CLASS I
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 |
LUNAX |
|
Large
Capitalization Growth |
SLCGX |
Moderately
Conservative Balanced Allocation |
SMICX |
|
Mid
Capitalization |
SMIPX |
Moderate
Balanced Allocation |
SBMIX |
|
Small
Capitalization |
SSCPX |
Moderately
Aggressive Balanced Allocation |
SAMIX |
|
International
Equity |
SIEPX |
Aggressive
Balanced Allocation |
SABIX |
|
Health
& Biotechnology |
SBHIX |
U.S.
Government Money Market |
SGMXX |
|
Technology
& Communications |
STPIX |
Investment
Quality Bond |
SIBPX |
|
Financial
Services |
SFPIX |
Municipal
Bond |
SMBPX |
|
Energy
& Basic Materials |
SEPIX |
Large
Capitalization Value |
SLCVX |
|
|
|
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. Class I shares may also be available on brokerage
platforms of firms that have agreements with the Portfolio’s principal
underwriter permitting such firms to (i) offer Class I shares solely when acting
as an agent for the investor and (ii) impose on an investor transacting in Class
I shares through such platforms a commission and/or other forms of compensation
to the broker. Shares of the Portfolio are available in other share classes that
have different fees and expenses.
|
|
|
| |
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.17% |
Acquired
Fund Fees and Expenses (1) |
|
0.60% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
2.67% |
Expense
Waiver/Reimbursement |
|
(1.08)% |
Total
Annual Portfolio Operating Expenses (after Expense Waiver/Reimbursement)
(2) |
|
1.59% |
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:
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$162 |
|
$727 |
|
$1,319 |
|
$2,923 |
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 I 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
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. 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 |
14.08% |
2020 |
7.46% |
2021 |
10.45% |
2022 |
-8.76% |
During the
periods shown in the bar chart, the
highest return for a calendar quarter was 8.88% (quarter
ended June 30, 2020) and the
lowest return for a calendar quarter was -10.65% (quarter
ended March 31,
2020). For the
period January 1, 2023 through September 30,
2023, the
return for the Portfolio’s Class I shares was 3.46%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
Since Inception* |
Conservative Balanced
Allocation Portfolio: |
|
|
|
|
Return
Before Taxes |
|
-8.76% |
|
3.33% |
Return After Taxes on
Distributions |
|
-9.80% |
|
2.21% |
Return After Taxes on
Distributions and Sale of Portfolio Shares |
|
-4.49% |
|
2.34% |
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. Class I shares may also be available on brokerage
platforms of firms that have agreements with the Portfolio’s principal
underwriter permitting such firms to (i) offer Class I shares solely when acting
as an agent for the investor and (ii) impose on an investor transacting in Class
I shares through such platforms a commission and/or other forms of compensation
to the broker. Shares of the Portfolio are available in other share classes that
have different fees and expenses.
|
|
|
|
|
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
2.08% |
Acquired
Fund Fees and Expenses (1) |
|
0.80% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
3.78% |
Expense
Waiver/Reimbursement |
|
(1.99)% |
Total
Annual Portfolio Operating Expenses (after Expense Waiver/Reimbursement)
(2) |
|
1.79% |
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:
One
Year |
|
Three
Years |
|
Five
Years |
|
Ten
Years |
$182 |
|
$972 |
|
$1,781 |
|
$3,892 |
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 I 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
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. 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 |
16.61% |
2020 |
9.22% |
2021 |
11.75% |
2022 |
-9.81% |
During
the periods shown in the
bar chart, the highest return for a calendar quarter was
11.48% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -13.93% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return
for the Portfolio’s Class I shares was 4.38%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
Since Inception* |
Moderately Conservative
Balanced Allocation Portfolio: |
|
|
|
|
Return
Before Taxes |
|
-9.81% |
|
3.54% |
Return
After Taxes on Distributions |
|
-11.34% |
|
2.05% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-4.68% |
|
2.51% |
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. Class I shares may also be available on brokerage
platforms of firms that have agreements with the Portfolio’s principal
underwriter permitting such firms to (i) offer Class I shares solely when acting
as an agent for the investor and (ii) impose on an investor transacting in Class
I shares through such platforms a commission and/or other forms of compensation
to the broker. Shares of the Portfolio are available in other share classes that
have different fees and expenses.
|
|
|
|
|
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.40% |
Acquired
Fund Fees and Expenses (1) |
|
0.93% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
3.23% |
Expense
Waiver/Reimbursement |
|
(1.31)% |
Total
Annual Portfolio Operating Expenses (after Expense Waiver/Reimbursement)
(2) |
|
1.92% |
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:
One Year |
|
Three Years |
|
Five Years |
|
Ten Years |
$195 |
|
$873 |
|
$1,575 |
|
$3,441 |
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 I 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
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. 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 |
17.03% |
2020 |
9.84% |
2021 |
13.43% |
2022 |
-10.36% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 12.36% (quarter ended June 30, 2020) and the
lowest
return for a calendar quarter was -14.51% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was 4.59%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
Since Inception* |
Moderate Balanced
Allocation Portfolio: |
|
|
|
|
Return
Before Taxes |
|
-10.36% |
|
4.27% |
Return
After Taxes on Distributions |
|
-11.54% |
|
2.98% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-5.27% |
|
3.05% |
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. Class I shares may also be available on brokerage
platforms of firms that have agreements with the Portfolio’s principal
underwriter permitting such firms to (i) offer Class I shares solely when acting
as an agent for the investor and (ii) impose on an investor transacting in Class
I shares through such platforms a commission and/or other forms of compensation
to the broker. Shares of the Portfolio are available in other share classes that
have different fees and expenses.
|
|
|
|
|
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.66% |
Acquired
Fund Fees and Expenses (1) |
|
0.97% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
3.53% |
Expense
Waiver/Reimbursement |
|
(1.57)% |
Total
Annual Portfolio Operating Expenses (after Expense Waiver/Reimbursement)
(2) |
|
1.96% |
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:
One Year |
|
Three Years |
|
Five Years |
|
Ten Years |
$199 |
|
$937 |
|
$1,697 |
|
$3,697 |
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 I 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
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. 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 |
17.86% |
2020 |
9.36% |
2021 |
14.01% |
2022 |
-10.54% |
During the periods
shown in the bar chart, the
highest return for a calendar quarter was 13.29% (quarter ended June 30, 2020) and
the
lowest return for a calendar quarter was -16.26% (quarter ended March 31, 2020).
For the period January 1, 2023 through September 30, 2023,
the return
for the Portfolio’s Class I shares was 4.65%. |
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
Since Inception* |
Moderately Aggressive
Balanced Allocation Portfolio: |
|
|
|
|
Return
Before Taxes |
|
-10.54% |
|
3.93% |
Return
After Taxes on Distributions |
|
-11.67% |
|
2.69% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-5.37% |
|
2.79% |
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. Class I shares may also be available on brokerage
platforms of firms that have agreements with the Portfolio’s principal
underwriter permitting such firms to (i) offer Class I shares solely when acting
as an agent for the investor and (ii) impose on an investor transacting in Class
I shares through such platforms a commission and/or other forms of compensation
to the broker. Shares of the Portfolio are available in other share classes that
have different fees and expenses.
|
|
|
|
|
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.67% |
Acquired
Fund Fees and Expenses (1) |
|
1.10% |
Total
Annual Portfolio Operating Expenses (before Expense
Waiver/Reimbursement) |
|
3.67% |
Expense
Waiver/Reimbursement |
|
(1.58)% |
Total
Annual Portfolio Operating Expenses (after Expense Waiver/Reimbursement)
(2) |
|
2.09% |
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:
One Year |
|
Three Years |
|
Five Years |
|
Ten Years |
$212 |
|
$977 |
|
$1,763 |
|
$3,822 |
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 I 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
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. 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 |
18.69% |
2020 |
9.53% |
2021 |
14.83% |
2022 |
-11.34% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 14.74% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -18.59% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was 5.19%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
Since Inception* |
Aggressive Balanced
Allocation Portfolio: |
|
|
|
|
Return
Before Taxes |
|
-11.34% |
|
4.11% |
Return
After Taxes on Distributions |
|
-12.73% |
|
2.65% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-5.71% |
|
2.91% |
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. Class
I shares may also be available on brokerage platforms of firms that have
agreements with the Portfolio’s principal underwriter permitting such firms to
(i) offer Class I shares solely when acting as an agent for the investor and
(ii) impose on an investor transacting in Class I shares through such platforms
a commission and/or other forms of compensation to the broker. Shares of the
Portfolio are available in other share classes that have different fees and
expenses.
|
|
|
|
|
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) |
|
None |
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 (12b-1) Fees |
|
None |
Other
Expenses |
|
0.475% |
Acquired
Fund Fees and Expenses (1) |
|
0.24% |
Total
Annual Portfolio Operating Expenses |
|
1.19% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$121 |
|
$378 |
|
$654 |
|
$1,443 |
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 in the future, 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 I 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
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. 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 |
0.62% |
2019 |
0.88% |
2020 |
0.05% |
2021 |
0.02% |
2022 |
0.72% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 0.71% (quarter ended December 31, 2022) and
the lowest
return for a calendar quarter was 0.00% (quarter ended March 31, 2017). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was 2.86%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
U.S.
Government Money Market Portfolio: |
|
0.72% |
|
0.46% |
|
0.23% |
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. Class
I shares may also be available on brokerage platforms of firms that have
agreements with the Portfolio’s principal underwriter permitting such firms to
(i) offer Class I shares solely when acting as an agent for the investor and
(ii) impose on an investor transacting in Class I shares through such platforms
a commission and/or other forms of compensation to the broker. Shares of the
Portfolio are available in other share classes that have different fees and
expenses.
|
|
|
| |
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
0.83% |
Acquired
Fund Fees and Expenses (1) |
|
0.12% |
Total
Annual Portfolio Operating Expenses |
|
1.50% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$153 |
|
$474 |
|
$818 |
|
$1,791 |
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 I 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
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. 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 |
-0.92% |
2014 |
0.89% |
2015 |
-0.18% |
2016 |
1.70% |
2017 |
0.68% |
2018 |
-0.72% |
2019 |
3.84% |
2020 |
3.37% |
2021 |
-1.74% |
2022 |
-2.51% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 2.21% (quarter ended March 31, 2016) and the
lowest return for a calendar quarter was -1.69% (quarter ended March 31, 2022). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was -0.58%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
Investment Quality Bond
Portfolio: |
|
|
|
|
|
|
Return
Before Taxes |
|
-2.51% |
|
0.41% |
|
0.42% |
Return
After Taxes on Distributions |
|
-2.56% |
|
0.10% |
|
0.02% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-1.48% |
|
0.21% |
|
0.22% |
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. Class
I shares may also be available on brokerage platforms of firms that have
agreements with the Portfolio’s principal underwriter permitting such firms to
(i) offer Class I shares solely when acting as an agent for the investor and
(ii) impose on an investor transacting in Class I shares through such platforms
a commission and/or other forms of compensation to the broker. Shares of the
Portfolio are available in other share classes that have different fees and
expenses.
|
|
|
| |
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
2.47% |
Acquired
Fund Fees and Expenses (1) |
|
0.19% |
Total Annual Portfolio
Operating Expenses |
|
3.21% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$324 |
|
$989 |
|
$1,678 |
|
$3,512 |
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 I 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
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. 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 |
-2.01% |
2014 |
2.25% |
2015 |
0.54% |
2016 |
-1.62% |
2017 |
2.45% |
2018 |
-2.37% |
2019 |
0.99% |
2020 |
0.77% |
2021 |
-1.39% |
2022 |
-2.57% |
During
the periods shown in the bar chart,
the
highest return for a calendar quarter was 2.13% (quarter ended June 30, 2016) and the
lowest return for a calendar quarter was -3.52% (quarter ended December 31, 2016). For
the period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was -2.30%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
Municipal Bond
Portfolio: |
|
|
|
|
|
|
Return
Before Taxes |
|
-2.57% |
|
-0.93% |
|
-0.31% |
Return
After Taxes on Distributions |
|
-2.57% |
|
-0.97% |
|
-0.69% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-1.52% |
|
-0.72% |
|
-0.32% |
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. Class I shares may
also be available on brokerage platforms of firms that have agreements with the
Portfolio’s principal underwriter permitting such firms to (i) offer Class I
shares solely when acting as an agent for the investor and (ii) impose on an
investor transacting in Class I shares through such platforms a commission
and/or other forms of compensation to the broker. Shares of the Portfolio are
available in other share classes that have different fees and
expenses.
|
|
|
| |
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.00% |
Acquired Fund Fees and
Expenses (1) |
|
0.01% |
Total Annual Portfolio
Operating Expenses |
|
1.66% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$169 |
|
$523 |
|
$902 |
|
$1,965 |
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 I 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
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. 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 |
40.50% |
2014 |
11.88% |
2015 |
-6.80% |
2016 |
9.16% |
2017 |
8.66% |
2018 |
-17.55% |
2019 |
40.86% |
2020 |
8.01% |
2021 |
29.21% |
2022 |
-7.01% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 24.43% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -31.88% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was 5.87%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
Large Capitalization
Value Portfolio: |
|
|
|
|
|
|
Return
Before Taxes |
|
-7.01% |
|
8.55% |
|
10.11% |
Return
After Taxes on Distributions |
|
-8.93% |
|
6.15% |
|
8.60% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-2.98% |
|
6.04% |
|
7.87% |
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:
The Large
Capitalization Growth Portfolio seeks 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. Class I shares may
also be available on brokerage platforms of firms that have agreements with the
Portfolio’s principal underwriter permitting such firms to (i) offer Class I
shares solely when acting as an agent for the investor and (ii) impose on an
investor transacting in Class I shares through such platforms a commission
and/or other forms of compensation to the broker. Shares of the Portfolio are
available in other share classes that have different fees and
expenses.
|
|
|
| |
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
0.97% |
Total Annual Portfolio
Operating Expenses |
|
1.62% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$165 |
|
$511 |
|
$881 |
|
$1,922 |
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 I 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
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. 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 |
36.25% |
2014 |
11.91% |
2015 |
10.05% |
2016 |
0.01% |
2017 |
30.35% |
2018 |
-0.52% |
2019 |
26.52% |
2020 |
28.70% |
2022 |
-28.73% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 26.78% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -20.71% (quarter ended June 30, 2022). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was 22.37%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
Large Capitalization
Growth Portfolio: |
|
|
|
|
|
|
Return
Before
Taxes |
|
-28.73% |
|
8.83% |
|
12.82% |
Return After Taxes on
Distributions |
|
-29.87% |
|
4.72% |
|
9.35% |
Return After Taxes on
Distributions and Sale of Portfolio Shares |
|
-16.12% |
|
6.31% |
|
9.72% |
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. Class I shares may
also be available on brokerage platforms of firms that have agreements with the
Portfolio’s principal underwriter permitting such firms to (i) offer Class I
shares solely when acting as an agent for the investor and (ii) impose on an
investor transacting in Class I shares through such platforms a commission
and/or other forms of compensation to the broker. Shares of the Portfolio are
available in other share classes that have different fees and
expenses.
|
|
|
| |
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
0.94% |
Acquired
Fund Fees and Expenses (1) |
|
0.01% |
Total Annual Portfolio
Operating Expenses |
|
1.70% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$173 |
|
$536 |
|
$923 |
|
$2,009 |
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 I 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
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. 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 |
41.71% |
2014 |
10.92% |
2015 |
-3.68% |
2016 |
5.32% |
2017 |
13.31% |
2018 |
-16.72% |
2019 |
30.38% |
2020 |
10.22% |
2021 |
20.42% |
2022 |
-11.60% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 22.44% (quarter ended December 31, 2020) and
the
lowest return for a calendar quarter was -28.19% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was 0.43%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
Mid Capitalization
Portfolio: |
|
|
|
|
|
|
Return
Before Taxes |
|
-11.60% |
|
4.96% |
|
8.69% |
Return
After Taxes on Distributions |
|
-11.98% |
|
3.14% |
|
6.57% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-6.60% |
|
3.63% |
|
6.61% |
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. Class I shares may
also be available on brokerage platforms of firms that have agreements with the
Portfolio’s principal underwriter permitting such firms to (i) offer Class I
shares solely when acting as an agent for the investor and (ii) impose on an
investor transacting in Class I shares through such platforms a commission
and/or other forms of compensation to the broker. Shares of the Portfolio are
available in other share classes that have different fees and
expenses.
|
|
|
| |
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.18% |
Total
Annual Portfolio Operating Expenses |
|
1.83% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$186 |
|
$576 |
|
$990 |
|
$2,148 |
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.
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.
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 I 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
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. 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 |
32.13% |
2014 |
3.20% |
2015 |
-9.67% |
2016 |
13.13% |
2017 |
15.58% |
2018 |
-16.31% |
2019 |
23.71% |
2020 |
25.37% |
2021 |
24.52% |
2022 |
-17.45% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 28.38% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -29.21% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was 0.66%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
Small Capitalization
Portfolio: |
|
|
|
|
|
|
Return
Before Taxes |
|
-17.45% |
|
5.94% |
|
7.95% |
Return
After Taxes on Distributions |
|
-19.22% |
|
3.60% |
|
5.34% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-9.00% |
|
4.48% |
|
5.91% |
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. Class I shares may
also be available on brokerage platforms of firms that have agreements with the
Portfolio’s principal underwriter permitting such firms to (i) offer Class I
shares solely when acting as an agent for the investor and (ii) impose on an
investor transacting in Class I shares through such platforms a commission
and/or other forms of compensation to the broker. Shares of the Portfolio are
available in other share classes that have different fees and
expenses.
|
|
|
| |
International Equity
Portfolio |
Shareholder
Fees (fees paid
directly from your investment) |
|
|
Maximum Sales Charge
(Load) Imposed on Purchases of Shares (as % 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) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.42% |
Total
Annual Portfolio Operating Expenses |
|
2.17% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$220 |
|
$679 |
|
$1,164 |
|
$2,503 |
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 I 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
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. 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 |
12.51% |
2014 |
-11.71% |
2015 |
-5.69% |
2016 |
0.42% |
2017 |
18.63% |
2018 |
-23.90% |
2019 |
19.76% |
2020 |
5.88% |
2021 |
19.33% |
2022 |
-21.85% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 18.77% (quarter ended December 31, 2020) and
the
lowest return for a calendar quarter was -26.98% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was 7.38%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
International Equity
Portfolio: |
|
|
|
|
|
|
Return
Before Taxes |
|
-21.85% |
|
-2.09% |
|
0.01% |
Return
After Taxes on Distributions |
|
-21.95% |
|
-2.48% |
|
-0.27% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-12.94% |
|
-1.72% |
|
-0.06% |
Index: (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. Class I shares may also be
available on brokerage platforms of firms that have agreements with the
Portfolio’s principal underwriter permitting such firms to (i) offer Class I
shares solely when acting as an agent for the investor and (ii) impose on an
investor transacting in Class I shares through such platforms a commission
and/or other forms of compensation to the broker. Shares of the Portfolio are
available in other share classes that have different fees and
expenses.
|
|
|
| |
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.10% |
Total
Annual Portfolio Operating Expenses |
|
2.35% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$238 |
|
$733 |
|
$1,255 |
|
$2,686 |
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 I 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
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. 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 |
36.71% |
2014 |
19.77% |
2015 |
7.30% |
2016 |
-1.54% |
2017 |
12.37% |
2018 |
-5.03% |
2019 |
16.62% |
2020 |
4.02% |
2021 |
17.16% |
2022 |
2.44% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 15.02% (quarter ended December 31, 2022) and
the
lowest return for a calendar quarter was -13.02% (quarter ended December 31, 2018). For
the period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was -5.69%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
Health &
Biotechnology Portfolio: |
|
|
|
|
|
|
Return
Before
Taxes |
|
2.44% |
|
6.69% |
|
10.39% |
Return After Taxes on
Distributions |
|
1.21% |
|
4.71% |
|
8.13% |
Return After Taxes on
Distributions and Sale of Portfolio Shares |
|
2.34% |
|
4.95% |
|
8.08% |
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. Class I shares may
also be available on brokerage platforms of firms that have agreements with the
Portfolio’s principal underwriter permitting such firms to (i) offer Class I
shares solely when acting as an agent for the investor and (ii) impose on an
investor transacting in Class I shares through such platforms a commission
and/or other forms of compensation to the broker. Shares of the Portfolio are
available in other share classes that have different fees and
expenses.
|
|
|
| |
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 (Load) (as a % of offering price) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.12% |
Total
Annual Portfolio Operating Expenses |
|
2.37% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$240 |
|
$739 |
|
$1,265 |
|
$2,706 |
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 I 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
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. 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 |
34.17% |
2014 |
9.94% |
2015 |
5.42% |
2016 |
17.10% |
2017 |
28.22% |
2018 |
0.45% |
2019 |
32.91% |
2020 |
27.36% |
2021 |
16.76% |
2022 |
-31.49% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 26.33% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -20.83% (quarter ended June 30, 2022). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was 28.81%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
Technology &
Communications Portfolio: |
|
|
|
|
|
|
Return
Before Taxes |
|
-31.49% |
|
6.34% |
|
12.25% |
Return
After Taxes on Distributions |
|
-34.00% |
|
4.05% |
|
9.89% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-16.76% |
|
5.24% |
|
9.94% |
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. Class I shares may
also be available on brokerage platforms of firms that have agreements with the
Portfolio’s principal underwriter permitting such firms to (i) offer Class I
shares solely when acting as an agent for the investor and (ii) impose on an
investor transacting in Class I shares through such platforms a commission
and/or other forms of compensation to the broker. Shares of the Portfolio are
available in other share classes that have different fees and
expenses.
|
|
|
| |
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.80% |
Total
Annual Portfolio Operating Expenses |
|
3.05% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$308 |
|
$942 |
|
$1,601 |
|
$3,365 |
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 I 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
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. 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 |
31.40% |
2014 |
7.54% |
2015 |
-6.26% |
2016 |
15.42% |
2017 |
19.84% |
2018 |
-19.02% |
2019 |
24.00% |
2020 |
-5.37% |
2021 |
31.59% |
2022 |
-13.96% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 23.82% (quarter ended December 31, 2020) and
the
lowest return for a calendar quarter was -33.03% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023,
the
return for the Portfolio’s Class I shares was -2.49%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
Financial
Services Portfolio: |
|
|
|
|
|
|
Return
Before Taxes |
|
-13.96% |
|
1.47% |
|
7.02% |
Return
After Taxes on Distributions |
|
-14.94% |
|
-0.13% |
|
6.17% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
-7.56% |
|
0.93% |
|
5.58% |
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, 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 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. Class I shares may
also be available on brokerage platforms of firms that have agreements with the
Portfolio’s principal underwriter permitting such firms to (i) offer Class I
shares solely when acting as an agent for the investor and (ii) impose on an
investor transacting in Class I shares through such platforms a commission
and/or other forms of compensation to the broker. Shares of the Portfolio are
available in other share classes that have different fees and
expenses.
|
|
|
| |
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) |
|
None |
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 |
|
None |
Other
Expenses |
|
1.89% |
Total
Annual Portfolio Operating Expenses |
|
3.14% |
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:
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
$317 |
|
$969 |
|
$1,645 |
|
$3,448 |
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 I 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
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. 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 |
25.23% |
2014 |
-20.09% |
2015 |
-23.71% |
2016 |
19.96% |
2017 |
8.79% |
2018 |
-17.60% |
2019 |
-0.61% |
2020 |
-18.80% |
2021 |
26.06% |
2022 |
19.95% |
During
the periods shown in the bar chart, the
highest return for a calendar quarter was 21.88% (quarter ended June 30, 2020) and the
lowest return for a calendar quarter was -42.82% (quarter ended March 31, 2020). For the
period January 1, 2023 through September 30, 2023, the
return for the Portfolio’s Class I shares was 6.45%.
AVERAGE
ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED DECEMBER 31,
2022)
|
|
1 Year |
|
5 Years |
|
10 Years |
Energy
& Basic Materials Portfolio: |
|
|
|
|
|
|
Return
Before Taxes |
|
19.95% |
|
0.11% |
|
0.02% |
Return
After Taxes on Distributions |
|
18.60% |
|
-0.35% |
|
-0.21% |
Return
After Taxes on Distributions and Sale of Portfolio Shares |
|
11.79% |
|
-0.13% |
|
-0.09% |
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 a 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 |
|
2.60% |
Large Capitalization
Value Portfolio |
|
2.60% |
Mid Capitalization
Portfolio |
|
2.60% |
Small Capitalization
Portfolio |
|
2.60% |
Investment Quality Bond
Portfolio |
|
1.90% |
Municipal Bond
Portfolio |
|
1.90% |
U.S. Government Money
Market Portfolio |
|
1.75% |
International Equity
Portfolio |
|
2.90% |
Health &
Biotechnology Portfolio |
|
3.00% |
Technology &
Communications Portfolio |
|
3.00% |
Financial Services
Portfolio |
|
3.00% |
Energy & Basic
Materials Portfolio |
|
3.00% |
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 0.99% of a Portfolio’s average net assets for Class I 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 |
|
0.99% |
Moderately Conservative
Balanced Allocation Portfolio |
|
0.99% |
Moderate Balanced
Allocation Portfolio |
|
0.99% |
Moderately Aggressive
Balanced Allocation Portfolio |
|
0.99% |
Aggressive Balanced
Allocation Portfolio |
|
0.99% |
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.
INVESTMENT ADVISORY PROGRAMS.
The Trust is designed to allow Consulting Programs and other investment advisory
programs to relieve investors of the burden of devising an asset allocation
strategy to meet their individual needs as well as selecting individual
investments within each asset category among the myriad of available choices.
Generally, the Consulting Programs provide advisory services in connection with
investments among the Portfolios by identifying the investor’s risk tolerance
and investment objectives through evaluation of an investor questionnaire;
identifying and recommending an appropriate allocation of assets among the
Portfolios that is intended to conform to such risk tolerance and objectives in
a recommendation; and providing, on a periodic basis, an analysis and evaluation
of the investor’s account and recommending any appropriate changes in the
allocation of assets among the Portfolios.
The investment advisers for
the Consulting Programs are also responsible for reviewing the asset allocation
recommendations and performance reports with the investor, providing any
interpretations, monitoring identified changes in the investor’s financial
characteristics and the implementation of investment decisions.
With respect to the Saratoga
Portfolios, the investment advisers in the Consulting Programs may use the
Manager’s SaratogaSHARP® Program in assisting their clients in translating
investor needs, preferences and attitudes into suggested portfolio allocations.
In addition, the Manager may provide some or all of the administrative services
to the investment advisers for the Consulting Programs such as the preparation,
printing and processing of investment questionnaires and investment literature
and other client communications. The Manager receives a fee from the investment
adviser for these services.
With respect to the Saratoga
Portfolios, the additional fee payable by the client for the Consulting Programs
is subject to negotiation between the client and his or her investment advisor
and is paid directly by each advisory client to his or her investment advisor
either by redemption of Portfolio shares or by separate payment.
OTHER ADVISORY PROGRAMS.
Shares of the Portfolios are also available for purchase by certain registered
investment advisers (other than the investment advisers for the Consulting
Programs) as a means of implementing asset allocation recommendations based on
an investor’s investment objectives and risk tolerance. In order to qualify to
purchase shares on behalf of its clients, the investment advisor must be
approved by the Manager. Investors purchasing shares through these investment
advisory programs will bear different fees for different levels of services as
agreed upon with the investment advisers offering the programs. Registered
investment advisers interested in utilizing the Portfolios for the purposes
described above should call 1-800-807-FUND (1-800-807-3863).
CONTINUOUS OFFERING. For
Class I 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.
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. 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. 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.
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.
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. 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 I 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 |
|
$ |
10.39 |
|
|
$ |
12.53 |
|
|
$ |
10.42 |
|
|
$ |
9.94 |
|
|
$ |
10.43 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (1) |
|
|
0.09 |
|
|
|
0.33 |
|
|
|
0.40 |
|
|
|
0.25 |
|
|
|
0.24 |
|
Net
realized and unrealized gain (loss) |
|
|
0.64 |
|
|
|
(1.35 |
) |
|
|
1.91 |
|
|
|
0.62 |
|
|
|
(0.45 |
) |
Total
from investment operations |
|
|
0.73 |
|
|
|
(1.02 |
) |
|
|
2.31 |
|
|
|
0.87 |
|
|
|
(0.21 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
(0.07 |
) |
|
|
(0.37 |
) |
|
|
(0.12 |
) |
|
|
(0.28 |
) |
|
|
(0.27 |
) |
Distributions
from realized gains |
|
|
(0.61 |
) |
|
|
(0.75 |
) |
|
|
(0.08 |
) |
|
|
(0.11 |
) |
|
|
(0.01 |
) |
Total
dividends and distributions |
|
|
(0.68 |
) |
|
|
(1.12 |
) |
|
|
(0.20 |
) |
|
|
(0.39 |
) |
|
|
(0.28 |
) |
Net
Asset Value, End of Year |
|
$ |
10.44 |
|
|
$ |
10.39 |
|
|
$ |
12.53 |
|
|
$ |
10.42 |
|
|
$ |
9.94 |
|
Total
Return* |
|
|
7.50 |
% |
|
|
(8.96 |
)% |
|
|
22.46 |
% |
|
|
8.76 |
% |
|
|
(1.81 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
851 |
|
|
$ |
773 |
|
|
$ |
842 |
|
|
$ |
666 |
|
|
$ |
595 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
2.57 |
% |
|
|
2.23 |
% |
|
|
2.39 |
% |
|
|
2.01 |
% |
|
|
3.01 |
% |
Ratio
of net operating expenses to average net assets (2) |
|
|
0.99 |
% |
|
|
0.99 |
% |
|
|
0.93 |
% |
|
|
0.79 |
% |
|
|
0.60 |
% |
Ratio
of net investment income after expense reimbursement/recoupment to average
net assets (2) |
|
|
0.88 |
% |
|
|
2.90 |
% |
|
|
3.44 |
% |
|
|
2.53 |
% |
|
|
2.47 |
% |
Portfolio
Turnover Rate |
|
|
26 |
% |
|
|
2 |
% |
|
|
54 |
% |
|
|
3 |
% |
|
|
56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conservative
Balanced Allocation Portfolio - Class I 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 |
|
$ |
10.41 |
|
|
$ |
12.00 |
|
|
$ |
10.58 |
|
|
$ |
10.20 |
|
|
$ |
10.33 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.17 |
|
|
|
0.30 |
|
|
|
(0.02 |
) |
|
|
0.23 |
|
|
|
0.23 |
|
Net
realized and unrealized gain (loss) |
|
|
0.25 |
|
|
|
(1.01 |
) |
|
|
1.49 |
|
|
|
0.52 |
|
|
|
(0.16 |
) |
Total
from investment operations |
|
|
0.42 |
|
|
|
(0.71 |
) |
|
|
1.47 |
|
|
|
0.75 |
|
|
|
0.07 |
|
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
(0.04 |
) |
|
|
(0.29 |
) |
|
|
(0.05 |
) |
|
|
(0.24 |
) |
|
|
(0.20 |
) |
Distributions
from realized gains |
|
|
(0.44 |
) |
|
|
(0.59 |
) |
|
|
- |
|
|
|
(0.10 |
) |
|
|
- |
** |
Distributions
from return of capital |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.03 |
) |
|
|
- |
|
Total
dividends and distributions |
|
|
(0.48 |
) |
|
|
(0.88 |
) |
|
|
(0.05 |
) |
|
|
(0.37 |
) |
|
|
(0.20 |
) |
Net
Asset Value, End of Year |
|
$ |
10.35 |
|
|
$ |
10.41 |
|
|
$ |
12.00 |
|
|
$ |
10.58 |
|
|
$ |
10.20 |
|
Total
Return* |
|
|
4.26 |
% |
|
|
(6.39 |
)% |
|
|
13.94 |
% |
|
|
7.45 |
% |
|
|
0.84 |
% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
2,128 |
|
|
$ |
1,960 |
|
|
$ |
2,050 |
|
|
$ |
1,656 |
|
|
$ |
1,602 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
2.07 |
% |
|
|
2.01 |
% |
|
|
1.95 |
% |
|
|
1.60 |
% |
|
|
1.77 |
% |
Ratio
of net operating expenses to average net assets (2) |
|
|
0.99 |
% |
|
|
0.99 |
% |
|
|
0.93 |
% |
|
|
0.79 |
% |
|
|
0.70 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (2) |
|
|
1.66 |
% |
|
|
2.70 |
% |
|
|
(0.22 |
)% |
|
|
2.28 |
% |
|
|
2.32 |
% |
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. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Moderate
Balanced Allocation Portfolio - Class I 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 |
|
$ |
10.75 |
|
|
$ |
12.55 |
|
|
$ |
10.69 |
|
|
$ |
10.15 |
|
|
$ |
10.43 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.11 |
|
|
|
0.33 |
|
|
|
(0.01 |
) |
|
|
0.22 |
|
|
|
0.28 |
|
Net
realized and unrealized gain (loss) |
|
|
0.47 |
|
|
|
(1.18 |
) |
|
|
2.02 |
|
|
|
0.67 |
|
|
|
(0.28 |
) |
Total
from investment operations |
|
|
0.58 |
|
|
|
(0.85 |
) |
|
|
2.01 |
|
|
|
0.89 |
|
|
|
(0.00 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
(0.34 |
) |
|
|
(0.08 |
) |
|
|
(0.24 |
) |
|
|
(0.28 |
) |
Distributions
from realized gains |
|
|
(0.59 |
) |
|
|
(0.61 |
) |
|
|
(0.07 |
) |
|
|
(0.11 |
) |
|
|
(0.00 |
)** |
Total
dividends and distributions |
|
|
(0.59 |
) |
|
|
(0.95 |
) |
|
|
(0.15 |
) |
|
|
(0.35 |
) |
|
|
(0.28 |
) |
Net
Asset Value, End of Year |
|
$ |
10.74 |
|
|
$ |
10.75 |
|
|
$ |
12.55 |
|
|
$ |
10.69 |
|
|
$ |
10.15 |
|
Total
Return* |
|
|
5.73 |
% |
|
|
(7.36 |
)% |
|
|
19.01 |
% |
|
|
8.93 |
% |
|
|
0.31 |
% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
1,150 |
|
|
$ |
1,134 |
|
|
$ |
1,187 |
|
|
$ |
967 |
|
|
$ |
743 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
2.30 |
% |
|
|
2.11 |
% |
|
|
2.11 |
% |
|
|
1.70 |
% |
|
|
2.12 |
% |
Ratio
of net operating expenses to average net assets (2) |
|
|
0.99 |
% |
|
|
0.99 |
% |
|
|
0.93 |
% |
|
|
0.79 |
% |
|
|
0.63 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (2) |
|
|
1.07 |
% |
|
|
2.88 |
% |
|
|
(0.09 |
)% |
|
|
2.19 |
% |
|
|
2.79 |
% |
Portfolio
Turnover Rate |
|
|
41 |
% |
|
|
2 |
% |
|
|
52 |
% |
|
|
8 |
% |
|
|
35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moderately
Aggressive Balanced Allocation Portfolio - Class I 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 |
|
$ |
10.58 |
|
|
$ |
12.44 |
|
|
$ |
10.48 |
|
|
$ |
9.93 |
|
|
$ |
10.35 |
|
(Loss)
from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.11 |
|
|
|
0.32 |
|
|
|
(0.00 |
)** |
|
|
0.22 |
|
|
|
0.28 |
|
Net
realized and unrealized gain (loss) |
|
|
0.52 |
|
|
|
(1.23 |
) |
|
|
2.14 |
|
|
|
0.59 |
|
|
|
(0.43 |
) |
Total
from investment operations |
|
|
0.63 |
|
|
|
(0.91 |
) |
|
|
2.14 |
|
|
|
0.81 |
|
|
|
(0.15 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
(0.36 |
) |
|
|
(0.08 |
) |
|
|
(0.25 |
) |
|
|
(0.27 |
) |
Distributions
from realized gains |
|
|
(0.58 |
) |
|
|
(0.59 |
) |
|
|
(0.10 |
) |
|
|
(0.01 |
) |
|
|
- |
|
Total
dividends and distributions |
|
|
(0.58 |
) |
|
|
(0.95 |
) |
|
|
(0.18 |
) |
|
|
(0.26 |
) |
|
|
(0.27 |
) |
Net
Asset Value, End of Year |
|
$ |
10.63 |
|
|
$ |
10.58 |
|
|
$ |
12.44 |
|
|
$ |
10.48 |
|
|
$ |
9.93 |
|
Total
Return* |
|
|
6.23 |
% |
|
|
(7.93 |
)% |
|
|
20.70 |
% |
|
|
8.14 |
% |
|
|
(1.18 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
712 |
|
|
$ |
656 |
|
|
$ |
693 |
|
|
$ |
568 |
|
|
$ |
380 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
2.56 |
% |
|
|
2.26 |
% |
|
|
2.50 |
% |
|
|
2.08 |
% |
|
|
2.62 |
% |
Ratio
of net operating expenses to average net assets (2) |
|
|
0.99 |
% |
|
|
0.99 |
% |
|
|
0.93 |
% |
|
|
0.79 |
% |
|
|
0.65 |
% |
Ratio
of net investment income after expenses reimbursement/recoupment to
average net assets (2) |
|
|
1.05 |
% |
|
|
2.84 |
% |
|
|
0.03 |
% |
|
|
2.20 |
% |
|
|
2.84 |
% |
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 I 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 |
|
$ |
9.95 |
|
|
$ |
11.98 |
|
|
$ |
10.36 |
|
|
$ |
9.94 |
|
|
$ |
10.25 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.10 |
|
|
|
0.32 |
|
|
|
(0.01 |
) |
|
|
0.24 |
|
|
|
0.26 |
|
Net
realized and unrealized gain (loss) |
|
|
0.42 |
|
|
|
(1.09 |
) |
|
|
1.78 |
|
|
|
0.53 |
|
|
|
(0.31 |
) |
Total
from investment operations |
|
|
0.52 |
|
|
|
(0.77 |
) |
|
|
1.77 |
|
|
|
0.77 |
|
|
|
(0.05 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
(0.32 |
) |
|
|
(0.01 |
) |
|
|
(0.26 |
) |
|
|
(0.26 |
) |
Distributions
from realized gains |
|
|
(0.71 |
) |
|
|
(0.94 |
) |
|
|
(0.14 |
) |
|
|
(0.09 |
) |
|
|
- |
|
Total
dividends and distributions |
|
|
(0.71 |
) |
|
|
(1.26 |
) |
|
|
(0.15 |
) |
|
|
(0.35 |
) |
|
|
(0.26 |
) |
Net
Asset Value, End of Year |
|
$ |
9.76 |
|
|
$ |
9.95 |
|
|
$ |
11.98 |
|
|
$ |
10.36 |
|
|
$ |
9.94 |
|
Total
Return* |
|
|
5.62 |
% |
|
|
(7.19 |
)% |
|
|
17.26 |
% |
|
|
7.84 |
% |
|
|
(0.19 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
573 |
|
|
$ |
495 |
|
|
$ |
618 |
|
|
$ |
836 |
|
|
$ |
741 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
2.98 |
% |
|
|
2.50 |
% |
|
|
2.34 |
% |
|
|
1.85 |
% |
|
|
2.30 |
% |
Ratio
of net operating expenses to average net assets (2) |
|
|
0.99 |
% |
|
|
0.99 |
% |
|
|
0.92 |
% |
|
|
0.79 |
% |
|
|
0.67 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (2) |
|
|
1.09 |
% |
|
|
2.95 |
% |
|
|
(0.07 |
)% |
|
|
2.46 |
% |
|
|
2.67 |
% |
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. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Large
Capitalization Value Portfolio - Class I 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 |
|
$ |
25.97 |
|
|
$ |
32.15 |
|
|
$ |
22.32 |
|
|
$ |
21.17 |
|
|
$ |
22.78 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment loss (1) |
|
|
(0.08 |
) |
|
|
(0.25 |
) |
|
|
(0.17 |
) |
|
|
(0.03 |
) |
|
|
(0.01 |
) |
Net
realized and unrealized gain (loss) |
|
|
2.26 |
|
|
|
0.36 |
|
|
|
10.00 |
|
|
|
1.18 |
|
|
|
(0.21 |
) |
Total
from investment operations |
|
|
2.18 |
|
|
|
0.11 |
|
|
|
9.83 |
|
|
|
1.15 |
|
|
|
(0.22 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.07 |
) |
Distributions
from realized gains |
|
|
(2.09 |
) |
|
|
(6.29 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1.32 |
) |
Total
dividends and distributions |
|
|
(2.09 |
) |
|
|
(6.29 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1.39 |
) |
Net
Asset Value, End of Year |
|
$ |
26.06 |
|
|
$ |
25.97 |
|
|
$ |
32.15 |
|
|
$ |
22.32 |
|
|
$ |
21.17 |
|
Total
Return* |
|
|
9.15 |
% |
|
|
(0.22 |
)% |
|
|
44.04 |
% |
|
|
5.43 |
% |
|
|
(0.14 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
20,692 |
|
|
$ |
19,753 |
|
|
$ |
19,033 |
|
|
$ |
12,317 |
|
|
$ |
13,358 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
1.65 |
% |
|
|
1.65 |
% |
|
|
1.33 |
% |
|
|
1.17 |
% |
|
|
1.14 |
% |
Ratio
of net investment loss after expense reimbursement/recoupment to average
net assets |
|
|
(0.33 |
)% |
|
|
(0.90 |
)% |
|
|
(0.61 |
)% |
|
|
(0.15 |
)% |
|
|
(0.04 |
)% |
Portfolio
Turnover Rate |
|
|
90 |
% |
|
|
117 |
% |
|
|
108 |
% |
|
|
82 |
% |
|
|
87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large
Capitalization Growth Portfolio - Class I 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 |
|
$ |
23.26 |
|
|
$ |
34.32 |
|
|
$ |
28.60 |
|
|
$ |
24.45 |
|
|
$ |
31.61 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment loss (1) |
|
|
(0.20 |
) |
|
|
(0.27 |
) |
|
|
(0.16 |
) |
|
|
(0.03 |
) |
|
|
- |
|
Net
realized and unrealized gain (loss) |
|
|
3.27 |
|
|
|
(3.97 |
) |
|
|
8.32 |
|
|
|
7.85 |
|
|
|
(1.76 |
) |
Total
from investment operations |
|
|
3.07 |
|
|
|
(4.24 |
) |
|
|
8.16 |
|
|
|
7.82 |
|
|
|
(1.76 |
) |
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 |
|
$ |
24.85 |
|
|
$ |
23.26 |
|
|
$ |
34.32 |
|
|
$ |
28.60 |
|
|
$ |
24.45 |
|
Total
Return* |
|
|
14.52 |
% |
|
|
(16.45 |
)% |
|
|
31.15 |
% |
|
|
35.93 |
% |
|
|
(4.37 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
21,638 |
|
|
$ |
20,826 |
|
|
$ |
27,040 |
|
|
$ |
28,236 |
|
|
$ |
24,398 |
|
Ratio
of gross operating expenses to average net assets (3) |
|
|
1.62 |
% |
|
|
1.67 |
% |
|
|
1.34 |
% |
|
|
1.12 |
% |
|
|
1.06 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets |
|
|
(0.89 |
)% |
|
|
(0.98 |
)% |
|
|
(0.54 |
)% |
|
|
(0.11 |
)% |
|
|
0.01 |
% |
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: |
|
|
|
1.65 |
% |
|
|
1.65 |
% |
|
|
1.33 |
% |
|
|
1.17 |
% |
|
|
1.14 |
% |
| (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: |
|
|
|
1.62 |
% |
|
|
1.67 |
% |
|
|
1.34 |
% |
|
|
1.12 |
% |
|
|
1.06 |
% |
| * |
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. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Mid
Capitalization Portfolio - Class I 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 |
|
$ |
11.75 |
|
|
$ |
14.96 |
|
|
$ |
11.60 |
|
|
$ |
11.69 |
|
|
$ |
13.48 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.03 |
|
|
|
(0.04 |
) |
|
|
(0.03 |
) |
|
|
0.03 |
|
|
|
0.08 |
|
Net
realized and unrealized gain (loss) |
|
|
0.53 |
|
|
|
(1.26 |
) |
|
|
4.50 |
|
|
|
(0.07 |
) |
|
|
(0.65 |
) |
Total
from investment operations |
|
|
0.56 |
|
|
|
(1.30 |
) |
|
|
4.47 |
|
|
|
(0.04 |
) |
|
|
(0.57 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
- |
|
|
|
(0.04 |
) |
|
|
(0.04 |
) |
|
|
(0.05 |
) |
|
|
(0.07 |
) |
Distributions
from realized gains |
|
|
(0.21 |
) |
|
|
(1.87 |
) |
|
|
(1.07 |
) |
|
|
- |
|
|
|
(1.15 |
) |
Total
dividends and distributions |
|
|
(0.21 |
) |
|
|
(1.91 |
) |
|
|
(1.11 |
) |
|
|
(0.05 |
) |
|
|
(1.22 |
) |
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
12.10 |
|
|
$ |
11.75 |
|
|
$ |
14.96 |
|
|
$ |
11.60 |
|
|
$ |
11.69 |
|
Total
Return* |
|
|
4.82 |
% |
|
|
(9.97 |
)% |
|
|
40.57 |
% |
|
|
(0.38 |
)% |
|
|
(3.13 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
9,587 |
|
|
$ |
9,486 |
|
|
$ |
10,919 |
|
|
$ |
8,126 |
|
|
$ |
8,859 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
1.69 |
% |
|
|
2.01 |
% |
|
|
1.64 |
% |
|
|
1.46 |
% |
|
|
1.29 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets |
|
|
0.26 |
% |
|
|
(0.32 |
)% |
|
|
(0.19 |
)% |
|
|
0.28 |
% |
|
|
0.66 |
% |
Portfolio
Turnover Rate |
|
|
68 |
% |
|
|
43 |
% |
|
|
55 |
% |
|
|
53 |
% |
|
|
49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small
Capitalization Portfolio - Class I 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 |
|
$ |
6.94 |
|
|
$ |
9.45 |
|
|
$ |
6.43 |
|
|
$ |
5.89 |
|
|
$ |
8.10 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment loss (1) |
|
|
(0.01 |
) |
|
|
(0.05 |
) |
|
|
(0.05 |
) |
|
|
(0.03 |
) |
|
|
- |
|
Net
realized and unrealized gain (loss) |
|
|
0.17 |
|
|
|
(0.47 |
) |
|
|
3.07 |
|
|
|
0.57 |
|
|
|
(1.30 |
) |
Total
from investment operations |
|
|
0.16 |
|
|
|
(0.52 |
) |
|
|
3.02 |
|
|
|
0.54 |
|
|
|
(1.30 |
) |
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 |
|
$ |
6.48 |
|
|
$ |
6.94 |
|
|
$ |
9.45 |
|
|
$ |
6.43 |
|
|
$ |
5.89 |
|
Total
Return* |
|
|
2.60 |
% |
|
|
(8.22 |
)% |
|
|
46.97 |
% |
|
|
9.19 |
% |
|
|
(15.41 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
6,233 |
|
|
$ |
5,893 |
|
|
$ |
6,632 |
|
|
$ |
5,362 |
|
|
$ |
5,357 |
|
Ratio
of gross operating expenses to average net assets (3) |
|
|
1.83 |
% |
|
|
2.06 |
% |
|
|
1.70 |
% |
|
|
1.68 |
% |
|
|
1.44 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets |
|
|
(0.10 |
)% |
|
|
(0.63 |
)% |
|
|
(0.61 |
)% |
|
|
(0.44 |
)% |
|
|
(0.04 |
)% |
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: |
|
|
|
1.69 |
% |
|
|
2.01 |
% |
|
|
1.64 |
% |
|
|
1.46 |
% |
|
|
1.29 |
% |
| (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: |
|
|
|
1.83 |
% |
|
|
2.06 |
% |
|
|
1.70 |
% |
|
|
1.68 |
% |
|
|
1.44 |
% |
| * |
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) |
|
|
International
Equity Portfolio - Class I 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 |
|
$ |
9.07 |
|
|
$ |
12.11 |
|
|
$ |
8.94 |
|
|
$ |
8.95 |
|
|
$ |
10.23 |
|
(Loss)
from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (1) |
|
|
0.02 |
|
|
|
0.06 |
|
|
|
0.07 |
|
|
|
0.10 |
|
|
|
0.19 |
|
Net
realized and unrealized gain (loss) |
|
|
1.47 |
|
|
|
(3.05 |
) |
|
|
3.28 |
|
|
|
0.08 |
|
|
|
(1.42 |
) |
Total
from investment operations |
|
|
1.49 |
|
|
|
(2.99 |
) |
|
|
3.35 |
|
|
|
0.18 |
|
|
|
(1.23 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
(0.03 |
) |
|
|
(0.05 |
) |
|
|
(0.18 |
) |
|
|
(0.19 |
) |
|
|
(0.05 |
) |
Total
dividends and distributions |
|
|
(0.03 |
) |
|
|
(0.05 |
) |
|
|
(0.18 |
) |
|
|
(0.19 |
) |
|
|
(0.05 |
) |
Redemption
Fees |
|
|
- |
** |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
10.53 |
|
|
$ |
9.07 |
|
|
$ |
12.11 |
|
|
$ |
8.94 |
|
|
$ |
8.95 |
|
Total
Return* |
|
|
16.45 |
%# |
|
|
(24.79 |
)% |
|
|
37.96 |
% |
|
|
1.80 |
%# |
|
|
(12.02 |
)%# |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
3,392 |
|
|
$ |
2,809 |
|
|
$ |
4,421 |
|
|
$ |
6,277 |
|
|
$ |
8,320 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
2.17 |
% |
|
|
3.23 |
% |
|
|
2.47 |
% |
|
|
1.64 |
% |
|
|
1.61 |
% |
Ratio
of net investment income after expense reimbursement/recoupment to average
net assets |
|
|
0.18 |
% |
|
|
0.50 |
% |
|
|
0.63 |
% |
|
|
1.09 |
% |
|
|
2.00 |
% |
Portfolio
Turnover Rate |
|
|
59 |
% |
|
|
47 |
% |
|
|
59 |
% |
|
|
52 |
% |
|
|
95 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Biotechnology Portfolio - Class I 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 |
|
$ |
22.60 |
|
|
$ |
25.10 |
|
|
$ |
23.02 |
|
|
$ |
21.14 |
|
|
$ |
27.51 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
(0.21 |
) |
|
|
(0.25 |
) |
|
|
(0.16 |
) |
|
|
0.01 |
|
|
|
(0.01 |
) |
Net
realized and unrealized gain (loss) |
|
|
1.75 |
|
|
|
(1.46 |
) |
|
|
4.82 |
|
|
|
2.78 |
|
|
|
(2.30 |
) |
Total
from investment operations |
|
|
1.54 |
|
|
|
(1.71 |
) |
|
|
4.66 |
|
|
|
2.79 |
|
|
|
(2.31 |
) |
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 |
|
$ |
22.87 |
|
|
$ |
22.60 |
|
|
$ |
25.10 |
|
|
$ |
23.02 |
|
|
$ |
21.14 |
|
Total
Return* |
|
|
6.59 |
% |
|
|
(6.92 |
)% |
|
|
22.43 |
% |
|
|
13.22 |
% |
|
|
(9.16 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
6,370 |
|
|
$ |
6,794 |
|
|
$ |
7,560 |
|
|
$ |
6,741 |
|
|
$ |
6,927 |
|
Ratio
of gross operating expenses to average net assets (3) |
|
|
2.35 |
% |
|
|
2.50 |
% |
|
|
2.14 |
% |
|
|
1.91 |
% |
|
|
1.82 |
% |
Ratio
of net investment loss after expense reimbursement/recoupment to average
net assets |
|
|
(0.93 |
)% |
|
|
(1.05 |
)% |
|
|
(0.69 |
)% |
|
|
0.05 |
% |
|
|
(0.02 |
)% |
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: |
|
|
|
2.90 |
% |
|
|
2.90 |
% |
|
|
2.32 |
% |
|
|
1.25 |
% |
|
|
1.25 |
% |
| (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: |
|
|
|
2.35 |
% |
|
|
2.50 |
% |
|
|
2.14 |
% |
|
|
1.91 |
% |
|
|
1.82 |
% |
| # |
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. 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) |
|
|
Technology
& Communications Portfolio - Class I 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 |
|
$ |
22.95 |
|
|
$ |
34.72 |
|
|
$ |
31.63 |
|
|
$ |
24.28 |
|
|
$ |
24.86 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
(0.27 |
) |
|
|
(0.29 |
) |
|
|
(0.37 |
) |
|
|
(0.11 |
) |
|
|
0.03 |
|
Net
realized and unrealized gain (loss) |
|
|
4.51 |
|
|
|
(7.84 |
) |
|
|
7.10 |
|
|
|
8.43 |
|
|
|
0.27 |
|
Total
from investment operations |
|
|
4.24 |
|
|
|
(8.13 |
) |
|
|
6.73 |
|
|
|
8.32 |
|
|
|
0.30 |
|
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 |
|
$ |
23.89 |
|
|
$ |
22.95 |
|
|
$ |
34.72 |
|
|
$ |
31.63 |
|
|
$ |
24.28 |
|
Total
Return* |
|
|
23.05 |
% |
|
|
(26.02 |
)% |
|
|
23.89 |
% |
|
|
35.28 |
% |
|
|
1.70 |
% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
22,829 |
|
|
$ |
22,533 |
|
|
$ |
35,680 |
|
|
$ |
32,790 |
|
|
$ |
28,695 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
2.37 |
% |
|
|
2.15 |
% |
|
|
1.99 |
% |
|
|
1.68 |
% |
|
|
1.68 |
% |
Ratio
of net investment loss after expense reimbursement/recoupment to average
net assets |
|
|
(1.29 |
)% |
|
|
(1.06 |
)% |
|
|
(1.20 |
)% |
|
|
(0.42 |
)% |
|
|
0.11 |
% |
Portfolio
Turnover Rate |
|
|
6 |
% |
|
|
3 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
& Basic Materials Portfolio - Class I 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 |
|
$ |
12.43 |
|
|
$ |
10.75 |
|
|
$ |
8.24 |
|
|
$ |
10.11 |
|
|
$ |
14.44 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (1) |
|
|
0.21 |
|
|
|
0.34 |
|
|
|
0.14 |
|
|
|
0.14 |
|
|
|
0.04 |
|
Net
realized and unrealized gain (loss) |
|
|
1.67 |
|
|
|
1.46 |
|
|
|
2.54 |
|
|
|
(2.01 |
) |
|
|
(4.37 |
) |
Total
from investment operations |
|
|
1.88 |
|
|
|
1.80 |
|
|
|
2.68 |
|
|
|
(1.87 |
) |
|
|
(4.33 |
) |
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
(0.36 |
) |
|
|
(0.12 |
) |
|
|
(0.17 |
) |
|
|
- |
|
|
|
- |
|
Total
dividends and distributions |
|
|
(0.36 |
) |
|
|
(0.12 |
) |
|
|
(0.17 |
) |
|
|
- |
|
|
|
- |
|
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
13.95 |
|
|
$ |
12.43 |
|
|
$ |
10.75 |
|
|
$ |
8.24 |
|
|
$ |
10.11 |
|
Total
Return* |
|
|
15.40 |
% |
|
|
16.84 |
% |
|
|
32.86 |
% |
|
|
(18.50 |
)% |
|
|
(29.99 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
1,261 |
|
|
$ |
1,523 |
|
|
$ |
1,107 |
|
|
$ |
942 |
|
|
$ |
976 |
|
Ratio
of gross operating expenses to average net assets (3) |
|
|
3.14 |
% |
|
|
3.22 |
% |
|
|
4.07 |
% |
|
|
3.65 |
% |
|
|
3.07 |
% |
Ratio
of net investment income after expense reimbursement/recoupment to average
net assets |
|
|
1.61 |
% |
|
|
2.75 |
% |
|
|
1.37 |
% |
|
|
1.57 |
% |
|
|
0.35 |
% |
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: |
|
|
|
2.37 |
% |
|
|
2.15 |
% |
|
|
1.99 |
% |
|
|
1.68 |
% |
|
|
1.68 |
% |
| (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: |
|
|
|
3.00 |
% |
|
|
3.00 |
% |
|
|
3.00 |
% |
|
|
3.00 |
% |
|
|
3.00 |
% |
| * |
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. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Financial
Services Portfolio - Class I 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 |
|
$ |
9.56 |
|
|
$ |
11.72 |
|
|
$ |
7.89 |
|
|
$ |
8.92 |
|
|
$ |
12.02 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment loss (1) |
|
|
(0.01 |
) |
|
|
(0.05 |
) |
|
|
(0.03 |
) |
|
|
(0.06 |
) |
|
|
(0.07 |
) |
Net
realized and unrealized gain (loss) |
|
|
0.18 |
|
|
|
(1.60 |
) |
|
|
4.20 |
|
|
|
(0.76 |
) |
|
|
(1.35 |
) |
Total
from investment operations |
|
|
0.17 |
|
|
|
(1.65 |
) |
|
|
4.17 |
|
|
|
(0.82 |
) |
|
|
(1.42 |
) |
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 |
|
$ |
9.26 |
|
|
$ |
9.56 |
|
|
$ |
11.72 |
|
|
$ |
7.89 |
|
|
$ |
8.92 |
|
Total
Return* |
|
|
1.74 |
% |
|
|
(14.74 |
)% |
|
|
54.37 |
% |
|
|
(9.60 |
)% |
|
|
(10.93 |
)% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
996 |
|
|
$ |
1,044 |
|
|
$ |
1,366 |
|
|
$ |
944 |
|
|
$ |
1,136 |
|
Ratio
of gross operating expenses to average net assets (2) |
|
|
3.05 |
% |
|
|
3.30 |
% |
|
|
3.41 |
% |
|
|
3.51 |
% |
|
|
3.41 |
% |
Ratio
of net investment income after expense reimbursement/recoupment to average
net assets |
|
|
(0.06 |
)% |
|
|
(0.43 |
)% |
|
|
(0.34 |
)% |
|
|
(0.66 |
)% |
|
|
(0.73 |
)% |
Portfolio
Turnover Rate |
|
|
45 |
% |
|
|
39 |
% |
|
|
59 |
% |
|
|
71 |
% |
|
|
67 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Quality Bond Portfolio - Class I 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 |
|
$ |
9.23 |
|
|
$ |
9.68 |
|
|
$ |
9.79 |
|
|
$ |
9.56 |
|
|
$ |
9.31 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.11 |
|
|
|
(0.10 |
) |
|
|
(0.06 |
) |
|
|
0.07 |
|
|
|
0.11 |
|
Net
realized and unrealized gain (loss) |
|
|
(0.09 |
) |
|
|
(0.23 |
) |
|
|
(0.03 |
) |
|
|
0.24 |
|
|
|
0.27 |
|
Total
from investment operations |
|
|
0.02 |
|
|
|
(0.33 |
) |
|
|
(0.09 |
) |
|
|
0.31 |
|
|
|
0.38 |
|
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
(0.05 |
) |
|
|
- |
|
|
|
(0.02 |
) |
|
|
(0.08 |
) |
|
|
(0.13 |
) |
Distributions
from realized gains |
|
|
- |
|
|
|
(0.12 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Distributions
from return of capital |
|
|
(0.05 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
dividends and distributions |
|
|
(0.10 |
) |
|
|
(0.12 |
) |
|
|
(0.02 |
) |
|
|
(0.08 |
) |
|
|
(0.13 |
) |
Redemption
Fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net
Asset Value, End of Year |
|
$ |
9.15 |
|
|
$ |
9.23 |
|
|
$ |
9.68 |
|
|
$ |
9.79 |
|
|
$ |
9.56 |
|
Total
Return* |
|
|
0.19 |
% |
|
|
(3.39 |
)% |
|
|
(0.87 |
)% |
|
|
3.24 |
% |
|
|
4.14 |
% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
10,834 |
|
|
$ |
11,436 |
|
|
$ |
12,020 |
|
|
$ |
4,345 |
|
|
$ |
4,243 |
|
Ratio
of gross operating expenses to average net assets (3)(4) |
|
|
1.38 |
% |
|
|
1.91 |
% |
|
|
1.45 |
% |
|
|
1.37 |
% |
|
|
1.27 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (4) |
|
|
1.19 |
% |
|
|
(1.11 |
)% |
|
|
-0.61 |
% |
|
|
0.71 |
% |
|
|
1.18 |
% |
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: |
|
|
|
3.00 |
% |
|
|
3.00 |
% |
|
|
3.01 |
% |
|
|
3.00 |
% |
|
|
3.00 |
% |
| (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: |
|
|
|
1.38 |
% |
|
|
1.90 |
% |
|
|
1.45 |
% |
|
|
1.37 |
% |
|
|
1.27 |
% |
| (4) |
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. |
FINANCIAL
HIGHLIGHTS (For a share outstanding throughout each
year) |
|
|
Municipal
Bond Portfolio - Class I 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 |
|
$ |
8.73 |
|
|
$ |
9.01 |
|
|
$ |
9.08 |
|
|
$ |
9.02 |
|
|
$ |
8.95 |
|
Income
(Loss) from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
investment income (loss) (1) |
|
|
0.01 |
|
|
|
(0.13 |
) |
|
|
(0.09 |
) |
|
|
- |
|
|
|
0.01 |
|
Net
realized and unrealized gain (loss) |
|
|
(0.10 |
) |
|
|
(0.15 |
) |
|
|
0.03 |
|
|
|
0.07 |
|
|
|
0.07 |
|
Total
from investment operations |
|
|
(0.09 |
) |
|
|
(0.28 |
) |
|
|
(0.06 |
) |
|
|
0.07 |
|
|
|
0.08 |
|
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 |
|
$ |
8.64 |
|
|
$ |
8.73 |
|
|
$ |
9.01 |
|
|
$ |
9.08 |
|
|
$ |
9.02 |
|
Total
Return* |
|
|
(1.03 |
)% |
|
|
(3.11 |
)%# |
|
|
(0.70 |
)%# |
|
|
0.77 |
%# |
|
|
0.88 |
%# |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
520 |
|
|
$ |
615 |
|
|
$ |
770 |
|
|
$ |
507 |
|
|
$ |
557 |
|
Ratio
of gross operating expenses to average net assets (2),(4) |
|
|
3.02 |
% |
|
|
2.58 |
% |
|
|
2.78 |
% |
|
|
2.35 |
% |
|
|
2.91 |
% |
Ratio
of net investment income (loss) after expense reimbursement/recoupment to
average net assets (4) |
|
|
0.11 |
% |
|
|
(1.43 |
)% |
|
|
-0.96 |
% |
|
|
0.04 |
% |
|
|
0.11 |
% |
Portfolio
Turnover Rate |
|
|
101 |
% |
|
|
0 |
% |
|
|
82 |
% |
|
|
22 |
% |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government Money Market Portfolio - Class I 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 |
** |
|
|
0.01 |
|
Net
realized and unrealized gain (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
from investment operations |
|
|
0.03 |
|
|
|
0.00 |
** |
|
|
0.00 |
** |
|
|
0.00 |
** |
|
|
0.01 |
|
Dividends
and Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
(0.03 |
) |
|
|
(0.00 |
)** |
|
|
(0.00 |
)** |
|
|
(0.00 |
)** |
|
|
(0.01 |
) |
Distributions
from realized gains |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
dividends and distributions |
|
|
(0.03 |
) |
|
|
(0.00 |
)** |
|
|
(0.00 |
)** |
|
|
(0.00 |
)** |
|
|
(0.01 |
) |
Net
Asset Value, End of Year |
|
$ |
1.00 |
|
|
$ |
1.00 |
|
|
$ |
1.00 |
|
|
$ |
1.00 |
|
|
$ |
1.00 |
|
Total
Return* |
|
|
3.24 |
% |
|
|
0.01 |
% |
|
|
0.02 |
% |
|
|
0.00 |
% |
|
|
1.09 |
% |
Ratios
and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of year (000s) |
|
$ |
5,138 |
|
|
$ |
5,108 |
|
|
$ |
5,488 |
|
|
$ |
5,213 |
|
|
$ |
5,992 |
|
Ratio
of gross operating expenses to average net assets (3),(4) |
|
|
0.95 |
% |
|
|
0.93 |
% |
|
|
1.07 |
% |
|
|
1.18 |
% |
|
|
1.24 |
% |
Ratio
of net investment income after expense reimbursement/recoupment to average
net assets (4) |
|
|
3.18 |
% |
|
|
0.02 |
% |
|
|
0.01 |
% |
|
|
0.28 |
% |
|
|
1.09 |
% |
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: |
|
|
|
1.90 |
% |
|
|
1.90 |
% |
|
|
1.52 |
% |
|
|
1.64 |
% |
|
|
1.41 |
% |
| (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: |
|
|
|
0.95 |
% |
|
|
0.46 |
% |
|
|
0.02 |
% |
|
|
0.68 |
% |
|
|
1.24 |
% |
| (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. 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. |
CLASS I
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.