nevertheless be required to report income for tax purposes while it is not
receiving distributions on that security. Preferred stocks are subordinated to
bonds and other debt instruments in a company’s capital structure in terms of
priority to corporate income and liquidation payments, and therefore will be
subject to greater credit risk than those debt
instruments.
Warrants
Risk. Certain Underlying Funds invest in warrants. The holder of a warrant has
the right to purchase a given number of shares of a particular issuer at a
specified price until expiration of the warrant. Such investments can provide a
greater potential for profit or loss than an equivalent investment in the
underlying security. Prices of warrants do not necessarily move in tandem with
the prices of the underlying securities, and are speculative investments.
Warrants pay no dividends and confer no rights other than a purchase option. If
a warrant is not exercised by the date of its expiration, an Underlying Fund
will lose its entire investment in such
warrant.
Liquidity
Risk. The Portfolio and/or an Underlying Fund may hold illiquid securities that
it is unable to sell at the preferred time or price and could lose its entire
investment in such securities. Investments with an active trading market or that
the Manager otherwise deems liquid could become illiquid before the Portfolio
can exit its positions. The liquidity of the Portfolio’s assets may change over
time.
Small and
Medium Capitalization Companies Risk. An Underlying Fund may invest in small and
medium capitalization companies. Investing in medium and small capitalization
companies may involve more risk than is usually associated with investing in
larger, more established companies. There is typically less publicly available
information concerning small and medium capitalization companies than for
larger, more established companies. Some small and medium capitalization
companies have limited product lines, distribution channels and financial and
managerial resources and tend to concentrate on fewer geographical markets than
do larger companies. Also, because small and medium capitalization companies
normally have fewer shares outstanding than larger companies and trade less
frequently, it may be more difficult for the Portfolio to buy and sell
significant amounts of shares without an unfavorable impact on prevailing market
prices.
Sector
Concentration Risk. Sector concentration risk is the possibility that securities
within the same sector will decline in price due to sector-specific market or
economic developments. To the extent the
Portfolio invests more heavily in particular sectors of the economy, its
performance will be especially sensitive to developments that significantly
affect those sectors. Additionally, some sectors (for example, the
financial services and energy sectors, among others) could be subject to greater
government regulation than other sectors. Therefore, changes in regulatory
policies for those sectors may have a material effect on the value of securities
issued by companies in those
sectors.
Derivatives
Risk. Certain Underlying Funds may invest in derivatives. A derivative is an
investment whose value depends on (or is derived from) the value of an
underlying asset (including an underlying security), reference rate or index.
Derivatives may be used as a substitute for purchasing the underlying asset or
as a hedge to reduce exposure to risks. The derivatives in which the Portfolio
or an Underlying Fund may invest include options, futures and swaps. Derivatives
may be volatile and some derivatives have the potential for loss that is greater
than the Underlying Fund’s initial investment. Many derivatives are entered into
over-the-counter or OTC (not on an exchange or contract market) and may be more
difficult to purchase, sell or value than more traditional investments, such as
stocks or bonds, because there may be fewer purchasers or sellers of the
derivative instrument or the derivative instrument may require participants
entering into offsetting transactions rather than making or taking delivery. An
Underlying Fund may also lose money on a derivative if the counterparty (issuer)
fails to pay the amount due. If a counterparty to an OTC derivative were to
default on its obligations, the Underlying Fund’s contractual remedies against
such counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Underlying Fund’s rights as a creditor (e.g., the Underlying Fund may
not receive the amount of payments that it is contractually entitled to
receive).
An
Underlying Fund may also lose money on a derivative if the underlying asset on
which the derivative is based, or the derivative itself, does not perform as an
Adviser anticipated. The Underlying Fund may incur higher taxes as a result of
its investing in derivatives.
Changes in
the value of a derivative may not correlate perfectly with, and may be more
sensitive to market events than, the underlying asset. Changes in regulation
relating to a mutual fund’s use of derivatives and related instruments could
potentially limit or impact an Underlying Fund’s ability to invest in
derivatives, limit the Underlying Fund’s ability to employ certain strategies
that use derivatives and/or adversely affect the value of derivatives and the
Underlying Fund’s performance.
Compared to
other types of investments, derivatives may be less tax efficient. The use of
certain derivatives may cause the Underlying Fund, and thus the Portfolio, to
realize higher amounts of ordinary income or short-term capital gains,
distributions from which are taxable to individual shareholders at ordinary
income tax rates rather than at the more favorable tax rates for long-term
capital gain. In addition, changes in government regulation of derivative
instruments could affect the character, timing and amount of the Underlying
Fund’s taxable income or gains, and may limit or prevent the Underlying Fund,
and thus the Portfolio, from using certain types of derivative instruments as a
part of its investment strategy, which could make the investment strategy more
costly to implement or require the Portfolio to change its investment strategy.
An Underlying Fund’s use of derivatives also may be limited by the requirements
for taxation of the Underlying Fund as a regulated investment
company.
Management
Risk. The performance of the Portfolio also will depend on whether the Manager
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1 year and since inception periods of the Portfolio
compare with those of a broad measure of market performance, as well as with an
index of funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the
future. The returns in the table assume you sold your
shares at the end of each period and include the effect of Class A shares
maximum applicable front-end sales charge. Of course, if you did not sell your
shares at the end of the period, your return would be higher. You may obtain the
Portfolio’s updated performance information by calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEAR
Years |
Returns |
2019 |
17.32% |
2020 |
8.26% |
2021 |
12.83% |
2022 |
-11.44% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 12.86% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -16.46% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was 3.89%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
Since
Inception* |
Moderately
Aggressive Balanced Allocation Portfolio: |
|
|
|
|
Return
Before Taxes |
|
-12.44% |
|
3.20% |
Return
After Taxes on Distributions |
|
-13.57% |
|
2.14% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-6.49% |
|
2.31% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
Morningstar
Moderate Target Risk TR |
|
-14.77% |
|
3.53% |
Morningstar
US Fund Moderate Allocation Category |
|
-13.84% |
|
4.14% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC serves as the Portfolio’s
Manager.
Portfolio
Managers: The following individuals serve as the Portfolio’s portfolio
managers:
Portfolio
Manager |
|
Primary
Title |
Stephen
Ventimiglia |
|
Vice
Chairman, Chief Investment Officer and Chief Economist of Saratoga Capital
Management, LLC, and has managed the Portfolio since its
inception. |
Bruce
E. Ventimiglia |
|
Chairman,
President and Chief Executive Officer of Saratoga Capital Management, LLC,
and has managed the Portfolio since its inception. |
Jonathan
W. Ventimiglia |
|
Chief
Financial Officer and Chief Compliance Officer of Saratoga Capital
Management, LLC, and has managed the Portfolio since its
inception. |
Purchase
and Sale of Portfolio Shares: There is generally a $2,500 minimum initial
investment for the Portfolio. The minimum subsequent investment in the Trust is
$100. There is no minimum subsequent investment for the Portfolio. There is no
minimum initial investment and no minimum subsequent investment for employee
benefit plans, mutual fund platform programs, supermarket programs, associations
and individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange is open. Redemption
requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: Dividends and capital gain distributions you receive from the
Portfolio, whether you reinvest your distributions in additional Portfolio
shares or receive them in cash, are taxable to you at either ordinary income or
capital gain tax rates unless you are investing through a tax-free plan, in
which case your distributions generally will be taxed when withdrawn from the
tax deferred account.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase
Portfolio shares through a broker-dealer or other financial intermediary (such
as a bank), the Manager and/or the Portfolio’s distributor may pay the
intermediary for the sale of Portfolio shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Portfolio over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
PORTFOLIO
SUMMARY: AGGRESSIVE BALANCED ALLOCATION PORTFOLIO
Investment
Objective:
The
Aggressive Balanced Allocation Portfolio seeks total return consisting of
capital appreciation and income.
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
Aggressive
Balanced Allocation Portfolio |
Shareholder
Fees (fees paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
|
Exchange
Fee |
|
None |
Annual
Portfolio Operating Expenses (expenses
that you pay each year as a percentage of the value of your
investment) |
|
|
Management
Fees |
|
0.90% |
Distribution
and/or Service Rule 12b-1 Fees |
|
1.00% |
Other
Expenses |
|
1.67% |
Acquired
Fund Fees and Expenses (1) |
|
1.10% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
4.67% |
Expense
Waiver/Reimbursement |
|
(1.58)% |
Total
Annual Portfolio Operating Expenses (after Expense Waiver/Reimbursement)
(2) |
|
3.09% |
Example.
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. This example
also assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same and reflect the contractual expense waiver in
place for the first year. Although your actual costs may be higher or lower,
based on these assumptions, your costs, if you held or sold your shares, at the
end of each period would be:
IF
YOU SOLD YOUR SHARES
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$412 |
|
$1,267 |
|
$2,228 |
|
$4,659 |
IF
YOU HELD YOUR SHARES
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$312 |
|
$1,267 |
|
$2,228 |
|
$4,659 |
The above
Example reflects applicable contractual fee waiver/expense reimbursement
arrangements for the duration of the arrangements only.
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in Total Annual Portfolio
Operating Expenses or in the example, affect the Portfolio’s performance. During
the most recent fiscal year, the Portfolio’s portfolio turnover rate was 26% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio is a “fund of funds.” The Portfolio’s main investment strategy is to
invest in other Saratoga Advantage Trust mutual funds (the “Saratoga Funds”)
and/or unaffiliated registered investment companies and exchange-traded funds
(“ETFs”) (together with the Saratoga Funds, the “Underlying Funds”).
The
Portfolio’s manager, Saratoga Capital Management, LLC (the “Manager”) allocates
the Portfolio’s investments in Underlying Funds based on a propriety asset
allocation model developed by the Manager (the “Saratoga Strategic Horizon Asset
Reallocation Program® model” or the “SaratogaSHARP®
model”). Consistent with the SaratogaSHARP® model, the Manager
allocates the Portfolio’s investments based on an analysis of capital markets
that includes an examination of current economic conditions, historical asset
class behavior and current market assumptions. In constructing the Portfolio,
the Manager typically allocates assets among asset classes in the following
investment categories: core equity, sector equity, fixed income, money market
and alternative investments. The target allocations are: approximately 35%-95%
of the Portfolio’s assets to core equity investments; 7.5%-30% to sector equity
investments; 2%-55% to fixed income investments; 2.5%-55% to money market
investments; and 4%-40% to alternative investments. The Portfolio will invest in
equity, fixed income and alternative instruments through its investments in the
Underlying Funds. The Manager regularly evaluates how individual economic
sectors and statistics are affecting the general economy and markets in order to
develop the asset allocation parameters. Accordingly, asset allocation
parameters may vary widely over time in response to changing market and/or
economic conditions.
The sectors
in which the Portfolio typically invests include: health and biotechnology,
technology and communications, financial services, energy and basic materials
and global real estate.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investments
in Mutual Funds Risk. The Portfolio invests in Underlying Funds as a primary
strategy, so the Portfolio’s investment performance and risks are directly
related to the performance and risks of the Underlying Funds. Shareholders will
indirectly bear the expenses charged by the Underlying Funds. Because the
Manager or its affiliates provide services to and receive fees, including
supervision fees, from some of the Saratoga Funds, the Portfolio’s investments
in some of the Underlying Funds benefit the Manager and/or its affiliates. In
addition, the Portfolio may hold a significant percentage of the shares of an
Underlying Fund. As a result, the Portfolio’s investments in an Underlying Fund
may create a conflict of
interest.
Exchange-Traded
Funds (ETF) Risk. Shares of ETFs have many of the same risks as direct
investments in common stocks or bonds. ETFs are typically open-end investment
companies, which may seek to track the performance of a specific index or be
actively managed. In addition, their market value is expected to rise and fall
as the value of the underlying index or other assets rises and falls. The market
value of their shares may differ from the net asset value (“NAV”) of the
particular fund. As a shareholder in an ETF (as with other investment
companies), the Portfolio would bear its ratable share of that entity’s expenses
in addition to its own fees and expenses. In addition, investments in an ETF are
subject to, among other risks, the risk that the ETF’s shares may trade at a
discount or premium relative to the NAV of the shares, especially during periods
of market volatility or stress, causing investors to pay significantly more or
less than the value of the ETF’s underlying portfolio, and the listing exchange
may halt trading of the ETF’s shares. ETFs also involve the risk that an active
trading market for an ETF’s shares may not develop or be maintained. In
addition, ETFs that track particular indices may be unable to match the
performance of such underlying indices due to the temporary unavailability of
certain index securities in the secondary market or other factors, such as
discrepancies with respect to the weighting of
securities.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. Certain Underlying Funds invest in equity securities (such as common
stock) that are more volatile and carry more risks than other forms of
investment. In general, stock values fluctuate in response to activities
specific to the company as well as general market, economic and political
conditions.
Stock prices
can fluctuate widely in response to these factors. Common stockholders are
subordinate to debt or preferred stockholders in a company’s capital structure
in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Foreign
Securities Risk. Certain Underlying Funds invest in foreign securities. An
Underlying Fund’s investments in foreign securities (including depositary
receipts) involve risks in addition to the risks associated with domestic
securities. One additional risk is currency risk. While the price of Underlying
Fund shares is quoted in U.S. dollars, an Underlying Fund generally converts
U.S. dollars to a foreign market’s local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security’s local price remains
unchanged.
Foreign
securities also have risks related to economic and political developments
abroad, including expropriations, confiscatory taxation, exchange control
regulation, limitations on the use or transfer of Underlying Fund assets and any
effects of foreign social, economic or political instability. In particular,
adverse political or economic developments in a geographic region or a
particular country in which an Underlying Fund invests could cause a substantial
decline in the value of its portfolio securities. Certain foreign markets may
rely heavily on particular industries or foreign capital and are more vulnerable
to diplomatic developments, the imposition of economic sanctions against a
particular country or countries, organizations, entities and/or individuals,
changes in international trading patterns, trade barriers and other
protectionist or retaliatory measures. Economic sanctions could, among other
things, effectively restrict or eliminate an Underlying Fund’s ability to
purchase or sell securities or groups of securities for a substantial period of
time. The severity of sanctions and related measures, such as retaliatory
actions, vary in scope and are unpredictable. The imposition of sanctions could
cause a decline in the value and/or liquidity of securities issued by the
sanctioned country or companies located in or economically tied to the
sanctioned country, significantly delay or prevent the settlement of securities
transactions, and significantly impact the Portfolio’s liquidity and
performance. International trade barriers or economic sanctions against foreign
countries, organizations, entities and/or individuals, may adversely affect an
Underlying Fund’s foreign holdings or exposures. Investments in foreign markets
may also be adversely affected by governmental actions such as the imposition of
capital controls, nationalization of companies or industries, expropriation of
assets, or the imposition of punitive taxes. Governmental actions can have a
significant effect on the economic conditions in foreign countries, which also
may adversely affect the value and liquidity of an Underlying Fund’s
investments. For example, the governments of certain countries may prohibit or
impose substantial restrictions on foreign investing in their capital markets or
in certain sectors or industries. In addition, a foreign government may limit or
cause delay in the convertibility or repatriation of its currency which would
adversely affect the U.S. dollar value and/or liquidity of investments
denominated in that currency. Any of these actions could severely affect
security prices, impair an Underlying Fund’s ability to purchase or sell foreign
securities or transfer an Underlying Fund’s assets back into the U.S., or
otherwise adversely affect the Underlying Fund’s
operations.
Certain
foreign investments may become less liquid in response to market developments or
adverse investor perceptions, or become illiquid after purchase by an Underlying
Fund, particularly during periods of market turmoil. Certain foreign investments
may become illiquid when, for instance, there are few, if any, interested buyers
and sellers or when dealers are unwilling to make a market for certain
securities. When an Underlying Fund holds illiquid investments, its portfolio
may be harder to value, especially in changing markets. Foreign companies, in
general, are not subject to the regulatory requirements of U.S. companies and
may have less stringent investor protections and disclosure standards and, as
such, there may be less publicly available information about these companies.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. In addition, in
the event of a default of any foreign debt obligations, it may be more difficult
for an Underlying Fund to obtain or enforce a judgment against the issuers of
the securities. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their U.S.
counterparts. Finally, differences in clearance and settlement procedures in
foreign markets may cause delays in settlements of an Underlying Fund’s trades
effected in those markets.
Depositary
receipts involve substantially identical risks associated with direct
investments in foreign securities. Issuers of the foreign security represented
by a depositary receipt, particularly unsponsored or unregistered depositary
receipts, may not be obligated to disclose material information in the U.S. or
to pass through to holders of such receipts voting rights with respect to the
deposited securities.
Compared to
the U.S. and other developed countries, developing or emerging countries may
have relatively unstable governments, economies based on only a few industries
and securities markets that trade a small number of securities. Prices of these
securities tend to be especially volatile and, in the past, securities in these
countries have been characterized by greater potential loss (as well as gain)
than securities of companies located in developed
countries.
Fixed-Income
Securities Risk. Certain Underlying Funds invest in fixed-income securities. All
fixed-income securities are subject to two types of risk: credit risk and
interest rate risk. Credit risk refers to the possibility that the issuer of a
security will be unable to make interest payments and/or repay the principal on
its debt. Interest rate risk refers to fluctuations in the value of a
fixed-income security resulting from changes in the general level of interest
rates.
When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. (Zero coupon securities are
typically subject to greater price fluctuations than comparable securities that
pay current interest.) Long-term fixed-income securities will rise and fall in
response to interest rate changes to a greater extent than short-term
securities. The Portfolio may face a heightened level of interest rate risk due
to certain changes in monetary policy, such as certain types of interest rate
changes by the Federal Reserve.
Certain
Underlying Funds may invest in securities issued or guaranteed by the U.S.
government or its agencies and instrumentalities (such as securities issued by
the Government National Mortgage Association (Ginnie Mae), the Federal National
Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation
(Freddie Mac)). Securities, such as those issued or guaranteed by Ginnie Mae or
the U.S. Treasury, that are backed by the full faith and credit of the United
States are guaranteed only as to the timely payment of interest and principal
when held to maturity. Notwithstanding that these securities are backed by the
full faith and credit of the United States, circumstances could arise that would
prevent the payment of principal and interest. Securities issued by U.S.
government-related organizations, such as Fannie Mae and Freddie Mac, are not
backed by the full faith and credit of the U.S. government and no assurance can
be given that the U.S. government will provide financial support. Therefore,
U.S. government-related organizations may not have the funds to meet their
payment obligations in the future.
Alternative
Investment Risk. Alternative investment strategies, which may include, but are
not limited to, investing in or having exposure to real estate, commodities,
foreign currency, natural resources, MLP and other non-traditional investments,
or following event-driven, macro, long-short, market neutral, merger arbitrage,
or other tactical investment strategies, may involve complex security types or
transactions and/or focus on narrow segments of the market, which may increase
and/or magnify the overall risks and volatility associated with these
strategies.
Mortgage-Backed
Securities and Prepayment Risk. Certain Underlying Funds invest in
mortgage-backed securities. Mortgage-backed securities, such as mortgage
pass-through securities, have different risk characteristics than traditional
debt securities. For example, principal is paid back over the life of the
security rather than at maturity. Although the value of fixed-income securities
generally increases during periods of falling interest rates and decreases
during periods of rising interest rates, this is not always the case with
mortgage-backed securities. This is due to the fact that the borrower’s payments
may be prepaid at any time as well as other factors. Generally, prepayments will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. The rate of prepayments also may be influenced by
economic and other factors. Prepayment risk includes the possibility that
securities with stated interest rates may have the principal prepaid earlier
than expected, which may occur when interest rates decline. Prepayment may
expose an Underlying Fund, and thus the Portfolio, to a lower rate of return
upon reinvestment of
principal.
Investments
in mortgage-backed securities are made based upon, among other things,
expectations regarding the rate of prepayments on the underlying loans. Rates of
prepayment faster or slower than expected by the Manager could reduce an
Underlying Fund’s yield, increase the volatility of the Underlying Fund and/or
cause a decline in net asset value. Mortgage-backed securities are also subject
to extension risk, which is the risk that the issuer of such a security pays
back the principal of an obligation later than expected, which may occur when
interest rates rise. This may have an adverse effect on returns, as the value of
the security decreases when principal payments are made later than expected. In
addition, an Underlying Fund may be prevented from investing proceeds it would
otherwise have received at a given time at the higher prevailing interest rates.
Certain mortgage-backed securities may be more volatile and less liquid than
other traditional types of debt securities. In addition, an unexpectedly high
rate of defaults on the mortgages held by a mortgage pool may adversely affect
the value of a mortgage-backed security and could result in losses to an
Underlying Fund. The risk of such defaults is generally higher in the case of
mortgage pools that include subprime mortgages. The risks associated with
mortgage-backed securities typically become elevated during periods of
distressed economic, market, health and labor conditions. In particular,
increased levels of unemployment, delays and delinquencies in payments of
mortgage and rent obligations, and uncertainty regarding the effects and extent
of government intervention with respect to mortgage payments and other economic
matters may adversely affect the Portfolio’s investments in mortgage-backed
securities.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Manager believes is
representative of its full value or that it may even go down in
price.
Convertible
Securities Risk. Certain Underlying Funds invest in convertible securities. An
Underlying Fund’s investments in convertible securities subject the Underlying
Fund to the risks associated with both fixed-income securities and common
stocks. To the extent that a convertible security’s investment value is greater
than its conversion value, its price will be likely to increase when interest
rates fall and decrease when interest rates rise, as with a fixed-income
security. If the conversion value exceeds the investment value, the price of the
convertible security will tend to fluctuate directly with the price of the
underlying equity
security.
Preferred
Stock Risk. Certain Underlying Funds invest in preferred stock. Preferred stocks
involve credit risk and certain other risks. Certain preferred stocks contain
provisions that allow an issuer under certain conditions to skip distributions
(in the case of “non-cumulative” preferred stocks) or defer distributions (in
the case of “cumulative” preferred stocks). If an Underlying Fund owns a
preferred stock on which distributions are deferred, the Underlying Fund may
nevertheless be required to report income for tax purposes while it is not
receiving distributions on that security. Preferred stocks are subordinated to
bonds and other debt instruments in a company’s capital structure in terms of
priority to corporate income and liquidation payments, and therefore will be
subject to greater credit risk than those debt
instruments.
Warrants
Risk. Certain Underlying Funds invest in warrants. The holder of a warrant has
the right to purchase a given number of shares of a particular issuer at a
specified price until expiration of the warrant. Such investments can provide a
greater potential for profit or loss than an equivalent investment in the
underlying security. Prices of warrants do not necessarily move in tandem with
the prices of the underlying securities, and are speculative investments.
Warrants pay no dividends and confer no rights other than a purchase option. If
a warrant is not exercised by the date of its expiration, an Underlying Fund
will lose its entire investment in such
warrant.
Liquidity
Risk. The Portfolio and/or an Underlying Fund may hold illiquid securities that
it is unable to sell at the preferred time or price and could lose its entire
investment in such securities. Investments with an active trading market or that
the Manager otherwise deems liquid could become illiquid before the Portfolio
can exit its positions. The liquidity of the Portfolio’s assets may change over
time.
Small and
Medium Capitalization Companies Risk. An Underlying Fund may invest in small and
medium capitalization companies. Investing in medium and small capitalization
companies may involve more risk than is usually associated with investing in
larger, more established companies. There is typically less publicly available
information concerning small and medium capitalization companies than for
larger, more established companies. Some small and medium capitalization
companies have limited product lines, distribution channels and financial and
managerial resources and tend to concentrate on fewer geographical markets than
do larger companies. Also, because small and medium capitalization companies
normally have fewer shares outstanding than larger companies and trade less
frequently, it may be more difficult for the Portfolio to buy and sell
significant amounts of shares without an unfavorable impact on prevailing market
prices.
Sector
Concentration Risk. Sector concentration risk is the possibility that securities
within the same sector will decline in price due to sector-specific market or
economic developments. To the extent the
Portfolio invests more heavily in particular sectors of the economy, its
performance will be especially sensitive to developments that significantly
affect those sectors. Additionally, some sectors (for example, the
financial services and energy sectors, among others) could be subject to greater
government regulation than other sectors. Therefore, changes in regulatory
policies for those sectors may have a material effect on the value of securities
issued by companies in those
sectors.
Derivatives
Risk. Certain Underlying Funds may invest in derivatives. A derivative is an
investment whose value depends on (or is derived from) the value of an
underlying asset (including an underlying security), reference rate or index.
Derivatives may be used as a substitute for purchasing the underlying asset or
as a hedge to reduce exposure to risks. The derivatives in which the Portfolio
or an Underlying Fund may invest include options, futures and swaps. Derivatives
may be volatile and some derivatives have the potential for loss that is greater
than the Underlying Fund’s initial investment. Many derivatives are entered into
over-the-counter or OTC (not on an exchange or contract market) and may be more
difficult to purchase, sell or value than more traditional investments, such as
stocks or bonds, because there may be fewer purchasers or sellers of the
derivative instrument or the derivative instrument may require participants
entering into offsetting transactions rather than making or taking delivery. An
Underlying Fund may also lose money on a derivative if the counterparty (issuer)
fails to pay the amount due. If a counterparty to an OTC derivative were to
default on its obligations, the Underlying Fund’s contractual remedies against
such counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Underlying Fund’s rights as a creditor (e.g., the Underlying Fund may
not receive the amount of payments that it is contractually entitled to
receive).
An
Underlying Fund may also lose money on a derivative if the underlying asset on
which the derivative is based, or the derivative itself, does not perform as an
Adviser anticipated. The Underlying Fund may incur higher taxes as a result of
its investing in derivatives. Changes in the value of a derivative may not
correlate perfectly with, and may be more sensitive to market events than, the
underlying asset. Changes in regulation relating to a mutual fund’s use of
derivatives and related instruments could potentially limit or impact an
Underlying Fund’s ability to invest in derivatives, limit the Underlying Fund’s
ability to employ certain strategies that use derivatives and/or adversely
affect the value of derivatives and the Underlying Fund’s
performance.
Compared to
other types of investments, derivatives may be less tax efficient. The use of
certain derivatives may cause the Underlying Fund, and thus the Portfolio, to
realize higher amounts of ordinary income or short-term capital gains,
distributions from which are taxable to individual shareholders at ordinary
income tax rates rather than at the more favorable tax rates for long-term
capital gain. In addition, changes in government regulation of derivative
instruments could affect the character, timing and amount of the Underlying
Fund’s taxable income or gains, and may limit or prevent the Underlying Fund,
and thus the Portfolio, from using certain types of derivative instruments as a
part of its investment strategy, which could make the investment strategy more
costly to implement or require the Portfolio to change its investment strategy.
An Underlying Fund’s use of derivatives also may be limited by the requirements
for taxation of the Underlying Fund as a regulated investment
company.
Management
Risk. The performance of the Portfolio also will depend on whether the Manager
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1 year and since inception periods of the Portfolio
compare with those of a broad measure of market performance, as well as with an
index of funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the
future. The returns in the table assume you sold your
shares at the end of each period and include the effect of Class A shares
maximum applicable front-end sales charge. Of course, if you did not sell your
shares at the end of the period, your return would be higher. You may obtain the
Portfolio’s updated performance information by calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEAR
Years |
Returns |
2019 |
18.02% |
2020 |
8.50% |
2021 |
13.69% |
2022 |
-12.23% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 14.42% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -18.70% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was 4.49%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
Since
Inception* |
Aggressive
Balanced Allocation Portfolio: |
|
|
|
|
Return
Before Taxes |
|
-13.23% |
|
3.38% |
Return
After Taxes on Distributions |
|
-14.47% |
|
2.15% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-6.92% |
|
2.43% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
Morningstar
Moderately Aggressive Target Risk TR |
|
-15.48% |
|
4.35% |
Morningstar
US Fund Moderately Aggressive Allocation Category |
|
-15.20% |
|
4.10% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC serves as the Portfolio’s
Manager.
Portfolio
Managers: The following individuals serve as the Portfolio’s portfolio
managers:
Portfolio
Manager |
|
Primary
Title |
Stephen
Ventimiglia |
|
Vice
Chairman, Chief Investment Officer and Chief Economist of Saratoga Capital
Management, LLC, and has managed the Portfolio since its inception.
|
Bruce
E. Ventimiglia |
|
Chairman,
President and Chief Executive Officer of Saratoga Capital Management, LLC,
and has managed the Portfolio since its inception. |
Jonathan
W. Ventimiglia |
|
Chief
Financial Officer and Chief Compliance Officer of Saratoga Capital
Management, LLC, and has managed the Portfolio since its
inception. |
Purchase
and Sale of Portfolio Shares: There is generally a $2,500 minimum initial
investment for the Portfolio. The minimum subsequent investment in the Trust is
$100. There is no minimum subsequent investment for the Portfolio. There is no
minimum initial investment and no minimum subsequent investment for employee
benefit plans, mutual fund platform programs, supermarket programs, associations
and individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange is open. Redemption
requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: Dividends and capital gain distributions you receive from the
Portfolio, whether you reinvest your distributions in additional Portfolio
shares or receive them in cash, are taxable to you at either ordinary income or
capital gain tax rates unless you are investing through a tax-free plan, in
which case your distributions generally will be taxed when withdrawn from the
tax deferred account.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase
Portfolio shares through a broker-dealer or other financial intermediary (such
as a bank), the Manager and/or the Portfolio’s distributor may pay the
intermediary for the sale of Portfolio shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Portfolio over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
PORTFOLIO
SUMMARY: U.S. GOVERNMENT MONEY MARKET PORTFOLIO
Investment
Objective:
The U.S.
Government Money Market Portfolio seeks to provide maximum current income to the
extent consistent with the maintenance of liquidity and the preservation of
capital.
Fees
and Expenses of the Portfolio:
This table describes the fees and expenses that you
may pay if you buy, hold and sell shares of the Portfolio. You may be subject to
other fees not reflected in the table, such as brokerage commission and fees to
financial intermediaries. In addition, Appendix A attached to this Prospectus
contains information regarding financial intermediary-specific sales charge
waivers and discounts.
|
|
U.S.
Government Money Market Portfolio |
Shareholder
Fees (fees paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
Annual
Portfolio Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment) |
|
|
Management
Fees |
|
0.475% |
Distribution
and/or Service Rule 12b-1 Fees |
|
1.00% |
Other
Expenses |
|
0.515% |
Acquired
Fund Fees and Expenses (1) |
|
0.24% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
2.23% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same and reflect the waiver in place for the first
year. Although your actual costs may be higher or lower, based on these
assumptions your costs, if you held or sold your shares, at the end of each
period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$326 |
|
$697 |
|
$1,195 |
|
$2,565 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$226 |
|
$697 |
|
$1,195 |
|
$2,565 |
The above
Example reflects applicable waiver/expense reimbursement arrangements for the
duration of the arrangements only.
Principal
Investment Strategies:
The Portfolio is a “fund of
funds.”
The
Portfolio will normally invest at least 80% of its total assets in unaffiliated
registered investment companies (the “Underlying Funds”) that invest in high
quality, short-term U.S. government securities. In
addition, in order to qualify as a “government money market fund” under the
rules governing money market funds, the Portfolio has adopted a policy to invest
99.5% or more of its total assets, through the Underlying Funds, in cash, U.S.
government securities, and/or repurchase agreements that are collateralized
fully by cash and U.S. government securities. Unless the context otherwise
requires, references to the Portfolio’s investments refer to those investments
of the Underlying Funds. The Manager seeks to maintain the Portfolio’s share
price at $1.00. The U.S. government securities that the Portfolio may purchase
include:
| ● |
U.S.
Treasury bills, notes and bonds, all of which are direct obligations of
the U.S. government. |
| ● |
Securities
issued by agencies and instrumentalities of the U.S. government, which are
backed by the full faith and credit of the United States. Among the
agencies and instrumentalities issuing these obligations are the
Government National Mortgage Association (“Ginnie Mae”) and the Federal
Housing Administration. |
| ● |
Securities
issued by agencies and instrumentalities, which are not backed by the full
faith and credit of the United States, but whose issuing agency or
instrumentality has the right to borrow from the U.S. Department of the
Treasury (the “Treasury”) to meet their obligations. Among these agencies
and instrumentalities are the Federal National Mortgage Association
(“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”)
and the Federal Home Loan Bank. Fannie Mae and Freddie Mac each may borrow
from the Treasury to meet their obligations, but the Treasury is under no
obligation to lend to Fannie Mae or Freddie
Mac. |
| ● |
Securities
issued by agencies and instrumentalities, which are backed solely by the
credit of the issuing agency or instrumentality. Among these agencies and
instrumentalities is the Federal Farm Credit
System. |
In addition,
the Portfolio may invest in repurchase agreements collateralized by securities
issued by the U.S. government, its agencies and instrumentalities.
By
operating as a government money market fund, the Portfolio is exempt from
requirements relating to the imposition of a liquidity fee. While the
Portfolio’s Board of Trustees may elect to subject the Portfolio to a
discretionary liquidity fee, the Board has not elected to do so at this
time.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. You
could lose money by investing in the Portfolio. Although the Portfolio seeks to
preserve the value of your investment at $1.00 per share, it cannot guarantee it
will do so. An investment in the Portfolio is not a bank account and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The Portfolio's sponsor is not required to reimburse the
Portfolio for losses, and you should not expect that the sponsor will provide
financial support to the Portfolio at any time, including during periods of
market stress.
U.S.
Government Securities Risk. There are different types of U.S. government
securities with different levels of credit risk, including the risk of default,
depending on the nature of the particular government support for that security.
For example, U.S. government-sponsored enterprises are not backed by the full
faith and credit of the U.S. government. There is the risk that the U.S.
government will not provide financial support to such U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so by
law. Certain U.S. government securities purchased by the Portfolio, such as
those issued by Fannie Mae and Freddie Mac, are not backed by the full faith and
credit of the U.S. government. The maximum potential liability of the issuers of
some U.S. government securities held by the Portfolio may greatly exceed their
current resources, including their legal right to support from the Treasury. It
is possible that these issuers will not have the funds to meet their payment
obligations in the
future.
Investment
in Mutual Funds Risk. The Portfolio invests in Underlying Funds as a primary
strategy, so the Portfolio’s investment performance and risks are directly
related to the performance and risks of the Underlying Funds. Shareholders will
indirectly bear the expenses charged by the Underlying Funds. In addition, the
Portfolio may hold a significant percentage of the shares of an Underlying Fund.
As a result, the Portfolio’s investments in an Underlying Fund may create a
conflict of interest because a situation could occur where an action for the
Portfolio could be adverse to the interest of an Underlying Fund or vice
versa.
Interest
Rate Risk. The value of the Portfolio’s investments generally will fall when
interest rates rise, and its yield will tend to lag behind prevailing rates. The
Portfolio may face a heightened level of interest rate risk due to certain
changes in monetary policy, such as certain types of interest rate changes by
the Federal Reserve. Portfolios with longer average portfolio durations tend to
be more sensitive to interest rate changes than portfolios with a shorter
average duration. Additionally, changes in monetary policy may exacerbate risks
associated with changing interest rates. During periods when interest rates are
low or there are negative interest rates, the Portfolio’s yield (and total
return) also may be low or otherwise adversely affected or the Portfolio may be
unable to maintain positive returns or a stable net asset value of $1.00 per
share. The Manager has agreed to voluntarily reimburse expenses or waive fees of
the Portfolio in an attempt to allow the Portfolio to avoid a negative yield.
There is no guarantee that the Portfolio will be able to avoid a negative yield.
The Manager may amend or discontinue this voluntary reimbursement and fee waiver
at any time without advance
notice.
Credit Risk.
Issuers of money market instruments or financial institutions that have entered
into repurchase agreements with an Underlying Fund may fail to make payments
when due or complete transactions, or they may become less willing or less able
to do so. Credit ratings may not be an accurate assessment of liquidity or
credit risk. Although credit quality may not accurately reflect the true credit
risk of an instrument, a change in the credit quality rating of an instrument or
an issuer can have a rapid, adverse effect on the instrument’s liquidity and
make it more difficult for the Portfolio to sell at an advantageous price or
time. These risks are increased where interest rates are
rising.
Market Risk.
The market value of the Portfolio’s investments may fluctuate, sometimes rapidly
or unpredictably, as the markets fluctuate, which may affect the Portfolio’s
ability to maintain a $1.00 share price. Market risk may affect a single issuer,
industry, or sector of the economy, or it may affect the market as a whole.
Social, political, economic and other conditions and events (such as recessions,
inflation, rapid interest rate changes, supply chain disruptions, war, natural
disasters, epidemics and pandemics, terrorism, conflicts and social unrest) will
occur that have significant impacts on issuers, industries, governments and
other systems, including the financial markets. Moreover, changing market,
economic, political and social conditions in one country or geographic region
could adversely impact market, economic, political and social conditions in
other countries or regions. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the
Portfolio.
NAV Risk.
The Portfolio may not be able to maintain a stable $1.00 share price at all
times. If the Portfolio or another money market fund fails to maintain a stable
NAV or maintain a weekly net liquid asset level (or such perception exists in
the marketplace), the Portfolio could be subject to increased redemptions, which
may adversely impact the Portfolio’s share
price.
Liquidity
Risk. Although the Portfolio invests in a diversified portfolio of high-quality
instruments, the Portfolio’s investments may become less liquid as a result of
market developments or adverse investor
perception.
Tax Risk.
While dividends paid by the Portfolio from interest directly earned on U.S.
government obligations may be exempt from state and local income taxes,
dividends paid by the Portfolio from interest indirectly earned through the
Underlying Funds with respect to U.S. government obligations is unlikely to be
exempt from state and local income tax. Thus, the use of a fund of funds
structure may result in a higher state income tax burden for certain
shareholders, as compared to a structure in which the Portfolio invests directly
in U.S. government
obligations.
Management
Risk. The performance of the Portfolio also will depend on whether the Manager
is successful in pursuing the Portfolio’s investment
strategy.
Risk
Associated with the Portfolio Holding Cash. The Portfolio will generally hold a
portion of its assets in cash, primarily to meet redemptions. Cash positions may
hurt performance and may subject the Portfolio to additional risks and costs,
such as increased exposure to the custodian bank holding the assets and any fees
imposed for large cash
balances.
Transactions
Risk. The Portfolio could experience a loss and its liquidity may be negatively
impacted when selling securities to meet redemption requests. The risk of loss
increases if the redemption requests are unusually large or frequent or occur in
times of overall market turmoil or declining prices. Similarly, large purchases
of Portfolio shares may adversely affect the Portfolio’s performance to the
extent that the Portfolio is delayed in investing new cash and is required to
maintain a larger cash position than it ordinarily
would.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with an index of
funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the
future. The returns in the table assume you sold your
shares at the end of each period and you were charged a contingent deferred
sales charge. Of course, if you did not sell your shares at the end of the
period, your return would be higher. You may obtain the Portfolio’s current
7-day yield by calling toll free 1-800-807-FUND.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
0.01% |
2014 |
0.01% |
2015 |
0.01% |
2016 |
0.01% |
2017 |
0.03% |
2018 |
0.32% |
2019 |
0.12% |
2020 |
0.01% |
2021 |
0.02% |
2022 |
0.69% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 0.69% (quarter ended December 31, 2022) and
the
lowest return for a calendar quarter was 0.00% (quarter ended June 30, 2022). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was 2.12%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
U.S.
Government Money Market Portfolio (1) |
|
-0.31% |
|
0.23% |
|
0.12% |
90
Day T-Bills |
|
1.47% |
|
1.27% |
|
0.77% |
Index:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
Lipper
U.S. Treasury Money Market Index |
|
1.33% |
|
1.00% |
|
0.55% |
Manager:
Saratoga Capital Management, LLC (the “Manager”) serves as the Portfolio’s
Manager.
Portfolio
Managers: The following individuals serve as the Portfolio’s portfolio
managers:
Portfolio
Manager |
|
Primary
Title |
Stephen
Ventimiglia |
|
Vice
Chairman, Chief Investment Officer and Chief Economist of Saratoga Capital
Management, LLC, and has managed the Portfolio since 2020. |
Bruce
E. Ventimiglia |
|
Chairman,
President and Chief Executive Officer of Saratoga Capital Management, LLC,
and has managed the Portfolio since 2020. |
Jonathan
W. Ventimiglia |
|
Chief
Financial Officer and Chief Compliance Officer of Saratoga Capital
Management, LLC, and has managed the Portfolio since
2020. |
Purchase
and Sale of Portfolio Shares: There is no minimum initial investment for the
Portfolio and generally there is a $10,000 minimum initial investment in the
Trust. The minimum subsequent investment in the Trust is $100. There is no
minimum subsequent investment for the Portfolio. There is no minimum initial
investment and no minimum subsequent investment for employee benefit plans,
mutual fund platform programs, supermarket programs, associations and individual
retirement accounts. You may purchase and redeem shares of the Portfolio on any
day that the New York Stock Exchange (“NYSE”) is open. Redemption requests may
be made in writing, by telephone, or through a financial intermediary and will
be paid by check or wire transfer.
Tax
Information: Dividends and capital gain distributions you receive from the
Portfolio, whether you reinvest your distributions in additional Portfolio
shares or receive them in cash, are taxable to you at either ordinary income or
capital gain tax rates unless you are investing through a tax-free plan, in
which case your distributions generally will be taxed when withdrawn from the
tax deferred account.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase
Portfolio shares through a broker-dealer or other financial intermediary (such
as a bank), the Manager and/or the Portfolio’s distributor may pay the
intermediary for the sale of Portfolio shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Portfolio over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
PORTFOLIO
SUMMARY: INVESTMENT QUALITY BOND PORTFOLIO
Investment
Objective:
The
Investment Quality Bond Portfolio seeks current income and reasonable stability
of principal.
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
Investment
Quality Bond Portfolio |
Shareholder
Fees (fees paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
Annual
Portfolio Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment) |
|
|
Management
Fees |
|
0.55% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
1.01% |
Acquired
Fund Fees and Expenses (1) |
|
0.12% |
Total
Annual Portfolio Operating Expenses |
|
2.68% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs, if you held or sold your shares,
at the end of each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$371 |
|
$832 |
|
$1,420 |
|
$3,012 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$271 |
|
$832 |
|
$1,420 |
|
$3,012 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was 103% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio is a “fund of funds.” The Portfolio’s main investment strategy is to
invest in unaffiliated registered investment companies and exchange-traded funds
(“ETFs”) (the “Underlying Funds”).
The
Portfolio will normally invest at least 80% of its total assets in Underlying
Funds which invest in investment grade fixed-income securities or mortgage
pass-through securities rated within the four highest grades by Moody’s
Investors Service, Inc. (“Moody’s”), Standard & Poor’s Corporation
(“S&P”) or Fitch Inc. (“Fitch”) or, if not rated, securities considered by
an Underlying Fund’s adviser to be of comparable quality.
In deciding which Underlying Funds to buy, hold or sell in pursuing the
Portfolio’s investment objective, the Manager considers economic developments,
interest rate trends and performance history of an Underlying Fund’s management
team, among other factors. The average maturity of the securities held by an
Underlying Fund will generally range from three to ten years. Mortgage
pass-through securities are mortgage-backed securities that represent a
participation interest in a pool of residential mortgage loans originated by the
United States government or private lenders such as banks. They differ from
conventional debt securities, which provide for periodic payment of interest in
fixed amounts and principal payments at maturity or on specified call dates.
Mortgage pass-through securities provide for monthly payments that are a
“pass-through” of the monthly interest and principal payments made by the
individual borrowers on the pooled mortgage loans.
An
Underlying Fund may invest in mortgage pass-through securities that are issued
or guaranteed by Ginnie Mae, Fannie Mae or Freddie Mac. Ginnie Mae securities
are backed by the full faith and credit of the United States government. Fannie
Mae and Freddie Mac securities are not backed by the full faith and credit of
the United States government, but they have the right to borrow from the U.S.
Department of the Treasury (the “Treasury”) to meet their obligations, although
the Treasury is not legally required to extend credit to the
agencies/instrumentalities.
Private
mortgage pass-through securities also can be Underlying Fund investments. They
are issued by private originators of and investors in mortgage loans, including
savings and loan associations and mortgage banks. Since private mortgage
pass-through securities typically are not guaranteed by an entity having the
credit status of a U.S. government agency, the securities generally are
structured with one or more type of credit enhancement.
In addition,
the Portfolio may invest up to 5% of its net assets in Underlying Funds that
invest in fixed-income securities of any grade, including those that are rated
lower than investment grade at the time of purchase, commonly known as “junk
bonds.”
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio’s share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investments
in Mutual Funds Risk. The Portfolio invests in Underlying Funds as a primary
strategy, so the Portfolio’s investment performance and risks are directly
related to the performance and risks of the Underlying Funds. Shareholders will
indirectly bear the expenses charged by the Underlying Funds. In addition, the
Portfolio may hold a significant percentage of the shares of an Underlying Fund.
As a result, the Portfolio’s investments in an Underlying Fund may create a
conflict of interest because a situation could occur where an action for the
Portfolio could be adverse to the interest of an Underlying Fund or vice
versa.
Exchange-Traded
Funds (ETF) Risk. Shares of ETFs have many of the same risks as direct
investments in common stocks or bonds. ETFs are typically open-end investment
companies, which may seek to track the performance of a specific index or be
actively managed. In addition, their market value is expected to rise and fall
as the value of the underlying index or other assets rises and falls. The market
value of their shares may differ from the net asset value (“NAV”) of the
particular fund. As a shareholder in an ETF (as with other investment
companies), the Portfolio would bear its ratable share of that entity’s expenses
in addition to its own fees and expenses. In addition, investments in an ETF are
subject to, among other risks, the risk that the ETF’s shares may trade at a
discount or premium relative to the NAV of the shares, especially during periods
of market volatility or stress, causing investors to pay significantly more or
less than the value of the ETF’s underlying portfolio, and the listing exchange
may halt trading of the ETF’s shares. ETFs also involve the risk that an active
trading market for an ETF’s shares may not develop or be maintained. In
addition, ETFs that track particular indices may be unable to match the
performance of such underlying indices due to the temporary unavailability of
certain index securities in the secondary market or other factors, such as
discrepancies with respect to the weighting of
securities.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Fixed-Income
Securities Risk. Certain Underlying Funds invest in fixed-income securities. All
fixed-income securities are subject to two types of risk: credit risk and
interest rate risk. Credit risk refers to the possibility that the issuer of a
security will be unable or unwilling to make interest payments and/or repay the
principal on its debt. Interest rate risk refers to fluctuations in the value of
a fixed-income security resulting from changes in the general level of interest
rates.
When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. (Zero coupon securities are
typically subject to greater price fluctuations than comparable securities that
pay current interest.) Long-term fixed-income securities will rise and fall in
response to interest rate changes to a greater extent than short-term
securities. The Portfolio may face a heightened level of interest rate risk due
to certain changes in monetary policy, such as certain types of interest rate
changes by the Federal Reserve.
Certain
Underlying Funds may invest in securities issued or guaranteed by the U.S.
government or its agencies and instrumentalities (such as securities issued by
the Government National Mortgage Association (Ginnie Mae), the Federal National
Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation
(Freddie Mac)). Securities, such as those issued or guaranteed by Ginnie Mae or
the U.S. Treasury, that are backed by the full faith and credit of the United
States are guaranteed only as to the timely payment of interest and principal
when held to maturity. Notwithstanding that these securities are backed by the
full faith and credit of the United States, circumstances could arise that would
prevent the payment of principal and interest. Securities issued by U.S.
government-related organizations, such as Fannie Mae and Freddie Mac, are not
backed by the full faith and credit of the U.S. government and no assurance can
be given that the U.S. government will provide financial support. Therefore,
U.S. government-related organizations may not have the funds to meet their
payment obligations in the future.
Mortgage-Backed
Securities and Prepayment Risk. Certain Underlying Funds invest in
mortgage-backed securities. Mortgage-backed securities, such as mortgage
pass-through securities, have different risk characteristics than traditional
debt securities. For example, principal is paid back over the life of the
security rather than at maturity. Although the value of fixed-income securities
generally increases during periods of falling interest rates and decreases
during periods of rising interest rates, this is not always the case with
mortgage-backed securities. This is due to the fact that the borrower’s payments
may be prepaid at any time as well as other factors. Generally, prepayments will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. The rate of prepayments also may be influenced by
economic and other factors. Prepayment risk includes the possibility that
securities with stated interest rates may have the principal prepaid earlier
than expected, which may occur when interest rates decline. Prepayment may
expose an Underlying Fund, and thus the Portfolio, to a lower rate of return
upon reinvestment of
principal.
Investments
in mortgage-backed securities are made based upon, among other things,
expectations regarding the rate of prepayments on the underlying loans. Rates of
prepayment faster or slower than expected by the Manager could reduce an
Underlying Fund’s yield, increase the volatility of the Underlying Fund and/or
cause a decline in net asset value. Mortgage-backed securities are also subject
to extension risk, which is the risk that the issuer of such a security pays
back the principal of an obligation later than expected, which may occur when
interest rates rise. This may have an adverse effect on returns, as the value of
the security decreases when principal payments are made later than expected. In
addition, an Underlying Fund may be prevented from investing proceeds it would
otherwise have received at a given time at the higher prevailing interest rates.
Certain mortgage-backed securities may be more volatile and less liquid than
other traditional types of debt securities. In addition, an unexpectedly high
rate of defaults on the mortgages held by a mortgage pool may adversely affect
the value of a mortgage-backed security and could result in losses to an
Underlying Fund. The risk of such defaults is generally higher in the case of
mortgage pools that include subprime mortgages. The risks associated with
mortgage-backed securities typically become elevated during periods of
distressed economic, market, health and labor conditions. In particular,
increased levels of unemployment, delays and delinquencies in payments of
mortgage and rent obligations, and uncertainty regarding the effects and extent
of government intervention with respect to mortgage payments and other economic
matters may adversely affect the Portfolio’s investments in mortgage-backed
securities.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Manager believes is
representative of its full value or that it may even go down in
price.
Liquidity
Risk. The Portfolio and/or an Underlying Fund may hold illiquid securities that
it is unable to sell at the preferred time or price and could lose its entire
investment in such securities. Investments with an active trading market or that
the Manager otherwise deems liquid could become illiquid before the Portfolio
can exit its positions. The liquidity of the Portfolio’s assets may change over
time.
Limited
Holdings Risk. The Portfolio may have a relatively high percentage of assets in
a single or small number of issuers or Underlying Funds. As a result, a decline
in the value of a single issuer or Underlying Fund could cause the Portfolio’s
overall value to decline to a greater degree than if the Portfolio invested in a
larger number of issuers and/or Underlying
Funds.
Portfolio
Turnover Risk. The frequency of the Portfolio’s transactions will vary from year
to year. Increased portfolio turnover may result in higher brokerage
commissions, dealer mark-ups and other transaction costs and may result in
taxable capital gains. Higher costs associated with increased portfolio turnover
may offset gains in the Portfolio’s
performance.
Management
Risk. The performance of the Portfolio also will depend on whether the Manager
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with an index of
funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the future.
The returns in the table assume you sold your shares at the end of each
period and you were charged a contingent deferred sales charge. Of course, if
you did not sell your shares at the end of the period, your return would be
higher. You may obtain the Portfolio’s updated performance information by
calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
-1.87% |
2014 |
0.02% |
2015 |
-0.89% |
2016 |
1.15% |
2017 |
0.02% |
2018 |
-1.26% |
2019 |
2.82% |
2020 |
2.36% |
2021 |
-2.70% |
2022 |
-3.54% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 2.14% (quarter ended March 31, 2016) and the
lowest return for a calendar quarter was -1.93% (quarter ended March 31, 2022). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was -1.30%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
Investment
Quality Bond Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes |
|
-4.54% |
|
-0.50% |
|
-0.41% |
Return
After Taxes on Distributions |
|
-4.54% |
|
-0.66% |
|
-0.62% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-2.69% |
|
-0.42% |
|
-0.35% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
Bloomberg
Intermediate U.S. Government/Credit Bond Index |
|
-8.23% |
|
0.73% |
|
1.12% |
Lipper
Short-Intermediate Investment Grade Debt Funds Index |
|
-6.03% |
|
1.06% |
|
1.25% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC (the
“Manager”) serves as the Portfolio’s Manager.
Portfolio
Managers: The following individuals serve as
the Portfolio’s portfolio managers:
Portfolio
Manager |
|
Primary
Title |
Stephen
Ventimiglia |
|
Vice Chairman, Chief
Investment Officer and Chief Economist of Saratoga Capital Management,
LLC, and has managed the Portfolio since 2018. |
Bruce E.
Ventimiglia |
|
Chairman, President and
Chief Executive Officer of Saratoga Capital Management, LLC, and has
managed the Portfolio since 2018. |
Jonathan W. Ventimiglia
|
|
Chief Financial Officer
and Chief Compliance Officer of Saratoga Capital Management, LLC, and has
managed the Portfolio since 2018. |
Purchase
and Sale of Portfolio Shares: There is generally a $250 minimum initial
investment for the Portfolio and generally there is a $10,000 minimum initial
investment in the Trust. The minimum subsequent investment in the Trust is $100.
There is no minimum subsequent investment for the Portfolio. There is no minimum
initial investment and no minimum subsequent investment for employee benefit
plans, mutual fund platform programs, supermarket programs, associations and
individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange (“NYSE”) is open.
Redemption requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: Dividends and capital gain
distributions you receive from the Portfolio, whether you reinvest your
distributions in additional Portfolio shares or receive them in cash, are
taxable to you at either ordinary income or capital gain tax rates unless you
are investing through a tax-free plan, in which case your distributions
generally will be taxed when withdrawn from the tax deferred
account.
Payments to
Broker-Dealers and Other Financial Intermediaries: If you purchase Portfolio shares through a
broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PORTFOLIO
SUMMARY: MUNICIPAL BOND PORTFOLIO
Investment
Objective:
The
Municipal Bond Portfolio seeks a high level of interest income that is excluded
from federal income taxation to the extent consistent with prudent investment
management and the preservation of capital.
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
Municipal
Bond
Portfolio |
Shareholder
Fees (fees paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
Annual
Portfolio Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment) |
|
|
Management
Fees |
|
0.55% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
2.51% |
Acquired
Fund Fees and Expenses (1) |
|
0.19% |
Total
Annual Portfolio Operating Expenses |
|
4.25% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs, if you held or sold your shares,
at the end of each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$527 |
|
$1,289 |
|
$2,165 |
|
$4,413 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$427 |
|
$1,289 |
|
$2,165 |
|
$4,413 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was 101% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio is a “fund of funds.” The Portfolio’s main investment strategy is to
invest in unaffiliated registered investment companies and exchange-traded funds
(“ETFs”) (the “Underlying Funds”).
As
a matter of fundamental policy, the Portfolio will normally invest at least 80%
of its total assets in securities that pay interest exempt from federal income
taxes. The Manager generally invests the Portfolio’s
assets in Underlying Funds that invest in municipal obligations. There are no
maturity limitations on the securities held by the Underlying Funds. Municipal
obligations are bonds, notes or short-term commercial paper issued by state
governments, local governments and their respective agencies. In pursuing the
Portfolio’s investment objective, the Manager has considerable leeway in
deciding which Underlying Funds it buys, holds or sells on a day-to-day
basis.
The
Underlying Fund’s adviser will invest primarily in municipal bonds rated within
the four highest grades by Moody’s Investors Service, Inc. (“Moody’s”), Standard
& Poor’s Corporation (“S&P”) or Fitch Inc. (“Fitch”) or, if not rated,
of comparable quality in the opinion of an Underlying Fund’s adviser.
An
Underlying Fund may invest without limit in municipal obligations such as
private activity bonds that pay interest income subject to the “alternative
minimum tax,” although the Portfolio does not currently expect to invest more
than 20% of its total assets in such instruments. Some shareholders may have to
pay tax on distributions of this income from the Portfolio. Municipal bonds,
notes and commercial paper are commonly classified as either “general
obligation” or “revenue”. General obligation bonds, notes and commercial paper
are secured by the issuer’s faith and credit, as well as its taxing power, for
payment of principal and interest. Revenue bonds, notes and commercial paper,
however, are generally payable from a specific source of income. They are issued
to fund a wide variety of public and private projects in sectors such as
transportation, education and industrial development. Included within the
revenue category are participations in lease obligations. An Underlying Fund’s
municipal obligation investments may include zero coupon securities, which are
purchased at a discount and make no interest payments until
maturity.
Principal
Investment Risks:
There is no assurance that the Portfolio will
achieve its investment objective. The Portfolio share price will fluctuate with
changes in the market value of its portfolio securities. When you sell your
Portfolio shares, they may be worth less than what you paid for them and,
accordingly, you can lose money investing in this Portfolio. Shares of the
Portfolio are not bank deposits and are not guaranteed or insured by the Federal
Deposit Insurance Corporation or any other government agency.
Investments in Mutual Funds
Risk. The Portfolio invests in Underlying Funds as a primary strategy, so the
Portfolio’s investment performance and risks are directly related to the
performance and risks of the Underlying Funds. Shareholders will indirectly bear
the expenses charged by the Underlying Funds. In addition, the Portfolio may
hold a significant percentage of the shares of an Underlying Fund. As a result,
the Portfolio’s investments in an Underlying Fund may create a conflict of
interest because a situation could occur where an action for the Portfolio could
be adverse to the interest of an Underlying Fund or vice
versa.
Exchange-Traded
Funds (ETF) Risk. Shares of ETFs have many of the same risks as direct
investments in common stocks or bonds. ETFs are typically open-end investment
companies, which may seek to track the performance of a specific index or be
actively managed. In addition, their market value is expected to rise and fall
as the value of the underlying index or other assets rises and falls. The market
value of their shares may differ from the net asset value (“NAV”) of the
particular fund. As a shareholder in an ETF (as with other investment
companies), the Portfolio would bear its ratable share of that entity’s expenses
in addition to its own fees and expenses. In addition, investments in an ETF are
subject to, among other risks, the risk that the ETF’s shares may trade at a
discount or premium relative to the NAV of the shares, especially during periods
of market volatility or stress, causing investors to pay significantly more or
less than the value of the ETF’s underlying portfolio, and the listing exchange
may halt trading of the ETF’s shares. ETFs also involve the risk that an active
trading market for an ETF’s shares may not develop or be maintained. In
addition, ETFs that track particular indices may be unable to match the
performance of such underlying indices due to the temporary unavailability of
certain index securities in the secondary market or other factors, such as
discrepancies with respect to the weighting of
securities.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Municipal
Bond Risk. The risk of a municipal obligation generally depends on the financial
and credit status of the issuer. Changes in a municipality’s financial health
may make it difficult for the municipality to make interest and principal
payments when due. This could decrease the Portfolio’s income or hurt the
ability to preserve capital and liquidity. Under some circumstances, municipal
obligations might not pay interest unless the state legislature or municipality
authorizes money for that
purpose.
Municipal
obligations may be more susceptible to downgrades or defaults during recessions
or similar periods of economic stress. In addition, since some municipal
obligations may be secured or guaranteed by banks and other institutions, the
risk to the Portfolio could increase if the banking or financial sector suffers
an economic downturn and/or if the credit ratings of the institutions issuing
the guarantee are downgraded or at risk of being downgraded by a national rating
organization. Such a downward revision or risk of being downgraded may have an
adverse effect on the market prices of the bonds and thus the value of the
Portfolio’s investments. In addition to being downgraded, an insolvent
municipality may file for bankruptcy. The reorganization of a municipality’s
debts may significantly affect the rights of creditors and the value of the
securities issued by the municipality and the value of the Portfolio’s
investments.
Credit and Interest Rate Risk.
An Underlying Fund may be subject to credit and interest rate risks. Municipal
obligations, like other debt securities, are subject to two types of risks:
credit risk and interest rate risk. Credit risk refers to the possibility that
the issuer of a security will be unable or unwilling to make interest payments
and/or repay the principal on its debt, and these risks are increased where
interest rates are rising. In the case of revenue bonds, notes or commercial
paper, for example, the credit risk is the possibility that the user fees from a
project or other specified revenue sources are insufficient to meet interest
and/or principal payment
obligations.
The issuers of private activity
bonds, used to finance projects in sectors such as industrial development and
pollution control, also may be negatively impacted by the general credit of the
user of the project. Lease obligations may have risks not normally associated
with general obligation or other revenue
bonds.
Certain lease obligations
contain “non-appropriation” clauses that provide that the governmental issuer
has no obligation to make future payments under the lease or contract unless
money is appropriated for such purposes by the appropriate legislative body on
an annual or other periodic basis.
Consequently, continued lease
payments on those lease obligations containing “non-appropriation” clauses are
dependent on future legislative actions. If such legislative actions do not
occur, the holders of the lease obligation may experience difficulty in
exercising their rights, including disposition of the
property.
Interest
rate risk refers to fluctuations in the value of a fixed-income security
resulting from changes in the general level of interest rates. When the general
level of interest rates goes up, the prices of most fixed-income securities go
down. When the general level of interest rates goes down, the prices of most
fixed-income securities go up. The Portfolio may face a heightened level of
interest rate risk due to certain changes in monetary policy, such as certain
types of interest rate changes by the Federal Reserve. Portfolios with longer
average portfolio durations tend to be more sensitive to interest rate changes
than portfolios with a shorter average duration. Additionally, changes in
monetary policy may exacerbate risks associated with changing interest rates.
During periods when interest rates are low or there are negative interest rates,
the Portfolio’s yield (and total return) also may be low or otherwise adversely
affected or the Portfolio may be unable to maintain positive returns. Credit
ratings may not be an accurate assessment of liquidity or credit risk. Although
credit quality may not accurately reflect the true credit risk of an instrument,
a change in the credit quality rating of an instrument or an issuer can have a
rapid, adverse effect on the instrument’s liquidity and make it more difficult
for a Portfolio to sell at an advantageous price or time. Longer term bonds and
zero coupon securities are typically subject to greater price fluctuations than
comparable securities that pay current interest. Generally, the longer the
average duration of the bonds in the Portfolio, the more the Portfolio’s share
price will fluctuate in response to interest rate
changes.
An Underlying Fund is not
limited as to the maturities of the municipal obligations in which it may
invest. Thus, a rise in the general level of interest rates may cause the price
of its portfolio securities to fall
substantially.
Investments in municipal bonds
in the fourth highest grade are considered speculative. The ratings of municipal
bonds do not ensure the stability or safety of an Underlying Fund’s, and thus
the Portfolio’s, investments.
Zero-Coupon Bond Risk. The
market value of a zero-coupon bond is generally more volatile than the market
value of other fixed income securities with similar maturities that pay interest
periodically.
Tax Risk. There is no guarantee
that the Portfolio’s income will be exempt from federal or state income taxes.
Events occurring after the date of issuance of a municipal bond or after an
Underlying Fund’s acquisition of a municipal bond may result in a determination
that interest on that bond is includible in gross income for federal income tax
purposes retroactively to its date of issuance. Such a determination may cause a
portion of prior distributions by the Portfolio to its shareholders to be
taxable to those shareholders in the year of receipt. Federal or state changes
in income or alternative minimum tax rates or in the tax treatment of municipal
bonds may make municipal bonds less attractive as investments and cause them to
lose value. An Underlying Fund may invest without limit in municipal obligations
that pay interest income subject to the “alternative minimum tax,” although the
Portfolio does not currently expect to invest more than 20% of its total assets
in such
instruments.
Issuer-Specific Risk. The price
of an individual security or particular type of security can be more volatile
than the market as a whole and can fluctuate differently than the market as a
whole. An individual issuer’s securities can rise or fall dramatically with
little or no warning based upon such things as a better (or worse) than expected
earnings report, news about the development of a promising product, or the loss
of key management personnel. There is also a risk that the price of a security
may never reach the level that the Manager believes is representative of its
full value or that it may even go down in
price.
Liquidity
Risk. The Portfolio and/or an Underlying Fund may hold illiquid securities that
it is unable to sell at the preferred time or price and could lose its entire
investment in such securities. Investments with an active trading market or that
the Manager otherwise deems liquid could become illiquid before the Portfolio
can exit its positions. The liquidity of the Portfolio’s assets may change over
time.
Limited
Holdings Risk. The Portfolio may have a relatively high percentage of assets in
a single or small number of issuers or Underlying Funds. As a result, a decline
in the value of a single issuer or Underlying Fund could cause the Portfolio’s
overall value to decline to a greater degree than if the Portfolio invested in a
larger number of issuers and/or Underlying
Funds.
Portfolio
Turnover Risk. The frequency of the Portfolio’s transactions will vary from year
to year. Increased portfolio turnover may result in higher brokerage
commissions, dealer mark-ups and other transaction costs and may result in
taxable capital gains. Higher costs associated with increased portfolio turnover
may offset gains in the Portfolio’s
performance.
Management
Risk. The performance of the Portfolio also will depend on whether the Manager
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with an index of
funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the future.
The returns in the table assume you sold your shares at the end of each
period and you were charged a contingent deferred sales charge. Of course, if
you did not sell your shares at the end of the period, your return would be
higher. You may obtain the Portfolio’s updated performance information by
calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Return |
2013 |
-2.93% |
2014 |
1.60% |
2015 |
0.35% |
2016 |
-2.03% |
2017 |
2.01% |
2018 |
-2.97% |
2019 |
0.99% |
2020 |
0.88% |
2021 |
-2.06% |
2022 |
-3.61% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 2.00% (quarter ended June 30, 2016) and the
lowest return for a calendar quarter was -3.63% (quarter ended December 31, 2016). For
the period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was -3.04%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
Municipal
Bond Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes |
|
-4.61% |
|
-1.37% |
|
-0.80% |
Return
After Taxes on Distributions |
|
-4.61% |
|
-1.41% |
|
-1.09% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-2.73% |
|
-1.05% |
|
-0.67% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
Bloomberg
Municipal Bond Index |
|
-8.53% |
|
1.25% |
|
2.13% |
Lipper
Intermediate Municipal Debt Funds Index |
|
-7.51% |
|
1.08% |
|
1.67% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC (the “Manager”) serves as the Portfolio’s
Manager.
Portfolio
Managers: The following individuals serve as the Portfolio’s portfolio
managers:
Portfolio
Manager |
|
Primary
Title |
Stephen
Ventimiglia |
|
Vice
Chairman, Chief Investment Officer and Chief Economist of Saratoga Capital
Management, LLC, and has managed the Portfolio since 2018. |
Bruce
E. Ventimiglia |
|
Chairman,
President and Chief Executive Officer of Saratoga Capital Management, LLC,
and has managed the Portfolio since 2018. |
Jonathan
W. Ventimiglia |
|
Chief
Financial Officer and Chief Compliance Officer of Saratoga Capital
Management, LLC, and has managed the Portfolio since
2018. |
Purchase
and Sale of Portfolio Shares: There is generally a $250 minimum initial
investment for the Portfolio and generally there is a $10,000 minimum initial
investment in the Trust. The minimum subsequent investment in the Trust is $100.
There is no minimum subsequent investment for the Portfolio. There is no minimum
initial investment and no minimum subsequent investment for employee benefit
plans, mutual fund platform programs, supermarket programs, associations and
individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange (“NYSE”) is open.
Redemption requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: It is anticipated that the
Portfolio’s distributions normally will be exempt from federal income taxes, but
not including federal alternative minimum tax. However, a portion of the
Portfolio’s distributions may not qualify as exempt. Interest, dividends and all
capital gains may be subject to federal, state and federal alternative minimum
tax, unless you are investing through a tax-free plan, in which case your
distributions generally will be taxed when withdrawn from the tax deferred
account.
Payments to
Broker-Dealers and Other Financial Intermediaries: If you purchase Portfolio shares through a
broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PORTFOLIO
SUMMARY: LARGE CAPITALIZATION VALUE PORTFOLIO
Investment
Objective:
The
Large Capitalization Value Portfolio seeks total return consisting of capital
appreciation and dividend income.
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
Large
Capitalization Value Portfolio |
Shareholder
Fees (fees paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
Annual
Portfolio Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment) |
|
|
Management
Fees |
|
0.65% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
1.00% |
Acquired
Fund Fees and Expenses (1) |
|
0.01% |
Total
Annual Portfolio Operating Expenses |
|
2.66% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs, if you held or sold your shares,
at the end of each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$369 |
|
$826 |
|
$1,410 |
|
$2,993 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$269 |
|
$826 |
|
$1,410 |
|
$2,993 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was 90% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio will normally invest at least 80% of its total assets in a diversified
portfolio of equity securities issued by U.S. issuers with total market
capitalizations of $5 billion or greater at the time of
purchase. Equity securities include common stocks,
preferred stocks, securities convertible into common stock and warrants. In
determining which securities to buy, hold or sell, the Portfolio’s Adviser
focuses its investment selection on finding high quality companies with
compelling valuations, measurable catalysts to unlock value and above-average
long-term earnings growth potential. In general, the Adviser looks for companies
that have value-added product lines to help preserve pricing power, a strong
history of free cash flow generation, strong balance sheets, competent
management with no record of misleading shareholders and financially sound
customers. Independent research is used to produce estimates for future
earnings, which are inputs into the Adviser’s proprietary valuation model. The
Adviser focuses its investments where it has a differentiated view and there
exists, in its view, significant price appreciation potential to its estimate of
the stocks’ intrinsic value.
Under
adverse market conditions, the Portfolio may also make temporary investments in
investment grade debt securities. Such investment strategies could result in the
Portfolio not achieving its investment objective.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities.
When you
sell your Portfolio shares, they may be worth less than what you paid for them
and, accordingly, you can lose money investing in this Portfolio. Shares of the
Portfolio are not bank deposits and are not guaranteed or insured by the Federal
Deposit Insurance Corporation or any other government agency.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. In general, stock values fluctuate in response to activities specific to
the company as well as general market, economic and political conditions. Stock
prices can fluctuate widely in response to these factors. Common stockholders
are subordinate to debt or preferred stockholders in a company’s capital
structure in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Value Style
Investing Risk. Value investing involves buying stocks that are out of favor
and/or undervalued in comparison to their peers or their prospects for growth.
Typically, their valuation levels are lower than those of growth stocks. Because
different types of stocks go out of favor with investors depending on market and
economic conditions, the Portfolio’s return may be adversely affected during
market downturns and when value stocks are out of
favor.
Convertible
Securities Risk. The Portfolio’s investments in convertible securities subject
the Portfolio to the risks associated with both fixed-income securities and
common stocks. To the extent that a convertible security’s investment value is
greater than its conversion value, its price will be likely to increase when
interest rates fall and decrease when interest rates rise, as with a
fixed-income security. If the conversion value exceeds the investment value, the
price of the convertible security will tend to fluctuate directly with the price
of the underlying equity
security.
Preferred
Stock Risk. Preferred stocks involve credit risk and certain other risks.
Certain preferred stocks contain provisions that allow an issuer under certain
conditions to skip distributions (in the case of “non-cumulative” preferred
stocks) or defer distributions (in the case of “cumulative” preferred stocks).
If the Portfolio owns a preferred stock on which distributions are deferred, the
Portfolio may nevertheless be required to report income for tax purposes while
it is not receiving distributions on that security. Preferred stocks are
subordinated to bonds and other debt instruments in a company’s capital
structure in terms of priority to corporate income and liquidation payments, and
therefore will be subject to greater credit risk than those debt
instruments.
Warrants
Risk. The holder of a warrant has the right to purchase a given number of shares
of a particular issuer at a specified price until expiration of the warrant.
Such investments can provide a greater potential for profit or loss than an
equivalent investment in the underlying security. Prices of warrants do not
necessarily move in tandem with the prices of the underlying securities, and are
speculative investments. Warrants pay no dividends and confer no rights other
than a purchase option. If a warrant is not exercised by the date of its
expiration, the Portfolio will lose its entire investment in such
warrant.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Adviser believes is
representative of its full value or that it may even go down in
price.
Adviser
Risk. The performance of the Portfolio also will depend on whether the Adviser
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with an index of
funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the
future. The returns in the table assume you sold your
shares at the end of each period and you were charged a contingent deferred
sales charge. Of course, if you did not sell your shares at the end of the
period, your return would be higher. You may obtain the Portfolio’s updated
performance information by calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
39.10% |
2014 |
10.89% |
2015 |
-7.72% |
2016 |
8.06% |
2017 |
7.60% |
2018 |
-18.41% |
2019 |
39.52% |
2020 |
6.86% |
2021 |
27.93% |
2022 |
-7.94% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 24.16% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -32.09% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was 5.13%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
Large
Capitalization Value Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes |
|
-8.94% |
|
7.46% |
|
9.02% |
Return
After Taxes on Distributions |
|
-11.57% |
|
4.42% |
|
7.14% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-3.69% |
|
5.03% |
|
6.84% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
S&P
500®/Citigroup Value Index |
|
-5.22% |
|
7.58% |
|
10.86% |
Morningstar
Large Value Average |
|
-5.90% |
|
7.03% |
|
10.23% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC (the “Manager”) serves as the Portfolio’s
Manager.
Adviser:
M.D. Sass, LLC (“M.D. Sass” or the “Adviser”) has served as the Adviser to
the Portfolio since August 2008. The Portfolio is managed by M.D. Sass’s
team of equity portfolio analysts. Ari Sass, President of M.D. Sass, has primary
responsibility for the day-to-day management of the Portfolio, which he assumed
in January 2019. Previously Mr. Sass served as Co-Portfolio Manager since
January 2018.
Purchase
and Sale of Portfolio Shares: There is generally a $250 minimum initial
investment for the Portfolio and generally there is a $10,000 minimum initial
investment in the Trust. The minimum subsequent investment in the Trust is $100.
There is no minimum subsequent investment for the Portfolio. There is no minimum
initial investment and no minimum subsequent investment for employee benefit
plans, mutual fund platform programs, supermarket programs, associations and
individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange (“NYSE”) is open.
Redemption requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: Dividends and capital gain
distributions you receive from the Portfolio, whether you reinvest your
distributions in additional Portfolio shares or receive them in cash, are
taxable to you at either ordinary income or capital gain tax rates unless you
are investing through a tax-free plan, in which case your distributions
generally will be taxed when withdrawn from the tax deferred
account.
Payments to
Broker-Dealers and Other Financial Intermediaries: If you purchase Portfolio shares through a
broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PORTFOLIO
SUMMARY: LARGE CAPITALIZATION GROWTH PORTFOLIO
Investment
Objective:
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
|
|
|
Large
Capitalization Growth Portfolio |
Shareholder
Fees (fees paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
|
|
|
Annual
Portfolio Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment) |
|
|
Management
Fees |
|
0.65% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
0.97% |
Total
Annual Portfolio Operating Expenses |
|
2.62% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs, if you held or sold your shares,
at the end of each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$365 |
|
$814 |
|
$1,390 |
|
$2,954 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$265 |
|
$814 |
|
$1,390 |
|
$2,954 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was 74% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio will normally invest at least 80% of its total assets in a portfolio
of equity securities issued by U.S. issuers with total market capitalizations of
$5 billion or more. Equity securities include common
stocks, preferred stocks, securities convertible into common stock and
warrants.
The Adviser
employs quantitative and qualitative analysis that seeks to identify high
quality companies that it believes have the ability to accelerate earnings
growth and exceed investor expectations. The Adviser’s selection process
consists of three steps. First, the Adviser reviews a series of screens
utilizing the Adviser’s investment models, which are based on fundamental
characteristics, designed to eliminate companies that the Adviser’s research
shows have a high probability of underperformance. Factors considered when
reviewing the screens include a multi-factor valuation framework, earnings
quality, capital structure and financial quality. Next, securities that pass the
initial screens are then evaluated to try to identify stocks with the highest
probability of producing an earnings growth rate that exceeds investor
expectations. This process incorporates changes in earnings expectations and
earnings quality analysis. Finally, these steps produce a list of eligible
companies which are subjected to analysis by the Adviser to further understand
each company’s business prospects and earnings potential. The Adviser uses the
results of this analysis to construct the Portfolio’s security
positions.
Under
adverse market conditions, the Portfolio may also make temporary investments in
investment grade debt securities. Such investment strategies could result in the
Portfolio not achieving its investment objective.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. In general, stock values fluctuate in response to activities specific to
the company as well as general market, economic and political conditions. Stock
prices can fluctuate widely in response to these factors. Common stockholders
are subordinate to debt or preferred stockholders in a company’s capital
structure in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Growth Style
Investing Risk. Growth investing involves buying stocks that have relatively
high price-to-earnings ratios. Growth stocks may be more volatile than other
stocks because they are generally more sensitive to investor perceptions and
market moves. During periods of growth stock underperformance, the Portfolio’s
performance may
suffer.
Convertible
Securities Risk. The Portfolio’s investments in convertible securities subject
the Portfolio to the risks associated with both fixed-income securities and
common stocks. To the extent that a convertible security’s investment value is
greater than its conversion value, its price will be likely to increase when
interest rates fall and decrease when interest rates rise, as with a
fixed-income security. If the conversion value exceeds the investment value, the
price of the convertible security will tend to fluctuate directly with the price
of the underlying equity
security.
Preferred
Stock Risk. Preferred stocks involve credit risk and certain other risks.
Certain preferred stocks contain provisions that allow an issuer under certain
conditions to skip distributions (in the case of “non-cumulative” preferred
stocks) or defer distributions (in the case of “cumulative” preferred stocks).
If the Portfolio owns a preferred stock on which distributions are deferred, the
Portfolio may nevertheless be required to report income for tax purposes while
it is not receiving distributions on that security. Preferred stocks are
subordinated to bonds and other debt instruments in a company’s capital
structure in terms of priority to corporate income and liquidation payments, and
therefore will be subject to greater credit risk than those debt
instruments.
Warrants
Risk. The holder of a warrant has the right to purchase a given number of shares
of a particular issuer at a specified price until expiration of the warrant.
Such investments can provide a greater potential for profit or loss than an
equivalent investment in the underlying security. Prices of warrants do not
necessarily move in tandem with the prices of the underlying securities, and are
speculative investments. Warrants pay no dividends and confer no rights other
than a purchase option. If a warrant is not exercised by the date of its
expiration, the Portfolio will lose its entire investment in such
warrant.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Adviser believes is
representative of its full value or that it may even go down in
price.
Technology
Sector Risk. Because of its investments, the Portfolio’s performance is affected
by events occurring in the technology sector. Companies in the same industry
often face similar obstacles, issues and regulatory burdens. As a result, the
securities owned by the Portfolio may react similarly to and move in unison with
one another. Because technology continues to advance at an accelerated rate, and
the number of companies and product offerings continues to expand, these
companies could become increasingly sensitive to short product cycles,
aggressive pricing and intense competition. Many technology companies sell stock
before they have a commercially viable product, and may be acutely susceptible
to problems relating to bringing their products to market. Additionally, many
technology companies have very high price/earnings ratios, high price volatility
and high personnel turnover due to severe labor shortages for skilled technology
professionals.
Adviser
Risk. The performance of the Portfolio also will depend on whether the Adviser
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with an index of
funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the future.
The returns in the table assume you sold your shares at the end of each
period and you were charged a contingent deferred sales charge. Of course, if
you did not sell your shares at the end of the period, your return would be
higher. You may obtain the Portfolio’s updated performance information by
calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
34.89% |
2014 |
10.80% |
2015 |
8.99% |
2016 |
-0.98% |
2017 |
29.07% |
2018 |
-1.58% |
2019 |
25.27% |
2020 |
27.39% |
2021 |
31.01% |
2022 |
-29.41% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 26.47% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -20.86% (quarter ended June 30, 2022). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was 21.45%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
Large
Capitalization Growth Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes (1) |
|
-30.41% |
|
7.75% |
|
11.70% |
Return
After Taxes on Distributions (1) |
|
-33.03% |
|
0.96% |
|
6.54% |
Return
After Taxes on Distributions and Sale of Portfolio Shares(1) |
|
-15.96% |
|
5.28% |
|
8.55% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
S&P
500®/Citigroup Growth Index |
|
-29.40% |
|
10.28% |
|
13.59% |
Morningstar
Large Growth Average |
|
-29.91% |
|
8.30% |
|
11.77% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts.
After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC (the “Manager”) serves as the Portfolio’s
Manager.
Adviser:
Smith Group Asset Management, LLC (“SGAM” or the “Adviser”) or its
predecessor has served as the Adviser to the Portfolio since December 29,
2015. Stephen S. Smith, CFA, Chief Executive Officer and Chairman of the
Investment Committee of the Adviser, and John D. Brim, CFA, President and Chief
Investment Officer, are co-portfolio managers responsible for the day-to-day
management of the Portfolio. Prior to founding the Adviser in 1995, Mr. Smith
held a number of senior investment positions at Bank of America. Mr. Brim joined
the Adviser in March 1998, and prior to that he was a manager within the
institutional investment consulting group of Deloitte & Touche,
LLP.
Purchase
and Sale of Portfolio Shares: There is generally a $250 minimum initial
investment for the Portfolio and generally there is a $10,000 minimum initial
investment in the Trust. The minimum subsequent investment in the Trust is $100.
There is no minimum subsequent investment for the Portfolio. There is no minimum
initial investment and no minimum subsequent investment for employee benefit
plans, mutual fund platform programs, supermarket programs, associations and
individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange (“NYSE”) is open.
Redemption requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: Dividends and capital gain
distributions you receive from the Portfolio, whether you reinvest your
distributions in additional Portfolio shares or receive them in cash, are
taxable to you at either ordinary income or capital gain tax rates unless you
are investing through a tax-free plan, in which case your distributions
generally will be taxed when withdrawn from the tax deferred
account.
Payments to
Broker-Dealers and Other Financial Intermediaries: If you purchase Portfolio shares through a
broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PORTFOLIO
SUMMARY: MID CAPITALIZATION PORTFOLIO
Investment
Objective:
The
Mid Capitalization Portfolio seeks long-term capital
appreciation.
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
|
|
|
Mid
Capitalization
Portfolio
|
Shareholder
Fees (fees paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
|
|
|
Annual
Portfolio Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment) |
|
|
Management
Fees |
|
0.75% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
0.94% |
Acquired
Fund Fees and Expenses (1) |
|
0.01% |
Total
Annual Portfolio Operating Expenses |
|
2.70% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs, if you held or sold your shares,
at the end of each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$373 |
|
$838 |
|
$1,430 |
|
$3,032 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$273 |
|
$838 |
|
$1,430 |
|
$3,032 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was 68% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio will normally invest at least 80% of its total assets in equity
securities of companies whose stock market capitalizations fall within the range
of the capitalizations in the Russell Midcap® Index at the time of
purchase. The market capitalization range of the Russell
Midcap® Index at September 30, 2023 was $451.61 million to $54.49 billion.
The Russell Midcap® Index is reconstituted annually in June of each year. Equity
securities include common stocks, preferred stocks, securities convertible into
common stocks and warrants. The Portfolio invests in securities of companies
that are believed by the Adviser to be undervalued, thereby offering
above-average potential for capital appreciation. The Portfolio may also invest
in equity securities of foreign companies.
The Adviser
invests in medium capitalization companies with a focus on total return using a
bottom-up value-oriented investment process. The Adviser seeks companies with
the following characteristics, although not all of the companies it selects will
have these attributes:
| ● |
companies
earning a positive economic margin with stable-to-improving
returns; |
| ● |
companies
valued at a discount to their asset value; and |
| ● |
companies
with an attractive dividend yield and minimal basis
risk. |
In selecting
investments, the Adviser generally employs the following strategy:
| ● |
value-driven
investment philosophy that selects stocks selling at attractive values
based upon business fundamentals, economic margin analysis, discounted
cash flow models and historical valuation
multiples. |
The Adviser
reviews companies that it believes are out-of-favor or misunderstood;
| ● |
use of
value-driven screens to create a research universe of companies with
market capitalizations of at least $1 billion;
and |
| ● |
use of
fundamental and risk analysis to construct a portfolio of securities that
the Adviser believes has an attractive return
potential. |
Under
adverse market conditions, the Portfolio may also make temporary investments in
investment grade debt securities. Such investment strategies could result in the
Portfolio not achieving its investment objective.
Principal
Investment Risks:
There is no assurance that the Portfolio will
achieve its investment objective. The Portfolio share price will fluctuate with
changes in the market value of its portfolio securities. When you sell your
Portfolio shares, they may be worth less than what you paid for them and,
accordingly, you can lose money investing in this Portfolio. Shares of the
Portfolio are not bank deposits and are not guaranteed or insured by the Federal
Deposit Insurance Corporation or any other government agency.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. In general, stock values fluctuate in response to activities specific to
the company as well as general market, economic and political conditions. Stock
prices can fluctuate widely in response to these factors. Common stockholders
are subordinate to debt or preferred stockholders in a company’s capital
structure in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Small and
Medium Capitalization Companies Risk. The Portfolio may also invest in small and
medium capitalization companies. Investing in small and medium capitalization
companies may involve more risk than is usually associated with investing in
larger, more established companies. There is typically less publicly available
information concerning small and medium capitalization companies than for
larger, more established companies. Some small and medium capitalization
companies have limited product lines, distribution channels and financial and
managerial resources and tend to concentrate on fewer geographical markets than
do larger companies. Also, because small and medium capitalization companies
normally have fewer shares outstanding than larger companies and trade less
frequently, it may be more difficult for the Portfolio to buy and sell
significant amounts of shares without an unfavorable impact on prevailing market
prices.
Foreign
Securities Risk. The Portfolio’s investments in foreign securities (including
depositary receipts) involve risks in addition to the risks associated with
domestic securities. One additional risk is currency risk. While the price of
Portfolio shares is quoted in U.S. dollars, the Portfolio generally converts
U.S. dollars to a foreign market’s local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security’s local price remains
unchanged.
Foreign
securities also have risks related to economic and political developments
abroad, including expropriations, confiscatory taxation, exchange control
regulation, limitations on the use or transfer of Portfolio assets and any
effects of foreign social, economic or political instability. In particular,
adverse political or economic developments in a geographic region or a
particular country in which the Portfolio invests could cause a substantial
decline in the value of its portfolio securities. Certain foreign markets may
rely heavily on particular industries or foreign capital and are more vulnerable
to diplomatic developments, the imposition of economic sanctions against a
particular country or countries, organizations, entities and/or individuals,
changes in international trading patterns, trade barriers and other
protectionist or retaliatory measures. Economic sanctions could, among other
things, effectively restrict or eliminate the Portfolio’s ability to purchase or
sell securities or groups of securities for a substantial period of time. The
severity of sanctions and related measures, such as retaliatory actions, vary in
scope and are unpredictable. The imposition of sanctions could cause a decline
in the value and/or liquidity of securities issued by the sanctioned country or
companies located in or economically tied to the sanctioned country,
significantly delay or prevent the settlement of securities transactions, and
significantly impact the Portfolio’s liquidity and performance. International
trade barriers or economic sanctions against foreign countries, organizations,
entities and/or individuals, may adversely affect the Portfolio’s foreign
holdings or exposures. Investments in foreign markets may also be adversely
affected by governmental actions such as the imposition of capital controls,
nationalization of companies or industries, expropriation of assets, or the
imposition of punitive taxes. Governmental actions can have a significant effect
on the economic conditions in foreign countries, which also may adversely affect
the value and liquidity of the Portfolio’s
investments.
For example,
the governments of certain countries may prohibit or impose substantial
restrictions on foreign investing in their capital markets or in certain sectors
or industries. In addition, a foreign government may limit or cause delay in the
convertibility or repatriation of its currency which would adversely affect the
U.S. dollar value and/or liquidity of investments denominated in that currency.
Any of these actions could severely affect security prices, impair the
Portfolio’s ability to purchase or sell foreign securities or transfer the
Portfolio’s assets back into the U.S., or otherwise adversely affect the
Portfolio’s operations.
Certain
foreign investments may become less liquid in response to market developments or
adverse investor perceptions, or become illiquid after purchase by the
Portfolio, particularly during periods of market turmoil. Certain foreign
investments may become illiquid when, for instance, there are few, if any,
interested buyers and sellers or when dealers are unwilling to make a market for
certain securities. When the Portfolio holds illiquid investments, its portfolio
may be harder to value, especially in changing markets. Foreign companies, in
general, are not subject to the regulatory requirements of U.S. companies and
may have less stringent investor protections and disclosure standards and, as
such, there may be less publicly available information about these companies.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. In addition, in
the event of a default of any foreign debt obligations, it may be more difficult
for the Portfolio to obtain or enforce a judgment against the issuers of the
securities. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their U.S.
counterparts. Finally, differences in clearance and settlement procedures in
foreign markets may cause delays in settlements of the Portfolio’s trades
effected in those markets.
Depositary
receipts involve substantially identical risks associated with direct
investments in foreign securities. Issuers of the foreign security represented
by a depositary receipt, particularly unsponsored or unregistered depositary
receipts, may not be obligated to disclose material information in the U.S. or
to pass through to holders of such receipts voting rights with respect to the
deposited securities.
Compared to
the U.S. and other developed countries, developing or emerging countries may
have relatively unstable governments, economies based on only a few industries
and securities markets that trade a small number of securities. Prices of these
securities tend to be especially volatile and, in the past, securities in these
countries have been characterized by greater potential loss (as well as gain)
than securities of companies located in developed
countries.
Convertible
Securities Risk. The Portfolio’s investments in convertible securities subject
the Portfolio to the risks associated with both fixed-income securities and
common stocks. To the extent that a convertible security’s investment value is
greater than its conversion value, its price will be likely to increase when
interest rates fall and decrease when interest rates rise, as with a
fixed-income security. If the conversion value exceeds the investment value, the
price of the convertible security will tend to fluctuate directly with the price
of the underlying equity
security.
Preferred
Stock Risk. Preferred stocks involve credit risk and certain other risks.
Certain preferred stocks contain provisions that allow an issuer under certain
conditions to skip distributions (in the case of “non-cumulative” preferred
stocks) or defer distributions (in the case of “cumulative” preferred stocks).
If the Portfolio owns a preferred stock on which distributions are deferred, the
Portfolio may nevertheless be required to report income for tax purposes while
it is not receiving distributions on that security. Preferred stocks are
subordinated to bonds and other debt instruments in a company’s capital
structure in terms of priority to corporate income and liquidation payments, and
therefore will be subject to greater credit risk than those debt
instruments.
Warrants
Risk. The holder of a warrant has the right to purchase a given number of shares
of a particular issuer at a specified price until expiration of the warrant.
Such investments can provide a greater potential for profit or loss than an
equivalent investment in the underlying security. Prices of warrants do not
necessarily move in tandem with the prices of the underlying securities, and are
speculative investments. Warrants pay no dividends and confer no rights other
than a purchase option. If a warrant is not exercised by the date of its
expiration, the Portfolio will lose its entire investment in such
warrant.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Adviser believes is
representative of its full value or that it may even go down in
price.
Adviser
Risk. The performance of the Portfolio also will depend on whether the Adviser
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with an index of
funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the future.
The returns in the table assume you sold your shares at the end of each
period and you were charged a contingent deferred sales charge. Of course, if
you did not sell your shares at the end of the period, your return would be
higher. You may obtain the Portfolio’s updated performance information by
calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
40.19% |
2014 |
10.11% |
2015 |
-4.67% |
2016 |
4.25% |
2017 |
12.25% |
2018 |
-17.57% |
2019 |
29.06% |
2020 |
9.10% |
2021 |
19.28% |
2022 |
-12.51% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 22.04% (quarter ended December 31, 2020) and
the
lowest return for a calendar quarter was -28.37% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was -0.27%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
Mid
Capitalization Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes(1) |
|
-13.51% |
|
3.91% |
|
7.63% |
Return
After Taxes on Distributions(1) |
|
-14.09% |
|
1.49% |
|
4.97% |
Return
After Taxes on Distributions and Sale of Portfolio Shares(1) |
|
-7.58% |
|
2.78% |
|
5.68% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
Russell
Midcap® Index |
|
-17.32% |
|
7.10% |
|
10.96% |
Morningstar
Mid Capitalization Blend Average |
|
-14.01% |
|
6.29% |
|
9.81% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC (the
“Manager”) serves as the Portfolio’s Manager.
Adviser:
Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson” or the
“Adviser”) has served as the Adviser to the Portfolio since April 2006. The
Portfolio is advised by Vaughan Nelson’s Mid Cap Value team which consists of
portfolio managers and analysts.
The
portfolio managers on the team that are jointly and primarily responsible for
the day-to-day management of the Portfolio are Dennis G. Alff, CFA (lead
portfolio manager), Chad D. Fargason, PhD, and Chris D. Wallis, CFA. Dennis G.
Alff, Senior Portfolio Manager, joined Vaughan Nelson in April 2006. Dr.
Fargason, Senior Portfolio Manager, has been associated with Vaughan Nelson
since 2013 and has served the Portfolio as a Senior Portfolio Manager since
November 2013; prior to joining Vaughan Nelson, Dr. Fargason was a Director
at KKR & Co. from 2003 to 2013. Chris D. Wallis CEO/CIO has been associated
with Vaughan Nelson since 1999. Messrs. Alff and Wallis have served the
Portfolio as Senior Portfolio Managers since April 2006.
Purchase
and Sale of Portfolio Shares: There is generally a $250 minimum initial
investment for the Portfolio and generally there is a $10,000 minimum initial
investment in the Trust. The minimum subsequent investment in the Trust is $100.
There is no minimum subsequent investment for the Portfolio. There is no minimum
initial investment and no minimum subsequent investment for employee benefit
plans, mutual fund platform programs, supermarket programs, associations and
individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange (“NYSE”) is open.
Redemption requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: Dividends and capital gain
distributions you receive from the Portfolio, whether you reinvest your
distributions in additional Portfolio shares or receive them in cash, are
taxable to you at either ordinary income or capital gain tax rates unless you
are investing through a tax-free plan, in which case your distributions
generally will be taxed when withdrawn from the tax deferred
account.
Payments to
Broker-Dealers and Other Financial Intermediaries: If you purchase Portfolio shares through a
broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PORTFOLIO
SUMMARY: SMALL CAPITALIZATION PORTFOLIO
Investment
Objective:
The Small Capitalization Portfolio seeks maximum
capital appreciation.
Fees
and Expenses of the Portfolio:
This
table describes the fees and expenses that you may pay if you buy, hold and sell
shares of the Portfolio. You may be subject to other fees not reflected in the
table, such as brokerage commission and fees to financial intermediaries. In
addition, Appendix A attached to this Prospectus contains information regarding
financial intermediary-specific sales charge waivers and
discounts.
|
|
|
|
|
Small
Capitalization Portfolio |
Shareholder
Fees (fees paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
|
|
|
Annual
Portfolio Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment) |
|
|
Management
Fees |
|
0.65% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
1.16% |
Total
Annual Portfolio Operating Expenses |
|
2.81% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs, if you held or sold your shares,
at the end of each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$384 |
|
$871 |
|
$1,484 |
|
$3,138 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$284 |
|
$871 |
|
$1,484 |
|
$3,138 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was 95% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio will normally invest at least 80% of its total assets in common stocks
of companies whose stock market capitalizations fall within the range of
capitalizations in the Russell 2000® Index. The market
capitalization range of the Russell 2000® Index at September 30, 2023 was
$159.5 million to $4.2 billion. The Russell 2000® Index is reconstituted
annually at the midpoint of the calendar year. The Portfolio will also
occasionally invest a portion of its assets in mid-cap stocks that are small
relative to their industries that the Adviser believes have compelling
valuations and fundamentals, and it will not immediately sell a security that
was bought as a small-cap stock but through appreciation has become a mid-cap
stock. In selecting securities for the Portfolio, the Adviser begins with a
screening process that seeks to identify growing companies whose stocks sell at
discounted price-to-earnings and price-to-cash flow multiples. The Adviser also
attempts to discern situations where intrinsic asset values are not widely
recognized. The Adviser favors such higher-quality companies that generate
strong cash flow, provide above-average free cash flow yields and maintain sound
balance sheets. Rigorous fundamental analysis, from both a quantitative and
qualitative standpoint, is applied to all investment candidates. While the
Adviser employs a disciplined “bottom-up” approach that attempts to identify
undervalued stocks, it nonetheless is sensitive to emerging secular trends. The
Adviser does not, however, rely on macroeconomic forecasts in its stock
selection efforts and prefers to remain fully invested. Under adverse market
conditions, the Portfolio may also make temporary investments in investment
grade debt securities. Such investment strategies could result in the Portfolio
not achieving its investment objective.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. In general, stock values fluctuate in response to activities specific to
the company as well as general market, economic and political conditions. Stock
prices can fluctuate widely in response to these factors. Common stockholders
are subordinate to debt or preferred stockholders in a company’s capital
structure in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Small
Capitalization Companies Risk. The Portfolio’s investments in small and medium
capitalization companies carry more risk than investments in larger companies.
While some of the Portfolio’s holdings in these companies may be listed on a
national securities exchange, such securities are more likely to be traded in
the over-the-counter (“OTC”) market. The low market liquidity of these
securities may have an adverse impact on the Portfolio’s ability to sell certain
securities at favorable prices and may also make it difficult for the Portfolio
to obtain market quotations based on actual trades, for purposes of valuing its
securities. Investing in lesser-known, small and medium capitalization companies
involves greater risk of volatility of the Portfolio’s net asset value (“NAV”)
than is customarily associated with larger, more established companies. Often
small and medium capitalization companies and the industries in which they are
focused are still evolving and, while this may offer better growth potential
than larger, more established companies, it also may make them more sensitive to
changing market conditions. Small capitalization companies may have returns that
can vary, occasionally significantly, from the market in general. In addition,
small capitalization companies may not pay a
dividend.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Adviser believes is
representative of its full value or that it may even go down in
price.
Adviser
Risk. The performance of the Portfolio also will depend on whether the Adviser
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with an index of
funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the
future. The returns in the table assume you sold your
shares at the end of each period and you were charged a contingent deferred
sales charge. Of course, if you did not sell your shares at the end of the
period, your return would be higher. You may obtain the Portfolio’s updated
performance information by calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
30.83% |
2014 |
2.08% |
2015 |
-10.51% |
2016 |
12.13% |
2017 |
14.43% |
2018 |
-17.00% |
2019 |
22.06% |
2020 |
24.90% |
2021 |
23.01% |
2022 |
-18.37% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 28.41% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -29.32% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was 0.00%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
Small
Capitalization Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes(1) |
|
-19.37% |
|
4.91% |
|
6.90% |
Return
After Taxes on Distributions(1) |
|
-27.23% |
|
-1.66% |
|
1.51% |
Return
After Taxes on Distributions and Sale of Portfolio Shares(1) |
|
-5.50% |
|
3.67% |
|
4.90% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
Russell
2000® Index |
|
-20.44% |
|
4.13% |
|
9.01% |
Morningstar
Small Blend Average |
|
-16.24% |
|
4.85% |
|
9.08% |
The table
above shows after-tax returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC (the
“Manager”) serves as the Portfolio’s Manager.
Adviser:
Zacks Investment Management, Inc. (“Zacks” or the “Adviser”) has served as
the Portfolio’s Adviser since August 2015. Mitchel Zacks has primary
responsibility for the day-to-day management of the Portfolio. Mr. Zacks, who
joined the Adviser in 1996, is a Managing Director and Portfolio Manager. Mr.
Zacks has written two books on quantitative investment strategies.
Purchase
and Sale of Portfolio Shares: There is generally a $250 minimum initial
investment for the Portfolio and generally there is a $10,000 minimum initial
investment in the Trust. The minimum subsequent investment in the Trust is $100.
There is no minimum subsequent investment for the Portfolio. There is no minimum
initial investment and no minimum subsequent investment for employee benefit
plans, mutual fund platform programs, supermarket programs, associations and
individual retirement accounts. You may purchase and redeem shares of the
Portfolio on any day that the New York Stock Exchange (“NYSE”) is open.
Redemption requests may be made in writing, by telephone, or through a financial
intermediary and will be paid by check or wire transfer.
Tax
Information: Dividends and capital gain
distributions you receive from the Portfolio, whether you reinvest your
distributions in additional Portfolio shares or receive them in cash, are
taxable to you at either ordinary income or capital gain tax rates unless you
are investing through a tax-free plan, in which case your distributions
generally will be taxed when withdrawn from the tax deferred
account.
Payments to
Broker-Dealers and Other Financial Intermediaries: If you purchase Portfolio shares through a
broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PORTFOLIO
SUMMARY: INTERNATIONAL EQUITY PORTFOLIO
Investment
Objective:
The
International Equity Portfolio seeks long-term capital
appreciation.
Fees
and Expenses of the Portfolio:
This table describes the
fees and expenses that you may pay if you buy, hold and sell shares of the
Portfolio. You may be subject to other fees not reflected in the table, such as
brokerage commission and fees to financial intermediaries. In addition, Appendix
A attached to this Prospectus contains information regarding financial
intermediary-specific sales charge waivers and
discounts.
|
|
|
|
|
International
Equity Portfolio |
Shareholder
Fees (fees
paid directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
|
|
|
Annual
Portfolio Operating Expenses (expenses that you pay
each year as a percentage of the value of your
investment) |
|
|
Management
Fees |
|
0.75% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
1.41% |
Total
Annual Portfolio Operating Expenses |
|
3.16% |
Example:
This example is intended to
help you compare the cost of investing in the Portfolio with the cost of
investing in other mutual funds. The example assumes that you invest $10,000 in
the Portfolio for the time periods indicated. The example also assumes that your
investment has a 5% return each year, and the Portfolio’s operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs, if you held or sold your shares, at the end of
each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$419 |
|
$974 |
|
$1,654 |
|
$3,467 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$319 |
|
$974 |
|
$1,654 |
|
$3,467 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was 59% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio will normally invest at least 80% of its total assets in the equity
securities of companies located outside of the United
States. Equity securities consist of common stock and
other securities such as depositary receipts. Under normal market conditions, at
least 65% of the Portfolio’s assets will be invested in securities of issuers
located in at least three foreign countries (generally in excess of three),
which may include countries with developing and emerging economies. The Adviser
employs quantitative and qualitative analysis to identify high quality,
reasonably valued stocks it believes have the ability to accelerate earnings
growth and exceed investor expectations.
The Adviser utilizes a
three-step process in stock selection. First, the Adviser reviews a series of
screens utilizing the Adviser’s investment models, which are based on
fundamental characteristics, designed to eliminate companies that the Adviser’s
research shows have a high probability of underperformance. Factors considered
when reviewing the screens include a multi-factor valuation framework, earnings
quality, capital structure and financial quality. Next, securities that pass the
initial screens are then evaluated to try to identify stocks with the highest
probability of producing an earnings growth rate that exceeds investor
expectations. This process incorporates changes in earnings expectations and
earnings quality analysis. Finally, these steps produce a list of eligible
companies which are subjected to analysis by the Adviser to further understand
each company’s business prospects and earnings potential. A stock is sold when
it no longer meets the Adviser’s criteria.
Under adverse market
conditions, the Portfolio may also make temporary investments in investment
grade debt securities. Such investment strategies could result in the Portfolio
not achieving its investment objective.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investment and Market Risk. An
investment in the Portfolio’s common shares is subject to investment risk,
including the possible loss of the entire principal amount invested. An
investment in the Portfolio’s common shares represents an indirect investment in
the securities owned by the Portfolio, which are generally traded on a
securities exchange or in the OTC markets. The value of these securities, like
other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock Risk. In general,
stock values fluctuate in response to activities specific to the company as well
as general market, economic and political conditions. Stock prices can fluctuate
widely in response to these factors. Common stockholders are subordinate to debt
or preferred stockholders in a company’s capital structure in terms of priority
to corporate income and liquidation payments and, therefore, will be subject to
greater credit risk than preferred stock or debt
instruments.
Foreign Securities Risk. The
Portfolio’s investments in foreign securities (including depositary receipts)
involve risks in addition to the risks associated with domestic securities. One
additional risk is currency risk. While the price of Portfolio shares is quoted
in U.S. dollars, the Portfolio generally converts U.S. dollars to a foreign
market’s local currency to purchase a security in that market. If the value of
that local currency falls relative to the U.S. dollar, the U.S. dollar value of
the foreign security will decrease. This is true even if the foreign security’s
local price remains
unchanged.
Foreign securities also have
risks related to economic and political developments abroad, including
expropriations, confiscatory taxation, exchange control regulation, limitations
on the use or transfer of Portfolio assets and any effects of foreign social,
economic or political instability. In particular, adverse political or economic
developments in a geographic region or a particular country in which the
Portfolio invests could cause a substantial decline in the value of its
portfolio securities. Certain foreign markets may rely heavily on particular
industries or foreign capital and are more vulnerable to diplomatic
developments, the imposition of economic sanctions against a particular country
or countries, organizations, entities and/or individuals, changes in
international trading patterns, trade barriers and other protectionist or
retaliatory measures. Economic sanctions could, among other things, effectively
restrict or eliminate the Portfolio’s ability to purchase or sell securities or
groups of securities for a substantial period of time. The severity of sanctions
and related measures, such as retaliatory actions, vary in scope and are
unpredictable. The imposition of sanctions could cause a decline in the value
and/or liquidity of securities issued by the sanctioned country or companies
located in or economically tied to the sanctioned country, significantly delay
or prevent the settlement of securities transactions, and significantly impact
the Portfolio’s liquidity and performance. International trade barriers or
economic sanctions against foreign countries, organizations, entities and/or
individuals, may adversely affect the Portfolio’s foreign holdings or exposures.
Investments in foreign markets may also be adversely affected by governmental
actions such as the imposition of capital controls, nationalization of companies
or industries, expropriation of assets, or the imposition of punitive taxes.
Governmental actions can have a significant effect on the economic conditions in
foreign countries, which also may adversely affect the value and liquidity of
the Portfolio’s investments. For example, the governments of certain countries
may prohibit or impose substantial restrictions on foreign investing in their
capital markets or in certain sectors or industries. In addition, a foreign
government may limit or cause delay in the convertibility or repatriation of its
currency which would adversely affect the U.S. dollar value and/or liquidity of
investments denominated in that currency. Any of these actions could severely
affect security prices, impair the Portfolio’s ability to purchase or sell
foreign securities or transfer the Portfolio’s assets back into the U.S., or
otherwise adversely affect the Portfolio’s
operations.
Certain foreign investments may
become less liquid in response to market developments or adverse investor
perceptions, or become illiquid after purchase by the Portfolio, particularly
during periods of market turmoil. Certain foreign investments may become
illiquid when, for instance, there are few, if any, interested buyers and
sellers or when dealers are unwilling to make a market for certain securities.
When the Portfolio holds illiquid investments, its portfolio may be harder to
value, especially in changing markets. Foreign companies, in general, are not
subject to the regulatory requirements of U.S. companies and may have less
stringent investor protections and disclosure standards and, as such, there may
be less publicly available information about these companies. Moreover, foreign
accounting, auditing and financial reporting standards generally are different
from those applicable to U.S. companies. In addition, in the event of a default
of any foreign debt obligations, it may be more difficult for the Portfolio to
obtain or enforce a judgment against the issuers of the
securities.
Furthermore, foreign exchanges
and broker-dealers are generally subject to less government and exchange
scrutiny and regulation than their U.S. counterparts. Finally, differences in
clearance and settlement procedures in foreign markets may cause delays in
settlements of the Portfolio’s trades effected in those
markets.
Depositary receipts involve
substantially identical risks associated with direct investments in foreign
securities. Issuers of the foreign security represented by a depositary receipt,
particularly unsponsored or unregistered depositary receipts, may not be
obligated to disclose material information in the U.S. or to pass through to
holders of such receipts voting rights with respect to the deposited
securities.
Compared to the U.S. and other
developed countries, developing or emerging countries may have relatively
unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities. Prices of these securities tend
to be especially volatile and, in the past, securities in these countries have
been characterized by greater potential loss (as well as gain) than securities
of companies located in developed countries.
Issuer-Specific Risk. The price
of an individual security or particular type of security can be more volatile
than the market as a whole and can fluctuate differently than the market as a
whole. An individual issuer’s securities can rise or fall dramatically with
little or no warning based upon such things as a better (or worse) than expected
earnings report, news about the development of a promising product, or the loss
of key management personnel. There is also a risk that the price of a security
may never reach the level that the Adviser believes is representative of its
full value or that it may even go down in
price.
Adviser Risk. The performance
of the Portfolio also will depend on whether the Adviser is successful in
pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as an index of funds
with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown. The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the future. The returns in the
table assume you sold your shares at the end of each period and you were charged
a contingent deferred sales charge. Of course, if you did not sell your shares
at the end of the period, your return would be higher. You may obtain the
Portfolio’s updated performance information by calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
11.35% |
2014 |
-12.64% |
2015 |
-6.86% |
2016 |
-0.58% |
2017 |
17.39% |
2018 |
-24.72% |
2019 |
18.75% |
2020 |
4.82% |
2021 |
18.10% |
2022 |
-22.60% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 18.48% (quarter ended December 31, 2020) and
the
lowest return for a calendar quarter was -27.21% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was 6.57%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
International Equity
Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes(1) |
|
-23.60% |
|
-3.05% |
|
-0.99% |
Return
After Taxes on Distributions(1) |
|
-23.60% |
|
-3.08% |
|
-1.03% |
Return
After Taxes on Distributions and Sale of Portfolio Shares(1) |
|
-13.97% |
|
-2.30% |
|
-0.74% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
MSCI
ACWI EX-USA Index |
|
-16.00% |
|
0.88% |
|
3.80% |
Morningstar
Foreign Large Blend Average |
|
-15.84% |
|
1.15% |
|
4.26% |
The table above shows after-tax
returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes.
Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC (the
“Manager”) serves as the Portfolio’s Manager.
Adviser: Smith Group
Asset Management, LLC (“SGAM” or the “Adviser”) or its predecessor has served as
the Adviser to the Portfolio since February 20, 2018. Stephanie Jones, CPA,
Director of Non-US Equities and Portfolio Manager of the Adviser, Stephen S.
Smith, CFA, Chief Executive Officer and Chairman of the Investment Committee of
the Adviser and John D. Brim, CFA, President and Chief Investment Officer of the
Adviser, are co-portfolio managers responsible for the day-to-day management of
the Portfolio. Ms. Jones joined the Adviser in February 2010 and prior to
that she was an Equity Analyst for Cimarron Asset Management, LLC. Prior to
founding the Adviser in 1995, Mr. Smith held a number of senior investment
positions at Bank of America. Mr. Brim joined the Adviser in March 1998,
and prior to that he was a manager within the institutional investment
consulting group of Deloitte & Touche, LLP.
Purchase and Sale of
Portfolio Shares: There is generally a $250 minimum initial investment for
the Portfolio and generally there is a $10,000 minimum initial investment in the
Trust. The minimum subsequent investment in the Trust is $100. There is no
minimum subsequent investment for the Portfolio. There is no minimum initial
investment and no minimum subsequent investment for employee benefit plans,
mutual fund platform programs, supermarket programs, associations and individual
retirement accounts. You may purchase and redeem shares of the Portfolio on any
day that the New York Stock Exchange (“NYSE”) is open. Redemption requests may
be made in writing, by telephone, or through a financial intermediary and will
be paid by check or wire transfer.
Tax
Information: Dividends and capital gain
distributions you receive from the Portfolio, whether you reinvest your
distributions in additional Portfolio shares or receive them in cash, are
taxable to you at either ordinary income or capital gain tax rates unless you
are investing through a tax-free plan, in which case your distributions
generally will be taxed when withdrawn from the tax deferred
account.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase Portfolio shares through a
broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PORTFOLIO
SUMMARY: HEALTH & BIOTECHNOLOGY PORTFOLIO
Investment
Objective:
The Health &
Biotechnology Portfolio seeks long-term capital
growth.
Fees
and Expenses of the Portfolio:
This table describes the
fees and expenses that you may pay if you buy, hold and sell shares of the
Portfolio. You may be subject to other fees not reflected in the table, such as
brokerage commission and fees to financial intermediaries. In addition, Appendix
A attached to this Prospectus contains information regarding financial
intermediary-specific sales charge waivers and
discounts.
|
|
|
|
|
Health
& Biotechnology Portfolio |
Shareholder
Fees (fees paid
directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
|
|
|
Annual
Portfolio Operating Expenses (expenses that you pay
each year as a percentage of the value of your
investment) |
|
|
Management
Fees |
|
1.25% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
1.10% |
Total
Annual Portfolio Operating Expenses |
|
3.35% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs, if you held or sold your shares,
at the end of each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$438 |
|
$1,030 |
|
$1,745 |
|
$3,640 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$338 |
|
$1,030 |
|
$1,745 |
|
$3,640 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was 58% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio will normally invest at least 80% of its total assets in equity
securities of U.S. and foreign healthcare companies and biotechnology companies,
regardless of their stock market value (or “market
capitalization”). Equity securities include common
stocks, preferred stocks, securities convertible into common stocks and
warrants. The Adviser utilizes a top-down investment approach focused on
long-term economic trends. The Adviser begins with the overall outlook for the
economy, then seeks to identify specific industries with attractive
characteristics and long-term growth potential. Ultimately, the Adviser seeks to
identify high-quality companies within the selected industries and to acquire
them at attractive prices. The Adviser’s stock selection process is based on an
analysis of individual companies’ fundamental values, such as earnings growth
potential and the quality of corporate management.
Companies described as Health
Care Equipment and Supplies, Health Care Provider Services, Pharmaceutical or
Biotechnology Companies under the North American Industry Classification System
are considered healthcare or biotechnology companies for purposes of investment
by the Portfolio.
These companies are principally
engaged in: the design, manufacture or sale of products or services used for or
in connection with health, medical, or personal care such as medical, dental and
optical supplies or equipment; research and development of pharmaceutical
products and services; the operation of healthcare facilities such as hospitals,
clinical test laboratories and convalescent and mental healthcare facilities;
and the design, manufacture, or sale of healthcare-related products and
services, research, development, manufacture or distribution of products and
services relating to human health care, pharmaceuticals, agricultural and
veterinary applications and the environment; and manufacturing and/or
distributing biotechnological and biomedical products, devices or instruments or
provide materials, products or services to the foregoing companies.
Factors considered include
growth potential, earnings, valuation, competitive advantages and management.
When market or financial conditions warrant, the Portfolio may also make
temporary investments in investment grade debt securities. Such investment
strategies could result in the Portfolio not achieving its investment
objective.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. In general, stock values fluctuate in response to activities specific to
the company as well as general market, economic and political conditions. Stock
prices can fluctuate widely in response to these factors. Common stockholders
are subordinate to debt or preferred stockholders in a company’s capital
structure in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Health &
Biotechnology Sector Concentration Risk. Because of its specific focus, the
Portfolio’s performance is closely tied to and affected by events occurring in
the healthcare and biotechnology industries. Companies in the same industry
often face similar obstacles, issues and regulatory burdens. As a result, the
securities owned by the Portfolio may react similarly to, and move in unison
with, one another. Healthcare companies are subject to government regulation and
approval of their products and services, which can have a significant effect on
their market price. Furthermore, the types of products or services produced or
provided by these companies may quickly become obsolete. Moreover, liability for
products that are later alleged to be harmful or unsafe may be substantial, and
may have a significant impact on a healthcare company’s market value and/or
share price. Biotechnology companies are affected by patent considerations,
intense competition, rapid technology change and obsolescence and regulatory
requirements of various federal and state agencies. In addition, many of these
companies are relatively small and have thinly-traded securities, may not yet
offer products or offer a single product and may have persistent losses during a
new product’s transition from development to production or erratic revenue
patterns. Moreover, stock prices of biotechnology companies are very volatile,
particularly when their products are up for regulatory approval and/or under
regulatory scrutiny. Consequently, the Portfolio’s performance may sometimes be
significantly better or worse than that of other types of
funds.
Foreign
Securities Risk. The Portfolio’s investments in foreign securities (including
depositary receipts) involve risks in addition to the risks associated with
domestic securities. One additional risk is currency risk. While the price of
Portfolio shares is quoted in U.S. dollars, the Portfolio generally converts
U.S. dollars to a foreign market’s local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security’s local price remains unchanged. Foreign securities also
have risks related to economic and political developments abroad, including
expropriations, confiscatory taxation, exchange control regulation, limitations
on the use or transfer of Portfolio assets and any effects of foreign social,
economic or political instability. In particular, adverse political or economic
developments in a geographic region or a particular country in which the
Portfolio invests could cause a substantial decline in the value of its
portfolio securities. Certain foreign markets may rely heavily on particular
industries or foreign capital and are more vulnerable to diplomatic
developments, the imposition of economic sanctions against a particular country
or countries, organizations, entities and/or individuals, changes in
international trading patterns, trade barriers and other protectionist or
retaliatory measures. Economic sanctions could, among other things, effectively
restrict or eliminate the Portfolio’s ability to purchase or sell securities or
groups of securities for a substantial period of time. The severity of sanctions
and related measures, such as retaliatory actions, vary in scope and are
unpredictable. The imposition of sanctions could cause a decline in the value
and/or liquidity of securities issued by the sanctioned country or companies
located in or economically tied to the sanctioned country, significantly delay
or prevent the settlement of securities transactions, and significantly impact
the Portfolio’s liquidity and performance. International trade barriers or
economic sanctions against foreign countries, organizations, entities and/or
individuals, may adversely affect the Portfolio’s foreign holdings or exposures.
Investments in foreign markets may also be adversely affected by governmental
actions such as the imposition of capital controls, nationalization of companies
or industries, expropriation of assets, or the imposition of punitive taxes.
Governmental actions can have a significant effect on the economic conditions in
foreign countries, which also may adversely affect the value and liquidity of
the Portfolio’s
investments.
For example, the governments of
certain countries may prohibit or impose substantial restrictions on foreign
investing in their capital markets or in certain sectors or industries. In
addition, a foreign government may limit or cause delay in the convertibility or
repatriation of its currency which would adversely affect the U.S. dollar value
and/or liquidity of investments denominated in that currency. Any of these
actions could severely affect security prices, impair the Portfolio’s ability to
purchase or sell foreign securities or transfer the Portfolio’s assets back into
the U.S., or otherwise adversely affect the Portfolio’s
operations.
Certain
foreign investments may become less liquid in response to market developments or
adverse investor perceptions, or become illiquid after purchase by the
Portfolio, particularly during periods of market turmoil. Certain foreign
investments may become illiquid when, for instance, there are few, if any,
interested buyers and sellers or when dealers are unwilling to make a market for
certain securities. When the Portfolio holds illiquid investments, its portfolio
may be harder to value, especially in changing markets. Foreign companies, in
general, are not subject to the regulatory requirements of U.S. companies and
may have less stringent investor protections and disclosure standards and, as
such, there may be less publicly available information about these companies.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. In addition, in
the event of a default of any foreign debt obligations, it may be more difficult
for the Portfolio to obtain or enforce a judgment against the issuers of the
securities. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their U.S.
counterparts. Finally, differences in clearance and settlement procedures in
foreign markets may cause delays in settlements of the Portfolio’s trades
effected in those markets.
Depositary receipts involve
substantially identical risks associated with direct investments in foreign
securities. Issuers of the foreign security represented by a depositary receipt,
particularly unsponsored or unregistered depositary receipts, may not be
obligated to disclose material information in the U.S. or to pass through to
holders of such receipts voting rights with respect to the deposited
securities.
Compared to the U.S. and other
developed countries, developing or emerging countries may have relatively
unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities. Prices of these securities tend
to be especially volatile and, in the past, securities in these countries have
been characterized by greater potential loss (as well as gain) than securities
of companies located in developed countries.
Small and Medium Capitalization
Companies Risk. The Portfolio may also invest in small and medium capitalization
companies. Investing in small and medium capitalization companies may involve
more risk than is usually associated with investing in larger, more established
companies. There is typically less publicly available information concerning
small and medium capitalization companies than for larger, more established
companies. Some small and medium capitalization companies have limited product
lines, distribution channels and financial and managerial resources and tend to
concentrate on fewer geographical markets than do larger companies. Also,
because small and medium capitalization companies normally have fewer shares
outstanding than larger companies and trade less frequently, it may be more
difficult for the Portfolio to buy and sell significant amounts of shares
without an unfavorable impact on prevailing market
prices.
Preferred Stock Risk. Preferred
stocks involve credit risk and certain other risks. Certain preferred stocks
contain provisions that allow an issuer under certain conditions to skip
distributions (in the case of “non-cumulative” preferred stocks) or defer
distributions (in the case of “cumulative” preferred stocks). If the Portfolio
owns a preferred stock on which distributions are deferred, the Portfolio may
nevertheless be required to report income for tax purposes while it is not
receiving distributions on that security. Preferred stocks are subordinated to
bonds and other debt instruments in a company’s capital structure in terms of
priority to corporate income and liquidation payments, and therefore will be
subject to greater credit risk than those debt
instruments.
Convertible Securities Risk.
The Portfolio’s investments in convertible securities subject the Portfolio to
the risks associated with both fixed-income securities and common stocks. To the
extent that a convertible security’s investment value is greater than its
conversion value, its price will be likely to increase when interest rates fall
and decrease when interest rates rise, as with a fixed-income security. If the
conversion value exceeds the investment value, the price of the convertible
security will tend to fluctuate directly with the price of the underlying equity
security.
Warrants Risk. The holder of a
warrant has the right to purchase a given number of shares of a particular
issuer at a specified price until expiration of the warrant. Such investments
can provide a greater potential for profit or loss than an equivalent investment
in the underlying security. Prices of warrants do not necessarily move in tandem
with the prices of the underlying securities, and are speculative investments.
Warrants pay no dividends and confer no rights other than a purchase option. If
a warrant is not exercised by the date of its expiration, the Portfolio will
lose its entire investment in such
warrant.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Adviser believes is
representative of its full value or that it may even go down in
price.
Adviser
Risk. The performance of the Portfolio also will depend on whether the Adviser
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with a healthcare
index. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the future.
The returns in the table assume you sold your shares at the end of each
period and you were charged a contingent deferred sales charge. Of course, if
you did not sell your shares at the end of the period, your return would be
higher. You may obtain the Portfolio’s updated performance information by
calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
35.36% |
2014 |
18.53% |
2015 |
6.25% |
2016 |
-2.50% |
2017 |
11.25% |
2018 |
-5.98% |
2019 |
15.43% |
2020 |
3.03% |
2021 |
16.00% |
2022 |
1.41% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 14.74% (quarter ended December 31, 2022) and
the
lowest return for a calendar quarter was -13.26% (quarter ended December 31, 2018). For
the period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was -6.45%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
Health
& Biotechnology Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes (1) |
|
0.41% |
|
5.64% |
|
9.30% |
Return
After Taxes on Distributions(1) |
|
-1.57% |
|
2.80% |
|
6.35% |
Return
After Taxes on Distributions and Sale of Portfolio Shares(1) |
|
1.69% |
|
4.03% |
|
7.08% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
S&P
500® Total Return Index |
|
-18.11% |
|
9.42% |
|
12.56% |
S&P
500® Healthcare Index |
|
-1.95% |
|
12.53% |
|
15.05% |
The table above shows after-tax
returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes.
Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager: Saratoga
Capital Management, LLC (the “Manager”) serves as the Portfolio’s
Manager.
Adviser:
Oak Associates, ltd. (“Oak Associates” or the “Adviser”) has served
as the Adviser to the Portfolio since July 2005. Robert D. Stimpson, CFA,
Portfolio Manager, is responsible for the day-to-day management of the
Portfolio, Mr. Stimpson is Co-Chief Investment Officer and a Portfolio Manager
at Oak Associates, which he joined in 2001. Mr. Stimpson has served the
Portfolio as Portfolio Manager since January 2019.
Purchase and Sale of
Portfolio Shares: There is generally a $250 minimum initial investment for
the Portfolio and generally there is a $10,000 minimum initial investment in the
Trust. The minimum subsequent investment in the Trust is $100. There is no
minimum subsequent investment for the Portfolio. There is no minimum initial
investment and no minimum subsequent investment for employee benefit plans,
mutual fund platform programs, supermarket programs, associations and individual
retirement accounts. You may purchase and redeem shares of the Portfolio on any
day that the New York Stock Exchange (“NYSE”) is open. Redemption requests may
be made in writing, by telephone, or through a financial intermediary and will
be paid by check or wire transfer.
Tax
Information: Dividends and capital gain
distributions you receive from the Portfolio, whether you reinvest your
distributions in additional Portfolio shares or receive them in cash, are
taxable to you at either ordinary income or capital gain tax rates unless you
are investing through a tax-free plan, in which case your distributions
generally will be taxed when withdrawn from the tax deferred
account.
Payments
to Broker-Dealers and other Financial Intermediaries: If you purchase Portfolio shares through a
broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PORTFOLIO
SUMMARY: TECHNOLOGY & COMMUNICATIONS
PORTFOLIO
Investment
Objective:
The Technology &
Communications Portfolio seeks long-term growth of
capital.
Fees
and Expenses of the Portfolio:
This table describes the fees and expenses that you
may pay if you buy, hold and sell shares of the Portfolio. You may be subject to
other fees not reflected in the table, such as brokerage commission and fees to
financial intermediaries. In addition, Appendix A attached to this Prospectus
contains information regarding financial intermediary-specific sales charge
waivers and discounts.
|
|
|
|
|
Technology
& Communications Portfolio |
Shareholder
Fees (fees paid
directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
|
|
|
Annual
Portfolio Operating Expenses (expenses that you pay
each year as a percentage of the value of your
investment) |
|
|
Management
Fees |
|
1.25% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
1.13% |
Total
Annual Portfolio Operating Expenses |
|
3.38% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs, if you held or sold your shares,
at the end of each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$441 |
|
$1,039 |
|
$1,760 |
|
$3,667 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$341 |
|
$1,039 |
|
$1,760 |
|
$3,667 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was
6% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio will normally invest at least 80% of its total assets in equity
securities issued by technology and communications companies, both domestic and
foreign, regardless of their stock market value (or “market
capitalization”). Equity securities include common
stocks, preferred stocks, securities convertible into common stocks and
warrants. The Portfolio may invest up to 25% of its total assets in foreign
companies. The Adviser employs a top-down and bottom-up investment approach. The
Adviser begins with the overall outlook for the economy, then identifies
specific industries which should benefit from economic trends and the investment
environment. Individual securities are then selected based on fundamental
analysis, growth potential, earnings, valuation, competitive advantages and the
opportunity of each issuer. Ultimately, the Adviser seeks to identify
high-quality companies at attractive prices whose long-term enduring value is
underappreciated.
The
Portfolio defines a “technology company” as an entity in which at least 50% of
the company’s revenues or earnings were derived from technology activities or at
least 50% of the company’s assets were devoted to such activities, based upon
the company’s most recent fiscal year. Technology companies may include, among
others, companies that are engaged in the research, design, development or
manufacturing of technology products. These companies include, among others,
those in the Internet, medical, pharmaceutical, manufacturing, computer software
and hardware industries.
The
Portfolio defines a “communications company” as an entity in which at least 50%
of the company’s revenues or earnings were derived from communications
activities or at least 50% of the company’s assets were devoted to such
activities, based upon the company’s most recent fiscal year.
Communications activities may
include, among others, regular telephone service; communications equipment and
services; electronic components and equipment; broadcasting; computer software
and hardware; semiconductors; mobile communications and cellular radio/paging;
electronic mail and other electronic data transmission services; networking and
linkage of word and data processing systems; publishing and information systems;
video text and teletext; emerging technologies combining telephone, television
and/or computer systems; and Internet and network equipment and
services.
When market or financial
conditions warrant, the Portfolio may also make temporary investments in
investment grade debt securities. Such investment strategies could result in the
Portfolio not achieving its investment objective.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. In general, stock values fluctuate in response to activities specific to
the company as well as general market, economic and political conditions. Stock
prices can fluctuate widely in response to these factors. Common stockholders
are subordinate to debt or preferred stockholders in a company’s capital
structure in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Technology & Communications
Sector Concentration Risk. Because of its specific focus, the Portfolio’s
performance is closely tied to, and affected by, events occurring in the
information, communications and related technology industries. Companies in the
same industry often face similar obstacles, issues and regulatory burdens. As a
result, the securities owned by the Portfolio may react similarly to and move in
unison with one another. Because technology continues to advance at an
accelerated rate, and the number of companies and product offerings continues to
expand, these companies could become increasingly sensitive to short product
cycles, aggressive pricing and intense competition. Many technology companies
sell stock before they have a commercially viable product, and may be acutely
susceptible to problems relating to bringing their products to market.
Additionally, many technology companies have very high price/earnings ratios,
high price volatility and high personnel turnover due to severe labor shortages
for skilled technology
professionals.
Emerging
Technology Sector Risk. Because of its narrow focus, the Portfolio’s performance
is closely tied to, and affected by, events occurring in the emerging technology
and general technology industries. Companies in the same industry often face
similar obstacles, issues and regulatory burdens. As a result, the securities
owned by the Portfolio may react similarly to and move in unison with one
another. Because technology continues to advance at an accelerated rate, and the
number of companies and product offerings continues to expand, these companies
could become increasingly sensitive to short product cycles, aggressive pricing
and intense
competition.
In some cases, there are some
emerging technology companies that sell stock before they have a commercially
viable product and may be acutely susceptible to problems relating to bringing
their products to market. Additionally, many emerging technology companies have
very high price/earnings ratios, high price volatility and high personnel
turnover due to severe labor shortages for skilled emerging technology
professionals.
Foreign
Securities Risk. The Portfolio’s investments in foreign securities (including
depositary receipts) involve risks in addition to the risks associated with
domestic securities. One additional risk is currency risk. While the price of
Portfolio shares is quoted in U.S. dollars, the Portfolio generally converts
U.S. dollars to a foreign market’s local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security’s local price remains
unchanged.
Foreign securities also have
risks related to economic and political developments abroad, including
expropriations, confiscatory taxation, exchange control regulation, limitations
on the use or transfer of Portfolio assets and any effects of foreign social,
economic or political instability. In particular, adverse political or economic
developments in a geographic region or a particular country in which the
Portfolio invests could cause a substantial decline in the value of its
portfolio securities. Certain foreign markets may rely heavily on particular
industries or foreign capital and are more vulnerable to diplomatic
developments, the imposition of economic sanctions against a particular country
or countries, organizations, entities and/or individuals, changes in
international trading patterns, trade barriers and other protectionist or
retaliatory measures.
Economic
sanctions could, among other things, effectively restrict or eliminate the
Portfolio’s ability to purchase or sell securities or groups of securities for a
substantial period of time. The severity of sanctions and related measures, such
as retaliatory actions, vary in scope and are unpredictable. The imposition of
sanctions could cause a decline in the value and/or liquidity of securities
issued by the sanctioned country or companies located in or economically tied to
the sanctioned country, significantly delay or prevent the settlement of
securities transactions, and significantly impact the Portfolio’s liquidity and
performance. International trade barriers or economic sanctions against foreign
countries, organizations, entities and/or individuals, may adversely affect the
Portfolio’s foreign holdings or exposures. Investments in foreign markets may
also be adversely affected by governmental actions such as the imposition of
capital controls, nationalization of companies or industries, expropriation of
assets, or the imposition of punitive taxes. Governmental actions can have a
significant effect on the economic conditions in foreign countries, which also
may adversely affect the value and liquidity of the Portfolio’s investments. For
example, the governments of certain countries may prohibit or impose substantial
restrictions on foreign investing in their capital markets or in certain sectors
or industries. In addition, a foreign government may limit or cause delay in the
convertibility or repatriation of its currency which would adversely affect the
U.S. dollar value and/or liquidity of investments denominated in that currency.
Any of these actions could severely affect security prices, impair the
Portfolio’s ability to purchase or sell foreign securities or transfer the
Portfolio’s assets back into the U.S., or otherwise adversely affect the
Portfolio’s operations.
Certain
foreign investments may become less liquid in response to market developments or
adverse investor perceptions, or become illiquid after purchase by the
Portfolio, particularly during periods of market turmoil. Certain foreign
investments may become illiquid when, for instance, there are few, if any,
interested buyers and sellers or when dealers are unwilling to make a market for
certain securities. When the Portfolio holds illiquid investments, its portfolio
may be harder to value, especially in changing markets. Foreign companies, in
general, are not subject to the regulatory requirements of U.S. companies and
may have less stringent investor protections and disclosure standards and, as
such, there may be less publicly available information about these companies.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. In addition, in
the event of a default of any foreign debt obligations, it may be more difficult
for the Portfolio to obtain or enforce a judgment against the issuers of the
securities. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their U.S.
counterparts. Finally, differences in clearance and settlement procedures in
foreign markets may cause delays in settlements of the Portfolio’s trades
effected in those markets.
Depositary receipts involve
substantially identical risks associated with direct investments in foreign
securities. Issuers of the foreign security represented by a depositary receipt,
particularly unsponsored or unregistered depositary receipts, may not be
obligated to disclose material information in the U.S. or to pass through to
holders of such receipts voting rights with respect to the deposited
securities.
Compared to the U.S. and other
developed countries, developing or emerging countries may have relatively
unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities. Prices of these securities tend
to be especially volatile and, in the past, securities in these countries have
been characterized by greater potential loss (as well as gain) than securities
of companies located in developed countries.
Small and Medium Capitalization
Companies Risk. The Portfolio may also invest in small and medium capitalization
companies. Investing in small and medium capitalization companies may involve
more risk than is usually associated with investing in larger, more established
companies. There is typically less publicly available information concerning
small and medium capitalization companies than for larger, more established
companies. Some small and medium capitalization companies have limited product
lines, distribution channels and financial and managerial resources and tend to
concentrate on fewer geographical markets than do larger companies. Also,
because small and medium capitalization companies normally have fewer shares
outstanding than larger companies and trade less frequently, it may be more
difficult for the Portfolio to buy and sell significant amounts of shares
without an unfavorable impact on prevailing market
prices.
Preferred Stock Risk. Preferred
stocks involve credit risk and certain other risks. Certain preferred stocks
contain provisions that allow an issuer under certain conditions to skip
distributions (in the case of “non-cumulative” preferred stocks) or defer
distributions (in the case of “cumulative” preferred stocks). If the Portfolio
owns a preferred stock on which distributions are deferred, the Portfolio may
nevertheless be required to report income for tax purposes while it is not
receiving distributions on that security. Preferred stocks are subordinated to
bonds and other debt instruments in a company’s capital structure in terms of
priority to corporate income and liquidation payments, and therefore will be
subject to greater credit risk than those debt
instruments.
Convertible Securities Risk.
The Portfolio’s investments in convertible securities subject the Portfolio to
the risks associated with both fixed-income securities and common stocks. To the
extent that a convertible security’s investment value is greater than its
conversion value, its price will be likely to increase when interest rates fall
and decrease when interest rates rise, as with a fixed-income security. If the
conversion value exceeds the investment value, the price of the convertible
security will tend to fluctuate directly with the price of the underlying equity
security.
Warrants Risk. The holder of a
warrant has the right to purchase a given number of shares of a particular
issuer at a specified price until expiration of the warrant. Such investments
can provide a greater potential for profit or loss than an equivalent investment
in the underlying security. Prices of warrants do not necessarily move in tandem
with the prices of the underlying securities, and are speculative investments.
Warrants pay no dividends and confer no rights other than a purchase option. If
a warrant is not exercised by the date of its expiration, the Portfolio will
lose its entire investment in such
warrant.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Adviser believes is
representative of its full value or that it may even go down in
price.
Adviser
Risk. The performance of the Portfolio also will depend on whether the Adviser
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year to year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with an index of
funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the future.
The returns in the table assume you sold your shares at the end of each
period and you were charged a contingent deferred sales charge. Of course, if
you did not sell your shares at the end of the period, your return would be
higher. You may obtain the Portfolio’s updated performance information by
calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
32.88% |
2014 |
8.74% |
2015 |
4.47% |
2016 |
15.87% |
2017 |
26.94% |
2018 |
-0.56% |
2019 |
31.62% |
2020 |
26.07% |
2021 |
15.61% |
2022 |
-32.15% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 25.93% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -20.97% (quarter ended June 30, 2022). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was 27.86%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
Technology
& Communications Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes(1) |
|
-33.15% |
|
5.30% |
|
11.13% |
Return
After Taxes on Distributions(1) |
|
-37.24% |
|
1.85% |
|
7.91% |
Return
After Taxes on Distributions and Sale of Portfolio Shares(1) |
|
-16.55% |
|
4.57% |
|
8.98% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
S&P
500® Total Return Index |
|
-18.11% |
|
9.42% |
|
12.56% |
Lipper
Science & Technology Funds Index |
|
-36.34% |
|
8.92% |
|
14.09% |
The table above shows after-tax
returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts.
After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager: Saratoga
Capital Management, LLC (the “Manager”) serves as the Portfolio’s
Manager.
Adviser: Oak Associates,
ltd. (“Oak Associates” or the “Adviser”) has served as the Adviser to a
portion of the Portfolio since August 2011 through December 28, 2015.
As of December 29, 2015, Oak Associates is the sole Adviser to the
Portfolio. Robert D. Stimpson, CFA, is responsible for the day-to-day management
of the Portfolio. He has served as a Portfolio Manager to the Portfolio since
August 2011. Mr. Stimpson is Co-Chief Investment Officer and a portfolio
manager at Oak Associates, which he joined in 2001.
Purchase and Sale of
Portfolio Shares: There is generally a $250 minimum initial investment for
the Portfolio and generally there is a $10,000 minimum initial investment in the
Trust. The minimum subsequent investment in the Trust is $100. There is no
minimum subsequent investment for the Portfolio. There is no minimum initial
investment and no minimum subsequent investment for employee benefit plans,
mutual fund platform programs, supermarket programs, associations and individual
retirement accounts. You may purchase and redeem shares of the Portfolio on any
day that the New York Stock Exchange (“NYSE”) is open. Redemption requests may
be made in writing, by telephone, or through a financial intermediary and will
be paid by check or wire transfer.
Tax
Information: Dividends and capital gain
distributions you receive from the Portfolio, whether you reinvest your
distributions in additional Portfolio shares or receive them in cash, are
taxable to you at either ordinary income or capital gain tax rates unless you
are investing through a tax-free plan, in which case your distributions
generally will be taxed when withdrawn from the tax deferred
account.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase Portfolio shares through a
broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PORTFOLIO
SUMMARY: FINANCIAL SERVICES PORTFOLIO
Investment
Objective:
The
Financial Services Portfolio seeks long-term growth of
capital.
Fees
and Expenses of the Portfolio:
This table describes the
fees and expenses that you may pay if you buy, hold and sell shares of the
Portfolio. You may be subject to other fees not reflected in the table, such as
brokerage commission and fees to financial intermediaries. In addition, Appendix
A attached to this Prospectus contains information regarding financial
intermediary-specific sales charge waivers and
discounts.
|
|
|
|
|
Financial
Services Portfolio |
Shareholder
Fees (fees paid
directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
|
|
|
Annual
Portfolio Operating Expenses (expenses that you pay
each year as a percentage of the value of your
investment) |
|
|
Management
Fees |
|
1.25% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
1.94% |
Total
Annual Portfolio Operating Expenses |
|
4.19% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs, if you held or sold your shares,
at the end of each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$521 |
|
$1,272 |
|
$2,138 |
|
$4,364 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$421 |
|
$1,272 |
|
$2,138 |
|
$4,364 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was 45% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio will normally invest at least 80% of its total assets in U.S. and
foreign equity securities issued by financial services companies, regardless of
their stock market value (or “market capitalization”).
Equity securities include common stocks, securities convertible into
common stocks, preferred stocks and warrants. Up to 20% of the Portfolio’s total
assets may be invested in U.S. and foreign securities outside of financial
companies.
The Adviser employs
quantitative and qualitative analysis that seeks to identify reasonably valued,
high quality financial services companies that it believes have the ability to
accelerate earnings growth and exceed investor expectations. The Adviser’s
selection process consists of three steps. First, the Adviser reviews a series
of screens utilizing the Adviser’s investment models, which are based on
fundamental characteristics designed to eliminate companies that the Adviser’s
research shows have a high probability of underperformance. Factors considered
when reviewing the screens include a multi-factor valuation framework, earnings
quality and capital structure. The valuation framework includes, but is not
limited to, analysis of price to earnings, price to sales, price to book, cash
held to price and various cash flow ratios. Valuation methodology is
industry-specific within the financial services sector. Next, securities that
pass the initial screens are then evaluated to try to identify stocks with the
highest probability of producing an earnings growth rate that exceeds investor
expectations. This process incorporates changes in earnings expectations and
earnings quality analysis.
Finally, these steps produce a
list of eligible companies which are subjected to analysis by the Adviser to
further understand each company’s business prospects and earnings potential. The
Adviser uses the results of this analysis to construct the Portfolio’s security
positions.
A “Financial
services company,” for purposes of Portfolio investments, is defined as an
entity in which at least 50% of the company’s revenues or earnings were derived
from financial services activities based upon the company’s most recent fiscal
year, or at least 50% of the company’s assets were devoted to such activities
based on the company’s most recent fiscal year or any company which is included
in the S&P Financial Sector Index.
Financial services companies
provide financial services to consumers and industry. Examples of companies in
the financial services sector include commercial banks, investment banks,
savings and loan associations, thrifts, finance companies, brokerage and
advisory firms, transaction and payroll processors, insurance companies, real
estate and leasing companies and companies that span across these segments and
service providers whose revenue is largely derived from the financial services
sector. Under Securities and Exchange Commission (“SEC”) regulations, the
Portfolio may not invest more than 5% of its total assets in the equity
securities of any company that derives more than 15% of its revenues from
brokerage or investment management activities.
Under adverse market
conditions, the Portfolio may also make temporary investments in investment
grade debt securities. Such investment strategies could result in the Portfolio
not achieving its investment objective.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. In general, stock values fluctuate in response to activities specific to
the company as well as general market, economic and political conditions. Stock
prices can fluctuate widely in response to these factors. Common stockholders
are subordinate to debt or preferred stockholders in a company’s capital
structure in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Financial
Services Sector Concentration Risk. Because of its specific focus, the
Portfolio’s performance is closely tied to and affected by events occurring in
the financial services industry. Companies in the same industry often face
similar obstacles, issues and regulatory burdens. As a result, the securities
owned by the Portfolio may react similarly to and move in unison with one
another. The Portfolio is more vulnerable to price fluctuations of financial
services companies and other factors that particularly affect financial services
companies than a more broadly diversified mutual fund. In particular, the prices
of stock issued by many financial services companies have historically been more
closely correlated with changes in interest rates than other stocks. Generally,
when interest rates go up, stock prices of these companies go down. This
relationship may not continue in the future. Financial services companies are
subject to extensive government regulation which tends to limit both the amount
and types of loans and other financial commitments the company can make, and the
interest rates and fees it can charge. These limitations can have a significant
impact on the profitability of a financial services company since profitability
is impacted by the company’s ability to make financial commitments such as
loans.
Insurance companies in which
the Portfolio invests may also have an impact on the Portfolio’s performance as
insurers may be subject to severe price competition, claims activity, marketing
competition and general economic conditions. Certain lines of insurance can be
significantly influenced by specific events.
For example, property and
casualty insurer profits may be affected by certain weather catastrophes and
other disasters; and life and health insurer profits may be affected by
mortality risks and morbidity rates. The financial services industry is
currently undergoing a number of changes such as continuing consolidations,
development of new products and structures and changes to its regulatory
framework. These changes are likely to have a significant impact on the
financial services industry and the
Portfolio.
Foreign
Securities Risk. The Portfolio’s investments in foreign securities (including
depositary receipts) involve risks in addition to the risks associated with
domestic securities. One additional risk is currency risk. While the price of
Portfolio shares is quoted in U.S. dollars, the Portfolio generally converts
U.S. dollars to a foreign market’s local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security’s local price remains
unchanged.
Foreign
securities also have risks related to economic and political developments
abroad, including expropriations, confiscatory taxation, exchange control
regulation, limitations on the use or transfer of Portfolio assets and any
effects of foreign social, economic or political instability. In particular,
adverse political or economic developments in a geographic region or a
particular country in which the Portfolio invests could cause a substantial
decline in the value of its portfolio securities. Certain foreign markets may
rely heavily on particular industries or foreign capital and are more vulnerable
to diplomatic developments, the imposition of economic sanctions against a
particular country or countries, organizations, entities and/or individuals,
changes in international trading patterns, trade barriers and other
protectionist or retaliatory measures. Economic sanctions could, among other
things, effectively restrict or eliminate the Portfolio’s ability to purchase or
sell securities or groups of securities for a substantial period of time. The
severity of sanctions and related measures, such as retaliatory actions, vary in
scope and are unpredictable. The imposition of sanctions could cause a decline
in the value and/or liquidity of securities issued by the sanctioned country or
companies located in or economically tied to the sanctioned country,
significantly delay or prevent the settlement of securities transactions, and
significantly impact the Portfolio’s liquidity and performance. International
trade barriers or economic sanctions against foreign countries, organizations,
entities and/or individuals, may adversely affect the Portfolio’s foreign
holdings or exposures. Investments in foreign markets may also be adversely
affected by governmental actions such as the imposition of capital controls,
nationalization of companies or industries, expropriation of assets, or the
imposition of punitive taxes. Governmental actions can have a significant effect
on the economic conditions in foreign countries, which also may adversely affect
the value and liquidity of the Portfolio’s investments. For example, the
governments of certain countries may prohibit or impose substantial restrictions
on foreign investing in their capital markets or in certain sectors or
industries. In addition, a foreign government may limit or cause delay in the
convertibility or repatriation of its currency which would adversely affect the
U.S. dollar value and/or liquidity of investments denominated in that currency.
Any of these actions could severely affect security prices, impair the
Portfolio’s ability to purchase or sell foreign securities or transfer the
Portfolio’s assets back into the U.S., or otherwise adversely affect the
Portfolio’s operations.
Certain foreign investments may
become less liquid in response to market developments or adverse investor
perceptions, or become illiquid after purchase by the Portfolio, particularly
during periods of market turmoil. Certain foreign investments may become
illiquid when, for instance, there are few, if any, interested buyers and
sellers or when dealers are unwilling to make a market for certain securities.
When the Portfolio holds illiquid investments, its portfolio may be harder to
value, especially in changing markets. Foreign companies, in general, are not
subject to the regulatory requirements of U.S. companies and may have less
stringent investor protections and disclosure standards and, as such, there may
be less publicly available information about these companies. Moreover, foreign
accounting, auditing and financial reporting standards generally are different
from those applicable to U.S. companies. In addition, in the event of a default
of any foreign debt obligations, it may be more difficult for the Portfolio to
obtain or enforce a judgment against the issuers of the securities. Furthermore,
foreign exchanges and broker-dealers are generally subject to less government
and exchange scrutiny and regulation than their U.S. counterparts. Finally,
differences in clearance and settlement procedures in foreign markets may cause
delays in settlements of the Portfolio’s trades effected in those
markets.
Depositary receipts involve
substantially identical risks associated with direct investments in foreign
securities. Issuers of the foreign security represented by a depositary receipt,
particularly unsponsored or unregistered depositary receipts, may not be
obligated to disclose material information in the U.S. or to pass through to
holders of such receipts voting rights with respect to the deposited
securities.
Compared to the U.S. and other
developed countries, developing or emerging countries may have relatively
unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities. Prices of these securities tend
to be especially volatile and, in the past, securities in these countries have
been characterized by greater potential loss (as well as gain) than securities
of companies located in developed countries.
Small and Medium Capitalization
Companies Risk. The Portfolio may also invest in small and medium capitalization
companies. Investing in small and medium capitalization companies may involve
more risk than is usually associated with investing in larger, more established
companies. There is typically less publicly available information concerning
small and medium capitalization companies than for larger, more established
companies. Some small and medium capitalization companies have limited product
lines, distribution channels and financial and managerial resources and tend to
concentrate on fewer geographical markets than do larger companies. Also,
because small and medium capitalization companies normally have fewer shares
outstanding than larger companies and trade less frequently, it may be more
difficult for the Portfolio to buy and sell significant amounts of shares
without an unfavorable impact on prevailing market
prices.
Preferred Stock Risk. Preferred
stocks involve credit risk and certain other risks. Certain preferred stocks
contain provisions that allow an issuer under certain conditions to skip
distributions (in the case of “non-cumulative” preferred stocks) or defer
distributions (in the case of “cumulative” preferred stocks). If the Portfolio
owns a preferred stock on which distributions are deferred, the Portfolio may
nevertheless be required to report income for tax purposes while it is not
receiving distributions on that security. Preferred stocks are subordinated to
bonds and other debt instruments in a company’s capital structure in terms of
priority to corporate income and liquidation payments, and therefore will be
subject to greater credit risk than those debt
instruments.
Convertible Securities Risk.
The Portfolio’s investments in convertible securities subject the Portfolio to
the risks associated with both fixed-income securities and common stocks. To the
extent that a convertible security’s investment value is greater than its
conversion value, its price will be likely to increase when interest rates fall
and decrease when interest rates rise, as with a fixed-income security. If the
conversion value exceeds the investment value, the price of the convertible
security will tend to fluctuate directly with the price of the underlying equity
security.
Warrants Risk. The holder of a
warrant has the right to purchase a given number of shares of a particular
issuer at a specified price until expiration of the warrant. Such investments
can provide a greater potential for profit or loss than an equivalent investment
in the underlying security. Prices of warrants do not necessarily move in tandem
with the prices of the underlying securities, and are speculative investments.
Warrants pay no dividends and confer no rights other than a purchase option. If
a warrant is not exercised by the date of its expiration, the Portfolio will
lose its entire investment in such
warrant.
Issuer-Specific
Risk. The price of an individual security or particular type of security can be
more volatile than the market as a whole and can fluctuate differently than the
market as a whole. An individual issuer’s securities can rise or fall
dramatically with little or no warning based upon such things as a better (or
worse) than expected earnings report, news about the development of a promising
product, or the loss of key management personnel. There is also a risk that the
price of a security may never reach the level that the Adviser believes is
representative of its full value or that it may even go down in
price.
Adviser
Risk. The performance of the Portfolio also will depend on whether the Adviser
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with an index of
funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the future.
The returns in the table assume you sold your shares at the end of each
period and you were charged a contingent deferred sales charge. Of course, if
you did not sell your shares at the end of the period, your return would be
higher. You may obtain the Portfolio’s updated performance information by
calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
30.30% |
2014 |
6.45% |
2015 |
-7.20% |
2016 |
14.29% |
2017 |
18.57% |
2018 |
-19.85% |
2019 |
22.74% |
2020 |
-6.17% |
2021 |
34.29% |
2022 |
-12.17% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 23.64% (quarter ended December 31, 2020) and
the
lowest return for a calendar quarter was -33.20% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was -0.71%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
Financial
Services Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes(1) |
|
-13.17% |
|
1.72% |
|
6.62% |
Return
After Taxes on Distributions(1) |
|
-14.46% |
|
-0.31% |
|
5.56% |
Return
After Taxes on Distributions and Sale of Portfolio Shares(1) |
|
-6.86% |
|
1.04% |
|
5.20% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
S&P
500® Total Return Index |
|
-18.11% |
|
9.42% |
|
12.56% |
Lipper
Financial Services Funds Index |
|
-11.61% |
|
5.82% |
|
10.78% |
The table above shows after-tax
returns. After-tax
returns are calculated using the historical highest individual federal marginal
income tax rates during the period shown and do not reflect the impact of state
and local taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC (the
“Manager”) serves as the Portfolio’s Manager.
Adviser:
Smith Group Asset Management (“SGAM” or the “Adviser”) or its predecessor
has served as the Adviser to the Portfolio since December 29, 2015. Stephen
S. Smith, CFA, Chief Executive Officer and Chairman of the Investment Committee
of the Adviser and John D. Brim, CFA, President and Chief Investment Officer of
the Adviser, are co-portfolio managers responsible for the day-to-day management
of the Portfolio. Prior to founding the Adviser in 1995, Mr. Smith held a number
of senior investment positions at Bank of America. Mr. Brim joined the Adviser
in March 1998, and prior to that he was a manager within the institutional
investment consulting group of Deloitte & Touche, LLP.
Purchase and Sale of
Portfolio Shares: There is generally a $250 minimum initial investment for
the Portfolio and generally there is a $10,000 minimum initial investment in the
Trust. The minimum subsequent investment in the Trust is $100. There is no
minimum subsequent investment for the Portfolio. There is no minimum initial
investment and no minimum subsequent investment for employee benefit plans,
mutual fund platform programs, supermarket programs, associations and individual
retirement accounts. You may purchase and redeem shares of the Portfolio on any
day that the New York Stock Exchange (“NYSE”) is open. Redemption requests may
be made in writing, by telephone, or through a financial intermediary and will
be paid by check or wire transfer.
Tax Information:
Dividends and capital gain distributions you receive from the Portfolio, whether
you reinvest your distributions in additional Portfolio shares or receive them
in cash, are taxable to you at either ordinary income or capital gain tax rates
unless you are investing through a tax-free plan, in which case your
distributions generally will be taxed when withdrawn from the tax deferred
account.
Payments to Broker-Dealers
and Other Financial Intermediaries: If you purchase Portfolio shares through
a broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PORTFOLIO
SUMMARY: ENERGY & BASIC MATERIALS PORTFOLIO
Investment
Objective:
The
Energy & Basic Materials Portfolio seeks long-term growth of
capital.
Fees
and Expenses of the Portfolio:
This table describes the
fees and expenses that you may pay if you buy, hold and sell shares of the
Portfolio. You may be subject to other fees not reflected in the table, such as
brokerage commission and fees to financial intermediaries. In addition, Appendix
A attached to this Prospectus contains information regarding financial
intermediary-specific sales charge waivers and
discounts.
|
|
|
|
|
Energy
& Basic Materials Portfolio |
Shareholder
Fees (fees paid
directly from your investment) |
|
|
Maximum
Sales Charge (Load) Imposed on Purchases of Shares (as a % of offering
price) |
|
None |
Maximum
Sales Charge (Load) Imposed on Reinvested Dividends (as a % of offering
price) |
|
None |
Maximum
Contingent Deferred Sales Charge (Load) (as a % of offering price) |
|
1.00% |
Redemption
Fee |
|
None |
Exchange
Fee |
|
None |
|
|
|
Annual
Portfolio Operating Expenses (expenses that you pay
each year as a percentage of the value of your
investment) |
|
|
Management
Fees |
|
1.25% |
Distribution
and/or Service (12b-1) Fees |
|
1.00% |
Other
Expenses |
|
2.20% |
Total
Annual Portfolio Operating Expenses |
|
4.45% |
Example:
This
example is intended to help you compare the cost of investing in the Portfolio
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Portfolio for the time periods indicated. The example also
assumes that your investment has a 5% return each year, and the Portfolio’s
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs, if you held or sold your shares,
at the end of each period would be:
IF
YOU SOLD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$546 |
|
$1,346 |
|
$2,256 |
|
$4,574 |
IF
YOU HELD YOUR SHARES
1
Year |
|
3
Years |
|
5
Years |
|
10
Years |
$446 |
|
$1,346 |
|
$2,256 |
|
$4,574 |
Portfolio
Turnover:
The
Portfolio pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover may
indicate higher transaction costs, which must be borne by the Portfolio and its
shareholders and may result in higher taxes when Portfolio shares are held in a
taxable account. These costs, which are not reflected in annual fund operating
expenses or in the Example, affect the Portfolio’s performance. During the most
recent fiscal year, the Portfolio’s portfolio turnover rate was 51% of the average value of its
portfolio.
Principal
Investment Strategies:
The
Portfolio will normally invest at least 80% of its total assets in equity
securities issued by U.S. and foreign Energy and Basic Materials Companies,
regardless of their stock market value (or “market
capitalization”). The Portfolio utilizes the Standard
& Poor’s classification system for purposes of determining whether a company
is an “Energy or Basic Materials Company.” Standard & Poor’s maintains a
proprietary classification system similar to the North American Industry
Classification System, which classifies companies according to industry sectors
and groups. Companies classified as Energy or Basic Materials Companies by
Standard & Poor’s are involved in the exploration, development, production,
refining or distribution of oil, natural gas, coal and uranium, the construction
or provision of oil rigs, drilling equipment and other energy related services
and equipment, basic materials such as metals, minerals, chemicals, water,
forest product, precious metals, glass and industrial gases or provide
materials, products or services to such companies. Equity securities include
common stocks, depositary receipts, securities convertible into common stocks,
preferred stocks and warrants. Standard & Poor’s classifications are
utilized to identify sectors.
The Adviser employs
quantitative and qualitative analysis that seeks to identify reasonably valued,
high quality companies within the energy and basic materials sectors. The
Adviser’s selection process incorporates a multi-factor valuation framework,
capital structure and financial quality analysis.
The valuation framework
includes, but is not limited to, analysis of price to earnings, price to sales,
price to book and price to operating cash flow. Valuation methodology is
industry-specific within the energy and basic materials sectors.
This process produces a list of
eligible companies which are then subjected to analysis by the Adviser to
further understand each company’s business prospects and earnings potential. The
Adviser uses the results of this analysis to construct the Portfolio’s security
positions.
Under adverse market
conditions, the Portfolio may also make temporary investments in investment
grade debt securities. Such investment strategies could result in the Portfolio
not achieving its investment objective.
Principal
Investment Risks:
There
is no assurance that the Portfolio will achieve its investment objective. The
Portfolio share price will fluctuate with changes in the market value of its
portfolio securities. When you sell your Portfolio shares, they may be worth
less than what you paid for them and, accordingly, you can lose money investing
in this Portfolio. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the Federal Deposit Insurance Corporation or any other
government agency.
Investment
and Market Risk. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. These events may negatively impact broad segments of
businesses and populations and have a significant and rapid negative impact on
the performance of the Portfolio’s investments, increase the Portfolio’s
volatility and exacerbate pre-existing risks to the Portfolio. The Portfolio’s
common shares at any point in time may be worth less than the original
investment, even after taking into account any reinvestment of dividends and
distributions.
Common Stock
Risk. In general, stock values fluctuate in response to activities specific to
the company as well as general market, economic and political conditions. Stock
prices can fluctuate widely in response to these factors. Common stockholders
are subordinate to debt or preferred stockholders in a company’s capital
structure in terms of priority to corporate income and liquidation payments and,
therefore, will be subject to greater credit risk than preferred stock or debt
instruments.
Energy &
Basic Materials Sector Concentration Risk. Because of its specific focus, the
Portfolio’s performance is closely tied to and affected by events occurring in
the energy and basic materials industries. Companies in the same industry often
face similar obstacles, issues and regulatory burdens. As a result, the
securities owned by the Portfolio may react similarly to and move in unison with
one another. Companies in the energy and basic materials sector are subject to
swift fluctuations in supply and demand. These fluctuations may be caused by
events relating to international political and economic developments, energy
conservation, the success of exploration projects, the environmental impact of
energy and basic materials operations and tax and other governmental regulatory
policies. Consequently, the Portfolio’s performance may sometimes be
significantly better or worse than that of other types of
funds.
Foreign
Securities Risk. The Portfolio’s investments in foreign securities (including
depositary receipts) involve risks in addition to the risks associated with
domestic securities. One additional risk is currency risk. While the price of
Portfolio shares is quoted in U.S. dollars, the Portfolio generally converts
U.S. dollars to a foreign market’s local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S. dollar,
the U.S. dollar value of the foreign security will decrease. This is true even
if the foreign security’s local price remains
unchanged.
Foreign
securities also have risks related to economic and political developments
abroad, including expropriations, confiscatory taxation, exchange control
regulation, limitations on the use or transfer of Portfolio assets and any
effects of foreign social, economic or political instability. In particular,
adverse political or economic developments in a geographic region or a
particular country in which the Portfolio invests could cause a substantial
decline in the value of its portfolio securities. Certain foreign markets may
rely heavily on particular industries or foreign capital and are more vulnerable
to diplomatic developments, the imposition of economic sanctions against a
particular country or countries, organizations, entities and/or individuals,
changes in international trading patterns, trade barriers and other
protectionist or retaliatory measures. Economic sanctions could, among other
things, effectively restrict or eliminate the Portfolio’s ability to purchase or
sell securities or groups of securities for a substantial period of time. The
severity of sanctions and related measures, such as retaliatory actions, vary in
scope and are unpredictable. The imposition of sanctions could cause a decline
in the value and/or liquidity of securities issued by the sanctioned country or
companies located in or economically tied to the sanctioned country,
significantly delay or prevent the settlement of securities transactions, and
significantly impact the Portfolio’s liquidity and performance. International
trade barriers or economic sanctions against foreign countries, organizations,
entities and/or individuals, may adversely affect the Portfolio’s foreign
holdings or exposures.
Investments in foreign markets
may also be adversely affected by governmental actions such as the imposition of
capital controls, nationalization of companies or industries, expropriation of
assets, or the imposition of punitive taxes. Governmental actions can have a
significant effect on the economic conditions in foreign countries, which also
may adversely affect the value and liquidity of the Portfolio’s investments. For
example, the governments of certain countries may prohibit or impose substantial
restrictions on foreign investing in their capital markets or in certain sectors
or industries. In addition, a foreign government may limit or cause delay in the
convertibility or repatriation of its currency which would adversely affect the
U.S. dollar value and/or liquidity of investments denominated in that currency.
Any of these actions could severely affect security prices, impair the
Portfolio’s ability to purchase or sell foreign securities or transfer the
Portfolio’s assets back into the U.S., or otherwise adversely affect the
Portfolio’s operations.
Certain
foreign investments may become less liquid in response to market developments or
adverse investor perceptions, or become illiquid after purchase by the
Portfolio, particularly during periods of market turmoil. Certain foreign
investments may become illiquid when, for instance, there are few, if any,
interested buyers and sellers or when dealers are unwilling to make a market for
certain securities. When the Portfolio holds illiquid investments, its portfolio
may be harder to value, especially in changing markets. Foreign companies, in
general, are not subject to the regulatory requirements of U.S. companies and
may have less stringent investor protections and disclosure standards and, as
such, there may be less publicly available information about these companies.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. In addition, in
the event of a default of any foreign debt obligations, it may be more difficult
for the Portfolio to obtain or enforce a judgment against the issuers of the
securities. Furthermore, foreign exchanges and broker-dealers are generally
subject to less government and exchange scrutiny and regulation than their U.S.
counterparts. Finally, differences in clearance and settlement procedures in
foreign markets may cause delays in settlements of the Portfolio’s trades
effected in those markets.
Depositary receipts involve
substantially identical risks associated with direct investments in foreign
securities. Issuers of the foreign security represented by a depositary receipt,
particularly unsponsored or unregistered depositary receipts, may not be
obligated to disclose material information in the U.S. or to pass through to
holders of such receipts voting rights with respect to the deposited
securities.
Compared to the U.S. and other
developed countries, developing or emerging countries may have relatively
unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities. Prices of these securities tend
to be especially volatile and, in the past, securities in these countries have
been characterized by greater potential loss (as well as gain) than securities
of companies located in developed countries.
Small and Medium Capitalization
Companies Risk. The Portfolio may also invest in small and medium capitalization
companies. Investing in small and medium capitalization companies may involve
more risk than is usually associated with investing in larger, more established
companies. There is typically less publicly available information concerning
small and medium capitalization companies than for larger, more established
companies. Some small and medium capitalization companies have limited product
lines, distribution channels and financial and managerial resources and tend to
concentrate on fewer geographical markets than do larger companies. Also,
because small and medium capitalization companies normally have fewer shares
outstanding than larger companies and trade less frequently, it may be more
difficult for the Portfolio to buy and sell significant amounts of shares
without an unfavorable impact on prevailing market
prices.
Preferred Stock Risk. Preferred
stocks involve credit risk and certain other risks. Certain preferred stocks
contain provisions that allow an issuer under certain conditions to skip
distributions (in the case of “non-cumulative” preferred stocks) or defer
distributions (in the case of “cumulative” preferred stocks). If the Portfolio
owns a preferred stock on which distributions are deferred, the Portfolio may
nevertheless be required to report income for tax purposes while it is not
receiving distributions on that security. Preferred stocks are subordinated to
bonds and other debt instruments in a company’s capital structure in terms of
priority to corporate income and liquidation payments, and therefore will be
subject to greater credit risk than those debt
instruments.
Convertible Securities Risk.
The Portfolio’s investments in convertible securities subject the Portfolio to
the risks associated with both fixed-income securities and common stocks. To the
extent that a convertible security’s investment value is greater than its
conversion value, its price will be likely to increase when interest rates fall
and decrease when interest rates rise, as with a fixed-income security. If the
conversion value exceeds the investment value, the price of the convertible
security will tend to fluctuate directly with the price of the underlying equity
security.
Warrants Risk. The holder of a
warrant has the right to purchase a given number of shares of a particular
issuer at a specified price until expiration of the warrant. Such investments
can provide a greater potential for profit or loss than an equivalent investment
in the underlying security. Prices of warrants do not necessarily move in tandem
with the prices of the underlying securities, and are speculative investments.
Warrants pay no dividends and confer no rights other than a purchase option. If
a warrant is not exercised by the date of its expiration, the Portfolio will
lose its entire investment in such
warrant.
Issuer-Specific Risk. The price
of an individual security or particular type of security can be more volatile
than the market as a whole and can fluctuate differently than the market as a
whole. An individual issuer’s securities can rise or fall dramatically with
little or no warning based upon such things as a better (or worse) than expected
earnings report, news about the development of a promising product, or the loss
of key management personnel. There is also a risk that the price of a security
may never reach the level that the Adviser believes is representative of its
full value or that it may even go down in
price.
Adviser
Risk. The performance of the Portfolio also will depend on whether the Adviser
is successful in pursuing the Portfolio’s investment
strategy.
Performance:
The
bar chart and table that follow provide some indication of the risks of
investing in the Portfolio by showing changes in the performance of the
Portfolio’s Class C shares from year-to-year and by showing how the average
annual returns for the past 1, 5 and 10 years of the Portfolio compare with
those of a broad measure of market performance, as well as with an index of
funds with similar investment objectives. The
returns in the bar chart do not reflect the deduction of sales charges. If these
amounts were reflected, returns would be less than shown.
The
Portfolio’s past performance (before and after taxes) is not necessarily an
indication of how the Portfolio will perform in the
future. The returns in the table assume you sold your
shares at the end of each period and you were charged a contingent deferred
sales charge. Of course, if you did not sell your shares at the end of the
period, your return would be higher. You may obtain the Portfolio’s updated
performance information by calling toll free 1-800-807-FUND
or visiting www.saratogacap.com.
ANNUAL
TOTAL RETURNS – CALENDAR YEARS
Years |
Returns |
2013 |
23.94% |
2014 |
-20.85% |
2015 |
-24.40% |
2016 |
15.64% |
2017 |
7.80% |
2018 |
-18.48% |
2019 |
0.00% |
2020 |
-19.66% |
2021 |
24.75% |
2022 |
18.83% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 21.72% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -42.99% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class C shares was 5.64%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1
Year |
|
5
Years |
|
10
Years |
Energy
& Basic Materials Portfolio (1) |
|
|
|
|
|
|
Return
Before Taxes(1) |
|
17.83% |
|
-0.59% |
|
-0.82% |
Return
After Taxes on Distributions(1) |
|
16.48% |
|
-0.95% |
|
-1.00% |
Return
After Taxes on Distributions and Sale of Portfolio Shares(1) |
|
10.54% |
|
-0.61% |
|
-0.70% |
Indices:
(Reflects
no deduction for fees, expenses or
taxes) |
|
|
|
|
|
|
S&P
500® Total Return Index |
|
-18.11% |
|
9.42% |
|
12.56% |
Lipper
Natural Resources Funds Index |
|
44.18% |
|
3.97% |
|
2.05% |
The
table above shows after-tax returns. After-tax returns are calculated using the
historical highest individual federal marginal income tax rates during the
period shown and do not reflect the impact of state and local
taxes. Actual
after-tax returns depend on the investor’s tax situation and may differ from
those shown, and the after-tax returns are not relevant to investors who hold
their Portfolio shares through tax deferred arrangements such as 401(k) plans or
individual retirement accounts. After-tax
returns may be higher than before-tax returns due to an assumed benefit from
capital losses that would have been realized had Portfolio shares been sold at
the end of the relevant
periods.
Manager:
Saratoga Capital Management, LLC (the
“Manager”) serves as the Portfolio’s Manager.
Adviser:
Smith Group Asset Management. LLC (“SGAM” or the “Adviser”) or its
predecessor has served as the Adviser to the Portfolio since December 29,
2015. Stephen S. Smith, CFA, Chief Executive Officer and Chairman of the
Investment Committee of the Adviser, John D. Brim, CFA, President and Chief
Investment Officer of the Adviser and Stephanie C. Jones, CPA, Director of
Non-US Equities and Portfolio Manager of the Adviser, are co-portfolio managers
responsible for the day-to-day management of the Portfolio.
Prior to founding the Adviser
in 1995, Mr. Smith held a number of senior investment positions at Bank of
America. Mr. Brim joined the Adviser in March 1998, and prior to that he
was a manager within the institutional investment consulting group of Deloitte
& Touche, LLP. Ms. Jones joined the Adviser in February 2010, prior to
that she was an Equity Analyst at Cimarron Asset Management, LLC from 2006 to
2010.
Purchase and Sale of
Portfolio Shares: There is generally a $250 minimum initial investment for
the Portfolio and generally there is a $10,000 minimum initial investment in the
Trust. The minimum subsequent investment in the Trust is $100. There is no
minimum subsequent investment for the Portfolio. There is no minimum initial
investment and no minimum subsequent investment for employee benefit plans,
mutual fund platform programs, supermarket programs, associations and individual
retirement accounts. You may purchase and redeem shares of the Portfolio on any
day that the New York Stock Exchange (“NYSE”) is open. Redemption requests may
be made in writing, by telephone, or through a financial intermediary and will
be paid by check or wire transfer.
Tax Information:
Dividends and capital gain distributions you receive from the Portfolio, whether
you reinvest your distributions in additional Portfolio shares or receive them
in cash, are taxable to you at either ordinary income or capital gain tax rates
unless you are investing through a tax-free plan, in which case your
distributions generally will be taxed when withdrawn from the tax deferred
account.
Payments
to Broker-Dealers and Other Financial Intermediaries: If you purchase Portfolio shares through a
broker-dealer or other financial intermediary (such as a bank), the Manager
and/or the Portfolio’s distributor may pay the intermediary for the sale of
Portfolio shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your
salesperson to recommend the Portfolio over another investment. Ask your
salesperson or visit your financial intermediary’s website for more
information.
PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS OF
INVESTING IN THE PORTFOLIOS
Principal
Investment Strategies for U.S. Government Money Market Portfolio, Investment
Quality Bond Portfolio, Municipal Bond Portfolio, Large Capitalization Value
Portfolio, Large Capitalization Growth Portfolio, Mid Capitalization Portfolio,
Small Capitalization Portfolio, International Equity Portfolio, Health &
Biotechnology Portfolio, Technology & Communications Portfolio, Financial
Services Portfolio and Energy & Basic Materials Portfolio (the “Saratoga
Portfolios”)
This section provides
additional information relating to each Portfolio’s investment
strategies.
INVESTMENT
POLICIES. The percentage limitations relating to the composition of a
Portfolio referenced in the discussion of a Portfolio apply at the time a
Portfolio acquires an investment and refer to the Portfolio’s net assets, unless
otherwise noted. Subsequent percentage changes that result from market
fluctuations will not require a Portfolio to sell any Portfolio security. The
Portfolios’ investment objective and strategies are non-fundamental (unless
otherwise indicated) and may be changed by the Board without the approval of the
Portfolios’ shareholders.
DEFENSIVE INVESTING. The
Portfolios are intended primarily as vehicles for the implementation of a
long-term investment program utilizing asset allocation strategies rendered
through investment advisory programs that are based on an evaluation of an
investor’s investment objectives and risk tolerance. Because these asset
allocation strategies are designed to spread investment risk across the various
segments of the securities markets through investment in a number of Portfolios,
each individual Portfolio generally intends to be substantially fully invested
in accordance with its investment objectives and policies during most market
conditions. Although the Manager or the Adviser of a Portfolio, upon the
concurrence of the Manager, may take a temporary defensive position during
adverse market conditions, it can be expected that a defensive posture will be
adopted less frequently than would be by other mutual funds. This policy may
impede the Manager or an Adviser’s ability to protect a Portfolio’s capital
during declines in the particular segment of the market to which the Portfolio’s
assets are committed.
FORWARD CURRENCY
CONTRACTS. Certain Portfolios’ investments also may include
forward currency contracts, which involve the purchase or sale of a specific
amount of foreign currency at the current price with delivery at a specified
future date. A Portfolio may use these contracts to hedge against adverse price
movements in its portfolio securities or securities it may purchase and the
currencies in which they are determined or to gain exposure to currencies
underlying various securities or financial instruments.
DERIVATIVES
AND OTHER STRATEGIES. Each of the Portfolios may invest in options, futures,
foreign securities, foreign currencies and other derivatives (collectively,
“Derivative Transactions”), and may enter into certain types of short sales. If
these practices are used by a Portfolio, the intent would be primarily to hedge
the Portfolio’s holdings. For example, a Portfolio may purchase or sell options
contracts on equity securities to hedge against the risk of fluctuations in the
prices of securities held by the Portfolio. Or, a Portfolio may purchase or sell
stock index futures contracts and might purchase put options or write call
options on such futures contracts to protect against a general stock market
decline or decline in a specific market sector that could adversely affect the
Portfolio’s holdings.
Investing
for hedging purposes may result in certain transaction costs, which may reduce a
Portfolio’s performance. In addition, no assurances can be given that hedging
will be implemented or that each derivative position will achieve a perfect
correlation with the security or currency being hedged against.
PARTICIPATION NOTES. The
International Equity Portfolio may invest in participation notes
(“P-Notes”).
EXCHANGE-TRADED
FUNDS. The Health & Biotechnology Portfolio, Technology & Communications
Portfolio, International Equity Portfolio, Mid Capitalization Portfolio and
Energy & Basic Materials Portfolio may invest up to 10% of their net assets
in shares of various ETFs. No more than 5% of a Portfolio’s net assets will be
invested in any one ETF. Each of these Portfolios may count investments in ETFs
towards their 80% investment policy.
REAL ESTATE INVESTMENT TRUSTS
AND FOREIGN REAL ESTATE COMPANIES. Real estate investment trusts
(“REITs”) and foreign real estate companies pool investors’ funds for investment
primarily in income producing real estate or real estate related loans or
interests. A shareholder, by investing in REITs and foreign real estate
companies indirectly through a Portfolio, will bear not only his proportionate
share of the expenses of the Portfolio, but also, indirectly, the management
expenses of the underlying REITs.
MONEY MARKET
FUNDS. Each Portfolio’s cash balances may be invested in money market
funds.
Principal Investment
Strategies for Conservative Balanced Allocation Portfolio, Moderately
Conservative Balanced Allocation Portfolio, Moderate Balanced Allocation
Portfolio, Moderately Aggressive Balanced Allocation Portfolio and Aggressive
Balanced Allocation Portfolio (the “Asset Allocation Portfolios”)
This section
provides additional information relating to each Asset Allocation Portfolio’s
investment strategies.
The Asset Allocation Portfolios
described in this Prospectus are “funds of funds.” Each Asset Allocation
Portfolio’s main investment strategy is to invest in other Saratoga Advantage
Trust mutual funds (the “Saratoga Funds”) and/or unaffiliated registered
investment companies and exchange-traded funds (“ETFs”) (together with the
Saratoga Funds, the “Underlying Funds”). The Asset Allocation Portfolios are
designed to provide investors access to five distinct asset allocation
strategies that vary in composition from more “conservative” strategies that
typically have higher weightings in fixed-income and money market instruments to
more “aggressive” strategies typically have higher weightings in equity and
alternative instruments. The target allocations for each Asset Allocation
Portfolio are discussed in the “PORTFOLIO SUMMARY – Principal Investment
Strategies” section with respect to each portfolio above. In constructing the
Asset Allocation Portfolios, the Manager currently allocates assets among the
following investment categories: core equity, sector equity, fixed income, money
market and alternative investments. These investment categories may be changed
by the Manager in the future. Exposure and diversification to such investment
categories is achieved primarily by investing in the Underlying
Funds.
Currently, the Saratoga Funds
eligible for investments by the Manager include:
Core Equity
| ● |
Large Capitalization
Growth Portfolio |
| ● |
Large Capitalization
Value Portfolio |
| ● |
Mid Capitalization
Portfolio |
| ● |
Small Capitalization
Portfolio |
| ● |
International Equity
Portfolio |
Sector Equity
| ● |
Health &
Biotechnology Portfolio |
| ● |
Technology &
Communications Portfolio |
| ● |
Financial Services
Portfolio |
| ● |
Energy & Basic
Materials Portfolio |
Fixed Income
| ● |
Investment Quality Bond
Portfolio |
| ● |
Municipal Bond
Portfolio |
Money Market
| ● |
U.S. Government Money
Market Portfolio |
Principal Risks of Investing
in the Portfolios
As with any mutual fund, it is
possible to lose money by investing in a Portfolio. There is no assurance that a
Portfolio will achieve its investment objective. When you sell your Portfolio
shares, they may be worth less than what you paid for them and, accordingly, you
can lose money investing in a Portfolio. Shares of the Portfolio are not bank
deposits and are not guaranteed or insured by the Federal Deposit Insurance
Corporation or any other government agency.
This section provides
information relating to risks of investing in the Portfolios or in Underlying
Funds in addition to the principal risks described previously. The risks set
forth below are applicable to a Portfolio only to the extent that a Portfolio or
an Underlying Fund invests in the investment described.
FOREIGN
SECURITIES. The Portfolio’s or an Underlying Fund’s investments in foreign
securities (including depositary receipts) involve risks in addition to the
risks associated with domestic securities. One additional risk is currency risk.
While the price of Portfolio or Underlying Fund shares is quoted in U.S.
dollars, the Portfolio or an Underlying Fund generally converts U.S. dollars to
a foreign market’s local currency to purchase a security in that market. If the
value of that local currency falls relative to the U.S. dollar, the U.S. dollar
value of the foreign security will decrease. This is true even if the foreign
security’s local price remains unchanged. Foreign securities also have risks
related to economic and political developments abroad, including expropriations,
confiscatory taxation, exchange control regulation, limitations on the use or
transfer of Portfolio or Underlying Fund assets and any effects of foreign
social, economic or political instability. In particular, adverse political or
economic developments in a geographic region or a particular country in which
the Portfolio or an Underlying Fund invests could cause a substantial decline in
the value of its portfolio securities. Certain foreign markets may rely heavily
on particular industries or foreign capital and are more vulnerable to
diplomatic developments, the imposition of economic sanctions against a
particular country or countries, organizations, entities and/or individuals,
changes in international trading patterns, trade barriers and other
protectionist or retaliatory measures. Economic sanctions could, among other
things, effectively restrict or eliminate a Portfolio’s or an Underlying Fund’s
ability to purchase or sell securities or groups of securities for a substantial
period of time. International trade barriers or economic sanctions against
foreign countries, organizations, entities and/or individuals, may adversely
affect a Portfolio’s or an Underlying Fund’s foreign holdings or exposures. The
severity of sanctions and related measures, such as retaliatory actions, vary in
scope and are unpredictable. The imposition of sanctions could, for instance,
cause a decline in the value and/or liquidity of securities issued by the
sanctioned country or companies located in or economically tied to the
sanctioned country. Market volatility could result, as well as disruption in the
sanctioned country and throughout the world. Sanctions and related measures
could limit or prevent a Portfolio or Underlying Fund from buying and selling
securities (in the sanctioned country and other markets), significantly delay or
prevent the settlement of securities transactions, and significantly impact the
Portfolio’s liquidity and performance.
Investments in foreign markets
may also be adversely affected by governmental actions such as the imposition of
capital controls, nationalization of companies or industries, expropriation of
assets, or the imposition of punitive taxes. Governmental actions can have a
significant effect on the economic conditions in foreign countries, which also
may adversely affect the value and liquidity of a Portfolio’s or an Underlying
Fund’s investments. For example, the governments of certain countries may
prohibit or impose substantial restrictions on foreign investing in their
capital markets or in certain sectors or industries. In addition, a foreign
government may limit or cause delay in the convertibility or repatriation of its
currency which would adversely affect the U.S. dollar value and/or liquidity of
investments denominated in that currency. Any of these actions could severely
affect security prices, impair the Portfolio’s or an Underlying Fund’s ability
to purchase or sell foreign securities or transfer a Portfolio’s or an
Underlying Fund’s assets back into the U.S., or otherwise adversely affect the
Portfolio’s or an Underlying Fund’s operations. Certain foreign investments may
become less liquid in response to market developments or adverse investor
perceptions, or become illiquid after purchase by a Portfolio or an Underlying
Fund, particularly during periods of market turmoil. Certain foreign investments
may become illiquid when, for instance, there are few, if any, interested buyers
and sellers or when dealers are unwilling to make a market for certain
securities. When a Portfolio or an Underlying Fund holds illiquid investments,
its portfolio may be harder to value, especially in changing markets. Foreign
companies, in general, are not subject to the regulatory requirements of U.S.
companies and may have less stringent investor protections and disclosure
standards and, as such, there may be less publicly available information about
these companies. Moreover, foreign accounting, auditing and financial reporting
standards generally are different from those applicable to U.S. companies. In
addition, in the event of a default of any foreign debt obligations, it may be
more difficult for the Portfolio or an Underlying Fund to obtain or enforce a
judgment against the issuers of the securities. Furthermore, foreign exchanges
and broker-dealers are generally subject to less government and exchange
scrutiny and regulation than their U.S. counterparts. Finally, differences in
clearance and settlement procedures in foreign markets may cause delays in
settlements of the Portfolio’s or an Underlying Fund’s trades effected in those
markets.
Depositary receipts involve
substantially identical risks associated with direct investments in foreign
securities. Issuers of the foreign security represented by a depositary receipt,
particularly unsponsored or unregistered depositary receipts, may not be
obligated to disclose material information in the U.S. or to pass through to
holders of such receipts voting rights with respect to the deposited
securities.
Compared to the U.S. and other
developed countries, developing or emerging countries may have relatively
unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities. Prices of these securities tend
to be especially volatile and, in the past, securities in these countries have
been characterized by greater potential loss (as well as gain) than securities
of companies located in developed countries.
EMERGING MARKETS RISK.
Investing in emerging markets companies, which may be smaller and have shorter
operating histories than companies in developed markets, involves risks in
addition to, and greater than, those generally associated with investing in
companies in developed foreign markets. The extent of economic development,
political stability, market depth, infrastructure, capitalization, accounting
standards and transparency and regulatory oversight in emerging market economies
is generally less than in more developed markets. Settlement practices for
transactions in foreign markets may differ from those in U.S. markets. Certain
investments may take more than seven days to settle. Such differences include
delays beyond periods customary in the U.S. and practices, such as delivery of
securities prior to receipt of payment, which increase the likelihood of a
“failed settlement.” Failed settlements can result in losses to a
Portfolio.
Low trading
volumes and volatile prices in less developed markets make trades harder to
complete and settle, and governments or trade groups may compel local agents to
hold securities in designated depositories that are not subject to independent
evaluation. Local agents are held only to the standards of care of their local
markets. Certain emerging market countries may be subject to less stringent
requirements regarding accounting, auditing, financial reporting and record
keeping and therefore, material information related to an investment may not be
available or reliable. In addition, a Portfolio is limited in its ability to
exercise its legal rights or enforce a counterparty’s legal obligations in
certain jurisdictions outside of the United States, in particular, in emerging
markets countries. Geopolitical developments, including current regional armed
conflict in Europe, could negatively impact the value of a Portfolio’s or
Underlying Fund’s investments.
JUNK BONDS.
A Portfolio’s or an Underlying Fund’s investments in securities rated lower than
investment grade or if unrated of comparable quality as determined by the
Adviser or the Underlying Fund’s adviser (commonly known as “junk bonds”) pose
significant risks. The prices of junk bonds are likely to be more sensitive to
adverse economic changes or individual corporate developments than higher rated
securities. During an economic downturn or substantial period of rising interest
rates, junk bond issuers and, in particular, highly leveraged issuers may
experience financial stress that would adversely affect their ability to service
their principal and interest payment obligations, to meet their projected
business goals or to obtain additional financing. In the event of a default, the
Portfolio or an Underlying Fund may incur additional expenses to seek recovery.
The secondary market for junk bonds may be less liquid than the markets for
higher quality securities and, as such, may have an adverse effect on the market
prices of certain securities. The illiquidity of the market may also adversely
affect the ability of the Trust’s Trustees to arrive at a fair value for certain
junk bonds at certain times and could make it difficult for the Portfolios or an
Underlying Fund to sell certain securities. In addition, periods of economic
uncertainty and change probably would result in increased volatility of market
prices of high yield securities and a corresponding volatility in a Portfolio’s
or an Underlying Fund’s net asset value (“NAV”).
MUNICIPAL
BOND RISK. The risk of a municipal obligation generally depends on the financial
and credit status of the issuer. Changes in a municipality’s financial health
may make it difficult for the municipality to make interest and principal
payments when due. A number of municipalities have had significant financial
problems recently, and these and other municipalities could, potentially,
continue to experience significant financial problems resulting from lower tax
revenues and/or decreased aid from state and local governments in the event of
an economic downturn. This could decrease the Portfolio’s income or hurt its
ability to preserve capital and liquidity.
Under some circumstances,
municipal obligations might not pay interest unless the state legislature or
municipality authorizes money for that purpose. Some securities, including
municipal lease obligations, carry additional risks. For example, they may be
difficult to trade or interest payments may be tied only to a specific stream of
revenue.
Municipal
bonds may be more susceptible to downgrades or defaults during recessions or
similar periods of economic stress. Factors contributing to the economic stress
on municipalities may include lower property tax collections as a result of
lower home values, lower sales tax revenue as a result of consumers cutting back
spending, and lower income tax revenue as a result of a higher unemployment
rate. In addition, since some municipal obligations may be secured or guaranteed
by banks and other institutions, the risk to the Portfolio could increase if the
banking or financial sector suffers an economic downturn and/or if the credit
ratings of the institutions issuing the guarantee are downgraded or at risk of
being downgraded by a national rating organization. If such events were to
occur, the value of the security could decrease or the value could be lost
entirely, and it may be difficult or impossible for the Portfolio (or an
Underlying Fund) to sell the security at the time and the price that normally
prevails in the market.
In addition to being
downgraded, an insolvent municipality may file for bankruptcy. For example,
Chapter 9 of the Bankruptcy Code provides a financially distressed municipality
protection from its creditors while it develops and negotiates a plan for
reorganizing its debts. “Municipality” is defined broadly by the Bankruptcy Code
as a “political subdivision or public agency or instrumentality of a state” and
may include various issuers of securities in which the Portfolio (or an
Underlying Fund) invests.
The reorganization of a
municipality’s debts may include extending debt maturities, reducing the amount
of principal or interest, refinancing the debt or taking other measures, which
may significantly affect the rights of creditors and the value of the securities
issued by the municipality and the value of a Portfolio’s investments. Interest
on municipal obligations, while generally exempt from federal income tax, may
not be exempt from federal alternative minimum tax.
INVESTMENT
AND MARKET RISK. An investment in the Portfolio’s common shares is subject to
investment risk, including the possible loss of the entire principal amount
invested. An investment in the Portfolio’s common shares represents an indirect
investment in the securities owned by the Portfolio, which are generally traded
on a securities exchange or in the OTC markets. The value of these securities,
like other market investments, may move up or down, sometimes rapidly and
unpredictably due to changes in general market conditions, economic trends or
events that are not specifically related to the issuer of the security or other
asset, or factors that affect a particular issuer or issuers, exchange, country,
group of countries, region, market, industry, group of industries, sector or
asset class. Social, political, economic and other conditions and events (such
as recessions, inflation, rapid interest rate changes, supply chain disruptions,
war, natural disasters, epidemics and pandemics, terrorism, conflicts and social
unrest) will occur that have significant impacts on issuers, industries,
governments and other systems, including the financial markets. As global
systems, economies and financial markets are increasingly interconnected, events
that once had only local impact are now more likely to have regional or even
global effects. Events that occur in one country, region or financial market
will, more frequently, adversely impact issuers in other countries, regions or
markets. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. Investors will
be negatively impacted if the value of their portfolio holdings decreases as a
result of such events, if these events adversely impact the operations and
effectiveness of the Manager or Adviser, as applicable, or key service providers
or if these events disrupt systems and processes necessary or beneficial to the
management of accounts. The Portfolio’s common shares at any point in time may
be worth less than the original investment, even after taking into account any
reinvestment of dividends and distributions, if the issuer fails to make
anticipated dividend payments because, among other reasons, the issuer of the
security experiences a decline in its financial condition.
Global
events may negatively impact broad segments of businesses and populations cause
a significant negative impact on the performance of the Portfolio’s investments,
increase the Portfolio’s volatility, exacerbate pre-existing political, social
and economic risks to the Fund. The Portfolio’s operations may be interrupted as
a result, which may contribute to the negative impact on investment performance.
In addition, governments, their regulatory agencies, or self-regulatory
organizations may take actions that affect the instruments in which the
Portfolio invests, or the issuers of such instruments, in ways that could have a
significant negative impact on the Portfolio’s investment
performance.
NAV
RISK. You could lose money by investing in a
Portfolio. Although the U.S. Government Money Market Portfolio seeks to preserve
the value of your investment at $1.00 per share, it cannot guarantee it will do
so. An investment in the U.S. Government Money Market Portfolio is not a bank
account and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. The U.S. Government Money Market
Portfolio’s sponsor is not required to reimburse the Portfolio for losses, and
you should not expect that the sponsor will provide financial support to the
Portfolio at any time, including during periods of market stress. If the
U.S. Government Money Market Portfolio or another money market fund fails to
maintain a stable NAV or maintain a weekly net liquid asset level (or such
perception exists in the marketplace), the U.S. Government Money Market
Portfolio could be subject to increased redemptions, which may adversely impact
the U.S. Government Money Market Portfolio’s ability to maintain a stable NAV of $1.00 per
share. In general, certain other money market funds have in the past
failed to maintain stable NAVs, and there can be no assurance that such failures
and resulting redemption pressures will not occur in the future. The U.S.
Government Money Market Portfolio is permitted, among other things, to reduce or
withhold any income and gains generated by the U.S. Government Money Market
Portfolio to maintain a stable $1.00 share price.
CREDIT RISK.
The issuers of fixed income instruments in which the Underlying Fund invests may
be unable to meet interest and/or principal payments. This risk is increased to
the extent the Underlying Fund invests in bonds related below investment-grade
bonds (junk bonds). An issuer’s securities may decrease in value if its
financial strength weakens, which may reduce its credit rating and possibly its
ability to meet its contractual obligations. Credit risks are increased where
interest rates are rising.
INTEREST
RATE RISK. Interest rate risk refers to the risk that bond prices generally fall
as interest rates rise; conversely, bond prices generally rise as interest rates
fall. Specific bonds differ in their sensitivity to changes in interest rates
depending on their individual characteristics. One measure of this sensitivity
is called duration. The longer the duration of a particular bond, the greater is
its price sensitivity to interest rates. Similarly, a longer duration portfolio
of securities has greater price sensitivity. In addition, changes in monetary
policy may exacerbate the risks associated with changing interest rates. An
increase in interest rates will generally cause the value of securities held by
a Portfolio or Underlying Fund to decline, may lead to heightened volatility in
the fixed-income markets and may adversely affect the liquidity of certain
fixed-income investments, including those held by a Portfolio or Underlying
Fund.
Falling interest rates may also
prompt some issuers to refinance existing debt, which could affect an Underlying
Fund’s performance.
During periods when interest
rates are low or there are negative interest rates, the Portfolio’s yield (and
total return) also may be low or otherwise adversely affected or the Portfolio
may be unable to maintain positive returns.
Certain countries have experienced negative interest
rates on certain debt securities. Negative or very low interest rates could
magnify the risks associated with changes in interest rates. In general,
changing interest rates, including rates that fall below zero, could have
unpredictable effects on markets and may expose debt and related markets to
heightened volatility and may detract from Portfolio performance to the extent a
Portfolio is exposed to such interest rates and/or volatility.
Governmental authorities and
regulators may enact significant fiscal and monetary policy changes, including
providing direct capital infusions into companies, creating new monetary
programs and lowering interest rates considerably. These actions present
heightened risks to debt instruments, and such risks could be even further
heightened if these actions are unexpectedly or suddenly reversed or are
ineffective in achieving their desired outcomes.
OPTIONS AND
FUTURES RISK. If a Portfolio or an Underlying Fund invests in options and/or
futures, its participation in these markets would subject the Portfolio or an
Underlying Fund to certain risks. An Adviser’s predictions of movements in the
direction of the stock, bond, stock index, currency or interest rate markets may
be inaccurate, and the adverse consequences to the Portfolio or an Underlying
Fund (e.g., a reduction in the Portfolio’s or Underlying Fund’s NAV or a
reduction in the amount of income available for distribution) may leave the
Portfolio or the Underlying Fund in a worse position than if these strategies
were not used. Other risks inherent in the use of options and futures include,
for example, the possible imperfect correlation between the price of options and
futures contracts and movements in the prices of the securities being hedged,
and the possible absence of a liquid secondary market for any particular
instrument. Certain options may be OTC options, which are options negotiated
with dealers; there is no secondary market for these investments.
FORWARD
CURRENCY CONTRACTS. A Portfolio’s or an Underlying Fund’s participation in
forward currency contracts also involves risks. If the Adviser employs a
strategy that does not correlate well with the Portfolio’s or the Underlying
Fund’s investments or the currencies in which the investments are denominated,
currency contracts could result in a loss. The contracts also may increase the
Portfolio’s or the Underlying Fund’s volatility and may involve a significant
risk.
DERIVATIVES RISK. A
derivative is an investment whose value depends on (or is derived from) the
value of an underlying asset (including an underlying security), reference rate
or index. Derivatives may be used as a substitute for purchasing the underlying
asset or as a hedge to reduce exposure to risks. The derivatives primarily used
by a Portfolio and/or the Underlying Funds include options, futures and swaps.
The use of derivatives involves risks similar to, as well as risks different
from, and possibly greater than, the risks associated with investing directly in
securities or other more traditional instruments. In the case of
over-the-counter (“OTC”) derivatives, they may be more difficult to purchase,
sell or value than other investments. When used for hedging or reducing
exposure, the derivative may not correlate perfectly with the underlying asset,
reference rate or index. The Portfolio or Underlying Fund could lose more than
the cash amount invested in derivatives.
Certain derivatives are also
subject to counterparty risk, which is the risk that the other party to the
contract will not fulfill its contractual obligation to complete the transaction
with the Portfolio or Underlying Fund. If a counterparty were to default on its
obligations, the Portfolio’s or Underlying Fund’s contractual remedies against
such counterparty may be subject to bankruptcy and insolvency laws, which could
affect the Portfolio’s or Underlying Fund’s rights as a creditor (e.g., the
Portfolio or Underlying Fund may not receive the amount of payments that it is
contractually entitled to receive). Central clearing and exchange trading of
certain derivatives are designed to reduce counterparty and liquidity risk, but
they do not eliminate those risks completely.
The use of derivatives involves
risks similar to, as well as risks different from, and possibly greater than,
the risks associated with investing directly in securities or other more
traditional instruments. In the case of OTC derivatives, they may be more
difficult to purchase, sell or value than other investments. When used for
hedging or reducing exposure, the derivative may not correlate perfectly with
the underlying asset, reference rate or index. The Underlying Fund could lose
more than the cash amount invested in derivatives. Changes in regulation
relating to a mutual fund’s use of derivatives and related instruments could
potentially limit or impact the Portfolio’s ability to invest in derivatives,
limit the Portfolio’s ability to employ certain strategies that use derivatives
and/or adversely affect the value of derivatives and the Portfolio’s
performance.
Compared to other types of
investments, derivatives may be less tax efficient. The use of certain
derivatives may cause the Portfolio or Underlying Fund to realize higher amounts
of ordinary income or short-term capital gains, distributions from which are
taxable to individual shareholders at ordinary income tax rates rather than at
the more favorable tax rates for long-term capital gain. In addition, changes in
government regulation of derivative instruments could affect the character,
timing and amount of the Portfolio’s or Underlying Fund’s taxable income or
gains, and may limit or prevent the Portfolio or Underlying Fund from using
certain types of derivative instruments as a part of its investment strategy,
which could make the investment strategy more costly to implement or require the
Portfolio or Underlying Fund to change its investment strategy. The Portfolio’s
or Underlying Fund’s use of derivatives also may be limited by the requirements
for taxation of the Portfolio or Underlying Fund as a regulated investment
company.
SPECIAL RISKS OF FUTURES.
Futures contracts are exchange-traded contracts that call for the future
delivery of an asset at a certain price and date, or cash settlement of the
terms of the contract. Risks of futures contracts may be caused by an imperfect
correlation between movements in the price of the instruments and the price of
the underlying assets. The liquidity of the futures market generally depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent that participants decide to make or take delivery of the
underlying investments, liquidity in this market could be reduced. Futures
contracts can be purchased with relatively small amounts of initial margin
compared to the cash value of the contracts. This economic leverage can increase
the volatility of the Portfolio or an Underlying Fund. Further, exchanges can
limit the number of positions that can be held or controlled by the Portfolio or
the Manager, thus limiting the ability to implement the Portfolio’s strategies.
Even a well-conceived futures transaction may be unsuccessful due to market
events.
SPECIAL RISKS OF SWAPS. Certain
swap transactions are structured as over-the-counter two-party contracts and are
therefore often less liquid than other types of investments, and the Portfolio
may be unable to sell or terminate its swap positions at a desired time or
price. Certain swaps, such as total return swaps where two parties agree to
“swap” payments on defined underlying assets or interest rates, can have the
potential for unlimited losses. Swaps are also subject to the risk that the swap
counterparty will not fulfill its contractual obligations. The swaps market is
subject to extensive regulation under the Dodd–Frank Wall Street Reform and
Consumer Protection Act (“Dodd-Frank”) and certain SEC and Commodity Futures
Trading Commission (“CFTC”) rules promulgated thereunder. It is possible that
developments in the swaps market, including new and additional government
regulation, could result in higher Portfolio or Underlying Fund costs and
expenses and could adversely affect the Portfolio’s or an Underlying Fund’s
ability, among other things, to terminate existing swap agreements or to realize
amounts to be received under such agreements.
SPECIAL RISKS OF OPTIONS. If
the Portfolio or an Underlying Fund sells (writes) a put option, there is risk
that the Portfolio or Underlying Fund may be required to buy the underlying
investment at a disadvantageous price. If the Portfolio or Underlying Fund sells
(writes) a call option, there is risk that the Portfolio or Underlying Fund may
be required to sell the underlying investment at a disadvantageous price. If the
Portfolio or Underlying Fund purchases a put option or call option, there is
risk that the price of the underlying investment will move in a direction that
causes the option to expire worthless. Options can involve economic leverage,
which could result in these investments experiencing greater volatility than
other investments, which could increase the volatility of the Portfolio or
Underlying Fund.
SPECIAL RISKS OF FORWARD
FOREIGN CURRENCY CONTRACTS. A forward foreign currency contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract. The cost to the
Portfolio of engaging in forward foreign currency contracts varies with factors
such as the currencies involved, the length of the contract period, interest
rate differentials and the prevailing market conditions. Because forward foreign
currency contracts are usually entered into on a principal basis, no fees or
commissions are typically involved. The use of forward foreign currency
contracts does not eliminate fluctuations in the prices of the underlying
securities the Portfolio owns or intends to acquire, but it does establish a
rate of exchange in advance. While forward foreign currency contract sales limit
the risk of loss due to a decline in the value of the hedged currencies, they
also limit any potential gain that might result should the value of the
currencies increase.
PARTICIPATION NOTES. P-Notes
are issued by banks or broker-dealers and are designed to offer a return linked
to the performance of a particular underlying equity security or market. P-Notes
can have the characteristics or take the form of various instruments, including,
but not limited to, certificates or warrants. The holder of a P-Note that is
linked to a particular underlying security is entitled to receive any dividends
paid in connection with the underlying security. However, the holder of a P-Note
generally does not receive voting rights as it would if it directly owned the
underlying security.
P-Notes constitute direct,
general and unsecured contractual obligations of the banks or broker-dealers
that issue them, subjecting a Portfolio or an Underlying Fund to counterparty
risk. Investments in P-Notes involve certain risks in addition to those
associated with a direct investment in the underlying foreign companies or
foreign securities markets whose return they seek to replicate. For instance,
there can be no assurance that the trading price of a P-Note will equal the
underlying value of the foreign company or foreign securities market that it
seeks to replicate.
As the purchaser of a P-Note, a
Portfolio is relying on the creditworthiness of the counterparty issuing the
P-Note and has no rights under a P-Note against the issuer of the underlying
security. Therefore, if such counterparty were to become insolvent, the
Portfolio or Underlying Fund would lose its investment. The risk that a
Portfolio or an Underlying Fund may lose its investments due to the insolvency
of a single counterparty may be amplified to the extent the Portfolio or
Underlying Fund purchases P-Notes issued by one issuer or a small number of
issuers. P-Notes also include transaction costs in addition to those applicable
to a direct investment in securities.
Due to liquidity and transfer
restrictions, the secondary markets on which P-Notes are traded may be less
liquid than the markets for other securities, which may lead to the absence of
readily available market quotations for securities in a Portfolio or an
Underlying Fund. The ability of a Portfolio or an Underlying Fund to value its
securities becomes more difficult and the judgment in the application of fair
value procedures may play a greater role in the valuation of the Portfolio’s or
an Underlying Fund’s securities due to reduced availability of reliable
objective pricing data. Consequently, while such determinations will be made in
good faith, it may nevertheless be more difficult for a Portfolio or an
Underlying Fund to accurately assign a daily value to such
securities.
SMALL AND
MEDIUM CAPITALIZATION COMPANIES. Certain Portfolios and/or Underlying Funds may
invest in companies with small and/or medium market capitalizations. Market
capitalization refers to the total market value of the outstanding stock of a
company.
Investing in
such companies may involve more risk than is usually associated with investing
in larger, more established companies. Small and medium capitalization companies
and the industries in which they are involved frequently are still maturing and
are more sensitive to changing market conditions than larger companies in more
established industries. Small companies often have limited product lines,
markets, financial resources and less experienced management. Small and medium
capitalization companies are often traded in the OTC market, and the low market
liquidity of these securities may have an adverse effect on the ability of a
Portfolio to sell certain securities at favorable prices.
Such
securities usually trade in lower volumes and are subject to greater and more
unpredictable price fluctuations than larger capitalization securities or the
stock market in general. This also may impede the Portfolio’s or an Underlying
Fund’s ability to obtain market quotations based on actual trades in order to
value the Portfolio’s or Underlying Fund’s securities. Small and medium
capitalization securities may have returns that can vary, occasionally
significantly, from the market in general. In addition, small and medium
capitalization companies may not pay a dividend. Although income may not be a
primary goal of a Portfolio or an Underlying Fund, dividends can cushion returns
in a falling market.
MICRO
CAPITALIZATION COMPANIES. Certain Portfolios and/or Underlying Funds may invest
in companies with micro capitalizations. Micro capitalization stocks may offer
greater opportunity for capital appreciation than the stocks of larger and more
established companies; however, they also involve substantially greater risks of
loss and price fluctuations. Micro capitalization companies carry additional
risks because their earnings and revenues tend to be less predictable (and some
companies may be experiencing significant losses), and their share prices tend
to be more volatile and their markets less liquid than companies with larger
market capitalizations. Micro capitalization companies may be newly formed or in
the early stages of development, with limited product lines, markets or
financial resources and may lack management depth. In addition, there may be
less public information available about these companies. The shares of micro
capitalization companies tend to trade less frequently than those of larger,
more established companies, which can adversely affect the pricing of these
securities and the future ability to sell these securities. Also, it may take a
long time before the Portfolio realizes a gain, if any, on an investment in a
micro capitalization company.
VALUE STYLE
INVESTING RISK. Certain Portfolios or Underlying Funds may use a “value” style
investment strategy. Value investing involves buying stocks that are out of
favor and/or undervalued in comparison to their peers or their prospects for
growth. Typically, their valuation levels are lower than those of growth stocks.
Because different types of stocks go out of favor with investors depending on
market and economic conditions, a Portfolio or an Underlying Fund’s return may
be adversely affected during market downturns and when value stocks are out of
favor.
GROWTH STYLE
INVESTING RISK. Certain Portfolios or Underlying Funds may use a “growth” style
investment strategy. Growth investing involves buying stocks that have
relatively high price-to-earnings ratios. Growth stocks may be more volatile
than other stocks because they are generally more sensitive to investor
perceptions and market moves. During periods of growth stock underperformance, a
Portfolio or an Underlying Fund’s performance may suffer.
SECTOR
CONCENTRATION RISK. Sector concentration risk is the possibility that securities
within the same sector will decline in price due to sector-specific market or
economic developments. To the extent a Portfolio invests more heavily in
particular sectors of the economy, its performance will be especially sensitive
to developments that significantly affect those sectors. Additionally, some
sectors (for example, the financial services and energy sectors, among others)
could be subject to greater government regulation than other sectors. Therefore,
changes in regulatory policies for those sectors may have a material effect on
the value of securities issued by companies in those sectors.
LIMITED
HOLDINGS RISK. A Portfolio may have a relatively high percentage of assets in a
single or small number of issuers or Underlying Funds. As a result, a decline in
the value of a single issuer or Underlying Fund could cause a Portfolio’s
overall value to decline to a greater degree than if the Portfolio invested in a
larger number of issuers and/or Underlying Funds.
CONVERTIBLE SECURITIES. Certain
Portfolios and/or Underlying Funds may invest a portion of their assets in
convertible securities, which are securities that generally pay interest and may
be converted into common stock. These securities may carry risks associated with
both fixed-income securities and common stocks. To the extent that a convertible
security’s investment value is greater than its conversion value, its price will
be likely to increase when interest rates fall and decrease when interest rates
rise, as with a fixed-income security. If the conversion value exceeds the
investment value, the price of the convertible security will tend to fluctuate
directly with the price of the underlying equity security.
PORTFOLIO
TURNOVER. The frequency of a Portfolio’s or an Underlying Fund’s transactions
will vary from year to year. Increased portfolio turnover may result in higher
brokerage commissions, dealer mark-ups and other transaction costs and may
result in taxable capital gains. Higher costs associated with increased
portfolio turnover may offset gains in a Portfolio’s or an Underlying Fund’s
performance.
ZERO-COUPON SECURITIES RISK.
The market value of a zero-coupon security is generally more volatile than the
market value of an interest-paying security, and is more likely to respond to a
greater degree to changes in interest rates and credit quality than other fixed
income securities with similar maturities that pay interest periodically. In
addition, federal income tax law requires that the holder of a zero-coupon bond
accrue a portion of the discount at which the bond was purchased as taxable
income each year, even though the holder receives no interest payment on the
bond during the year.
Each Underlying Fund must
distribute substantially all of its net income (including non-cash income
attributable to zero-coupon bonds) to its shareholders each year to maintain its
status as a regulated investment company and to eliminate tax at the Underlying
Fund level. Accordingly, such accrued discount must be taken into account in
determining the amount of taxable distributions to shareholders. An Underlying
Fund may consequently have to dispose of portfolio securities under
disadvantageous circumstances to generate cash to satisfy such distribution
requirements. These actions may reduce the assets to which the Underlying Fund’s
expenses could otherwise be allocated and may reduce the Underlying Fund’s (and
thus the Portfolio’s) rate of return.
EXCHANGE-TRADED
FUNDS RISK. Shares of ETFs have many of the same risks as direct investments in
securities. In addition, their market value is expected to rise and fall as the
value of the underlying index or portfolio securities rises and falls. The
market value of their shares may differ from the net asset value of the
particular fund and shares may trade at a price above their NAV (premium) or
below their NAV (discount), especially during periods of market volatility or
stress, causing investors to pay significantly more or less than the value of
the ETF’s underlying portfolio. Also, ETFs that track particular indices
typically will be unable to match the performance of the index exactly due to,
among other things, the ETF’s operating expenses and transaction
costs.
As a
shareholder in an ETF (as with other investment companies), if a Portfolio
invests in shares of ETFs it would bear its ratable share of that entity’s
expenses. At the same time, the Portfolio would continue to pay its own
investment management fees and other expenses. As a result, the Portfolio and
its shareholders, in effect, will be absorbing duplicate levels of fees with
respect to investments in ETFs. In addition, the Portfolio would have increased
market exposure to those companies held in its portfolio that are also held by
the ETF. The securities of other investment companies and ETFs in which a
Portfolio may invest may be leveraged. As a result, the Portfolio may be
indirectly exposed to leverage through an investment in such securities. The
Portfolios will not invest in leveraged ETFs as a principal investment strategy.
An investment in securities of other investment companies and ETFs that use
leverage may expose the Portfolio to higher volatility in the market value of
such securities and the possibility that the Portfolio’s long-term returns on
such securities (and, indirectly, the long-term returns of the shares) will be
diminished. Subject to applicable law and/or pursuant to an exemptive order
obtained from the SEC or under an exemptive rule adopted by the SEC, the
Portfolio may invest in other investment companies, including ETFs, in excess of
the limits of Section 12(d)(1) of the Investment Company of 1940 Act, as
amended (the “1940 Act”). The market prices of ETF shares will fluctuate, in
some cases materially, in response to changes in the ETF’s NAV and supply and
demand for shares. Differences between secondary market prices and the value of
an ETF’s holdings may be due largely to supply and demand forces in the
secondary market, which may not be the same forces as those influencing prices
for securities held by the ETF at a particular time. While the
creation/redemption feature of ETFs is designed to make it likely that shares
normally will trade close to the value of an ETF’s holdings, disruptions to
creations and redemptions, including disruptions at market makers, authorized
participants (“APs”) or market participants, or during periods of market
volatility, may result in trading prices that differ significantly from the
value of an ETF’s holdings. Although market makers will generally take advantage
of differences between the NAV and the market price of ETF shares through
arbitrage opportunities, there is no guarantee that they will do so. In
addition, an ETF may have a limited number of financial institutions that may
act as APs or market makers. If those APs exit the business or are unable to
process creation and/or redemption orders (including in situations where APs
have limited or diminished access to capital required to post collateral), and
no other AP is able to step forward to create and redeem in either of these
cases, an ETF’s shares may trade at a discount to NAV like closed-end fund
shares (and may even face delisting). Similar effects may result if market
makers exit the business or are unable to continue making markets in ETF shares.
ETFs also involve the risk that an active trading market for an ETF’s shares may
not develop or be maintained. In addition, ETFs that track particular indices
may be unable to match the performance of such underlying indices due to the
temporary unavailability of certain index securities in the secondary market or
other factors, such as discrepancies with respect to the weighting of
securities.
The market price of shares,
like the price of any exchange-traded security, includes a “bid-ask spread”
charged by the exchange specialist, market makers or other participants that
trade the particular security. In times of severe market disruption, the bid-ask
spread often increases significantly. This means that shares may trade at a
discount to an ETF’s NAV, and the discount is likely to be greatest when the
price of shares is falling fastest. In addition, the securities held by an ETF
may be traded in markets that close at a different time than the NYSE. Liquidity
in those securities may be reduced after the applicable closing times.
Accordingly, during the time when NYSE is open but after the applicable market
closing, fixing or settlement times, bid-ask spreads and the resulting premium
or discount to the ETF shares’ NAV is likely to widen. More generally, secondary
markets may be subject to irregular trading activity, wide bid-ask spreads and
extended trade settlement periods, which could cause a material decline in an
ETF’s NAV.
The bid-ask spread varies over
time for shares of an ETF based on the ETF’s trading volume and market
liquidity, and is generally lower if the ETF has substantial trading volume and
market liquidity, and higher if the ETF has little trading volume and market
liquidity (which is often the case for funds that are newly launched or small in
size).
An ETF’s bid-ask spread may
also be impacted by the liquidity of the underlying securities held by the ETF,
particularly for newly launched or smaller funds or in instances of significant
volatility of the underlying securities. In addition, transactions by large
shareholders may account for a large percentage of the trading volume of an ETF
and may, therefore, have a material effect on the market price of the ETF’s
shares.
INTEREST RATE CHANGES. Debt
securities have varying levels of sensitivity to changes in interest rates. In
general, the price of a debt security may fall when interest rates rise and may
rise when interest rates fall. Securities with longer maturities may be more
sensitive to interest rate changes. Generally, the longer the average duration
of the bonds in a Portfolio, the more the Portfolio’s share price will fluctuate
in response to interest rate changes.
Duration is
a measure used to determine the sensitivity of a security’s price to changes in
interest rates that incorporates a security’s yield, coupon, final maturity and
call features, among other characteristics. For example, the price of a bond
fund with an average duration of eight years would be expected to fall
approximately 8% if interest rates rose by one percentage point. Conversely, the
price of a bond fund with an average duration of negative three years would be
expected to rise approximately 3% if interest rates rose by one percentage
point. However, duration may not accurately reflect the true interest rate
sensitivity of instruments held by a Portfolio and, in turn, a Portfolio’s
susceptibility to changes in interest rates.
REAL ESTATE INVESTMENT TRUSTS
AND FOREIGN REAL ESTATE COMPANIES. REITs and foreign real estate companies
expose a Portfolio or an Underlying Fund to the risks of the real estate market.
These risks can include fluctuations in the value of underlying properties;
defaults by borrowers or tenants; market saturation; changes in general and
local, regional or general economic conditions; decreases in market rates for
rents; increases in vacancies, competition, property taxes, capital
expenditures, or operating expenses;, deterioration of the real estate market
and the financial circumstances of tenants and sellers, environmental factors
and other economic, political or regulatory occurrences affecting the real
estate industry. REITs and foreign real estate companies may also be affected by
risks similar to those associated with investment in debt securities, including
changes in interest rates and the quality of credit extended. REITs and foreign
real estate companies require specialized management and pay management
expenses; may have less trading volume; may be subject to more abrupt or erratic
price movements than the overall securities markets; may not qualify for
preferential tax treatments or exemptions; and may invest in a limited number of
properties, in a narrow geographic area, or in a single property type, which
increases the risk that the portfolio could be unfavorably affected by the poor
performance of a single investment or investment type. The failure of a company
to qualify as a REIT could have adverse consequences for a Portfolio, including
significantly reducing return to a Portfolio on its investment in such
company.
In the event of a default of an
underlying borrower or lessee, a REIT could experience delays in enforcing its
rights as a mortgagee or lessor and may incur substantial costs associated with
protecting its investments. In addition, defaults on or sales of investments the
REIT holds could reduce the cash flow needed to make distributions to investors.
Furthermore, investments in REITs and foreign real estate companies may involve
duplication of management fees and certain other expenses, as the Fund
indirectly bears its proportionate share of any expenses paid by REITs and
foreign real estate companies in which it invests.
FUND OF FUNDS RISK. To the
extent that a Portfolio’s or an Underlying Fund’s exposure is achieved through
investments in Underlying Funds, the Portfolio’s performance will depend on such
funds and it will be subject to the risks of the Underlying Funds. There can be
no assurance that the Underlying Funds will achieve their investment objectives,
and their performance may be lower than their represented asset classes. The
Underlying Funds may change their investment objectives, policies or practices
without the approval of the Portfolios or the Underlying Fund, which may cause
the Portfolio or the Underlying Fund to withdraw its investments therein at a
disadvantageous time.
MORTGAGE-
AND ASSET-BACKED SECURITIES RISK. Certain Underlying Funds may invest in
mortgage and asset-backed securities that are subject to prepayment or call
risk, which is the risk that the borrower’s payments may be received earlier or
later than expected due to changes in prepayment rates on underlying loans.
Faster prepayments often happen when interest rates are falling. As a result,
the Underlying Fund may reinvest these early payments at lower interest rates,
thereby reducing the Underlying Fund’s income. Conversely, when interest rates
rise, prepayments may happen more slowly, causing the security to lengthen in
duration. Longer duration securities tend to be more volatile as the value of
most mortgage- and asset-backed securities tends to vary inversely with changes
in interest rates (i.e., as interest rates increase, the value of the
securities decrease). Securities may be prepaid at a price less than the
original purchase value.
The risks associated with
mortgage-backed securities are elevated in distressed economic, market, health
and labor conditions, notably, increased levels of unemployment, delays and
delinquencies in payments of mortgage and rent obligations, and uncertainty
regarding the effects and extent of government intervention with respect to
mortgage payments and other economic matters.
Delinquencies,
defaults and losses on residential mortgage loans may increase substantially
over certain periods, including periods of rising interest rates, which may
affect the performance of the mortgage-backed securities in which a Portfolio
may invest. Mortgage loans backing non-agency mortgage-backed securities are
more sensitive to economic factors that could affect the ability of borrowers to
pay their obligations under the mortgage loans backing these securities. In
addition, housing prices and appraisal values in many states and localities over
certain periods have declined or stopped appreciating. A sustained decline or an
extended flattening of those values may result in additional increases in
delinquencies and losses on mortgage-backed securities generally (including the
mortgage-backed securities that the Portfolio may invest in as described above).
Adverse changes in market conditions and regulatory climate may reduce the cash
flow which a Portfolio, to the extent it invests in mortgage-backed securities
or other asset-backed securities, receives from such securities and increase the
incidence and severity of credit events and losses in respect of such
securities. In the event that interest rate spreads for mortgage-backed
securities and other asset-backed securities widen following the purchase of
such assets by a Portfolio, the market value of such securities is likely to
decline and, in the case of a substantial spread widening, could decline by a
substantial amount. Furthermore, adverse changes in market conditions may result
in reduced liquidity in the market for mortgage-backed securities and other
asset-backed securities (including the mortgage-backed securities and other
asset-backed securities in which a Portfolio may invest) and an unwillingness by
banks, financial institutions and investors to extend credit to servicers,
originators and other participants in the market for mortgage-backed and other
asset-backed securities. As a result, the liquidity and/or the market value of
any mortgage-backed or asset-backed securities that are owned by a Portfolio may
experience declines after they are purchased by a Portfolio.
BONDS/FIXED INCOME SECURITIES.
If a security is given different ratings by different nationally recognized
statistical rating organizations, the Manager and/or the Portfolios’ adviser
considers the security’s rating to be the highest rating of the
ratings.
Investments
in Mutual Funds Risk. Certain Portfolios may invest
in Underlying Funds as a primary strategy, so a Portfolio’s performance is
directly related to the performance of the Underlying funds. A Portfolio’s net
asset value will change with the value of the Underlying Funds and changes in
the markets where the Underlying Funds invest. Because the Manager or its
affiliates provide services to and receive fees, including supervision fees,
from some of the Saratoga Funds, some of the investments in a Portfolio benefit
the Manager and/or its affiliates. In addition, a Portfolio may hold a
significant percentage of the shares of an Underlying Fund.
As a result, a Portfolio’s
investments in an Underlying Fund may create a conflict of interest because a
situation could occur where an action for a Portfolio could be adverse to the
interest of an Underlying Fund or vice versa.
LIQUIDITY
RISK. Certain Portfolios may hold illiquid securities that it is unable to sell
at the preferred time or price and could lose its entire investment in such
securities. Illiquidity can result because of a reduction in market trading
volume, an inability to find a buyer, or legal restrictions on the securities’
resale. Investments with an active trading market or that the Manager and/or
Sub-Adviser otherwise deems liquid could become illiquid before the Portfolio
can exit its positions. The Portfolio may also make investments that may become
less liquid in response to market developments or adverse investor perceptions.
Investments that are illiquid or that trade in lower volumes may be more
difficult to value. When there is no willing buyer and investments cannot be
readily sold at the desired time or price, the Portfolio may have to accept a
lower price or may not be able to sell the security or instrument at all and
could lose its entire investment in such investments. Investments in foreign
securities, particularly those of issuers located in emerging market countries,
tend to have greater exposure to liquidity risk than domestic securities. In
unusual market conditions, including periods of rapid interest rate changes,
even normally liquid securities may be affected by a degree of liquidity risk
(i.e., if the number and capacity of traditional market participants is
reduced). The liquidity of the Portfolio’s assets may change over
time.
Liquidity
risk also refers to the risk that the Portfolio will not be able to pay
redemption proceeds in time or without significant dilution to remaining
investors’ interests. This may occur for reasons including unusual market
conditions, declining prices of the securities sold, and/or an unusually high
volume of redemption requests.
COMMON STOCK RISK. Certain
Underlying Funds invest their net assets in common stocks. Common stocks
represent an ownership interest in a company. Common stocks are more volatile
and more risky than some other forms of investment. Therefore, the value of your
investment in the Portfolio may sometimes decrease instead of
increase.
Common stock prices fluctuate
for many reasons, including changes in investors’ perceptions of the financial
condition of an issuer, the general condition of the relevant stock market or
when political or economic events affecting the issuer occur. In addition,
common stock prices may be sensitive to rising interest rates, as the costs of
capital rise for issuers. The common stocks in which an Underlying Fund invests
are structurally subordinated to preferred securities, bonds and other debt
instruments in a company’s capital structure in terms of priority to corporate
income and assets and, therefore, will be subject to greater risk than the
preferred securities or debt instruments of such issuers.
U.S. GOVERNMENT SECURITIES
RISK. U.S. government-sponsored enterprises are not backed by the full faith and
credit of the U.S. government. There is the risk that the U.S. government will
not provide financial support to such U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so by
law. Certain U.S. government securities purchased by the Portfolio, such as
those issued by Fannie Mae and Freddie Mac, are not backed by the full faith and
credit of the United States. The maximum potential liability of the issuers of
some U.S. government securities held by the Portfolio may greatly exceed their
current resources, including their legal right to support from the Treasury. It
is possible that these issuers will not have the funds to meet their payment
obligations in the future.
EQUITY SECURITIES RISK. Certain
Portfolios are subject to risks associated with investing in equity securities,
including market risk, issuer risk, price volatility risks and market trends
risk. A Portfolio’s ability to achieve its investment objective may be affected
by the risks attendant to any investment in equity securities.
EXCHANGE-TRADED NOTE (“ETN”)
RISK. Generally, ETNs are structured as senior, unsecured notes in which an
issuer such as a bank agrees to pay a return based on the target commodity index
less any fees. ETNs are synthetic instruments that allow individual investors to
have access to derivatives linked to commodities and assets such as oil,
currencies and foreign stock indexes. ETNs combine certain aspects of bond and
ETFs. Similar to ETFs, ETNs are traded on a major exchange (e.g., the New York
Stock Exchange (“NYSE”)) during normal trading hours. There may be restrictions
on the Portfolio’s right to redeem its investment in an ETN, which is meant to
be held until maturity. The Portfolio’s decision to sell its ETN holdings may be
limited by the unavailability of a secondary market At maturity, the issuer pays
to the investor a cash amount equal to the principal amount, subject to the
day’s index factor. ETN returns are based upon the performance of a market index
minus applicable fees. ETNs are subject to the credit risk of the issuer, and
the value of the ETN may drop due to a downgrade in the issuer’s credit rating,
despite the underlying market benchmark or assets remaining unchanged. The value
of an ETN may also be influenced by time to maturity, level of supply and demand
for the exchange-traded note, volatility and lack of liquidity in the underlying
market, changes in the applicable interest rates and economic, legal, political
or geographic events that affect the referenced underlying market or assets.
ETNs are also subject to the risk that the other party to the contract will not
fulfill its contractual obligations, which may cause losses or additional costs
to the Portfolio. When a Portfolio invests in exchange-traded notes it will bear
its proportionate share of any fees and expenses borne by the ETN, which may
cause the Portfolio’s operating expenses to be higher and its performance to be
lower.
RISK ASSOCIATED WITH THE PORTFOLIO HOLDING CASH. A
Portfolio will generally hold a portion of its assets in cash, primarily to meet
redemptions. Cash positions may hurt performance and may subject a Portfolio to
additional risks and costs, such as increased exposure to the custodian bank
holding the assets and any fees imposed for large cash balances.
TRANSACTIONS RISK. A Portfolio could experience a
loss and its liquidity may be negatively impacted when selling securities to
meet redemption requests. The risk of loss increases if the redemption requests
are unusually large or frequent or occur in times of overall market turmoil or
declining prices. Similarly, large purchases of Portfolio shares may adversely
affect the Portfolio’s performance to the extent that the Portfolio is delayed
in investing new cash and is required to maintain a larger cash position than it
ordinarily would.
Principal Risks of Investing
in the Asset Allocation Portfolios
In addition to the Principal
Risks above, the Asset Allocation Portfolios are subject to the following
Principal Risks:
BONDS/FIXED INCOME SECURITIES.
If a security is given different ratings by different nationally recognized
statistical rating organizations, the Asset Allocation Portfolios’ adviser
considers the security’s rating to be the highest rating of the ratings. The
Portfolios do not seek to maintain a set duration with respect to their
investments in fixed income investments and any duration target may change. The
Underlying Funds may target a range of durations in connection with their
investment strategies. Duration is a measure of price sensitivity of a debt
security or a portfolio of debt securities to relative changes in interest
rates. For instance, a duration of “five years” means that a security’s or
portfolio’s price would be expected to decrease by approximately 5% with a 1%
increase in interest rates (assuming a parallel shift in yield
curve).
SOVEREIGN
DEBT RISK. A Portfolio may invest in securities issued or guaranteed by foreign
governmental entities (known as sovereign debt securities). The governmental
authority that controls the repayment of sovereign debt may be unwilling or
unable to repay the principal and/or interest when due in accordance with the
terms of such securities due to: cash flow problems; the extent of its foreign
currency reserves; the availability of sufficient foreign exchange on the date a
payment is due; the relative size of the debt service burden to the economy as a
whole; the general economic environment of a country; the government debtor’s
policy towards the International Monetary Fund and the political and social
constraints to which a government debtor may be subject. Holders of sovereign
debt may be requested to participate in the rescheduling of such debt and to
extend further loans to governmental entities. If an issuer of sovereign debt
defaults on payments of principal and/or interest, the Portfolio may have
limited legal recourse against the issuer and/or guarantor. In certain cases,
remedies must be pursued in the courts.
ISSUER RISK. The value of an
issuer’s securities that are held in an Underlying Fund’s portfolio may decline
for a number of reasons which directly relate to the issuer, such as management
performance, financial leverage and reduced demand for the issuer’s goods and
services.
ALTERNATIVE INVESTMENT RISK.
Certain Asset Allocation Funds may use alternative investment strategies.
Alternative investment strategies, which may include, but are not limited to,
investing in or having exposure to real estate, commodities, foreign currency,
natural resources, MLP and other non-traditional investments, or following
event-driven, macro, long-short, market neutral, merger arbitrage, or other
tactical investment strategies, may involve complex security types or
transactions and/or focus on narrow segments of the market, which may increase
and/or magnify the overall risks and volatility associated with these
strategies.
COUNTERPARTY RISK. Individually
negotiated or OTC derivative instruments in which an Underlying Fund may invest
such as OTC swaps and options, are subject to counterparty risk, which is the
risk that the other party to a contract will not fulfill its contractual
obligations, which may cause losses or additional costs to the Underlying
Fund.
COMMODITIES RISK. An Underlying
Fund or its subsidiary may invest in commodity-linked investments that may
subject it to greater volatility than investments in traditional securities. The
commodities markets may fluctuate widely based on a variety of factors,
including changes in overall market movements, domestic and foreign political
and economic events and policies, war, acts of terrorism, changes in domestic or
foreign interest rates and/or investor expectations concerning interest rates,
domestic and foreign inflation rates and investment and trading activities of
mutual funds, hedge funds and commodities funds. Prices of various commodities
may also be affected by factors such as drought, floods, weather, livestock
disease, embargoes, tariffs and other regulatory developments. The prices of
commodities can also fluctuate widely due to supply and demand disruptions in
major producing or consuming regions. Also, ETFs and certain other commodity-
linked derivative investments may subject the Underlying Fund and its subsidiary
to leveraged market exposure for commodities.
HEDGE FUND RISK. Certain
Underlying Funds may invest in private investment funds, or “hedge funds,” which
pursue alternative investment strategies. Certain investment instruments and
techniques that a hedge fund may use are speculative and involve a high degree
of risk. Because of the speculative nature of a hedge fund’s investments and
trading strategies, the Underlying Fund may suffer a significant or complete
loss of its invested capital in one or more hedge funds. In addition to the
Underlying Fund’s direct fees and expenses, shareholders will also bear,
indirectly, fees and expenses charged by the underlying hedge funds, which are
often greater than the Underlying Fund’s fees and expenses. In addition,
interests in a hedge fund are typically less liquid than shares of a registered
investment companies such as an Underlying Fund and, therefore, the Underlying
Fund may be unable to sell its shares in the hedge fund at a desirable time or
price.
MLP RISK. Certain Underlying
Funds invest in master limited partnerships (“MLPs”) An MLP is a public limited
partnership or limited liability company. Although the characteristics of MLPs
closely resemble a traditional limited partnership, a major difference is that
MLPs may trade on a public exchange or in the over- the-counter market. The
ability to trade on a public exchange or in the over-the-counter market provides
a certain amount of liquidity not found in many limited partnership investments.
However, MLP interests may be less liquid than conventional publicly traded
securities. The risks of investing in an MLP are similar to those of investing
in a partnership, including more flexible governance structures, which could
result in less protection for investors than investments in a
corporation.
The managing general partner of
an MLP may receive an incentive allocation based on increases in the amount and
growth of cash distributions to investors in the MLP. This method of
compensation may create an incentive for the managing general partner to make
investments that are riskier or more speculative than would be the case in the
absence of such compensation arrangements. Investors in an MLP would normally
not be liable for the debts of the MLP beyond the amount that the investor has
contributed but investors may not be shielded to the same extent that a
shareholder of a corporation would be. In addition, MLP distributions may be
reduced by fees and other expenses incurred by the MLP. Investments in MLPs may
involve duplication of management fees and certain other expenses, as the
Portfolio indirectly bears its proportionate share of any expenses paid by MLPs
in which it invests. Such expenses are not reflected in the above fee table.
MLPs are generally considered interest-rate sensitive investments. During
periods of interest rate volatility, these investments may not provide
attractive returns.
Certain MLPs may operate in, or
have exposure to, the energy sector. The energy sector can be significantly
affected by changes in the prices and supplies of oil and other energy fuels,
energy conservation, the success of exploration projects and tax and other
government regulations, policies of the Organization of Petroleum Exporting
Countries (OPEC) and relationships among OPEC members and between OPEC and oil
importing nations.
MLP TAX RISK. MLPs generally do
not pay U.S. federal income tax at the partnership level. Rather, each partner
is allocated a share of the partnership’s income, gains, losses, deductions and
expenses. A change in current tax law, or a change in the underlying business
mix of a given MLP, could result in an MLP being treated as a corporation for
U.S. federal income tax purposes, which would result in such MLP being required
to pay U.S. federal income tax on its taxable income. The classification of an
MLP as a corporation for U.S. federal income tax purposes would have the effect
of reducing the amount of cash available for distribution by the MLP. Thus, if
any of the MLPs owned by the Underlying Fund were treated as corporations for
U.S. federal income tax purposes, it could result in a reduction in the value of
the Portfolio’s investment in the Underlying Fund and lower income.
Distributions from an MLP in
excess of the Underlying Fund’s basis in the MLP will generally be treated as
capital gain. However, a portion of the gain may instead be treated as ordinary
income to the extent attributable to certain assets held by the MLP the sale of
which would produce ordinary income. To the extent a distribution received by
the Underlying Fund from an MLP is treated as a return of capital, the
Underlying Fund’s adjusted tax basis in the interests of the MLP may be reduced,
which will result in an increase in an amount of income or gain (or de-crease in
the amount of loss) that will be recognized by the Underlying Fund for tax
purposes upon the sale of any such interests or upon subsequent distributions in
respect of such interests. Furthermore, any return of capital distribution
received from the MLP may require the Underlying Fund (and thus a Portfolio) to
restate the character of its distributions and amend any shareholder tax
reporting previously issued.
PRIVATE EQUITY RISK. Certain
Underlying Funds may invest in instruments that provide exposure to private
equity strategies, including direct or indirect investments in mezzanine debt
and leveraged buyout strategies. The risks an Underlying Fund may face when
investing in private equity-related investments, including the possible
illiquidity of such investments and the risk that the companies in which a
private equity firm invests its capital do not survive (which would decrease the
value of the firm or the fund it creates and, consequently, the value of the
Underlying Fund’s private equity-related investments). Investments in private
equity instruments are subject to additional risks, including liquidity risk,
valuation risk, legal and regulatory risks and tax risk. Private equity-related
investments may include illiquid securities that the Portfolio is unable to sell
at the preferred time or price and could lose its entire investment in such
securities.
Private equity-related
investments are subject to valuation risk partly because there is little or no
publicly available information about private companies. These instruments are
usually highly illiquid and may have restrictions on redemptions. In addition,
recent economic events have given rise to a political climate that may result in
private equity investments becoming subject to increased regulatory scrutiny
and/or entirely new legal, tax or regulatory regimes both within the United
States and in other countries in which the Portfolio may directly or indirectly
invest. The Portfolio’s private equity-related investments may be adversely
affected as a result of new or revised legislation, or regulations imposed by
the Securities and Exchange Commission (“SEC”), Commodity Futures Trading
Commission (“CFTC”), Internal Revenue Service (“IRS”), Federal Reserve, other
U.S. or non-U.S. tax or governmental regulatory authorities or self-regulatory
organizations that supervise the financial markets.
Structurally, mezzanine debt
usually ranks subordinate in priority of payment to senior debt, such as senior
bank debt, and are often unsecured. However, mezzanine loans rank senior to
common and preferred equity in a borrower’s capital structure. Mezzanine debt is
often used in leveraged buyout and real estate finance transactions. Due to the
higher risk profile and often less restrictive covenants of mezzanine loans as
compared to senior loans, mezzanine loans sometimes earn a higher return than
senior secured loans. Typically, mezzanine debt has elements of both debt and
equity instruments, offering fixed returns in the form of interest payments
associated with senior debt, while providing lenders an opportunity to
participate in the capital appreciation of a borrower, if any, through an equity
interest. This equity interest typically takes the form of warrants.
LEVERAGE RISK. Leverage exists
when an Underlying Fund purchases or sells an instrument or enters into a
transaction without investing cash in an amount equal to the full economic
exposure of the instrument or transaction. Such instruments may include, among
others, written options and other derivatives.
To the extent that an
Underlying Fund is not able to close out a leveraged position because of market
illiquidity, the Underlying Fund’s liquidity may be impaired. In such cases, the
Underlying Fund may be required to liquidate positions when it may not be
advantageous to do so. Leveraging may cause an Underlying Fund to be more
volatile because it may exaggerate the effect of any increase or decrease in the
value of the Underlying Fund’s portfolio securities. There can be no assurance
that an Underlying Fund’s leverage strategies will be successful. Certain
investments, such as ETFs, may include “embedded” leverage, which means the ETF
pays a return linked to a multiple of the performance of an underlying index,
securities basket or other reference asset. These investments may be more
volatile than investments in unlevered securities, which may increase the
volatility of an Underlying Fund, and thus a Portfolio.
QUANTITATIVE
STRATEGY RISK. Certain Underlying Funds may use quantitative mathematical models
that rely on patterns inferred from historical prices and other financial data
in evaluating prospective investments. However, most quantitative models cannot
fully match the complexity of the financial markets and therefore sudden
unanticipated changes in underlying market conditions can significantly impact
the performance of the Underlying Fund. Further, as market dynamics shift over
time, a previously highly successful model may become outdated. Moreover, there
are an increasing number of market participants who rely on quantitative
mathematical models. These models may be similar to those used by the Underlying
Fund, which may result in a substantial number of market participants taking the
same action with respect to an investment and some of these market participants
may be substantially larger than the Underlying Fund.
SHORT SALES RISK. Short sales
involve selling a security the Portfolio does not own in anticipation that the
security’s price will decline. If an Underlying Fund sells short a security that
it does not own and the security increases in value, the Underlying Fund will
pay a higher price to repurchase the security and thereby incur a loss. A short
position in a security poses more risk than holding a long position in the same
security. It is possible that the market value of the securities the Underlying
Fund holds in long positions will decline at the same time that the market value
of the securities the Portfolio has sold short increases, thereby increasing the
Underlying Fund’s potential volatility. The more the Underlying Fund pays, the
more it will lose on the transaction, which adversely affects its share price.
The loss on a long position is limited to what the Underlying Fund originally
paid for the security together with any transaction costs. As there is no limit
on how much the price of the security can increase, the Underlying Fund’s
exposure is theoretically unlimited.
In order to establish a short
position in a security, the Underlying Fund must borrow the security from a
broker. The Underlying Fund may not always be able to borrow a security the
Underlying Fund seeks to sell short at a particular time or at an acceptable
price. As such, there is a risk that the Underlying Fund may be unable to
implement its investment strategy due to a lack of available securities or for
other reasons. The Underlying Fund normally closes a short sale of securities
that it does not own by purchasing an equivalent number of shares of the
borrowed security on the open market and delivering them to the broker. The
Underlying Fund may not always be able to complete or “close out” the short
position by replacing the borrowed securities at a particular time or at an
acceptable price. The Underlying Fund may be prematurely forced to close out a
short position if the broker demands the return of the borrowed security. The
Portfolio incurs a loss if the Underlying Fund is required to buy the security
at a time when the security has appreciated in value from the date of the short
sale.
The
Underlying Fund will incur increased transaction costs when selling securities
short. In addition, taking short positions results in a form of leverage which
may increase the volatility of the Underlying Fund.
SUBSIDIARY RISK. Certain
Underlying Funds may invest through a wholly-owned subsidiary (the “Cayman
Subsidiary”). The Cayman Subsidiary, unlike the Underlying Fund, may invest
without limitation in commodity-linked derivatives. By investing in the Cayman
Subsidiary, the Underlying Fund is indirectly exposed to the risks associated
with the subsidiary’s investments. The derivatives and other investments held by
the Cayman Subsidiary are generally similar to those that are permitted to be
held by the Underlying Fund and are subject to the same risks that apply to
similar investments if held directly by the Underlying Fund. There can be no
assurance that the investment objective of the Cayman Subsidiary will be
achieved. The Cayman Subsidiary is not registered under 1940 Act and, unless
otherwise noted in this Prospectus, is not subject to all the investor
protections of the 1940 Act. Accordingly, the Underlying Fund, as the sole
investor in the Cayman Subsidiary, will not have all of the protections offered
to investors in registered investment companies. In addition, changes in the
laws of the United States and/or the Cayman Islands could result in the
inability of the Underlying Fund and/or the Cayman Subsidiary to operate as
described in the Underlying Fund’s prospectus and the statement of additional
information and could adversely affect the Cayman Subsidiary and the Underlying
Fund and its shareholders, including a Portfolio. For example, Cayman Islands
law does not currently impose any income, corporate or capital gains tax, estate
duty, inheritance tax or withholding tax on the subsidiary. If this were to
change, the subsidiary may have to pay such taxes and Underlying Fund
shareholders will experience decreased returns.
Additionally, as a regulated
investment company, each Underlying Fund must derive at least 90% of its gross
income for each taxable year from sources treated as qualifying income under the
Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). Each
Underlying Fund that invests in a Cayman Subsidiary expects to treat the income
it derives from the Cayman Subsidiary as qualifying income based on the
principles underlying a number of private letter rulings provided to
third-parties not associated with the Underlying Fund. However, an Underlying
Fund is not able to rely on private letter rulings issued to other taxpayers.
Additionally, the IRS recently issued final regulations that would generally
treat an Underlying Fund’s income inclusion with respect to a Cayman Subsidiary
as qualifying income either if (A) there is a distribution out of the earnings
and profits of the Cayman Subsidiary that are attributable to such income
inclusion or (B) such inclusion is derived with respect to the Underlying Fund’s
business of investing in stock, securities, or currencies. Each Underlying Fund
intends to treat the income it derives from a Cayman Subsidiary as qualifying
income. However, each Underling Fund has not received a private letter ruling,
and the Underlying Fund is not able to rely on private letter rulings issued to
other taxpayers. If, contrary to a number of private letter rulings issued by
the IRS to third-parties, the IRS were to determine such income is
nonqualifying, an Underlying Fund might fail to satisfy the income requirement.
Additionally, each Underlying Fund intends to limit its investment in a Cayman
Subsidiary to no more than 25% of the value of the Underlying Fund’s total
assets in order to satisfy the asset diversification requirement.
UNDERLYING
POOLS RISK. Underlying Pools are subject to investment advisory and other
expenses, which will be indirectly paid by the Portfolio as an investor in swaps
whose returns are based on the returns of Underlying Pools. As a result, the
cost of investing in the Portfolio may be higher than the cost of investing
directly in an Underlying Pool. The Underlying Pools will pay management fees,
brokerage commissions and operating expenses, and may also pay performance-based
fees to each Underlying Pool manager, which may be reflected in the return
earned by the Portfolio on swaps based on Underlying Pools. Underlying Pools are
subject to specific risks, depending on the nature of the fund. There is no
guarantee that any of the trading strategies used by the managers retained by an
Underlying Pool will be profitable or avoid losses and, therefore, that the
Portfolio’s investments based on these Underlying Pools will not lose money. The
Underlying Pools on which a portion of the Portfolio’s returns will be based are
not registered investment companies and, therefore, will not be subject to the
same controls and regulatory protections as registered investment
companies.
Shares of the Portfolios are
not bank deposits and are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other government agency.
ADDITIONAL INVESTMENT STRATEGIES AND RISKS
Additional
Investment Strategies for the Saratoga Portfolios
As an additional non-principal
investment strategy, the Portfolios may invest in individual securities and
exchange-traded notes (“ETNs”).
SECURITIES LENDING. Each
Portfolio, except the U.S. Government Money Market Portfolio, may lend its
portfolio securities to brokers, dealers and other financial institutions
desiring to borrow securities to complete transactions and for other purposes.
In connection with such loans, a Portfolio receives liquid collateral equal to
at least 102% of the value of the portfolio securities being lent. This
collateral is marked to market on a daily basis. A Portfolio may lend its
portfolio securities in an amount up to 33 1/3% of its total assets.
Securities lending involves the
risk that a Portfolio may lose money because the borrower of the loaned
securities fails to return the securities in a timely manner or at all. A
Portfolio could also lose money in the event of a decline in the value of the
collateral provided for the loaned securities or a decline in the value of any
investments made with cash collateral. These events, and securities lending in
general, could trigger adverse tax consequences for a Portfolio and its
investors. For example, if a Portfolio loans its securities, the Portfolio and
its investors may lose the ability to treat certain Portfolio distributions
associated with those securities as qualified dividend income.
Additional
Investment Strategies for the Asset Allocation Portfolios
When the Manager believes
market conditions are unfavorable, the Manager may attempt to “hedge” a
Portfolio with defensive positions and strategies using derivative instruments
(e.g., exchange-traded futures and options, and other derivatives such as swaps,
options on swaps, and caps and floors).
A Portfolio is not required to
use hedging and may choose not to do so even in unfavorable conditions. As an
additional non-principal investment strategy, the Portfolios may invest in
individual securities and exchange-traded notes.
General
Investment Policies of the Asset Allocation Portfolios
Temporary or Cash Investments.
Under normal market conditions, the Portfolios will stay fully invested
according to their principal investment strategies as noted above. The
Portfolios, however, may temporarily depart from their principal investment
strategies by making short-term investments in cash, cash equivalents and
high-quality, short-term debt securities and money market instruments, including
affiliated and unaffiliated instruments, for temporary defensive purposes in
response to adverse conditions, including adverse market, economic or political
conditions, amongst others. This may result in the Portfolios not achieving
their investment objectives during that period. To the extent that the
Portfolios use a money market fund for their cash position, there will be some
duplication of expenses because the Portfolios would bear their pro rata
portion of such money market fund’s advisory fees and operational
expenses.
Change in Investment Objective
and Strategies. Each Portfolio’s investment objective and strategies, including
the principal investment strategies are non-fundamental and may be changed by
the Board without the approval of the Portfolio’s shareholders.
Additional
Risk Information (Asset Allocation Portfolios only)
While the Portfolios intend to
primarily allocate their assets to investments in the Underlying Funds, a
Portfolio may be exposed to the investment risks described above under
“Principal Investment Risks” to the extent such Portfolio directly invests in
individual securities and ETNs.
PORTFOLIO HOLDINGS
A description of the
Portfolios’ policies and procedures with respect to the disclosure of each of
the Portfolios’ securities is available in the Trust’s Statement of Additional
Information.
The Trust discloses each
Portfolio’s top holdings on a calendar quarter basis with a one to three-week
lag on its public website until they are included in the Trust’s next
shareholder report or quarterly report. Each Portfolio will make available
complete month-end portfolio holdings information with a 30-day lag. Such
information can be obtained by calling 1-800-807-FUND.
In addition, you may obtain
complete Portfolio holdings information or other disclosure of holdings as
required by applicable legal or regulatory requirements on a fiscal quarterly
basis within two months after the end of the fiscal period by calling
1-800-807-FUND.
MANAGEMENT OF THE PORTFOLIOS
The Manager
Saratoga
Capital Management, LLC (“SCM”), a registered investment adviser, serves as the
Trust’s Manager and is located at 12725 W. Indian School Road, Suite E-101,
Avondale, Arizona 85392. The Manager is a Delaware limited liability company. As
of September 30, 2023, the Manager had approximately $138.7 million in assets
under management. The Manager and the Trust have obtained an exemptive order
(the “Order”) from the SEC that permits the Manager to enter into investment
advisory agreements with advisers without obtaining shareholder approval. The
Manager, subject to the review and approval of the Board of Trustees of the
Trust, may select Advisers for each Portfolio and supervises and monitors the
performance of each Adviser.
The Order also permits the
Manager, subject to the approval of the Trustees, to replace investment advisers
or amend investment advisory agreements, including fees, without shareholder
approval whenever the Manager and the Trustees believe such action will benefit
a Portfolio and its shareholders. This means that the Manager can reduce the
sub-advisory fees and retain a larger portion of the management fee, or increase
the sub-advisory fees and retain a smaller portion of the management fee.
Pursuant to the Order, the Manager or the Adviser is not required to disclose
its contractual fee arrangements with any sub-adviser. The Manager compensates
each Adviser out of its management fee.
The total amount of investment
management fees payable by each Portfolio to the Manager may not be changed
without shareholder approval. The management fee for each Portfolio is computed
daily and paid monthly at the following annual percentage rates of the average
daily net assets of the Portfolios:
Portfolio |
|
Management
Fee |
Conservative
Balanced Allocation Portfolio |
|
0.90% |
Moderately
Conservative Balanced Allocation Portfolio |
|
0.90% |
Moderate
Balanced Allocation Portfolio |
|
0.90% |
Moderately
Aggressive Balanced Allocation Portfolio |
|
0.90% |
Aggressive
Balanced Allocation Portfolio |
|
0.90% |
U.S.
Government Money Market Portfolio |
|
0.475% |
Investment
Quality Bond Portfolio |
|
0.55% |
Municipal
Bond Portfolio |
|
0.55% |
Large
Capitalization Value Portfolio |
|
0.65% |
Large
Capitalization Growth Portfolio |
|
0.65% |
Mid
Capitalization Portfolio |
|
0.75% |
Small
Capitalization Portfolio |
|
0.65% |
International
Equity Portfolio |
|
0.75% |
Health
& Biotechnology Portfolio |
|
1.25% |
Technology
& Communications Portfolio |
|
1.25% |
Financial
Services Portfolio |
|
1.25% |
Energy
& Basic Materials Portfolio |
|
1.25% |
Expense
Reductions and Reimbursements and Net Expenses. The Trust and the Manager
have entered into an Excess Expense Agreement (the “Expense Agreement”)
effective January 1, 1999. In connection with the Expense Agreement, the
Manager is currently voluntarily waiving all or a portion of its management fees
and/or assuming certain other operating expenses of the Portfolios in order to
maintain the expense ratios of each class of the Portfolios at or below
predetermined levels (each, an “Expense Cap”). Under the terms of the Expense
Agreement, fees waived and expenses paid by the Manager are subject to
reimbursement by the relevant class of the Portfolio within three (3) years of
the end of the fiscal year in which such management fees were waived or expenses
were paid. Prior Board approval is required with respect to any such expense
reimbursements. No reimbursement payment will be made by a Portfolio if it would
result in that Portfolio exceeding its current Expense Cap. Acquired Fund Fees
and Expenses are not considered in the calculation of the Expense Cap. The
Expense Agreement can be terminated by either party, without penalty, upon 60
days’ prior notice. Currently, the Manager is voluntarily limiting total annual
operating expenses of the Portfolios as follows:
Portfolio |
|
Expense
Cap |
Large
Capitalization Growth Portfolio |
|
3.60% |
Large
Capitalization Value Portfolio |
|
3.60% |
Mid
Capitalization Portfolio |
|
3.60% |
Small
Capitalization Portfolio |
|
3.60% |
Investment
Quality Bond Portfolio |
|
2.90% |
Municipal
Bond Portfolio |
|
2.90% |
U.S.
Government Money Market Portfolio |
|
2.75% |
International
Equity Portfolio |
|
3.90% |
Health
& Biotechnology Portfolio |
|
4.00% |
Technology
& Communications Portfolio |
|
4.00% |
Financial
Services Portfolio |
|
4.00% |
Energy
& Basic Materials Portfolio |
|
4.00% |
Portfolio Expenses.
Each Asset Allocation Portfolio is responsible
for its own operating expenses. Pursuant to an Operating Expense Limitation
Agreement between the Manager and the Asset Allocation Portfolios, the Manager
has agreed to waive its management fees and/or pay expenses of the Portfolios to
ensure that the total amount of Portfolio operating expenses (excluding front
end and contingent deferred sales loads, leverage, interest and tax expenses,
dividends and interest on short positions, brokerage commissions, expenses
incurred in connection with any merger, reorganization or liquidation,
extraordinary or non-routine expenses and Acquired Fund Fees and Expenses for a
Portfolio) do not exceed 1.99% of a Portfolio’s average net assets for Class C
shares through December 31, 2024, subject thereafter to annual re-approval
of the agreement by the Board of Trustees (the “Expense Cap”). Any reduction in
management fees or payment of expenses made by the Manager may be reimbursed by
a Portfolio in subsequent fiscal years if the Manager so requests. This
reimbursement may be requested if the aggregate amount actually paid by the
Manager toward operating expenses for such fiscal year (taking into account the
reimbursement) does not exceed the applicable limitation on Portfolio expenses.
The Manager is permitted to seek reimbursement from the Portfolios for
management fees waived and/or expense payments made by the Manager within three
(3) years of the end of the fiscal year in which such management fees were
waived or expenses paid, as long as the reimbursement does not cause a
Portfolio’s operating expenses to exceed (i) the expense cap in place at the
time the fees were waived or the expenses were incurred; or (ii) the current
Expense Cap, whichever is less. Any such reimbursement will be reviewed and
approved by the Board of Trustees. A Portfolio must pay its current ordinary
operating expenses before the Manager is entitled to any reimbursement of
management fees and/or expenses. This Operating Expense Limitation Agreement can
be terminated during its term only by, or with the consent of, the Trust’s Board
of Trustees.
The Expense Cap in place for
each Asset Allocation Portfolio is shown in the table below:
Portfolio |
|
Expense
Cap |
Conservative
Balanced Allocation Portfolio |
|
1.99% |
Moderately
Conservative Balanced Allocation Portfolio |
|
1.99% |
Moderate
Balanced Allocation Portfolio |
|
1.99% |
Moderately
Aggressive Balanced Allocation Portfolio |
|
1.99% |
Aggressive
Balanced Allocation Portfolio |
|
1.99% |
The Advisers
The
following sets forth certain information about each of the Advisers:
SCM,
a registered investment adviser, serves as the Trust’s Manager and Adviser to
the Conservative Balanced Allocation Portfolio, Moderately Conservative Balanced
Allocation Portfolio, Moderate Balanced Allocation Portfolio, Moderately
Aggressive Balanced Allocation Portfolio, Aggressive Balanced Allocation
Portfolio, Investment Quality Bond Portfolio, Municipal Bond Portfolio and U.S.
Government Money Markey Portfolio. SCM, which is located at 12725 W. Indian
School Road, Suite E-101, Avondale, Arizona 85392, had approximately $138.7
million in assets under management as of September 30, 2023.
M.D.
Sass, LLC (“M.D. Sass”), a registered investment adviser founded in 1972, serves
as the Adviser to the Large Capitalization Value Portfolio. M.D. Sass is a
privately-owned investment manager for family offices, high net worth
individuals and institutional investors such as corporations, endowments and
foundations. As of September 30, 2023, M.D. Sass advised accounts having assets
of approximately $2.0 billion. M.D. Sass is located at 55 West 46th
Street, 28th Floor, New York, New York 10036.
Oak
Associates ltd. (“Oak Associates”), a registered investment adviser,
located at 3800 Embassy Parkway, Suite 310, Akron, Ohio 44333-8398, serves as
the Adviser to the Health & Biotechnology Portfolio and the Technology &
Communications Portfolio. Oak Associates advises mutual funds and other
investors. As of September 30, 2023, Oak Associates had approximately $1.4
billion in assets under management.
Smith
Group Asset Management, LLC (“SGAM”), a registered investment adviser, located
at 100 Crescent Court, Suite 1150, Dallas, Texas, 75201, serves as the Adviser
to the Large Capitalization Growth Portfolio, Financial Services Portfolio,
Energy & Basic Materials Portfolio and International Equity Portfolio. SGAM
advises institutional, high net worth and mutual fund clients. SGAM managed
assets of approximately $2.3 billion as of September 30, 2023.
Vaughan
Nelson Investment Management, L.P. (“Vaughan Nelson”), a registered investment
adviser located at 600 Travis, Suite 3800, Houston, Texas 77002, serves as the
Adviser to the Mid Capitalization Portfolio. With approximately $14.9 billion of
assets under management as of September 30, 2023, Vaughan Nelson provides
investment services to foundations, endowments, institutions, corporate pension
funds, mutual funds and families/individuals.
Zacks
Investment Management, Inc. (“Zacks”), a registered investment adviser, serves
as the Adviser to the Small Capitalization Portfolio. Zacks, located at 10 S.
Riverside Plaza, Suite 1600, Chicago, Illinois 60606, is a wholly-owned
subsidiary of Zacks Investment Research. Zacks acts as an investment manager for
individuals and institutions. As of September 30, 2023, Zacks had approximately
$8.6 billion in assets under management.
A
discussion regarding the basis for the Board of Trustees’ approval of the
Investment Management Agreement and the Advisory Agreements of the Portfolios in
this Prospectus is available in the Portfolios’ Annual Report to Shareholders
for the fiscal year ended August 31, 2023.
Administration
The Bank of New York Mellon,
located at 240 Greenwich Street, New York, New York 10286, is the custodian of
the assets of the Trust.
Gemini Fund
Services, LLC, located at 4221 North 203rd Street, Suite 100, Elkhorn, Nebraska
68022-3474, serves as the Trust’s transfer agent (the “Transfer
Agent”).
Gemini Fund
Services, LLC, located at 4221 North 203rd Street, Suite 100, Elkhorn, Nebraska
68022-3474, provides administrative (including custody administration) and fund
accounting services to the Trust. As such, they manage the administrative
affairs of the Trust, calculate the NAV of the shares of each Portfolio, and
create and maintain the Trust’s required financial records.
SHAREHOLDER INFORMATION
Pricing of Portfolio Shares
The price of shares of each
Portfolio called “net asset value” or “NAV” is based on the value of the
Portfolio’s investments. The NAV per share of each Portfolio is determined once
daily at the close of trading on the NYSE (typically 4:00 p.m. Eastern Time)
(“Valuation Time”) on each day that the NYSE is open. Shares will not be priced
on days that the NYSE is closed.
Generally, a Portfolio’s
securities are valued each day at the last quoted sales price on each security’s
primary securities exchange. Securities traded or dealt in upon one or more
securities exchanges (whether domestic or foreign, and including the National
Association of Securities Dealers’ Automated Quotation System (“NASDAQ”)) for
which market quotations are readily available and not subject to restrictions
against resale shall be valued at the last quoted sales price on the primary
securities exchange (or in the case of NASDAQ securities, at the NASDAQ Official
Closing Price) or, in the absence of a sale on the primary exchange, at the mean
between the current bid and ask prices on the primary exchange. When a market
price is not readily available, including circumstances under which the Manager
or an Adviser determines that a security’s market price is not accurate, a
portfolio security is valued by a pricing committee at its fair value, as
determined under procedures established by the Trust’s Board of Trustees. In
these cases, the Portfolio’s NAV will reflect certain portfolio securities’ fair
value rather than their market price.
All securities held by the U.S.
Government Money Market Portfolio and debt securities with remaining maturities
of sixty days or less at the time of purchase may be valued at amortized cost.
The amortized cost valuation method involves valuing a debt obligation in
reference to its cost rather than market forces.
Securities traded on a foreign
exchange which has not closed by the Valuation Time or for which the official
closing prices are not available at the time the NAV is determined may use
alternative market prices provided by a pricing service. In addition, with
respect to securities that primarily are listed on a foreign exchange, when an
event occurs after the close of a foreign exchange that is likely to have
changed the value of the foreign securities (for example, a percentage change in
value of one or more U.S. securities indices in excess of specified thresholds),
such securities will be valued at their fair value, as determined under
procedures established by the Trust’s Board of Trustees. Securities also may be
fair valued in the event of a development affecting a country or region or an
issuer-specific development, which is likely to have changed the value of the
security. To the extent a Portfolio invests in ETFs, such Portfolio’s NAV is
calculated, in relevant part, based upon the NAV of such ETFs (which are
registered open-end management investment companies). The prospectuses for these
ETFs explain the circumstances under which they will use fair value pricing and
the effects of using fair value pricing. Fair value pricing involves subjective
judgments and it is possible that the fair value determined for a security is
materially different than the value that could be realized upon the sale of that
security.
Purchase of Shares
Purchase of
shares of a Portfolio must be made through a Financial Intermediary having a
sales agreement with Northern Lights Distributors, LLC, the Trust’s distributor
(the “Distributor”), or through a broker or intermediary designated by that
Financial Intermediary, or directly through the Transfer Agent. Shares of a
Portfolio are available to participants in Consulting Programs and to other
investors and investment advisory services. Purchase requests received by the
Trust in good order prior to the close of regular trading on the NYSE will be
effected at the NAV per share determined on that day. Requests received after
the close of regular trading will receive the NAV per share determined on the
following business day. A purchase order is deemed to be received by the Trust
when it is received in good order by the Transfer Agent or by a Financial
Intermediary, or a broker or intermediary designated by a Financial
Intermediary, authorized to accept purchase orders on behalf of the Trust. The
Portfolios, however, reserve the right, in their sole discretion, to reject any
application to purchase shares. Make all checks payable to a Portfolio.
Applications will not be accepted unless they are accompanied by a check drawn
on a U.S. bank, thrift institution, or credit union in U.S. funds for the full
amount of the shares to be purchased. The Portfolios do not accept payment in
cash, including cashier’s checks or money orders. Also, to prevent check fraud,
the Portfolios will not accept third party checks, U.S. Treasury checks, credit
card checks, or starter checks for the purchase of shares. Redemption of shares
of a Portfolio purchased by check may be subject to a hold period until the
check has been cleared by the issuing bank. To avoid such holding periods,
shares may be purchased through a broker or by wire, as described in this
section.
Current
shareholders may purchase additional shares via Automated Clearing House
(“ACH”). To have this option added to your account, please send a letter to the
Portfolio requesting this option and supply a voided check for the bank account.
Only bank accounts held at domestic institutions that are ACH members may be
used for these transactions. You may not use ACH transactions for your initial
purchase of Portfolio shares. ACH purchases will be effective at the closing
price per share on the business day after the order is placed. The Trust may
alter, modify or terminate this purchase option at any time.
The Trust is designed to help
investors to implement an asset allocation strategy to meet their individual
needs as well as select individual investments within each asset category among
the myriad choices available. The Trust offers several classes of shares to
investors designed to provide them with the flexibility of selecting an
investment best suited to their needs. Not all share classes may be available
for purchase in all states. For more information regarding the purchase of
shares, contact the Trust at 1-800-807-FUND.
Note: Gemini Fund Services, LLC, the Portfolios’ Transfer
Agent, will charge a $25 fee against a shareholder’s account, in addition to any
loss sustained by the Portfolios, for any check or electronic payment returned
to the Transfer Agent for insufficient funds.
Information regarding
transaction processing and the establishment of new accounts should be sent
to:
via Regular Mail |
|
via Overnight
Mail |
The Saratoga Advantage
Trust
c/o Gemini Fund Services,
LLC
P.O. Box
541150
Omaha, NE
68154 |
|
The Saratoga Advantage
Trust
c/o Gemini Fund Services,
LLC
4221 North 203rd Street,
Suite 100
Elkhorn, Nebraska
68022-3474 |
If you wish to wire money to
make a subsequent investment in a Portfolio, contact the Trust at 1-800-807-FUND
to receive wiring instructions and to notify the Trust that a wire transfer is
coming. Any commercial bank can transfer same-day funds by wire. The Trust will
normally accept wired funds for investment on the day of receipt provided that
such funds are received by the Trust’s designated bank before the close of
regular trading on the NYSE. Your bank may charge you a fee for wiring same-day
funds.
Purchase
of Shares in Good Order. All purchase requests
directly through the Transfer Agent must be received by the Transfer Agent in
“good order.” This means that your request must include:
| ● |
The Portfolio and account
number. |
| ● |
The amount of the
transaction (in dollars or shares). |
| ● |
Accurately completed
orders. |
| ● |
Any supporting legal
documentation that may be required. |
If you are purchasing shares
through a Financial Intermediary, please consult your intermediary for purchase
instructions. Orders to purchase shares through a Financial Intermediary will be
effected at the NAV per share next determined after the purchase order has been
received in good order by the Financial Intermediary. The Trust makes available
assistance to help certain investors identify their risk tolerance and
investment objectives through use of an investor questionnaire, and to select an
appropriate model allocation of assets among the Portfolios. As further
assistance, the Trust makes available to certain investors the option of
automatic reallocation or rebalancing of their selected model. The investors are
solely responsible for determining their risk tolerances, investment objectives
and which Portfolios are appropriate for them to invest in. The Trust also
provides, on a periodic basis, a report to the investor containing an analysis
and evaluation of the investor’s account.
Financial Intermediaries may
charge a processing or service fee in connection with the purchase or redemption
of Trust shares. The amount and applicability of such a fee is determined and
disclosed to its customers by each individual Financial Intermediary. Processing
or service fees typically are fixed, nominal dollar amounts and are in addition
to the sales and other charges described in this Prospectus. Your Financial
Intermediary will provide you with specific information about any processing or
service fees you will be charged.
To help the government fight
the funding of terrorism and money laundering activities, federal law requires
all financial institutions to obtain, verify and record information that
identifies each person who opens an account. What this means to you: when you
open an account we will ask your name, address, date of birth and other
information that will allow us to identify you. If you are unable to verify your
identity, we reserve the right to restrict additional transactions and/or
liquidate your account at the next calculated NAV after your account is closed
(less any applicable sales/account charges and/or tax penalties) or take any
other action required by law.
CONTINUOUS OFFERING. For Class
C shares of the Trust’s Portfolios described in this Prospectus (other than the
Asset Allocation Portfolios) the minimum initial investment in the Trust is
generally $10,000 and the minimum initial investment in any individual Portfolio
(other than the U.S. Government Money Market Portfolio) is generally $250 (there
is no minimum investment for the U.S. Government Money Market Portfolio). The
minimum initial investment for the Asset Allocation Portfolios is generally
$2,500. The minimum subsequent investment in the Trust is $100. There is no
minimum subsequent investment for any Portfolio.
For employees and relatives of
the Manager, firms distributing shares of the Trust, and the Trust service
providers and their affiliates, the minimum initial investment in the Trust is
$1,000 with no individual Portfolio minimum. There is no minimum initial
investment and no minimum subsequent investment for employee benefit plans,
mutual fund platform programs, supermarket programs, associations and individual
retirement accounts. The Trust reserves the right at any time to vary the
initial and subsequent investment minimums.
The Trust offers an Automatic
Investment Plan under which purchase orders of $100 or more may be placed
periodically in the Trust. The purchase price is paid automatically from cash
held in the shareholder’s designated account. For further information regarding
the Automatic Investment Plan, shareholders should contact their Consulting
Broker or the Trust at 1-800-807-FUND (1-800-807-3863).
The sale of shares will be
suspended during any period when the determination of NAV is suspended and may
be suspended by the Board of Trustees whenever the Board judges it to be in the
best interest of the Trust to do so. The Distributor in its sole discretion, may
accept or reject any purchase order.
Generally, each Portfolio
reserves the right to reject any purchase requests, including exchanges from
other Saratoga Portfolios, which it regards as disruptive to efficient Portfolio
management. A purchase request could be rejected because of, amongst other
things, the timing or amount of the investment or because of a history of
excessive trading by the investor.
Contingent Deferred Sales Charge
Shares are sold at NAV next
determined without an initial sales charge so that the full amount of an
investor’s purchase payment may be invested in the Trust. A CDSC of 1%, however,
will be imposed on most shares redeemed within one year after purchase. The CDSC
will be imposed on any redemption of shares if after such redemption the
aggregate current value of an account with the Trust falls below the aggregate
amount of the investor’s purchase payments for shares made during the one year
preceding the redemption. In addition, shares are subject to an annual 12b-1 fee
of 1.00% of the average daily net assets. Shares of the Trust which are held for
one year or more after purchase will not be subject to any CDSC upon redemption.
For investments made prior to January 1, 2003, the CDSC is based upon the
investors original purchase price, or the current NAV of the shares that they
redeem, whichever is lower. For investments that are made on or after
January 1, 2003, the CDSC is based upon the investors original purchase
price. Any CDSC paid on the redemptions of Class C shares expressed as a
percentage of the applicable redemption amount may be higher or lower than the
charge described due to rounding.
Brokers that have entered into
selling agreements with the Portfolios’ distributor may receive a commission of
up to 1.00% of the purchase price of Class C shares at the time of purchase.
Brokers may also receive distribution and/or shareholder service fees for Class
C shares held for over a year.
Certain shareholders may be
eligible for CDSC waivers. Please see the information set forth below for
specific eligibility requirements. You must notify your authorized Financial
Intermediary or the Transfer Agent at the time a purchase order is placed that
the purchase (or redemption) qualifies for a CDSC waiver. Similar notification
must be made in writing when an order is placed by mail. The CDSC waiver will
not be granted if: (i) notification is not furnished at the time of order; or
(ii) a review of the records of the authorized dealer of the Portfolios’ shares
or the Trust’s Transfer Agent does not confirm your represented holdings. In
order to verify your eligibility, you may be required to provide account
statements and/or confirmations regarding shares of a Portfolio or other Trust
Portfolios.
CDSC WAIVERS. A CDSC will not
be imposed on: (i) any amount which represents an increase in value of shares
purchased within the one year preceding the redemption; (ii) the current NAV of
shares purchased more than one year prior to the redemption; and (iii) the
current NAV of shares purchased through reinvestment of dividends or
distributions. Moreover, in determining whether a CDSC is applicable it will be
assumed that amounts described in (i), (ii) and (iii) above (in that order) are
redeemed first.
In addition, the CDSC, if
otherwise applicable, will be waived in the case of:
(1) redemptions of shares held
at the time a shareholder dies or becomes disabled, only if the shares
are:
(a)
registered either in the name of an individual shareholder (not a trust), or in
the names of such shareholder and his or her spouse as joint tenants with right
of survivorship; or (b) held in a qualified corporate or self-employed
retirement plan, Individual Retirement Account (“IRA”) or Custodial Account
under Section 403(b)(7) of the Internal Revenue Code (“403(b) Custodial
Account”), provided in either case that the redemption is requested within one
year of the death or initial determination of disability;
(2)
redemptions in connection with the following retirement plan distributions: (a)
lump-sum or other distributions from a qualified corporate or self-employed
retirement plan following retirement (or, in the case of a “key employee” of a
“top heavy” plan, following attainment of age 59½); (b) distributions from an
IRA or 403(b) Custodial Account following attainment of age 70½; or (c) a
tax-free return of an excess contribution to an IRA; and
(3) certain
redemptions pursuant to the Portfolio’s Systematic Withdrawal Plan (see
“Redemption of Shares—Systematic Withdrawal Plan”).
With
reference to (1) above, for the purpose of determining disability, the
Distributor utilizes the definition of disability contained in
Section 72(m)(7) of the Internal Revenue Code, which relates to the
inability to engage in gainful employment. With reference to (2) above, the term
“distribution” does not encompass a direct transfer of an IRA, 403(b) Custodial
Account or retirement plan assets to a successor custodian or trustee. All
waivers will be granted only following receipt by the Distributor of written
confirmation of the shareholder’s entitlement.
The sales charge waivers (and
discounts) available through financial intermediaries are set forth in Appendix
A to this Prospectus (Intermediary-Specific Sales Charge Waivers and Discounts).
Please contact your financial intermediary regarding applicable sales charge
waivers (and discounts) and for information regarding the financial
intermediary’s related policies and procedures.
Class C Shares Conversion Feature
After 10 years, Class C shares
generally will convert automatically to Class A shares of the Portfolio with no
initial sales charge, provided that the Portfolio or the financial intermediary
through which a shareholder purchased or holds Class C shares has records
verifying that the Class C shares have been held for at least 10 years. The
automatic conversion of Class C shares to Class A shares will not apply to
shares held through group retirement plan record keeping platforms of certain
intermediaries who hold such shares in an omnibus account and do not track
participant level share lot aging to facilitate such a conversion. The 10-year
period runs from the last day of the month in which the shares were purchased
or, in the case of Class C shares acquired through an exchange, from the last
day of the month in which the original Class C shares were purchased; the shares
will convert to Class A shares based on their relative NAVs in the month
following the 10-year period. At the same time, an equal proportion of Class C
shares acquired through automatically reinvested distributions will convert to
Class A shares on the same basis. A conversion of shares of one Class directly
for shares of another Class of the same Fund normally should not be taxable for
federal income tax purposes.
Plan of Distribution
The Portfolios have adopted a
Plan of Distribution pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the “Plan”) with respect to the sale and distribution of shares of
the Portfolios. The Plan provides that each Portfolio will pay the Distributor
or other entities, including the Manager, a fee, which is accrued daily and paid
monthly, at the annual rate of 1.00% of the average net assets. A portion of the
fee payable pursuant to the Plan, equal to 0.25% of the average daily net
assets, is currently characterized as a service fee as such term is defined
under Rule 2830 of the Financial Industry Regulatory Authority (“FINRA”)
Conduct Rules and it may be paid directly to the Manager or other entities for
providing support services. A service fee is a payment made for personal service
and/or the maintenance of shareholder accounts. The fee is treated by each
Portfolio as an expense in the year it is accrued. Because the fee is paid out
of each Portfolio’s assets on an ongoing basis, over time the fee may increase
the costs of your investment and may cost you more than paying other types of
service charges.
Additional amounts paid under
the Plan are paid to the Distributor or other entities for services provided and
the expenses borne by the Distributor and others in the distribution of the
shares, including the payment of commissions for sales of the shares and
incentive compensation to and expenses of dealers and others who engage in or
support distribution of shares or who service shareholder accounts, including
overhead and telephone expenses; printing and distribution of prospectuses and
reports used in connection with the offering of the Portfolios’ shares to other
than current shareholders; and preparation, printing and distribution of sales
literature and advertising materials. In addition, the Distributor or other
entities may utilize fees paid pursuant to the Plan to compensate dealers or
other entities for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.
Frequent Purchases and Redemptions of Trust
Shares
“Market-timing” often times
involves the frequent purchases and redemptions of shares of the Portfolios by
shareholders, and “market-timing” may present risks for other shareholders of
the Portfolios, which may include, among other things, dilution in the value of
Portfolio shares held by long-term shareholders, interference with the efficient
management of the Trust’s Portfolios, increased brokerage and administrative
costs, incurring unwanted taxable gains, and forcing the Portfolios to hold
excess levels of cash.
Short term trading strategies
also present certain risks based on a Portfolio’s investment objective,
strategies and policies. To the extent that a Portfolio invests substantially in
foreign securities it is particularly susceptible to the risk that market timers
may take advantage of time zone differences. The foreign securities in which a
Portfolio invests may be traded on foreign markets that close well before the
Portfolio calculates its NAV. This gives rise to the possibility that
developments may have occurred in the interim that would affect the value of
these securities. A market timer may seek to capitalize on these time zone
differences by purchasing shares of the Portfolio based on events occurring
after foreign market closing prices are established, but before the Portfolio’s
NAV calculation, that are likely to result in higher prices in foreign markets
the following day (“time zone arbitrage”). The market timer might redeem the
Portfolio’s shares the next day when the Portfolio’s share price would reflect
the increased prices in foreign markets, for a quick profit at the expense of
long-term Portfolio shareholders.
Investments in other types of
securities may also be susceptible to short-term trading strategies. These
investments include securities that are, among other things, thinly traded,
traded infrequently, or relatively illiquid, which have the risk that the
current market price for the securities may not accurately reflect current
market values. A shareholder may seek to engage in short-term trading to take
advantage of these pricing differences (referred to as “price arbitrage”). To
the extent that a Portfolio invests in small capitalization securities,
technology and other specific industry sector securities, and in certain
fixed-income securities, such as high-yield bonds (also referred to as junk
bonds) or municipal bonds, a Portfolio may be adversely affected by price
arbitrage trading strategies.
The Trust discourages frequent
purchases and redemptions of Portfolio shares by Portfolio shareholders and the
Trust’s Board of Trustees has adopted policies and procedures with respect to
such frequent purchases and redemptions. The Trust does not accommodate frequent
purchases and sales by Portfolio shareholders.
The Trust’s policies with
respect to purchases, redemptions and exchanges of Portfolio shares are
described in the “SHAREHOLDER INFORMATION-Purchase of Shares” and “SHAREHOLDER
INFORMATION-Redemption of Shares” sections of this Prospectus. Except as
described in these sections, the Trust’s policies regarding frequent trading of
Portfolio shares are applied uniformly to all shareholders.
The Trust requires all
intermediaries to enforce all of the Trust’s policies contained in this
Prospectus and in the Trust’s Statement of Additional Information. Omnibus
accounts intermediaries generally do not identify customers’ trading activity to
the Trust on an individual basis. The ability of the Trust to monitor exchanges
made by the underlying shareholders in omnibus accounts, therefore, is severely
limited. Consequently, the Trust must rely on the Financial Intermediary to
monitor frequent short-term trading within the Portfolios by the Financial
Intermediary’s customers. The Trust monitors enforcement by Financial
Intermediaries, and if a Financial Intermediary fails to enforce the Trust’s
restrictions, the Trust may take certain actions, including terminating the
relationship. There can be no assurance that the Trust will be able to eliminate
all market-timing activities.
Certain patterns of past
exchanges and/or purchase or redemption transactions involving a Portfolio may
result in a Portfolio sending a warning letter, rejecting, limiting or
prohibiting, at its sole discretion and without prior notice, additional
purchases and/or exchanges. Determinations in this regard may be made based on,
amongst other things, the frequency or dollar amount of the previous exchanges
or purchase or redemption transactions.
Redemption of Shares
Shares of a Portfolio may be
redeemed on any day that the Portfolio calculates its NAV. Redemption requests
received by the Trust in good order prior to the close of regular trading on the
NYSE will be effected at the NAV per share determined on that day less the
amount of any applicable CDSC. Redemption requests received by the Trust after
the close of regular trading on the NYSE will be effected at the NAV next
determined by the Trust less any applicable CDSC. Orders to redeem shares
through a Financial Intermediary will receive the NAV per share next determined
after the redemption request has been received in good order by the Financial
Intermediary. A redemption order is deemed to be received by the Trust when it
is received in good order by the Transfer Agent or by a Financial Intermediary
authorized to accept redemption orders on behalf of the Trust.
A Portfolio is required to
transmit redemption proceeds for credit to the shareholder’s account within
seven days after receipt of a redemption request. However, payments for
redemptions of shares purchased by check will not be transmitted until the check
clears. Redemption requests may be given to a Financial Intermediary having a
selling agreement with the Distributor. The Financial Intermediary is
responsible for transmitting such redemption requests to the Trust’s Transfer
Agent. Redemption requests also may be given directly to the Transfer Agent, if
the shareholder purchased shares directly through the Transfer Agent. In order
to be effective, redemption requests of a shareholder in the event of death,
divorce or other legal matter may require the submission of documents commonly
required to assure the safety of a particular account.
Generally, all redemptions will
be for cash. The Portfolios typically expect to satisfy redemption requests by
selling portfolio assets or by using holdings of cash or cash equivalents. These
methods may be used during both normal and stressed market
conditions.
The
agreement relating to participation in a Consulting Program between a client and
the investment adviser typically will provide that, absent separate payment by
the participant, fees charged pursuant to that agreement may be paid through
automatic redemptions of a portion of the participant’s Trust
account.
The Trust
may suspend redemption procedures and postpone redemption payment during any
period when the NYSE is closed other than for customary weekend or holiday
closing or when the SEC has determined an emergency exists or has otherwise
permitted such suspension or postponement.
Written Redemption Requests.
To redeem shares by mail, send a written redemption request in good order
to:
via Regular Mail |
|
via Overnight
Mail |
The Saratoga Advantage
Trust
c/o Gemini Fund Services,
LLC
P.O. Box
541150
Omaha, NE
68154 |
|
The Saratoga Advantage
Trust
c/o Gemini Fund Services,
LLC
4221 North 203rd Street,
Suite 100
Elkhorn, Nebraska
68022-3474 |
Receipt of a redemption order
by the U.S. Postal Service (“USPS”) does not constitute receipt of such an order
by the Trust or its Transfer Agent. Requests sent via the USPS will be processed
at the NAV on the business day the request is received in good order at the
Trust’s Transfer Agent. There may be a delay between the time the request
reaches the P.O. Box and the time of the Trust’s receipt of the request, which
may affect the NAV at which the request is processed. Regular mail is retrieved
from the Transfer Agent’s post office box at least once a day by 12:00 p.m.,
Eastern Time and overnight mail is processed as received by the Transfer Agent
from the delivery service. In both cases, processing of redemption requests is
subject to the provisions described above in the opening paragraph in this
section.
If you own
an IRA or other retirement plan, you must indicate on your redemption request
whether the Portfolio should withhold federal income tax. Unless you elect in
your redemption request that you do not want to have federal tax withheld, the
redemption will be subject to withholding.
Redeeming
by Telephone. The telephone redemption privilege is automatically available
to all new accounts. If you do not want the telephone redemption privilege, you
must indicate this in the appropriate area on your account application or you
must write to the Trust and instruct it to remove this privilege from your
account. The proceeds will be sent by mail to the address designated on your
account or wired directly to your existing account in any commercial bank or
brokerage firm in the United States as designated on your application. To redeem
by telephone, call 1-800-807-FUND (1-800-807-3863). During periods of high
market activity, you may encounter higher than usual wait times. Please allow
sufficient time to ensure that you will be able to complete your telephone
transaction prior to market close. Neither the Fund nor its Transfer Agent will
be held liable if you are unable to place your trade due to high call volume.
The redemption proceeds normally will be sent by mail or by wire within three
business days after receipt of your telephone instructions. If redeeming from an
IRA account, you will be asked about tax withholding.
The Trust reserves the right to
suspend the telephone redemption privileges with respect to your account if the
names(s) or the address on the account has been changed within the previous 30
days. Neither the Trust, the Transfer Agent, nor their respective affiliates
will be liable for any loss, damage, cost or expenses in acting on telephone
instructions if they reasonably believe such telephone instructions to be
genuine and you will be required to bear the risk of any such loss. The Trust or
the Transfer Agent, or both, will employ reasonable procedures to determine that
telephone instructions are genuine. If the Trust and/or the Transfer Agent do
not employ these procedures, they may be liable to you for losses due to
unauthorized or fraudulent instructions. These procedures may include, among
others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
Wire Redemptions. If you
request your redemption by wire transfer, you will be required to pay a $15.00
wire transfer fee to the Transfer Agent to cover costs associated with the
transfer but the Transfer Agent does not charge a fee when transferring
redemption proceeds by electronic funds transfer. In addition, your bank may
impose a charge for receiving wires.
When Redemptions are Sent.
Once the Trust receives your redemption request in “good order” as described
below, it will issue a check based on the next determined NAV following your
redemption request. If you purchase shares using a check and soon after request
a redemption, your redemption proceeds, which are payable at the next determined
NAV following the receipt of your redemption request in “good order”, will not
be processed until the check used for your purchase has cleared. Redemption
proceeds requested to be sent via wire or ACH are typically sent 1-3 business
days after the redemption request was received in “good order.” Redemption
proceeds requested to be sent via check are typically mailed via USPS 2-3
business days after the redemption request was received in “good
order.”
Good Order. Your
redemption request will be processed if it is in “good order.” To be in good
order, the following conditions must be satisfied:
The request should be in
writing indicating the number of shares or dollar amount to be
redeemed;
The request must identify your
account number;
The request should be signed by
you and any other person listed on the account, exactly as the shares are
registered; and
If you request the redemption
proceeds to be sent to a person, bank or an address other than that of record,
or if the proceeds of a requested redemption exceed $100,000, the signature(s)
on the request must be medallion signature guaranteed by an eligible signature
guarantor.
Medallion Signature
Guarantee. Certain requests require a medallion signature guarantee. To
protect you and the Trust from fraud, certain transactions and redemption
requests must be in writing and must include a medallion signature guarantee in
the following situations (there may be other situations also requiring a
medallion signature guarantee in the discretion of the Trust or Transfer
Agent):
| 1. |
Re-registration of the
account. |
| 2. |
Changing bank wiring
instructions on the account. |
| 3. |
Name change on the
account. |
| 4. |
Setting up/changing
systematic withdrawal plan to a secondary
address. |
| 5. |
Redemptions greater than
$100,000. |
| 6. |
Any redemption check that
is being mailed to a different address than the address of
record. |
| 7. |
Your account registration
has changed within the last 30 days. |
You should be able to obtain a
medallion signature guarantee from a bank or trust company, credit union,
broker-dealer, securities exchange or association, clearing agency or savings
association, as defined by federal law.
SYSTEMATIC
WITHDRAWAL PLAN. A systematic withdrawal plan (the “Withdrawal Plan”) is
available for shareholders. Any Portfolio from which redemptions will be made
pursuant to the Plan will be referred to as a “SWP Portfolio”. The Withdrawal
Plan provides for monthly, quarterly, semi-annual or annual payments in any
amount not less than $25, or in any whole percentage of the value of the SWP
Portfolio’s shares, on an annualized basis. Any applicable CDSC will be imposed
on shares redeemed under the Withdrawal Plan (see “Purchase of Shares”), except
that the CDSC, if any, will be waived on redemptions under the Withdrawal Plan
of up to 12% annually of the value of each SWP Portfolio account, based on the
share values next determined after the shareholder establishes the Withdrawal
Plan.
Redemptions for which this CDSC
waiver policy applies may be in amounts up to 1% per month, 3% per quarter, 6%
semi-annually or 12% annually. Under this CDSC waiver policy, amounts withdrawn
each period will be paid by first redeeming shares not subject to a CDSC because
the shares were purchased by the reinvestment of dividends or capital gains
distributions, the CDSC period has elapsed or some other waiver of the CDSC
applies. If shares subject to a CDSC must be redeemed, shares held for the
longest period of time will be redeemed first followed by shares held the next
longest period of time until shares held the shortest period of time are
redeemed. Any shareholder participating in the Withdrawal Plan will have
sufficient shares redeemed from his or her account so that the proceeds (net of
any applicable CDSC) to the shareholder will be the designated monthly,
quarterly, semi-annual or annual amount.
A shareholder may suspend or
terminate participation in the Withdrawal Plan at any time. A shareholder who
has suspended participation may resume payments under the Withdrawal Plan,
without requiring a new determination of the account value for the 12% CDSC
waiver. The Withdrawal Plan may be terminated or revised at any time by the
Portfolios.
The addition of a new SWP
Portfolio will not change the account value for the 12% CDSC waiver for the SWP
Portfolios already participating in the Withdrawal Plan.
Withdrawal Plan payments should
not be considered dividends, yields or income. If periodic Withdrawal Plan
payments continuously exceed net investment income and net capital gains, the
shareholder’s original investment will be correspondingly reduced and ultimately
exhausted. Each withdrawal constitutes a redemption of shares and any gain or
loss realized must be recognized for federal income tax purposes. Shareholders
should contact their dealer representative or the Manager for further
information about the Withdrawal Plan.
REINSTATEMENT PRIVILEGE. A
shareholder who has had his or her shares redeemed or repurchased and has not
previously exercised this reinstatement privilege may, within 35 days after the
date of the redemption or repurchase, reinstate any portion or all of the
proceeds of such redemption or repurchase in shares of the Portfolios in the
same Class from which such shares were redeemed or repurchased, at NAV next
determined after a reinstatement request (made in writing to and approved by the
Manager), together with the proceeds, is received by the Transfer Agent and
receive a pro-rata credit for any CDSC paid in connection with such redemption
or repurchase.
INVOLUNTARY REDEMPTIONS. Due to
the relatively high cost of maintaining small accounts, the Trust may redeem an
account having a current value of $7,500 ($1,000 for Asset Allocation
Portfolios) or less as a result of redemptions, but not as a result of a
fluctuation in a Portfolio’s NAV or redemptions to pay fees for Consulting
Programs, after the shareholder has been given at least 30 days in which to
increase the account balance to more than that amount. Involuntary redemptions
may result in the liquidation of Portfolio holdings at a time when the value of
those holdings is lower than the investor’s cost of the investment or may result
in the realization of taxable capital gains. No CDSC will be imposed on any
involuntary redemption.
No CDSC is imposed at the time
of any exchange of shares, although any applicable CDSC will be imposed upon
ultimate redemption. The Trust may in the future offer an exchange feature
involving shares of an unaffiliated fund group subject to receipt of appropriate
regulatory relief.
REDEMPTION-IN-KIND.
If the Board of Trustees determines that it would be detrimental to the best
interests of a Portfolio’s shareholders to make a redemption payment wholly in
cash, the Portfolio may pay, in accordance with rules adopted by the SEC, any
portion of a redemption in excess of the lesser of $250,000 or 1% of the
Portfolio’s net assets by a distribution-in-kind of readily marketable portfolio
securities in lieu of cash. Redemptions failing to meet this threshold must be
made in cash. Redemption in-kind proceeds will typically be made by delivering a
pro-rata amount of a Portfolio’s holdings that are readily marketable securities
to the redeeming shareholder within seven days after the Portfolio’s receipt of
the redemption order. Shareholders receiving distributions-in-kind of portfolio
securities will be subject to market risks on the securities received, and may
incur brokerage commissions when subsequently disposing of those
securities.
EXCHANGE PRIVILEGE. Shares of a
Portfolio may be exchanged without payment of any exchange fee for shares of
another Portfolio of the same class at their respective NAVs. The Trust may in
the future offer an exchange feature involving shares of an unaffiliated fund
group subject to receipt of appropriate regulatory relief.
There are
special considerations when you exchange Portfolio shares that are subject to a
CDSC. When determining the length of time you held the shares and the
corresponding CDSC rate, any period (starting at the end of the month) during
which you held shares of a Portfolio that does not charge a CDSC will
not be counted. Thus, in effect the “holding period” for purposes of
calculating the CDSC is frozen upon exchanging into a fund that does not charge
a CDSC. In addition, shares that are exchanged into or from a Saratoga Portfolio
subject to a higher CDSC rate will be subject to the higher rate, even if the
shares are re-exchanged into a Portfolio with a lower CDSC rate.
An exchange of shares generally
is treated for federal income tax purposes as a redemption (sale) of shares
given in exchange by the shareholder, and an exchanging shareholder may,
therefore, realize a taxable gain or loss in connection with the exchange. The
exchange privilege is available to shareholders residing in any state in which
Portfolio shares being acquired may be legally sold.
The Manager reserves the right
to reject any exchange request and the exchange privilege may be modified or
terminated upon notice to shareholders in accordance with applicable rules
adopted by the SEC.
With regard to redemptions and
exchanges made by telephone, the Distributor and the Trust’s Transfer Agent will
request personal or other identifying information to confirm that the
instructions received from shareholders or their account representatives are
genuine. Calls may be recorded. If our lines are busy or you are otherwise
unable to reach us by phone, you may wish to ask your investment representative
for assistance or send us written instructions, as described elsewhere in this
Prospectus. For your protection, we may delay a transaction or not implement one
if we are not reasonably satisfied that the instructions are genuine. If this
occurs, we will not be liable for any loss. The Distributor and the Transfer
Agent also will not be liable for any losses if they follow instructions by
phone that they reasonably believe are genuine or if an investor is unable to
execute a transaction by phone.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS AND DISTRIBUTIONS.
Each Portfolio intends to qualify each year as a regulated investment company
under the Internal Revenue Code. As a regulated investment company, a Portfolio
generally pays no federal income tax on the income and gains it distributes to
you. Each Portfolio, except the U.S. Government Money Market Portfolio, the
Municipal Bond Portfolio and the Investment Quality Bond Portfolio, declares and
pays dividends from net investment income, if any, annually. Dividends
attributable to the net investment income of the U.S. Government Money Market
Portfolio, will be declared daily and paid monthly. Shareholders of the U.S.
Government Money Market Portfolio receive dividends from the day following the
purchase settlement up to and including the date of redemption settlement.
Dividends attributable to the net investment income of the Municipal Bond
Portfolio and the Investment Quality Bond Portfolio are paid monthly.
Distributions of net realized long-term and short-term capital gains, if any,
earned by a Portfolio will be made annually.
Each
Portfolio may distribute such income dividends and capital gains more
frequently, if necessary, in order to reduce or eliminate federal excise or
income taxes on the Portfolio. Net investment income (i.e., income other than
long and short-term capital gains) and net realized long and short-term capital
gains will be determined separately for Conservative Balanced Allocation
Portfolio, Moderately Conservative Balanced Allocation Portfolio, Moderate
Balanced Allocation Portfolio, Moderately Aggressive Balanced Allocation
Portfolio, Aggressive Balanced Allocation Portfolio, U.S. Government Money
Market Portfolio, Investment Quality Bond Portfolio, Municipal Bond Portfolio,
Large Capitalization Value Portfolio, Large Capitalization Growth Portfolio, Mid
Capitalization Portfolio, Small Capitalization Portfolio, International Equity
Portfolio, Health & Biotechnology Portfolio, Technology & Communications
Portfolio, Financial Services Portfolio and Energy & Basic Materials
Portfolio. Dividends derived from net investment income and distributions of net
realized long and short-term capital gains paid by a Portfolio to a shareholder
will be automatically reinvested (at current NAV) in additional shares of that
Portfolio (which will be deposited in the shareholder’s account) unless the
shareholder instructs the Trust, in writing, to pay all dividends and
distributions in cash.
ANNUAL STATEMENTS. You will be
sent annually a statement (IRS Form 1099-DIV) showing the taxable
distributions paid to you in the previous calendar year, if any. The statement
provides information on your dividends and capital gains for tax purposes. If
any dividends are declared in October, November or December to shareholders of
record in such months and paid in January of the following year, then such
amounts will be treated for tax purposes as received by the shareholders on
December 31 of the prior year. The Portfolios may reclassify income after
your tax reporting statement is mailed to you. Prior to issuing your statement,
the Portfolios make every effort to search for reclassified income to reduce the
number of corrected forms mailed to shareholders. However, when necessary, the
Portfolios will send you a corrected Form 1099-DIV to reflect reclassified
information, or adjust the cost basis of any covered shares (defined
below).
AVOID “BUYING A DIVIDEND.” At
the time you purchase your Portfolio shares, a Portfolio’s NAV may reflect
undistributed income, undistributed capital gains, or net unrealized
appreciation in value of portfolio securities held by the Portfolio. For taxable
investors, a subsequent distribution to you of such amounts, although
constituting a return of your investment, would be taxable. For example, if you
buy shares in the Portfolio shortly before it makes a distribution, you may
receive some of your investment back in the form of a taxable distribution. This
is known as “buying a dividend.”
TAX CONSEQUENCES
The following tax information
in this Prospectus is provided as general information. You should consult your
own tax professional about the tax consequences of an investment in the Trust.
Unless your investment in the Trust is through a tax-deferred retirement
account, such as a 401(k) plan or IRA, you need to be aware of the possible tax
consequences when a Portfolio makes distributions and when you sell Portfolio
shares, including an exchange to another Portfolio.
TAXES ON DISTRIBUTIONS. Your
distributions normally are subject to federal and state income tax when they are
paid, whether you take them in cash or reinvest them in Portfolio shares. A
distribution also may be subject to local income tax. Depending on your state’s
rules, however, dividends attributable to interest earned on direct obligations
of the U.S. government may be exempt from state and local taxes. Any income
dividend distributions and any short-term capital gain distributions are taxable
to you as ordinary income. Any long-term capital gain distributions are taxable
as long-term capital gains, no matter how long you have owned shares in the
Trust.
Certain ordinary income
dividends received by individuals may be taxed at the same rate as long-term
capital gains if certain holding period and other requirements are satisfied.
However, even if income received in the form of ordinary income dividends is
taxed at the same rate as long-term capital gains, such income will not be
considered long-term capital gains for other federal income tax purposes. For
example, you generally will not be permitted to offset ordinary income dividends
with capital losses when calculating your net capital gains or
losses.
Certain ordinary income
dividends received by corporations may be eligible for the corporate dividends
received deduction if certain holding period and other requirements are
satisfied. Short-term capital gain distributions will continue to be taxed at
ordinary income rates.
Given the investment strategies
of the Investment Quality Bond Portfolio, Municipal Bond Portfolio and U.S.
Government Money Market Portfolio, it is not anticipated that a significant
portion of the ordinary income dividends paid by these Portfolios will be taxed
at the same rate as long-term capital gains, or will be eligible for the
corporate dividends received deduction.
With respect
to the Municipal Bond Portfolio, distributions designated as “exempt-interest
dividends” generally will be exempt from federal income tax. However, income
exempt from federal income tax may be subject to state or local tax. In
addition, income derived from certain municipal securities may be subject to the
federal “alternative minimum tax.” Certain tax-exempt securities whose proceeds
are used to finance private, for-profit organizations are subject to this
special tax system that ensures that individuals pay at least some federal
taxes.
Although interest on these
securities generally is exempt from federal income tax, some taxpayers who have
many tax deductions or exemptions nevertheless may have to pay tax on the
income. If you borrow money to purchase shares of the Portfolio, the interest on
the borrowed money generally is not deductible for personal income tax
purposes.
Individuals
and certain other noncorporate entities are generally eligible for a 20%
deduction with respect to ordinary dividends received from REITs (“qualified
REIT dividends”) and certain taxable income from MLPs. Treasury regulations
permit a regulated investment company (such as the Portfolio) to pass through to
its shareholders qualified REIT dividends eligible for the 20% deduction.
However, the regulations do not provide a mechanism for a regulated investment
company to pass through to its shareholders income from MLPs that would be
eligible for such deduction if received directly by the shareholders.
OTHER.
Portfolio distributions and gains from the sale or exchange of your Portfolio
shares also may be subject to state and local taxes. If more than 50% of a
Portfolio’s assets are invested in foreign securities at the end of any fiscal
year, or if at least 50% of the value of a Portfolio’s assets at the close of
each quarter of its taxable year consists of interests in Underlying Funds that
are regulated investment companies, the Portfolio may elect to permit
shareholders to generally take a credit or deduction on their federal income tax
return for foreign taxes paid (or deemed to be paid) by the Portfolio (subject
to various limitations). In such a case, shareholders would also need to include
such foreign taxes in income.
Portfolio investments in
Underlying Funds could affect the amount, timing and character of distributions
to shareholders, as compared to a fund that directly invests in stocks,
securities or other investments.
TAXES ON SALES. Your sale of
Portfolio shares normally is subject to federal and state income tax and may
result in a taxable gain or loss to you. A sale also may be subject to local
income tax. Your exchange of Portfolio shares for shares of another Portfolio is
treated for tax purposes like a sale of your original Portfolio shares and a
purchase of your new shares. Thus, the exchange may, like a sale, result in a
taxable gain or loss to you and will give you a new tax basis for your new
shares.
Generally,
the gain or loss is long-term or short-term depending on whether your holding
period exceeds one year, except that any loss realized on Portfolio shares held
for six months or less will be treated as long-term to the extent of any
long-term capital gain dividends that were received on the Portfolio shares.
With respect to the Municipal Bond Portfolio, any loss realized on a sale or
exchange of Portfolio shares with a tax holding period of six months or less may
be disallowed to the extent of any distributions treated as exempt-interest
dividends with respect to the Portfolio shares. If a shareholder realizes a loss
on the redemption or exchange of a Portfolio’s shares and reinvests in that
Portfolio’s shares or substantially identical shares within 30 days before or
after the redemption or exchange, the transactions may be subject to the “wash
sale” rules, resulting in a postponement of the recognition of such loss for tax
purposes. The ability to deduct losses is subject to further limitations under
the Internal Revenue Code.
COST BASIS. A Portfolio (or its
administrative agents) is required to report to the Internal Revenue Service and
furnish to Portfolio shareholders cost basis and holding period information upon
a redemption of “covered shares” (those generally purchased on or after
January 1, 2012, and sold on or after that date). In the absence of an
election, the Portfolios will use a default cost basis method which is the
average cost method. The cost basis method elected by a Portfolio shareholder
(or the cost basis method applied by default) for each sale of Portfolio shares
may not be changed after the close of business on the trade date of each such
sale of Portfolio shares. Portfolio shareholders should consult with their tax
advisers prior to making redemptions to determine the best Internal Revenue
Service accepted cost basis method for their tax situation and to obtain more
information about the cost basis reporting rules.
MEDICARE TAX. An additional
3.8% Medicare tax is imposed on certain net investment income (including
ordinary dividends and capital gain distributions received from a Portfolio and
net gains from redemptions or other taxable dispositions of Portfolio shares) of
U.S. individuals, estates and trusts to the extent that such person’s “modified
adjusted gross income” (in the case of an individual) or “adjusted gross income”
(in the case of an estate or trust) exceeds certain threshold
amounts.
BACK-UP WITHHOLDING. By law, a
Portfolio must withhold a portion of your taxable distributions and redemption
proceeds unless you provide your correct social security number or taxpayer
identification number, certify that this number is correct, certify that you are
not subject to backup withholding, and certify that you are a U.S. person
(including a U.S. resident alien). A Portfolio also must withhold if the IRS
instructs it to do so. When withholding is required, the amount is currently 24%
of your taxable distributions or redemption proceeds.
When you open your Portfolio
account, you should provide your social security or tax identification number on
your investment application. By providing this information, you can avoid being
subject to federal backup withholding on taxable distributions and redemption
proceeds. Any withheld amount would be sent to the IRS as an advance tax
payment.
FOREIGN SHAREHOLDERS.
Shareholders other than U.S. persons may be subject to a different U.S. federal
income tax treatment, including withholding tax at the rate of 30% on amounts
treated as ordinary dividends from a Portfolio, as discussed in more detail in
the Statement of Additional Information.
This discussion of “Tax
Consequences” is not intended or written to be used as tax advice. Because
everyone’s tax situation is unique, you should consult your tax professional
about federal, state, local or foreign tax consequences before making an
investment in a Portfolio.
ADDITIONAL INFORMATION
The Manager and/or the
Distributor may pay additional compensation (out of their own resources and not
as an expense of the Portfolios) to selected affiliated or unaffiliated brokers
or other service providers in connection with the sale, distribution, retention
and/or servicing of the Portfolios’ shares. Such compensation may be significant
in amount and the prospect of receiving any such additional compensation may
provide affiliated or unaffiliated entities with incentive to favor sales of
shares of the Portfolios over other investment options. Any such payments will
not change the NAV of the price of the Portfolios’ shares.
In addition, the Portfolios or
the Distributor also may make payments to financial intermediaries for certain
administrative services, including recordkeeping, sub-accounting and
sub-transfer agency of shareholder accounts pursuant to an administrative
services agreement with the Portfolios and/or their agents. The fees payable by
the Portfolios under this category of services are subject to certain
limitations approved by the Board of Trustees of the Trust and, to the extent
paid, will increase expenses of the Portfolios. These expenses are not
separately identified in the fee table under the sections titled “Portfolio
Summary – Fees and Expenses of the Portfolio” in this Prospectus, but are
included within “Other Expenses” in the fee tables.
Benchmark
Information
The
Portfolios are not sponsored, endorsed, sold or promoted by Morningstar, Inc.,
or any of its affiliated companies (all such entities, collectively,
“Morningstar Entities”). The Morningstar Entities make no representation or
warranty, express or implied, to the owners of the Portfolios or any member of
the public regarding the advisability of investing in mutual funds generally or
in the Portfolios in particular or the ability of the Morningstar index(es) to
track general equity or asset allocation market performance. The Morningstar
Entities’ only relationship to the Manager is the licensing of certain service
marks and service names of Morningstar and of the Morningstar index(es)
contained in this prospectus which is determined, composed and calculated by the
Morningstar Entities without regard to the Manager or the Portfolios. The
Morningstar Entities have no obligation to take the needs of the Manager or the
owners of the Portfolios into consideration in determining, composing or
calculating the Morningstar index(es). The Morningstar Entities are not
responsible for and has not participated in the determination of the prices and
amount of the Portfolios’ shares or the timing of the issuance or sale of the
Portfolios’ shares or in the determination or calculation of the equation by
which the Portfolios’ shares are converted into cash. The Morningstar Entities
have no obligation or liability in connection with the administration, marketing
or trading of the Portfolios.
THE
MORNINGSTAR ENTITIES DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF
THE MORNINGSTAR INDEXES CONTAINED IN THIS PROSPETUS OR ANY DATA INCLUDED THEREIN
AND THE MORNINGSTAR ENTITIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS,
OR INTERRUPTIONS THEREIN. THE MORNINGSTAR ENTITIES MAKE NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE MANAGER, OWNERS OR USERS OF THE
MORNINGSTAR INDEXES CONTAINED IN THIS PROSPECTUS, OR ANY OTHER PERSON OR ENTITY
FROM THE USE OF THE MORNINGSTAR INDEXES CONTAINED IN THIS PROSPECTUS OR ANY DATA
INCLUDED THEREIN. THE MORNINGSTAR ENTITIES MAKE NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE MORNINGSTAR INDEXES
CONTAINED IN THIS PROSPECTUS OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL THE MORNINGSTAR ENTITIES HAVE ANY LIABILITY
FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD)
The financial highlights
tables are intended to help you understand each Portfolio’s financial
performance for the periods shown. The total returns in the table represent the
rate an investor would have earned or lost on an investment in each respective
Portfolio (assuming reinvestment of all dividends and distributions).
The information for the
Conservative Balanced Allocation Portfolio, Moderately Conservative Balanced
Allocation Portfolio, Moderate Balanced Allocation Portfolio, Moderately
Aggressive Balanced Allocation Portfolio, Aggressive Balanced Allocation
Portfolio, U.S. Government Money Market Portfolio, Investment Quality Bond
Portfolio, Municipal Bond Portfolio, Large Capitalization Value Portfolio, Large
Capitalization Growth Portfolio, Small Capitalization Portfolio, International
Equity Portfolio, Health & Biotechnology Portfolio, Technology &
Communications Portfolio, Financial Services Portfolio, Energy & Basic
Materials Portfolio and the Mid Capitalization Portfolio for the fiscal years
ended August 31, 2023, August 31, 2022, August 31, 2021,
August 31, 2020, and August 31, 2019, has been audited by Tait, Weller
& Baker LLP, an independent registered public accounting firm, whose report,
along with the Portfolios’ financial statements are included in the Portfolios’
August 31, 2023 Annual Report, which is available upon request.
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Aggressive
Balanced Allocation Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year Income |
|
$ |
10.30 |
|
|
$ |
12.43 |
|
|
$ |
10.34 |
|
|
$ |
9.92 |
|
|
$ |
10.43 |
|
(Loss)
from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
(0.01 |
) |
|
|
0.22 |
|
|
|
0.32 |
|
|
|
0.07 |
|
|
|
(0.44 |
) |
Net
realized and unrealized gain (loss) |
|
|
0.64 |
|
|
|
(1.36 |
) |
|
|
1.88 |
|
|
|
0.69 |
|
|
|
0.21 |
|
Total
from investment operations |
|
|
0.63 |
|
|
|
(1.14 |
) |
|
|
2.20 |
|
|
|
0.76 |
|
|
|
(0.23 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
(0.24 |
) |
|
|
(0.03 |
) |
|
|
(0.23 |
) |
|
|
(0.27 |
) |
Distributions
from realized gains |
|
|
(0.61 |
) |
|
|
(0.75 |
) |
|
|
(0.08 |
) |
|
|
(0.11 |
) |
|
|
(0.01 |
) |
Total
dividends and distributions |
|
|
(0.61 |
) |
|
|
(0.99 |
) |
|
|
(0.11 |
) |
|
|
(0.34 |
) |
|
|
(0.28 |
) |
Net
Asset Value, End of Year |
|
$ |
10.32 |
|
|
$ |
10.30 |
|
|
$ |
12.43 |
|
|
$ |
10.34 |
|
|
$ |
9.92 |
|
Total
Return* |
|
|
6.48 |
% |
|
|
(9.93 |
)% |
|
|
21.37 |
%# |
|
|
7.64 |
% |
|
|
(2.01 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
167 |
|
|
$ |
152 |
|
|
$ |
182 |
|
|
$ |
184 |
|
|
$ |
116 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
3.57 |
% |
|
|
3.25 |
% |
|
|
3.35 |
% |
|
|
3.01 |
% |
|
|
2.54 |
% |
Ratio
of net operating expenses to average net assets (2) |
|
|
1.99 |
% |
|
|
1.99 |
% |
|
|
1.92 |
% |
|
|
1.79 |
% |
|
|
1.79 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (2) |
|
|
(0.13 |
)% |
|
|
1.93 |
% |
|
|
2.85 |
% |
|
|
0.76 |
% |
|
|
(4.31 |
)% |
Portfolio
Turnover Rate |
|
|
26 |
% |
|
|
2 |
% |
|
|
54 |
% |
|
|
3 |
% |
|
|
56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conservative
Balanced Allocation Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
10.27 |
|
|
$ |
11.85 |
|
|
$ |
10.51 |
|
|
$ |
10.18 |
|
|
$ |
10.33 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.07 |
|
|
|
0.19 |
|
|
|
(0.14 |
) |
|
|
0.14 |
|
|
|
(0.27 |
) |
Net
realized and unrealized gain (loss) |
|
|
0.25 |
|
|
|
(1.00 |
) |
|
|
1.48 |
|
|
|
0.51 |
|
|
|
0.31 |
|
Total
from investment operations |
|
|
0.32 |
|
|
|
(0.81 |
) |
|
|
1.34 |
|
|
|
0.65 |
|
|
|
0.04 |
|
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
(0.18 |
) |
|
|
- |
|
|
|
(0.19 |
) |
|
|
(0.19 |
) |
Distributions
from realized gains |
|
|
(0.44 |
) |
|
|
(0.59 |
) |
|
|
- |
|
|
|
(0.10 |
) |
|
|
- |
** |
Distributions
from return of capital |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.03 |
) |
|
|
- |
|
Total
dividends and distributions |
|
|
(0.44 |
) |
|
|
(0.77 |
) |
|
|
- |
|
|
|
(0.32 |
) |
|
|
(0.19 |
) |
Net
Asset Value, End of Year |
|
$ |
10.15 |
|
|
$ |
10.27 |
|
|
$ |
11.85 |
|
|
$ |
10.51 |
|
|
$ |
10.18 |
|
Total
Return* |
|
|
3.31 |
% |
|
|
(7.34 |
)% |
|
|
12.75 |
% |
|
|
6.45 |
% |
|
|
0.58 |
% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
604 |
|
|
$ |
626 |
|
|
$ |
675 |
|
|
$ |
594 |
|
|
$ |
712 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
3.07 |
% |
|
|
3.01 |
% |
|
|
2.94 |
% |
|
|
2.60 |
% |
|
|
2.38 |
% |
Ratio
of net operating expenses to average net assets (2) |
|
|
1.99 |
% |
|
|
1.99 |
% |
|
|
1.93 |
% |
|
|
1.79 |
% |
|
|
1.79 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (2) |
|
|
0.66 |
% |
|
|
1.72 |
% |
|
|
(1.22 |
)% |
|
|
1.39 |
% |
|
|
(2.60 |
)% |
Portfolio
Turnover Rate |
|
|
50 |
% |
|
|
11 |
% |
|
|
71 |
% |
|
|
12 |
% |
|
|
31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Per
share amounts calculated using the average shares method, which more
appropriately presents the per share data for the
year. |
(2) |
Does
not include the expenses of funds in which the Fund
invests. |
* |
Assumes
reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.
Total return does not reflect the deduction of taxes that a shareholder
would pay on distributions or on the redemption of
shares. |
** |
Per
share amount represents less than $0.01 per
share. |
^ |
Net
assets at end of period less than $1,000. |
# |
Includes
adjustments in accordance with accounting principles generally accepted in
the United States and, consequently, the net asset value for financial
reporting purposes and the returns based upon those net asset values may
differ from the net asset values and returns for shareholder
transactions. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Moderate
Balanced Allocation Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
10.63 |
|
|
$ |
12.43 |
|
|
$ |
10.61 |
|
|
$ |
10.13 |
|
|
$ |
10.43 |
|
Income
from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.01 |
|
|
|
0.22 |
|
|
|
(0.13 |
) |
|
|
0.10 |
|
|
|
(0.40 |
) |
Net
realized and unrealized gain (loss) |
|
|
0.46 |
|
|
|
(1.19 |
) |
|
|
2.02 |
|
|
|
0.68 |
|
|
|
0.38 |
|
Total
from investment operations |
|
|
0.47 |
|
|
|
(0.97 |
) |
|
|
1.89 |
|
|
|
0.78 |
|
|
|
(0.02 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
(0.22 |
) |
|
|
- |
|
|
|
(0.19 |
) |
|
|
(0.28 |
) |
Distributions
from realized gains |
|
|
(0.59 |
) |
|
|
(0.61 |
) |
|
|
(0.07 |
) |
|
|
(0.11 |
) |
|
|
- |
** |
Total
dividends and distributions |
|
|
(0.59 |
) |
|
|
(0.83 |
) |
|
|
(0.07 |
) |
|
|
(0.30 |
) |
|
|
(0.28 |
) |
Net
Asset Value, End of Year |
|
$ |
10.51 |
|
|
$ |
10.63 |
|
|
$ |
12.43 |
|
|
$ |
10.61 |
|
|
$ |
10.13 |
|
Total
Return* |
|
|
4.72 |
% |
|
|
(8.37 |
)% |
|
|
17.94 |
% |
|
|
7.83 |
% |
|
|
0.11 |
% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
529 |
|
|
$ |
497 |
|
|
$ |
534 |
|
|
$ |
502 |
|
|
$ |
402 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
3.30 |
% |
|
|
3.11 |
% |
|
|
3.10 |
% |
|
|
2.70 |
% |
|
|
2.56 |
% |
Ratio
of net operating expenses to average net assets (2) |
|
|
1.99 |
% |
|
|
1.99 |
% |
|
|
1.93 |
% |
|
|
1.79 |
% |
|
|
1.79 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (2) |
|
|
0.05 |
% |
|
|
1.93 |
% |
|
|
(1.10 |
)% |
|
|
0.96 |
% |
|
|
(3.98 |
)% |
Portfolio
Turnover Rate |
|
|
41 |
% |
|
|
2 |
% |
|
|
52 |
% |
|
|
8 |
% |
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moderately
Aggressive Balanced Allocation Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
10.48 |
|
|
$ |
12.32 |
|
|
$ |
10.41 |
|
|
$ |
9.91 |
|
|
$ |
10.35 |
|
Income
from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.01 |
|
|
|
0.20 |
|
|
|
(0.12 |
) |
|
|
0.19 |
|
|
|
(0.45 |
) |
Net
realized and unrealized gain (loss) |
|
|
0.51 |
|
|
|
(1.21 |
) |
|
|
2.13 |
|
|
|
0.52 |
|
|
|
0.28 |
|
Total
from investment operations |
|
|
0.52 |
|
|
|
(1.01 |
) |
|
|
2.01 |
|
|
|
0.71 |
|
|
|
(0.17 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
(0.24 |
) |
|
|
- |
|
|
|
(0.20 |
) |
|
|
(0.27 |
) |
Distributions
from realized gains |
|
|
(0.58 |
) |
|
|
(0.59 |
) |
|
|
(0.10 |
) |
|
|
(0.01 |
) |
|
|
- |
|
Total
dividends and distributions |
|
|
(0.58 |
) |
|
|
(0.83 |
) |
|
|
(0.10 |
) |
|
|
(0.21 |
) |
|
|
(0.27 |
) |
Net
Asset Value, End of Year |
|
$ |
10.42 |
|
|
$ |
10.48 |
|
|
$ |
12.32 |
|
|
$ |
10.41 |
|
|
$ |
9.91 |
|
Total
Return* |
|
|
5.20 |
% |
|
|
(8.79 |
)% |
|
|
19.45 |
% |
|
|
7.13 |
% |
|
|
(1.38 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
202 |
|
|
$ |
187 |
|
|
$ |
202 |
|
|
$ |
161 |
|
|
$ |
175 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
3.56 |
% |
|
|
3.26 |
% |
|
|
3.50 |
% |
|
|
3.08 |
% |
|
|
2.40 |
% |
Ratio
of net operating expenses to average net assets (2) |
|
|
1.99 |
% |
|
|
1.99 |
% |
|
|
1.93 |
% |
|
|
1.79 |
% |
|
|
1.79 |
% |
Ratio
of net investment income (loss) after expenses reimbursement/recoupment to
average net assets (2) |
|
|
0.05 |
% |
|
|
1.75 |
% |
|
|
(1.09 |
)% |
|
|
1.88 |
% |
|
|
(4.40 |
)% |
Portfolio
Turnover Rate |
|
|
34 |
% |
|
|
0 |
% |
|
|
48 |
% |
|
|
8 |
% |
|
|
69 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Per
share amounts calculated using the average shares method, which more
appropriately presents the per share data for the
year. |
| (2) |
Does
not include the expenses of funds in which the Fund
invests. |
| * |
Assumes
reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.
Total return does not reflect the deduction of taxes that a shareholder
would pay on distributions or on the redemption of
shares. |
| ** |
Per
share amount represents less than $0.01 per
share. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Moderately
Conservative Balanced Allocation Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
9.78 |
|
|
$ |
11.78 |
|
|
$ |
10.28 |
|
|
$ |
9.92 |
|
|
$ |
10.25 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.01 |
|
|
|
0.19 |
|
|
|
(0.13 |
) |
|
|
0.15 |
|
|
|
(0.37 |
) |
Net
realized and unrealized gain (loss) |
|
|
0.39 |
|
|
|
(1.05 |
) |
|
|
1.77 |
|
|
|
0.51 |
|
|
|
0.30 |
|
Total
from investment operations |
|
|
0.40 |
|
|
|
(0.86 |
) |
|
|
1.64 |
|
|
|
0.66 |
|
|
|
(0.07 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
(0.20 |
) |
|
|
- |
|
|
|
(0.21 |
) |
|
|
(0.26 |
) |
Distributions
from realized gains |
|
|
(0.71 |
) |
|
|
(0.94 |
) |
|
|
(0.14 |
) |
|
|
(0.09 |
) |
|
|
- |
|
Total
dividends and distributions |
|
|
(0.71 |
) |
|
|
(1.14 |
) |
|
|
(0.14 |
) |
|
|
(0.30 |
) |
|
|
(0.26 |
) |
Net
Asset Value, End of Year |
|
$ |
9.47 |
|
|
$ |
9.78 |
|
|
$ |
11.78 |
|
|
$ |
10.28 |
|
|
$ |
9.92 |
|
Total
Return* |
|
|
4.44 |
% |
|
|
(8.01 |
)% |
|
|
16.10 |
% |
|
|
6.72 |
%# |
|
|
(0.39 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
178 |
|
|
$ |
155 |
|
|
$ |
168 |
|
|
$ |
83 |
|
|
$ |
190 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
4.09 |
% |
|
|
3.50 |
% |
|
|
3.39 |
% |
|
|
2.85 |
% |
|
|
3.29 |
% |
Ratio
of net operating expenses to average net assets (2) |
|
|
1.99 |
% |
|
|
1.99 |
% |
|
|
1.93 |
% |
|
|
1.79 |
% |
|
|
1.79 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (2) |
|
|
0.09 |
% |
|
|
1.82 |
% |
|
|
(1.16 |
)% |
|
|
1.50 |
% |
|
|
(3.77 |
)% |
Portfolio
Turnover Rate |
|
|
87 |
% |
|
|
10 |
% |
|
|
74 |
% |
|
|
11 |
% |
|
|
57 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Per
share amounts calculated using the average shares method, which more
appropriately presents the per share data for the
year. |
| (2) |
Does
not include the expenses of funds in which the Fund
invests. |
| * |
Assumes
reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.
Total return does not reflect the deduction of taxes that a shareholder
would pay on distributions or on the redemption of
shares. |
| # |
Includes
adjustments in accordance with accounting principles generally accepted in
the United States and, consequently, the net asset value for financial
reporting purposes and the returns based upon those net asset values may
differ from the net asset values and returns for shareholder
transactions. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Large
Capitalization Value Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
18.79 |
|
|
$ |
25.16 |
|
|
$ |
17.64 |
|
|
$ |
16.91 |
|
|
$ |
18.61 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment loss (1) |
|
|
(0.23 |
) |
|
|
(0.40 |
) |
|
|
(0.33 |
) |
|
|
(0.20 |
) |
|
|
(0.17 |
) |
Net
realized and unrealized gain (loss) |
|
|
1.57 |
|
|
|
0.32 |
|
|
|
7.85 |
|
|
|
0.93 |
|
|
|
(0.21 |
) |
Total
from investment operations |
|
|
1.34 |
|
|
|
(0.08 |
) |
|
|
7.52 |
|
|
|
0.73 |
|
|
|
(0.38 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
from realized gains |
|
|
(2.09 |
) |
|
|
(6.29 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1.32 |
) |
Total
dividends and distributions |
|
|
(2.09 |
) |
|
|
(6.29 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1.32 |
) |
Net
Asset Value, End of Year |
|
$ |
18.04 |
|
|
$ |
18.79 |
|
|
$ |
25.16 |
|
|
$ |
17.64 |
|
|
$ |
16.91 |
|
Total
Return* |
|
|
8.09 |
% |
|
|
(1.22 |
)% |
|
|
42.63 |
% |
|
|
4.32 |
% |
|
|
(1.15 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
139 |
|
|
$ |
120 |
|
|
$ |
125 |
|
|
$ |
113 |
|
|
$ |
245 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
2.65 |
% |
|
|
2.67 |
% |
|
|
2.30 |
% |
|
|
2.17 |
% |
|
|
2.14 |
% |
Ratio
of net investment loss after expense reimbursement/recoupment to average
net assets |
|
|
(1.33 |
)% |
|
|
(1.93 |
)% |
|
|
(1.51 |
)% |
|
|
(1.16 |
)% |
|
|
(1.03 |
)% |
Portfolio
Turnover Rate |
|
|
90 |
% |
|
|
117 |
% |
|
|
108 |
% |
|
|
82 |
% |
|
|
87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large
Capitalization Growth Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
10.01 |
|
|
$ |
18.60 |
|
|
$ |
16.76 |
|
|
$ |
15.88 |
|
|
$ |
22.83 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment loss (1) |
|
|
(0.17 |
) |
|
|
(0.25 |
) |
|
|
(0.26 |
) |
|
|
(0.16 |
) |
|
|
(0.17 |
) |
Net
realized and unrealized gain (loss) |
|
|
1.22 |
|
|
|
(1.52 |
) |
|
|
4.54 |
|
|
|
4.71 |
|
|
|
(1.38 |
) |
Total
from investment operations |
|
|
1.05 |
|
|
|
(1.77 |
) |
|
|
4.28 |
|
|
|
4.55 |
|
|
|
(1.55 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
from realized gains |
|
|
(1.48 |
) |
|
|
(6.37 |
) |
|
|
(2.44 |
) |
|
|
(3.67 |
) |
|
|
(5.40 |
) |
Distributions
from return of capital |
|
|
- |
|
|
|
(0.45 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
dividends and distributions |
|
|
(1.48 |
) |
|
|
(6.82 |
) |
|
|
(2.44 |
) |
|
|
(3.67 |
) |
|
|
(5.40 |
) |
Net
Asset Value, End of Year |
|
$ |
9.58 |
|
|
$ |
10.01 |
|
|
$ |
18.60 |
|
|
$ |
16.76 |
|
|
$ |
15.88 |
|
Total
Return* |
|
|
13.43 |
% |
|
|
(17.28 |
)% |
|
|
29.86 |
% |
|
|
34.52 |
% |
|
|
(5.32 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
1,695 |
|
|
$ |
1,919 |
|
|
$ |
2,854 |
|
|
$ |
2,676 |
|
|
$ |
3,258 |
|
Ratio
of gross operating expenses to average net assets (3) |
|
|
2.62 |
% |
|
|
2.68 |
% |
|
|
2.37 |
% |
|
|
2.13 |
% |
|
|
2.06 |
% |
Ratio
of net investment loss after expense reimbursement/recoupment to average
net assets |
|
|
(1.89 |
)% |
|
|
(2.00 |
)% |
|
|
(1.57 |
)% |
|
|
(1.12 |
)% |
|
|
(0.98 |
)% |
Portfolio
Turnover Rate |
|
|
74 |
% |
|
|
60 |
% |
|
|
65 |
% |
|
|
74 |
% |
|
|
90 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Per
share amounts calculated using the average shares method, which more
appropriately presents the per share data for the
year. |
| (2) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the Large Cap
Value Portfolio: |
|
|
|
2.65 |
% |
|
|
2.67 |
% |
|
|
2.30 |
% |
|
|
2.17 |
% |
|
|
2.14 |
% |
| (3) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the Large Cap
Growth Portfolio: |
|
|
|
2.62 |
% |
|
|
2.68 |
% |
|
|
2.37 |
% |
|
|
2.13 |
% |
|
|
2.06 |
% |
| * |
Assumes
reinvestment of all dividends and distributions and does not assume the
effects of any sales charges. Aggregate (not annualized) total return is
shown for any period shorter than one year. Total return does not reflect
the deduction of taxes that a shareholder would pay on distributions or on
the redemption of shares. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Mid
Capitalization Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
7.53 |
|
|
$ |
10.32 |
|
|
$ |
8.34 |
|
|
$ |
8.45 |
|
|
$ |
10.15 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
(0.06 |
) |
|
|
(0.12 |
) |
|
|
(0.11 |
) |
|
|
(0.06 |
) |
|
|
(0.03 |
) |
Net
realized and unrealized gain (loss) |
|
|
0.34 |
|
|
|
(0.80 |
) |
|
|
3.16 |
|
|
|
(0.05 |
) |
|
|
(0.52 |
) |
Total
from investment operations |
|
|
0.28 |
|
|
|
(0.92 |
) |
|
|
3.05 |
|
|
|
(0.11 |
) |
|
|
(0.55 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
from realized gains |
|
|
(0.21 |
) |
|
|
(1.87 |
) |
|
|
(1.07 |
) |
|
|
- |
|
|
|
(1.15 |
) |
Total
dividends and distributions |
|
|
(0.21 |
) |
|
|
(1.87 |
) |
|
|
(1.07 |
) |
|
|
- |
|
|
|
(1.15 |
) |
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
7.60 |
|
|
$ |
7.53 |
|
|
$ |
10.32 |
|
|
$ |
8.34 |
|
|
$ |
8.45 |
|
Total
Return* |
|
|
3.78 |
% |
|
|
(10.84 |
)% |
|
|
39.15 |
% |
|
|
(1.30 |
)% |
|
|
(4.10 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
104 |
|
|
$ |
122 |
|
|
$ |
178 |
|
|
$ |
141 |
|
|
$ |
246 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
2.69 |
% |
|
|
3.02 |
% |
|
|
2.64 |
% |
|
|
2.46 |
% |
|
|
2.32 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets |
|
|
(0.74 |
)% |
|
|
(1.35 |
)% |
|
|
(1.19 |
)% |
|
|
(0.74 |
)% |
|
|
(0.34 |
)% |
Portfolio
Turnover Rate |
|
|
68 |
% |
|
|
43 |
% |
|
|
55 |
% |
|
|
53 |
% |
|
|
49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small
Capitalization Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
1.55 |
|
|
$ |
3.59 |
|
|
$ |
2.47 |
|
|
$ |
2.28 |
|
|
$ |
3.86 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (1) |
|
|
(0.01 |
) |
|
|
(0.03 |
) |
|
|
(0.06 |
) |
|
|
(0.03 |
) |
|
|
(0.02 |
) |
Net
realized and unrealized gain (loss) |
|
|
0.02 |
|
|
|
(0.02 |
) |
|
|
1.18 |
|
|
|
0.22 |
|
|
|
(0.65 |
) |
Total
from investment operations |
|
|
0.01 |
|
|
|
(0.05 |
) |
|
|
1.12 |
|
|
|
0.19 |
|
|
|
(0.67 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
from realized gains |
|
|
(0.62 |
) |
|
|
(1.99 |
) |
|
|
- |
|
|
|
- |
|
|
|
(0.91 |
) |
Total
dividends and distributions |
|
|
(0.62 |
) |
|
|
(1.99 |
) |
|
|
- |
|
|
|
- |
|
|
|
(0.91 |
) |
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
0.94 |
|
|
$ |
1.55 |
|
|
$ |
3.59 |
|
|
$ |
2.47 |
|
|
$ |
2.28 |
|
Total
Return* |
|
|
1.82 |
% |
|
|
(8.75 |
)% |
|
|
45.34 |
% |
|
|
8.33 |
% |
|
|
(16.13 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
6 |
|
|
$ |
4 |
|
|
$ |
3 |
|
|
$ |
1 |
|
|
$ |
41 |
|
Ratio
of gross operating expenses to average net assets (3) |
|
|
2.81 |
% |
|
|
3.05 |
% |
|
|
2.84 |
% |
|
|
2.67 |
% |
|
|
2.43 |
% |
Ratio
of net investment loss after expense reimbursement/recoupment to average
net assets |
|
|
(1.06 |
)% |
|
|
(1.58 |
)% |
|
|
(1.69 |
)% |
|
|
(1.43 |
)% |
|
|
(1.03 |
)% |
Portfolio
Turnover Rate |
|
|
95 |
% |
|
|
104 |
% |
|
|
103 |
% |
|
|
101 |
% |
|
|
90 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Per
share amounts calculated using the average shares method, which more
appropriately presents the per share data for the
year. |
| (2) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the Mid
Capitalization Portfolio: |
|
|
|
2.69 |
% |
|
|
3.02 |
% |
|
|
2.64 |
% |
|
|
2.46 |
% |
|
|
2.32 |
% |
| (3) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the Small Cap
Portfolio: |
|
|
|
2.81 |
% |
|
|
3.05 |
% |
|
|
2.84 |
% |
|
|
2.67 |
% |
|
|
2.43 |
% |
| * |
Assumes
reinvestment of all dividends and distributions and does not assume the
effects of any sales charges. Aggregate (not annualized) total return is
shown for any period shorter than one year. Total return does not reflect
the deduction of taxes that a shareholder would pay on distributions or on
the redemption of shares. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
International
Equity Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
8.15 |
|
|
$ |
10.98 |
|
|
$ |
8.04 |
|
|
$ |
7.97 |
|
|
$ |
9.14 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
(0.07 |
) |
|
|
(0.04 |
) |
|
|
(0.03 |
) |
|
|
0.01 |
|
|
|
0.09 |
|
Net
realized and unrealized gain (loss) |
|
|
1.32 |
|
|
|
(2.76 |
) |
|
|
2.97 |
|
|
|
0.06 |
|
|
|
(1.26 |
) |
Total
from investment operations |
|
|
1.25 |
|
|
|
(2.80 |
) |
|
|
2.94 |
|
|
|
0.07 |
|
|
|
(1.17 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
(0.03 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
dividends and distributions |
|
|
- |
|
|
|
(0.03 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
9.40 |
|
|
$ |
8.15 |
|
|
$ |
10.98 |
|
|
$ |
8.04 |
|
|
$ |
7.97 |
|
Total
Return* |
|
|
15.34 |
%# |
|
|
(25.55 |
)% |
|
|
36.57 |
% |
|
|
0.63 |
%# |
|
|
(12.80 |
)%# |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
10 |
|
|
$ |
8 |
|
|
$ |
9 |
|
|
$ |
1 |
|
|
$ |
9 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
3.16 |
% |
|
|
4.18 |
% |
|
|
3.96 |
% |
|
|
2.69 |
% |
|
|
2.58 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets |
|
|
(0.84 |
)% |
|
|
(0.39 |
)% |
|
|
(0.31 |
)% |
|
|
0.15 |
% |
|
|
1.13 |
% |
Portfolio
Turnover Rate |
|
|
59 |
% |
|
|
47 |
% |
|
|
59 |
% |
|
|
52 |
% |
|
|
95 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Biotechnology Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
13.94 |
|
|
$ |
15.95 |
|
|
$ |
15.68 |
|
|
$ |
14.79 |
|
|
$ |
20.70 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment loss (1) |
|
|
(0.27 |
) |
|
|
(0.30 |
) |
|
|
(0.25 |
) |
|
|
(0.15 |
) |
|
|
(0.17 |
) |
Net
realized and unrealized gain (loss) |
|
|
1.09 |
|
|
|
(0.92 |
) |
|
|
3.10 |
|
|
|
1.95 |
|
|
|
(1.68 |
) |
Total
from investment operations |
|
|
0.82 |
|
|
|
(1.22 |
) |
|
|
2.85 |
|
|
|
1.80 |
|
|
|
(1.85 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
from realized gains |
|
|
(1.27 |
) |
|
|
(0.79 |
) |
|
|
(2.58 |
) |
|
|
(0.91 |
) |
|
|
(4.06 |
) |
Total
dividends and distributions |
|
|
(1.27 |
) |
|
|
(0.79 |
) |
|
|
(2.58 |
) |
|
|
(0.91 |
) |
|
|
(4.06 |
) |
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
13.49 |
|
|
$ |
13.94 |
|
|
$ |
15.95 |
|
|
$ |
15.68 |
|
|
$ |
14.79 |
|
Total
Return* |
|
|
5.45 |
% |
|
|
(7.85 |
)% |
|
|
21.24 |
% |
|
|
12.16 |
% |
|
|
(10.03 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
554 |
|
|
$ |
632 |
|
|
$ |
722 |
|
|
$ |
743 |
|
|
$ |
744 |
|
Ratio
of gross operating expenses to average net assets (3) |
|
|
3.35 |
% |
|
|
3.50 |
% |
|
|
3.13 |
% |
|
|
2.91 |
% |
|
|
2.83 |
% |
Ratio
of net investment loss after expense reimbursement/recoupment to average
net assets |
|
|
(1.93 |
)% |
|
|
(2.06 |
)% |
|
|
(1.67 |
)% |
|
|
(0.96 |
)% |
|
|
(1.02 |
)% |
Portfolio
Turnover Rate |
|
|
58 |
% |
|
|
23 |
% |
|
|
19 |
% |
|
|
21 |
% |
|
|
32 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Per
share amounts calculated using the average shares method, which more
appropriately presents the per share data for the
year. |
| (2) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the
International Equity Portfolio: |
|
|
|
3.90 |
% |
|
|
3.90 |
% |
|
|
3.65 |
% |
|
|
2.25 |
% |
|
|
2.25 |
% |
| (3) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the Health &
Biotechnology Portfolio: |
|
|
|
3.35 |
% |
|
|
3.50 |
% |
|
|
3.13 |
% |
|
|
2.91 |
% |
|
|
2.83 |
% |
| # |
Includes
adjustments in accordance with accounting principles generally accepted in
the United States and, consequently, the net asset value for financial
reporting purposes and the returns based upon those net asset values may
differ from the net asset values and returns for shareholder
transactions. |
| * |
Assumes
reinvestment of all dividends and distributions and does not assume the
effects of any sales charges. Aggregate (not annualized) total return is
shown for any period shorter than one year. Total return does not reflect
the deduction of taxes that a shareholder would pay on distributions or on
the redemption of shares. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Technology
& Communications Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
13.97 |
|
|
$ |
22.78 |
|
|
$ |
22.19 |
|
|
$ |
17.47 |
|
|
$ |
18.34 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment loss (1) |
|
|
(0.27 |
) |
|
|
(0.37 |
) |
|
|
(0.46 |
) |
|
|
(0.26 |
) |
|
|
(0.15 |
) |
Net
realized and unrealized gain (loss) |
|
|
2.31 |
|
|
|
(4.80 |
) |
|
|
4.69 |
|
|
|
5.95 |
|
|
|
0.16 |
|
Total
from investment operations |
|
|
2.04 |
|
|
|
(5.17 |
) |
|
|
4.23 |
|
|
|
5.69 |
|
|
|
0.01 |
|
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
from realized gains |
|
|
(3.30 |
) |
|
|
(3.64 |
) |
|
|
(3.64 |
) |
|
|
(0.97 |
) |
|
|
(0.88 |
) |
Total
dividends and distributions |
|
|
(3.30 |
) |
|
|
(3.64 |
) |
|
|
(3.64 |
) |
|
|
(0.97 |
) |
|
|
(0.88 |
) |
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
12.71 |
|
|
$ |
13.97 |
|
|
$ |
22.78 |
|
|
$ |
22.19 |
|
|
$ |
17.47 |
|
Total
Return* |
|
|
21.90 |
% |
|
|
(26.74 |
)% |
|
|
22.63 |
% |
|
|
33.93 |
% |
|
|
0.68 |
% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
2,896 |
|
|
$ |
3,887 |
|
|
$ |
9,708 |
|
|
$ |
9,994 |
|
|
$ |
8,280 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
3.38 |
% |
|
|
3.27 |
% |
|
|
2.97 |
% |
|
|
2.68 |
% |
|
|
2.68 |
% |
Ratio
of net investment loss after expense reimbursement/recoupment to average
net assets |
|
|
(2.30 |
)% |
|
|
(2.10 |
)% |
|
|
(2.18 |
)% |
|
|
(1.43 |
)% |
|
|
(0.88 |
)% |
Portfolio
Turnover Rate |
|
|
6 |
% |
|
|
3 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
& Basic Materials Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
9.24 |
|
|
$ |
8.03 |
|
|
$ |
6.17 |
|
|
$ |
7.64 |
|
|
$ |
10.86 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.11 |
|
|
|
0.16 |
|
|
|
0.03 |
|
|
|
0.03 |
|
|
|
(0.04 |
) |
Net
realized and unrealized gain (loss) |
|
|
1.17 |
|
|
|
1.09 |
|
|
|
1.91 |
|
|
|
(1.50 |
) |
|
|
(3.18 |
) |
Total
from investment operations |
|
|
1.28 |
|
|
|
1.25 |
|
|
|
1.94 |
|
|
|
(1.47 |
) |
|
|
(3.22 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
(0.27 |
) |
|
|
(0.04 |
) |
|
|
(0.08 |
) |
|
|
- |
|
|
|
- |
|
Total
dividends and distributions |
|
|
(0.27 |
) |
|
|
(0.04 |
) |
|
|
(0.08 |
) |
|
|
- |
|
|
|
- |
|
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
10.25 |
|
|
$ |
9.24 |
|
|
$ |
8.03 |
|
|
$ |
6.17 |
|
|
$ |
7.64 |
|
Total
Return* |
|
|
14.11 |
% |
|
|
15.66 |
% |
|
|
31.63 |
% |
|
|
(19.24 |
)% |
|
|
(29.65 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
0 |
|
|
$ |
7 |
|
|
$ |
6 |
|
|
$ |
5 |
|
|
$ |
8 |
|
Ratio
of gross operating expenses to average net assets (3) |
|
|
4.45 |
% |
|
|
4.23 |
% |
|
|
5.06 |
% |
|
|
4.66 |
% |
|
|
4.14 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets |
|
|
1.12 |
% |
|
|
1.74 |
% |
|
|
0.41 |
% |
|
|
0.41 |
% |
|
|
(0.41 |
)% |
Portfolio
Turnover Rate |
|
|
51 |
% |
|
|
43 |
% |
|
|
81 |
% |
|
|
63 |
% |
|
|
45 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Per
share amounts calculated using the average shares method, which more
appropriately presents the per share data for the
year. |
| (2) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the Technology
& Communications Portfolio: |
|
|
|
3.38 |
% |
|
|
3.27 |
% |
|
|
2.97 |
% |
|
|
2.68 |
% |
|
|
2.68 |
% |
| (3) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the Energy &
Basic Materials Portfolio: |
|
|
|
4.00 |
% |
|
|
4.00 |
% |
|
|
4.00 |
% |
|
|
4.00 |
% |
|
|
4.00 |
% |
| * |
Assumes
reinvestment of all dividends and distributions and does not assume the
effects of any sales charges. Aggregate (not annualized) total return is
shown for any period shorter than one year. Total return does not reflect
the deduction of taxes that a shareholder would pay on distributions or on
the redemption of shares. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Financial
Services Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
7.41 |
|
|
$ |
8.96 |
|
|
$ |
6.05 |
|
|
$ |
6.95 |
|
|
$ |
9.89 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.13 |
|
|
|
0.19 |
|
|
|
(0.03 |
) |
|
|
(0.15 |
) |
|
|
(0.14 |
) |
Net
realized and unrealized gain (loss) |
|
|
0.13 |
|
|
|
(1.23 |
) |
|
|
3.28 |
|
|
|
(0.54 |
) |
|
|
(1.12 |
) |
Total
from investment operations |
|
|
0.26 |
|
|
|
(1.04 |
) |
|
|
3.25 |
|
|
|
(0.69 |
) |
|
|
(1.26 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
from realized gains |
|
|
(0.47 |
) |
|
|
(0.51 |
) |
|
|
(0.34 |
) |
|
|
(0.21 |
) |
|
|
(1.68 |
) |
Total
dividends and distributions |
|
|
(0.47 |
) |
|
|
(0.51 |
) |
|
|
(0.34 |
) |
|
|
(0.21 |
) |
|
|
(1.68 |
) |
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
7.20 |
|
|
$ |
7.41 |
|
|
$ |
8.96 |
|
|
$ |
6.05 |
|
|
$ |
6.95 |
|
Total
Return* |
|
|
3.57 |
% |
|
|
(12.37 |
)% |
|
|
55.79 |
% |
|
|
(10.47 |
)% |
|
|
(11.79 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
7 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
4.19 |
% |
|
|
4.28 |
% |
|
|
3.42 |
% |
|
|
4.21 |
% |
|
|
4.35 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets |
|
|
1.82 |
% |
|
|
2.34 |
% |
|
|
(0.37 |
)% |
|
|
(2.04 |
)% |
|
|
(1.75 |
)% |
Portfolio
Turnover Rate |
|
|
45 |
% |
|
|
39 |
% |
|
|
59 |
% |
|
|
71 |
% |
|
|
67 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Quality Bond Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
9.02 |
|
|
$ |
9.55 |
|
|
$ |
9.74 |
|
|
$ |
9.55 |
|
|
$ |
9.32 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
(0.06 |
) |
|
|
(0.19 |
) |
|
|
(0.12 |
) |
|
|
(0.02 |
) |
|
|
0.01 |
|
Net
realized and unrealized gain (loss) |
|
|
(0.03 |
) |
|
|
(0.22 |
) |
|
|
(0.06 |
) |
|
|
0.23 |
|
|
|
0.27 |
|
Total
from investment operations |
|
|
(0.09 |
) |
|
|
(0.41 |
) |
|
|
(0.18 |
) |
|
|
0.21 |
|
|
|
0.28 |
|
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
(0.02 |
) |
|
|
- |
|
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.05 |
) |
Distributions
from realized gains |
|
|
- |
|
|
|
(0.12 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Distributions
from return of capital |
|
|
(0.01 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
dividends and distributions |
|
|
(0.03 |
) |
|
|
(0.12 |
) |
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.05 |
) |
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
8.90 |
|
|
$ |
9.02 |
|
|
$ |
9.55 |
|
|
$ |
9.74 |
|
|
$ |
9.55 |
|
Total
Return* |
|
|
(1.00 |
)% |
|
|
(4.28 |
)% |
|
|
(1.83 |
)% |
|
|
2.17 |
% |
|
|
3.04 |
% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
4 |
|
|
$ |
35 |
|
|
$ |
37 |
|
|
$ |
39 |
|
|
$ |
103 |
|
Ratio
of gross operating expenses to average net assets (3),(4) |
|
|
2.56 |
% |
|
|
2.91 |
% |
|
|
2.39 |
% |
|
|
2.39 |
% |
|
|
2.32 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (4) |
|
|
(0.62 |
)% |
|
|
(2.11 |
)% |
|
|
(1.27 |
)% |
|
|
(0.24 |
)% |
|
|
0.15 |
% |
Portfolio
Turnover Rate |
|
|
103 |
% |
|
|
1 |
% |
|
|
62 |
% |
|
|
23 |
% |
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Per
share amounts calculated using the average shares method, which more
appropriately presents the per share data for the
year. |
| (2) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the Financial
Services Portfolio: |
|
|
|
4.00 |
% |
|
|
4.00 |
% |
|
|
3.00 |
% |
|
|
4.00 |
% |
|
|
4.00 |
% |
| (3) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the Investment
Quality Bond Portfolio: |
|
|
|
2.56 |
% |
|
|
2.90 |
% |
|
|
2.39 |
% |
|
|
2.39 |
% |
|
|
2.32 |
% |
| (4) |
Does
not include the expenses of funds in which the Fund
invests. |
| * |
Assumes
reinvestment of all dividends and distributions and does not assume the
effects of any sales charges. Aggregate (not annualized) total return is
shown for any period shorter than one year. Total return does not reflect
the deduction of taxes that a shareholder would pay on distributions or on
the redemption of shares. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Municipal
Bond Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
8.60 |
|
|
$ |
8.97 |
|
|
$ |
9.08 |
|
|
$ |
9.01 |
|
|
$ |
8.95 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
(0.07 |
) |
|
|
(0.22 |
) |
|
|
(0.12 |
) |
|
|
0.00 |
** |
|
|
0.00 |
** |
Net
realized and unrealized gain (loss) |
|
|
(0.11 |
) |
|
|
(0.15 |
) |
|
|
0.02 |
|
|
|
0.08 |
|
|
|
0.07 |
|
Total
from investment operations |
|
|
(0.18 |
) |
|
|
(0.37 |
) |
|
|
(0.10 |
) |
|
|
0.08 |
|
|
|
0.07 |
|
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Return
of Capital |
|
|
- |
|
|
|
- |
|
|
|
(0.01 |
) |
|
|
- |
|
|
|
- |
|
Total
dividends and distributions |
|
|
- |
|
|
|
- |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Net
Asset Value, End of Year |
|
$ |
8.42 |
|
|
$ |
8.60 |
|
|
$ |
8.97 |
|
|
$ |
9.08 |
|
|
$ |
9.01 |
|
Total
Return* |
|
|
(2.09 |
)% |
|
|
(4.12 |
)%# |
|
|
(1.14 |
)%# |
|
|
0.88 |
%# |
|
|
0.77 |
%# |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
22 |
|
|
$ |
22 |
|
|
$ |
35 |
|
|
$ |
35 |
|
|
$ |
70 |
|
Ratio
of gross operating expenses to average net assets (2),(4) |
|
|
4.06 |
% |
|
|
3.68 |
% |
|
|
3.74 |
% |
|
|
3.72 |
% |
|
|
4.01 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (4) |
|
|
(0.85 |
)% |
|
|
(2.47 |
)% |
|
|
(1.30 |
)% |
|
|
0.00 |
% |
|
|
0.04 |
% |
Portfolio
Turnover Rate |
|
|
101 |
% |
|
|
0 |
% |
|
|
82 |
% |
|
|
22 |
% |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government Money Market Portfolio - Class C Shares |
|
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
Year
Ended |
|
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
August 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net
Asset Value, Beginning of Year |
|
$ |
1.00 |
|
|
$ |
1.00 |
|
|
$ |
1.00 |
|
|
$ |
1.00 |
|
|
$ |
1.00 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (1) |
|
|
0.03 |
|
|
|
0.00 |
** |
|
|
0.00 |
** |
|
|
0.00 |
** |
|
|
0.00 |
** |
Net
realized and unrealized gain (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
from investment operations |
|
|
0.03 |
|
|
|
0.00 |
** |
|
|
0.00 |
** |
|
|
0.00 |
** |
|
|
0.00 |
** |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
(0.03 |
) |
|
|
(0.00 |
)** |
|
|
(0.00 |
)** |
|
|
(0.00 |
)** |
|
|
(0.00 |
)** |
Distributions
from realized gains |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
dividends and distributions |
|
|
(0.03 |
) |
|
|
(0.00 |
)** |
|
|
(0.00 |
)** |
|
|
(0.00 |
)** |
|
|
(0.00 |
)** |
Net
Asset Value, End of Year |
|
$ |
1.00 |
|
|
$ |
1.00 |
|
|
$ |
1.00 |
|
|
$ |
1.00 |
|
|
$ |
1.00 |
|
Total
Return* |
|
|
2.55 |
% |
|
|
0.01 |
% |
|
|
0.02 |
% |
|
|
0.00 |
%# |
|
|
0.16 |
% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
280 |
|
|
$ |
94 |
|
|
$ |
105 |
|
|
$ |
98 |
|
|
$ |
165 |
|
Ratio
of gross operating expenses to average net assets (3),(4) |
|
|
1.99 |
% |
|
|
1.92 |
% |
|
|
1.07 |
% |
|
|
2.18 |
% |
|
|
2.21 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (4) |
|
|
2.48 |
% |
|
|
0.02 |
% |
|
|
0.00 |
% |
|
|
(0.77 |
)% |
|
|
0.18 |
% |
Portfolio
Turnover Rate |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Per
share amounts calculated using the average shares method, which more
appropriately presents the per share data for the
year. |
| (2) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the Municipal
Bond Portfolio: |
|
|
|
2.90 |
% |
|
|
2.90 |
% |
|
|
1.94 |
% |
|
|
1.55 |
% |
|
|
1.95 |
% |
| (3) |
Ratio
of net operating expenses to average net assets (after waiver and/or
reimbursement or reduction by commissions recaptured) for the U.S.
Government Money Market Portfolio: |
|
|
|
1.99 |
% |
|
|
0.46 |
% |
|
|
0.02 |
% |
|
|
1.68 |
% |
|
|
2.15 |
% |
| (4) |
Does
not include the expenses of funds in which the Fund
invests. |
| # |
Includes
adjustments in accordance with accounting principles generally accepted in
the United States and, consequently, the net asset value for financial
reporting purposes and the returns based upon those net asset values may
differ from the net asset values and returns for shareholder
transactions. |
| * |
Assumes
reinvestment of all dividends and distributions and does not assume the
effects of any sales charges. Aggregate (not annualized) total return is
shown for any period shorter than one year. Total return does not reflect
the deduction of taxes that a shareholder would pay on distributions or on
the redemption of shares. |
| ** |
Per
share amount represents less than $0.01 per
share. |
Privacy Policy Notice for The Saratoga Advantage
Trust
Rev. July 2011
FACTS |
WHAT
DOES THE SARATOGA ADVANTAGE TRUST DO WITH YOUR PERSONAL
INFORMATION? |
Why? |
Financial
companies choose how they share your personal information. Federal law
gives consumers the right to limit some but not all sharing. Federal law
also requires us to tell you how we collect, share and protect your
personal information. Please read this notice carefully to understand what
we do. |
What? |
The
types of personal information we collect and share depend on the product
or service you have with us. This information can include:
● Social
Security number and wire transfer instructions
● account
transactions and transaction history
● investment
experience and purchase history
When
you are no longer our customer, we continue to share your
information as described in this notice. |
How? |
All
financial companies need to share customers’ personal information to run
their everyday business. In the section below, we list the reasons
financial companies can share their customers’ personal information; the
reasons The Saratoga Advantage Trust (the “Trust”) choose to share; and
whether you can limit this sharing. |
|
|
|
|
Reasons
we can share your personal information |
Does
the Trust share? |
Can
you limit this sharing? |
For
our everyday business purposes – such as to process your transactions,
maintain your account(s), respond to court orders and legal
investigations, or report to credit bureaus |
Yes |
No |
For
our marketing purposes – to offer our products and services to
you |
Yes |
No |
For
joint marketing with other financial companies |
No |
We
don’t share |
For
our affiliates’ everyday business purposes – information about your
transactions and experiences |
Yes |
No |
For
our affiliates’ everyday business purposes – information about your
creditworthiness |
No |
We
don’t share |
For
our affiliates to market to you |
No |
We
don’t share |
For
nonaffiliates to market to you |
No |
We
don’t share |
|
|
Questions? |
Call
1-800-807-FUND |
Who
we are |
Who
is providing this notice? |
The
Saratoga Advantage Trust |
What
we do |
How
does The Trust protect my personal information? |
To
protect your personal information from unauthorized access and use, we use
security measures that comply with federal law. These measures include
computer safeguards and secured files and buildings. We restrict access to
nonpublic personal information about you to those employees who need to
know that information to provide products or services to you.
|
How
does The Trust collect my personal information? |
We
collect your personal information, for example, when you
● open
an account or deposit money
● direct
us to buy securities or direct us to sell your securities
● seek
information about your investments
We
also collect your personal information from others, such as credit
bureaus, affiliates, or other companies. |
Why
can’t I limit all sharing? |
Federal
law gives you the right to limit only
● sharing
for affiliates’ everyday business purposes—information about your
creditworthiness
● affiliates
from using your information to market to you
● sharing
for non-affiliates to market to you
● State
laws and individual companies may give you additional rights to limit
sharing. |
Definitions
|
Affiliates
|
Companies
related by common ownership or control. They can be financial and
nonfinancial companies.
● Our
affiliates include financial companies such as Saratoga Capital
Management, LLC. |
Nonaffiliates
|
Companies
not related by common ownership or control. They can be financial and
nonfinancial companies.
● The
Trust does not share your personal information with nonaffiliates so they
can market you. |
Joint
marketing |
A
formal agreement between nonaffiliated financial companies that together
market financial products or services to you.
● The
Trust does not jointly market. |
APPENDIX A
Intermediary-Specific Sales
Charge Waivers and Discounts
The availability of certain
initial or deferred sales charge waivers and discounts may depend on the
particular financial intermediary or type of account through which you purchase
or hold Portfolio shares.
Intermediaries may have
different policies and procedures regarding the availability of front-end sales
load waivers or contingent deferred (back-end) sales load (“CDSC”) waivers which
are discussed below. In all instances, it is the purchaser’s responsibility to
notify the fund or the purchaser’s financial intermediary at the time of
purchase of any relationship or other facts qualifying the purchaser for sales
charge waivers or discounts. For waivers and discounts not available through a
particular intermediary, shareholders will have to purchase fund shares directly
from the fund or through another intermediary to receive these waivers or
discounts.
Raymond James & Associates, Inc., Raymond
James Financial Services, Inc. and each entity’s affiliates (“Raymond
James”)
Effective March 1, 2019,
shareholders purchasing Portfolio shares through a Raymond James platform or
account, or through an introducing broker-dealer or independent registered
investment adviser for which Raymond James provides trade execution, clearance,
and/or custody services, will be eligible only for the following load waivers
(front-end sales charge waivers and contingent deferred, or back-end, sales
charge waivers) and discounts, which may differ from those disclosed elsewhere
in this Portfolios’ Prospectus or SAI.
Front-end sales load waivers
on Class A shares available at Raymond James
| ● |
Shares purchased in an
investment advisory program. |
| ● |
Shares purchased within
the same fund family through a systematic reinvestment of capital gains
distributions and dividend reinvestment when purchasing shares of the same
portfolio (but not any other fund within the fund
family). |
| ● |
Employees and registered
representatives of Raymond James or its affiliates and their family
members as designated by Raymond James. |
| ● |
Shares purchased from the
proceeds of redemptions within the same portfolio family, provided (1) the
repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occurs in the same account, and (3) redeemed
shares were subject to a front-end or deferred sales load (known as Rights
of Reinstatement). |
| ● |
A shareholder in a
Portfolio’s Class C shares will have their shares converted at NAV to
Class A shares (or the appropriate share class) of the Portfolio if the
shares are no longer subject to a CDSC and the conversion is in line with
the policies and procedures of Raymond James. |
CDSC Waivers on Classes A
and C shares available at Raymond James
| ● |
Death or disability of
the shareholder. |
| ● |
Shares sold as part of a
systematic withdrawal plan as described in the
Prospectus. |
| ● |
Return of excess
contributions from an IRA Account. |
| ● |
Shares sold as part of a
required minimum distribution for IRA and retirement accounts due to the
shareholder reaching age 70½ as described in the
Prospectus. |
| ● |
Shares sold to pay
Raymond James fees but only if the transaction is initiated by Raymond
James. |
| ● |
Shares acquired through a
right of reinstatement. |
Front-end load discounts
available at Raymond James: breakpoints, and/or rights of accumulation, and/or
letters of intent
| ● |
Breakpoints as described
in this Prospectus. |
| ● |
Rights of accumulation
which entitle shareholders to breakpoint discounts will be automatically
calculated based on the aggregated holding of fund family assets held by
accounts within the purchaser’s household at Raymond James. Eligible fund
family assets not held at Raymond James may be included in the calculation
of rights of accumulation calculation only if the shareholder notifies his
or her financial advisor about such assets. |
| ● |
Letters of intent which
allow for breakpoint discounts based on anticipated purchases within a
fund family, over a 13-month time period. Eligible fund family assets not
held at Raymond James may be included in the calculation of letters of
intent only if the shareholder notifies his or her financial advisor about
such assets. |
Janney Montgomery Scott LLC
(“Janney”)
Effective May 1, 2020, if
you purchase fund shares through a Janney brokerage account, you will be
eligible for the following load waivers (front-end sales charge waivers and
contingent deferred sales charge (“CDSC”), or back-end sales charge, waivers)
and discounts, which may differ from those disclosed elsewhere in this fund’s
Prospectus or SAI.
Front-end sales
charge* waivers on Class A shares available at Janney
| ● |
Shares purchased through
reinvestment of capital gains distributions and dividend reinvestment when
purchasing shares of the same fund (but not any other fund within the fund
family). |
| ● |
Shares purchased by
employees and registered representatives of Janney or its affiliates and
their family members as designated by Janney. |
| ● |
Shares purchased from the
proceeds of redemptions within the same fund family, provided (1) the
repurchase occurs within ninety (90) days following the redemption, (2)
the redemption and purchase occur in the same account, and (3) redeemed
shares were subject to a front-end or deferred sales load (i.e., right of
reinstatement). |
| ● |
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement
plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh
plans. |
| ● |
Shares acquired through a
right of reinstatement. |
| ● |
Class C shares that are
no longer subject to a contingent deferred sales charge and are converted
to Class A shares of the same fund pursuant to Janney’s policies and
procedures. |
CDSC waivers on Class A and
C shares available at Janney
| ● |
Shares sold upon the
death or disability of the shareholder. |
| ● |
Shares sold as part of a
systematic withdrawal plan as described in the fund’s
Prospectus. |
| ● |
Shares purchased in
connection with a return of excess contributions from an IRA
account. |
| ● |
Shares sold as part of a
required minimum distribution for IRA and other retirement accounts due to
the shareholder reaching age 70½ as described in the fund’s
Prospectus. |
| ● |
Shares sold to pay Janney
fees but only if the transaction is initiated by
Janney. |
| ● |
Shares acquired through a
right of reinstatement. |
| ● |
Shares exchanged into the
same share class of a different fund. |
Front-end sales
charge* discounts available at Janney: breakpoints, rights of
accumulation, and/or letters of intent
| ● |
Breakpoints as described
in the fund’s Prospectus. |
| ● |
Rights of accumulation
(“ROA”), which entitle shareholders to breakpoint discounts, will be
automatically calculated based on the aggregated holding of fund family
assets held by accounts within the purchaser’s household at Janney.
Eligible fund family assets not held at Janney may be included in the ROA
calculation only if the shareholder notifies his or her financial advisor
about such assets. |
| ● |
Letters of intent which
allow for breakpoint discounts based on anticipated purchases within a
fund family, over a 13-month time period. Eligible fund family assets not
held at Janney Montgomery Scott may be included in the calculation of
letters of intent only if the shareholder notifies his or her financial
advisor about such assets. |
| * |
Also referred to as an
“initial sales charge.” |
Robert W. Baird & Co.
(“Baird”)
Effective September 15,
2020, shareholders purchasing fund shares through a Baird platform or account
will only be eligible for the following sales charge waivers (front-end sales
charge waivers and CDSC waivers) and discounts, which may differ from those
disclosed elsewhere in this Prospectus or the SAI.
Front-End Sales Charge
Waivers on Class A shares Available at Baird
| ● |
Shares purchased through
reinvestment of capital gains distributions and dividend reinvestment when
purchasing shares of the same fund |
| ● |
Shares purchased by
employees and registered representatives of Baird or its affiliate(s) and
their family members as designated by Baird |
| ● |
Shares purchased using
the proceeds of redemptions from a Portfolio, provided (1) the repurchase
occurs within 90 days following the redemption, (2) the redemption and
purchase occur in the same accounts, and (3) redeemed shares were subject
to a front-end or deferred sales charge (known as rights of
reinstatement) |
| ● |
A shareholder in the
Portfolio’s Class C shares will have their share converted at net asset
value to Class A shares of the same fund if the shares are no longer
subject to CDSC and the conversion is in line with the policies and
procedures of Baird |
| ● |
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage
account at Baird, including 401(k) plans, 457 plans, employer-sponsored
403(b) plans, profit sharing and money purchase pension plans and defined
benefit plans. For purposes of this provision, employer-sponsored
retirement plans do not include SEP IRAs, Simple IRAs or
SAR-SEPs |
CDSC Waivers on Class A and
C shares Available at Baird
| ● |
Shares sold due to death
or disability of the shareholder |
| ● |
Shares sold as part of a
systematic withdrawal plan as described in the Portfolio’s
Prospectus |
| ● |
Shares bought due to
returns of excess contributions from an IRA
Account |
| ● |
Shares sold as part of a
required minimum distribution for IRA and retirement accounts due to the
shareholder reaching the qualified age based on applicable Internal
Revenue Service regulations as described in the Portfolio’s
Prospectus |
| ● |
Shares sold to pay Baird
fees but only if the transaction is initiated by
Baird |
| ● |
Shares acquired through a
right of reinstatement |
Front-End Sales Charge
Discounts Available at Baird: Breakpoints and/or Rights of
Accumulation
| ● |
Breakpoints as described
in this Prospectus |
| ● |
Rights of accumulation,
which entitle shareholders to breakpoint discounts, will be automatically
calculated based on the aggregated holding of fund family assets held by
accounts within the purchaser’s household at Baird. Eligible fund family
assets not held at Baird may be included in the rights of accumulation
calculation only if the shareholder notifies his or her financial advisor
about such assets |
| ● |
Letters of Intent (LOI)
allow for breakpoint discounts based on anticipated purchases within a
fund family through Baird, over a 13-month period of
time |
CLASS C
SHARES
PROSPECTUS
Additional information about
each Portfolio’s investments is available in the Trust’s Annual and Semi-Annual
Reports to Shareholders. In the Trust’s Annual Report, you will find a
discussion of the market conditions and investment strategies that significantly
affected each Portfolio’s performance during its last fiscal year. The Trust’s
Statement of Additional Information also provides additional information about
each Portfolio. The Statement of Additional Information is incorporated herein
by reference (legally is part of this Prospectus). For a free copy of the Annual
Report, the Semi-Annual Report or the Statement of Additional Information, to
request other information about the Trust, or to make shareholder inquiries,
please call: 1-(800) 807- FUND.
You also may obtain information
about the Trust, including the Annual and Semi-Annual Reports and the Statement
of Additional Information, by calling your financial advisor or by visiting our
Internet site at: www.saratogacap.com.
Information about the Trust,
including the Annual and Semi-Annual Reports and the Statement of Additional
Information, can be reviewed and copied at the SEC’s Public Reference Section.
Reports and other information about the Trust are available on the EDGAR
Database on the SEC’s Internet site at http://www.sec.gov and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following e-mail address: [email protected].
The Trust’s Investment Company
Act file number is 811-08542.