SARATOGA ADVANTAGE TRUST, 485BPOS, 1995-05-05

SARATOGA ADVANTAGE TRUST
485BPOS, 1995-05-05

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<PAGE>

As filed with the Securities and Exchange Commission on May 5, 1995

Registration No. 33-79708

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

-----------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

PRE-EFFECTIVE AMENDMENT NO. [ ]

POST-EFFECTIVE AMENDMENT NO. 1 [X]

and/or

REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 3

THE SARATOGA ADVANTAGE TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

TWO WORLD FINANCIAL CENTER, NEW YORK, NY 10080
(Address of Principal Executive Offices)

(212) 667-7495
(Registrant's Telephone Number)

Thomas E. Duggan, Esq. Stuart Strauss, Esq.
Oppenheimer Capital Gordon Altman Butowsky
One World Financial Center Weitzen Shalov & Wein
New York, NY 10281 114 West 47th Street
New York, NY 10036

(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

[] immediately upon filing pursuant to paragraph (b)

[X] On May 12, 1995 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)

[ ] pursuant to paragraph (a) of Rule 485 or 486

Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulagated under the
Investment Company Act of 1940 and has filed its report pursuant to that Rule
for the fiscal year ended August 31,1994 on October 31, 1994.

<PAGE>

CROSS REFERENCE SHEET

Form N-1A
Item

Part A Caption Prospectus
- -------------- ----------

1. Cover Page Cover Page

2. Synopsis Summary

3. Condensed Financial Financial Highlights
Information

4. General Description of Objectives and Policies of the Portfolios;
Registrant Certain Securities and Investment
Techniques; Risk Factors; Additional
Information

5. Management of the Fund Objectives and Policies of the Portfolios;
Management of the Trust

5A. Management's Discussion Not Applicable
of Fund Performance

6. Capital Stock and Other Dividends, Distributions and Taxes;
Redemption of Shares; Additional
Information

7. Purchase of Securities Purchase of Shares

8. Redemption or Repurchase Redemption of Shares

9. Legal Proceedings N/A

Part B Caption Statement of Additional Information
- ---------------- -----------------------------------

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and Not Applicable
History

13. Investment Objectives Investment of the Trust's Assets;
and Policies Investment Restrictions

14. Management of the Fund Trustees and Officers

<PAGE>

15. Control Persons and Principal Principal Holders of Securities and
Holders of Securities Control Persons of the Portfolios;
Trustees and Officers

16. Investment Advisory and Management and Other Services;
Other Services Investment Advisory Services;
Additional Information

17. Brokerage Allocation Investment Advisory Services

18. Capital Stock and Other Additional Information
Securities

19. Purchase, Redemption and Determination of Net Asset Value
Pricing of Securities

20. Tax Status Additional Information

21. Underwriters Additional Information

22. Calculations of Performance Portfolio Yield and Total Return
Data Information

23. Financial Statements Financial Statements

<PAGE>

SUPPLEMENT DATED MAY 12, 1995
TO THE PROSPECTUS DATED
AUGUST 25, 1994 OF THE
SARATOGA ADVANTAGE TRUST

The following language is added to the footnote under the table set forth
under "Summary of Trust Expenses" on page 5:

"The expenses set forth in the above table reflect voluntary
expense limitations currently in effect. During the period
September 2, 1994 (commencement of operations) to February 28,
1995, the Manager waived its management fee and absorbed all
operating expenses of each Portfolio. Without such voluntary
waivers and expense absorptions, the Manager would have waived
fees and expenses so that annual operating expenses as a percentage
of average daily net assets of each Portfolio would have been 2.50%
in order for each Portfolio to comply with state expense limitations."

The following table is added to page 6:

FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) (UNAUDITED)

INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS
-------------------------------------- ------------
NET
REALIZED DIVIDENDS TO
NET ASSET AND TOTAL SHAREHOLDERS NET ASSET NET ASSETS
VALUE, NET UNREALIZED FROM FROM NET VALUE, END OF
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT END OF TOTAL PERIOD
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME PERIOD RETURN* (000'S)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 $1.000 (3) $0.024 $0.000 $0.024 ($0.024) $1.000 2.47% $1,867

INVESTMENT QUALITY BOND PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 $10.00 (3) $0.30 ($0.13) $0.17 ($0.30) $9.87 1.75% $1,104

MUNICIPAL BOND PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 $10.00 (3) $0.27 ($0.22) $0.05 ($0.27) $9.78 0.61% $442

LARGE CAPITALIZATION VALUE PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 $10.00 (3) $0.14 $0.41 $0.55 ($0.05) $10.50 5.51% $2,137

LARGE CAPITALIZATION GROWTH PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 $10.00 (3) $0.04 $0.54 $0.58 ($0.01) $10.57 5.84% $1,976

SMALL CAPITALIZATION PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 $10.00 (3) $0.03 $0.08 $0.11 ($0.01) $10.10 1.14% $3,117

INTERNATIONAL EQUITY PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 $10.00 (3) $0.02 ($1.39) ($1.37) ($0.01) $8.62 (13.72%) $1,363

<CAPTION>
RATIOS
--------------------------------------
RATIO OF NET RATIO OF NET
OPERATING INVESTMENT
EXPENSES INCOME PORTFOLIO
TO AVERAGE TO AVERAGE TURNOVER
NET ASSETS NET ASSETS RATE
<S> <C> <C> <C>

U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 0.00%(1,4,5) 5.58%(1,4,5) --

(1) DURING THE PERIOD PRESENTED ABOVE, SARATOGA CAPITAL MANAGEMENT HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED
THE PORTFOLIO FOR ALL OF ITS OPERATING EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE
ANNUALIZED RATIO OF NET OPERATING EXPENSES TO AVERAGE DAILY NET ASSETS AND THE ANNUALIZED RATIO OF NET INVESTMENT
LOSS TO AVERAGE DAILY NET ASSETS WOULD HAVE BEEN 14.85% AND (9.27%), RESPECTIVELY.

INVESTMENT QUALITY BOND PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 0.00%(1,4,5) 6.19%(1,4,5) 26%

MUNICIPAL BOND PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 0.00%(1,4,5) 5.50%(1,4,5) 38%

<PAGE>

LARGE CAPITALIZATION VALUE PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 0.00%(1,4,5) 2.95%(1,4,5) 3%

LARGE CAPITALIZATION GROWTH PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 0.00%(1,4,5) 0.89%(1,4,5) 7%

SMALL CAPITALIZATION PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 0.00%(1,4,5) 0.53%(1,4,5) 43%

INTERNATIONAL EQUITY PORTFOLIO
SEPTEMBER 2, 1994 (2)
TO FEBRUARY 28, 1995 0.00%(1,4,5) 0.52%(1,4,5) 16%

- ------------------
<FN>

(2) COMMENCEMENT OF OPERATIONS.
(3) OFFERING PRICE.
(4) AVERAGE DAILY NET ASSETS FOR THE PERIOD ENDED FEBRUARY 28, 1995 WERE $800,530, $728,607, $279,695, $1,086,072, $1,040,838,
$1,555,429 AND $838,426 FOR U.S. GOVERNMENT MONEY MARKET, INVESTMENT QUALITY BOND, MUNICIPAL BOND, LARGE CAPITALIZATION VALUE,
LARGE CAPITALIZATION GROWTH, SMALL CAPITALIZATION AND INTERNATIONAL EQUITY, RESPECTIVELY.
(5) ANNUALIZED.

* Assumes reinvestment of all dividends. Aggregate (not annualized) total return is shown for any period shorter than one year.

</TABLE>

The following is added to the section "Custodian and Transfer Agent" on page
29:

The Shareholder Services Group is the shareholder servicing agent for
certain retirement plan accounts.

<PAGE>
LOGO

PROSPECTUS DATED AUGUST 25, 1994

T H E S A R A T O G A A D V A N T A G E T R U S T

The Saratoga Advantage Trust (the "Trust") is an open-end, management
investment company providing a convenient means of investing in a series of
separate investment portfolios (the "Portfolios") professionally managed by
Saratoga Capital Management (the "Manager"). Each of the Portfolios is
diversified and is provided with discretionary advisory services by a registered
investment advisor (the "Advisor") identified, retained, supervised and
compensated by the Manager. The Trust is a series company that currently
consists of the following Portfolios to which this Prospectus relates:

Income Portfolios:

- U.S. GOVERNMENT MONEY MARKET PORTFOLIO

- INVESTMENT QUALITY BOND PORTFOLIO

- MUNICIPAL BOND PORTFOLIO

Equity Portfolios:

- LARGE CAPITALIZATION VALUE PORTFOLIO

- LARGE CAPITALIZATION GROWTH PORTFOLIO

- SMALL CAPITALIZATION PORTFOLIO

- INTERNATIONAL EQUITY PORTFOLIO

SHARES OF THE U.S. GOVERNMENT MONEY MARKET PORTFOLIO ARE NOT GUARANTEED OR
INSURED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE U.S.
GOVERNMENT MONEY MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN A CONSTANT NET ASSET
VALUE OF $1.00 PER SHARE.

Shares of the Portfolios are offered to participants in investment advisory
programs that provide asset allocation recommendations to investors based on an
evaluation of the investor's investment objectives and risk tolerance. The
advisors in certain of these investment advisory programs may use an asset
allocation methodology developed by the Manager--the SMART-Strategically Managed
Asset Reallocation Track-SM- program ("SMART")--to assist them in translating
investor needs, preferences and attitudes identified from an investment
questionnaire into suggested portfolio allocations. Shares of the Portfolios are
also available to other investors and investment advisory services. Investors
purchasing shares through an investment advisory service will be subject to the
payment of a separate fee imposed by the investment advisor for such services.
See "Purchase of Shares--General." The operating expenses of the Portfolios,
when combined with any investment advisory fees separately paid, may involve
greater fees and expenses than other investment companies whose shares are
purchased without the benefit of the professional consulting and asset
allocation services rendered by the investment advisors.

This Prospectus sets forth concisely certain information about the Trust,
including expenses, that prospective investors will find helpful in making an
investment decision. Investors are encouraged to read this Prospectus carefully
and retain it for future reference.

Additional information about the Trust is contained in a Statement of
Additional Information dated August 25, 1994, as amended or supplemented from
time to time, which is available upon request and without charge by calling or
writing the Trust or Saratoga Capital Management at Two World Financial Center,
New York, New York 10080-6116, 800-807-FUND (800-807-3863). The Statement of
Additional Information, which has been filed with the Securities and Exchange
Commission, bears the same date as this Prospectus and is incorporated by
reference into this Prospectus in its entirety.

SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED OR
ENDORSED BY ANY BANK AND THE SHARES OF THE PORTFOLIOS ARE NOT FEDERALLY INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary........................................................... 2
Summary of Trust Expenses......................................... 5
Objectives and Policies of the Portfolios......................... 6
Certain Securities and Investment Techniques...................... 10
Risk Factors...................................................... 17
Certain Investment Policies....................................... 18
Management of the Trust........................................... 19
Purchase of Shares................................................ 23
Redemption of Shares.............................................. 25
Net Asset Value................................................... 25
Exchange Privilege................................................ 26
Dividends, Distributions and Taxes................................ 27
Custodian and Transfer Agent...................................... 29
Performance of the Portfolios..................................... 29
Additional Information............................................ 30
Appendix.......................................................... A-1
</TABLE>

SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION INCLUDED ELSEWHERE IN THIS PROSPECTUS.

THE TRUST. The Trust is a newly organized management investment company
providing a convenient means of investing in separate Portfolios professionally
managed by the Manager. The assets of each of the Portfolios are invested on a
discretionary basis by a separate Advisor. See "Management of the Trust." The
Trust is a series company currently consisting of the following 7 Portfolios:

Income Portfolios:

- - U.S. GOVERNMENT MONEY MARKET PORTFOLIO, whose Advisor is Sterling Capital
Management Company.

- - INVESTMENT QUALITY BOND PORTFOLIO, whose Advisor is Fox Asset Management, Inc.

- - MUNICIPAL BOND PORTFOLIO, whose Advisor is Quest for Value Advisors.

Equity Portfolios:

- - LARGE CAPITALIZATION VALUE PORTFOLIO, whose Advisor is Quest for Value
Advisors.

- - LARGE CAPITALIZATION GROWTH PORTFOLIO, whose Advisor is Harris Bretall
Sullivan & Smith, Inc.

- - SMALL CAPITALIZATION PORTFOLIO, whose Advisor is Axe-Houghton Associates, Inc.

- - INTERNATIONAL EQUITY PORTFOLIO, whose Advisor is Ivory & Sime International,
Inc.

~ 2 ~
<PAGE>
MANAGEMENT. Saratoga Capital Management is the Manager of the Portfolios. Each
of the Portfolios is provided with the discretionary advisory services of an
Advisor identified, retained, supervised and compensated by the Manager. Quest
for Value Advisors, an affiliate of the Manager, serves as the Portfolios'
administrator and, in connection therewith, provides administration to each
Portfolio. See "Management of the Trust."

INVESTMENT ADVISORY SERVICES. Shares of the Portfolios are offered to
participants in certain investment advisory programs and to other investors and
investment advisory services. Generally, the investment advisors for the
investment advisory programs provide asset allocation recommendations with
respect to the Portfolios based on an evaluation of an investor's investment
objectives and risk tolerance. Certain investment advisors offering asset
allocation programs may enter into agreements with the Manager pursuant to which
the Manager will make available its SMART program and provide various
administrative services to the investment advisor ("Consulting Programs"). The
investment advisory fee for these Consulting Programs will be determined by the
investment advisors and their clients. The fee is paid to the client's
investment advisor either directly or by redeeming a sufficient number of
Portfolio shares. The Manager is paid a fee by the client's investment advisor
for services provided to the investment advisor in connection with the
investment advisory program. See "Purchase of Shares--General."

PURCHASE AND REDEMPTION OF SHARES. Shares of the Portfolios are offered for
purchase and redemption at their respective net asset values next determined,
WITHOUT IMPOSITION OF ANY SALES CHARGE. See "Purchase of Shares" and "Redemption
of Shares."

RISK FACTORS AND SPECIAL CONSIDERATIONS. No assurance can be given that the
Portfolios will achieve their investment objectives. Investing in an investment
company that invests in securities of companies and governments of foreign
countries, particularly developing countries, involves risks that go beyond the
usual risks inherent in an investment company limiting its holdings to domestic
investments. Certain Portfolios may also be subject to certain risks in using
investment techniques and strategies such as entering into forward currency
contracts, repurchase agreements, trading futures contracts and options on
futures contracts. In addition, the Investment Quality Bond Portfolio and the
Municipal Bond Portfolio may invest in zero coupon securities, which, due to
changes in interest rates, may be more speculative and subject to greater
fluctuations in value than securities that pay interest currently. See
"Objectives and Policies of the Portfolios," "Certain Securities and Investment
Techniques" and "Risk Factors."

Investors should be aware that the Manager receives a fee from the investment
advisor for each participant in a Consulting Program for services rendered to
the investment advisor in connection with the investment advisory program. This
fee does not vary based on the Portfolios recommended for the participant's
investments. The Manager also serves as the Trust's Manager with responsibility
for identifying, retaining, supervising and compensating each Portfolio's
Advisor and receives a fee from each Portfolio. The portion of each Portfolio's
management fee that is retained by the Manager does not vary based on the
Portfolio involved. However, Quest for Value Advisors, an affiliate of the
Manager, is the Advisor to two of the Portfolios. Consequently, to the extent
investors' funds are allocated to such Portfolios, the Manager's affiliates will
realize greater financial benefits than if the assets were allocated to
Portfolios not advised by Quest for Value Advisors. The Manager's decisions as
to the retention of particular Advisors and specific amount of the Manager's
compensation to be paid to the Advisor are subject to review and approval by a
majority of the Board of Trustees and separately by a majority of the Trustees
who are not affiliated with the Manager or any of its affiliates. These
decisions are also subject to approval of shareholders of the Portfolio
involved. See "Management of the Trust-- Investment Manager" and "Purchase of
Shares--General--Investment Advisory Programs."

The Portfolios are intended primarily as vehicles for the implementation of long
term 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

~ 3 ~
<PAGE>
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 Advisor of a Portfolio may, upon the concurrence of the
Manager, 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 an Advisor'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. Consequently, no single
Portfolio should be considered a complete investment program and an investment
among the Portfolios should be regarded as a long term commitment that should be
held through several market cycles. In addition, although the investment
advisors for the Consulting Programs may recommend adjustments in the allocation
of assets among the Portfolios based on, among other things, anticipated market
trends, there can be no assurance that these recommendations can be developed,
transmitted and acted upon in a manner sufficiently timely to avoid market
shifts, which can be sudden and substantial. Participants in Consulting Programs
should note that responsibility for investment recommendations rests solely with
the investment advisor for the program or the client itself and not with the
Trust or the Manager. Investors intending to purchase Portfolio shares through
investment advisory programs should evaluate carefully whether the service is
ongoing and continuous, as well as their investment advisors' ability to
anticipate and respond to market trends. See "Objectives and Policies of the
Portfolios," and "Certain Securities and Investment Techniques--Temporary
Investments."

DIVIDENDS AND DISTRIBUTIONS. Each Portfolio intends to distribute annually to
its shareholders substantially all of its net investment income and its net
realized long and short term capital gains. Dividends from the net investment
income of the U.S. Government Money Market Portfolio, the Investment Quality
Bond Portfolio, and the Municipal Bond Portfolio are declared daily and paid
monthly. Dividends from the net investment income of the remaining Portfolios
are declared and paid annually. Distributions of any net realized long term and
short term capital gains earned by a Portfolio will be made annually. See
"Dividends, Distributions and Taxes."

TAXATION. Each of the Portfolios intends to qualify as a regulated investment
company for U.S. federal income tax purposes. As such, the Trust anticipates
that no Portfolio will be subject to U.S. federal income tax on income and
gains, if any, that are distributed to shareholders. It is expected that certain
capital gains and certain dividends and interest earned by the International
Equity Portfolio will be subject to foreign withholding taxes. These taxes may
be deductible or creditable in whole or in part by shareholders of the Portfolio
for U.S. federal income tax purposes. See "Dividends, Distributions and Taxes."

CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company ("State
Street") acts as the custodian of the Trust's U.S. and non-U.S. assets and may
employ sub-custodians outside the United States approved by the Trustees of the
Trust in accordance with regulations of the Securities and Exchange Commission
(the "SEC"). State Street also serves as the transfer agent for the Portfolios'
shares. See "Custodian and Transfer Agent."

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<PAGE>
SUMMARY OF TRUST EXPENSES

ANNUAL PORTFOLIO OPERATING EXPENSES. THE FOLLOWING TABLE LISTS THE COSTS AND
EXPENSES THAT AN INVESTOR WILL INCUR AS A SHAREHOLDER OF EACH OF THE PORTFOLIOS
BASED ON THE PORTFOLIO'S PROJECTED ANNUAL OPERATING EXPENSES. THERE ARE NO
SHAREHOLDER TRANSACTION EXPENSES, SALES LOADS OR DISTRIBUTION FEES.
<TABLE>
<CAPTION>
U.S. GOVERNMENT INVESTMENT LARGE LARGE
MONEY MARKET QUALITY BOND MUNICIPAL BOND CAPITALIZATION CAPITALIZATION
PORTFOLIO PORTFOLIO PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO
--------------- --------------- -------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES....... NONE NONE NONE NONE NONE
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average net
assets)
Management Fees...................... .475 % .55 % .55 % .65 % .65 %
Distribution (Rule 12b-1) Expenses... NONE NONE NONE NONE NONE
Other Expenses....................... .65 % .59 % .53 % .50 % .50 %
----- --- --- --- ---
Total Operating Expenses............. 1.125 % 1.14 % 1.08 % 1.15 % 1.15 %

<CAPTION>
SMALL
CAPITALIZATION INTERNATIONAL
PORTFOLIO EQUITY PORTFOLIO
------------------- -----------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES....... NONE NONE
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average net
assets)
Management Fees...................... .65 % .75 %
Distribution (Rule 12b-1) Expenses... NONE NONE
Other Expenses....................... .50 % .50 %
--- ---
Total Operating Expenses............. 1.15 % 1.25 %
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Management Fees and Other Estimated Expenses. Each Portfolio pays the Manager a
fee for its services that is computed daily and paid monthly at an annual rate
ranging from .475% to .75% of the value of the average daily net assets of the
Portfolio. The fees of each Advisor are paid by the Manager. The nature of the
services provided to, and the aggregate management fees paid by, each Portfolio
are described under "Management of the Trust." The percentage of "Other
Expenses" in the table above is based on estimated amounts. "Other Expenses"
include fees for shareholder services, administration, custodial fees, legal and
accounting fees, printing costs, registration fees, the costs of regulatory
compliance, a Portfolio's allocated portion of the costs associated with
maintaining the Trust's legal existence and the costs involved in the Trust's
communications with shareholders. The table does not reflect any fees paid by
investors pursuant to Consulting Programs.

Example. The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Portfolios. These amounts are based upon (i)
payment by the Portfolios of operating expenses at the levels set forth in the
table above and (ii) the specific assumptions stated below:

A shareholder would pay the following expenses on a $1,000 investment assuming
(i) a 5% annual return and (ii) redemption at the end of each time period:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1 year $ 11.47 $ 11.62 $ 11.01 $ 11.72 $ 11.72 $ 11.72
3 years $ 35.75 $ 36.22 $ 34.34 $ 36.53 $ 36.53 $ 36.53

1 year $ 12.73

3 years $ 39.65
</TABLE>

The purpose of this example is to assist an investor in understanding various
costs and expenses that an investor in a Portfolio will bear. THIS EXAMPLE
SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE EXPENSES;
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Moreover, although the
table assumes a 5% annual return, a Portfolio's actual performance will vary and
may result in an actual return greater
or less than 5%.

~ 5 ~
<PAGE>
OBJECTIVES AND POLICIES OF THE PORTFOLIOS

Set forth below is a description of the investment objectives and policies of
each Portfolio. There can be no assurance that any Portfolio will achieve its
investment objectives. Further information about the investment policies of each
Portfolio, including a list of those restrictions on its investment activities
that cannot be changed without shareholder approval, appears in the Statement of
Additional Information.

U.S. GOVERNMENT MONEY MARKET PORTFOLIO is advised by Sterling Capital Management
Company. The Portfolio's investment objective is to provide maximum current
income to the extent consistent with the maintenance of liquidity and the
preservation of capital by investing exclusively in short term securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities ("U.S.
Government Securities") and repurchase agreements with respect to those
securities. The Portfolio may purchase securities on a when-issued or
delayed-delivery basis. See "Certain Securities and Investment Techniques." The
Portfolio will invest only in securities that are purchased with and payable in
U.S. dollars and that have remaining maturities of 397 days or less at the time
of purchase. The Portfolio maintains a dollar-weighted average portfolio
maturity of 90 days or less. All securities purchased by the Portfolio,
including repurchase agreements, will present minimal credit risks in the
opinion of the Advisor acting pursuant to criteria adopted by the Trust's Board
of Trustees. The Portfolio follows these policies in order to maintain a
constant net asset value of $1.00 per share, although there can be no assurance
it can do so on a continuing basis. The Portfolio is not insured or guaranteed
by the U.S. Government. The yield attained by the Portfolio may not be as high
as that of other funds that invest in lower quality or longer term securities.

INVESTMENT QUALITY BOND PORTFOLIO is advised by Fox Asset Management, Inc.
("Fox"). The Portfolio seeks, as its investment objectives, current income and
reasonable stability of principal. The Portfolio seeks to achieve its objectives
through investment in investment quality fixed income securities and the active
management of such securities. The average maturity of the securities held by
the Portfolio may be shortened, but not below three years, in order to preserve
capital if the Advisor anticipates a rise in interest rates. Conversely, the
average maturity may be lengthened, but not beyond ten years, to maximize
returns if interest rates are expected to decline.

Under normal conditions, the Portfolio will invest at least 65% of its assets in
debt instruments including U.S. Government Securities, corporate bonds,
debentures, Eurodollar bonds, Yankee bonds and foreign currency denominated
bonds. In addition, the Portfolio may invest in non-convertible fixed income
preferred stock and mortgage pass-through securities. The Portfolio limits its
investments to investment grade securities, which are securities rated within
the four highest categories established by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("S&P"), and unrated securities
determined by the Advisor to be of comparable quality. The Portfolio is not
obligated to dispose of securities that fall below such ratings due to changes
made by the rating agencies subsequent to the purchase of the securities but
will dispose of any such securities in order to limit its holdings of securities
rated below Baa by Moody's or BBB by S & P to no more than 5% of its net assets.
See the Appendix to the Statement of Additional Information for a description of
Moody's and S&P ratings and "Risk Factors--Medium and Lower Rated and Unrated
Securities" for a description of certain risks associated with securities in the
fourth highest rating category. Although the Portfolio is authorized to hedge
against unfavorable changes in interest rates by entering into interest rate
futures contracts and purchasing and writing put and call options thereon, its
Advisor has no present intention of using such techniques. The Portfolio also
may engage in repurchase agreements, purchase temporary investments, purchase
securities on a when-issued basis and lend its portfolio securities. See
"Certain Securities and Investment Techniques."

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The Portfolio is managed by Paul Stach, Russell Tompkins and Thayer Potter. Mr.
Stach is a Managing Director and Director of Fixed Income Research at Fox where
he has worked for one year. He joined the firm from Kidder, Peabody & Co. where
he was a Managing Director in Investment Banking. Mr. Tompkins is a Managing
Director and also coordinates all compliance matters for the firm. He joined the
firm in 1988. Mr. Potter is a Vice President and Portfolio Manager of Fox. He
has been with the firm for one year, and was previously with Acorn Asset
Management, serving as Vice President and portfolio manager.

MUNICIPAL BOND PORTFOLIO is advised by Quest for Value Advisors. The Portfolio
seeks, as its investment objective, 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. The Portfolio seeks to
achieve its objectives through investment in a diversified portfolio of general
obligation, revenue and private activity bonds, including lease obligations, and
notes that are issued by or on behalf of states, territories and possessions of
the United States and the District of Columbia and their political subdivisions,
agencies and instrumentalities, or multi-state agencies or authorities, the
interest on which, in the opinion of counsel to the issuer of the instrument, is
excluded from gross income for federal income tax purposes ("Municipal
Obligations") See "Municipal Obligations" on page 14.

Portfolio composition generally covers a full range of maturities with broad
geographic and issuer diversification. The Portfolio may also invest in variable
rate Municipal Obligations, most of which permit the holder thereof to receive
the principal amount on demand upon seven days' notice. The Portfolio will
invest primarily in municipal bonds rated at the time of purchase within the
four highest ratings assigned by Moody's, S&P or by Fitch Municipal Division
("Fitch") or, if unrated, which are of comparable quality in the opinion of
Quest for Value Advisors. See the Appendix to the SAI for a description of such
ratings and "Risk Factors-- Medium and Lower Rated and Unrated Securities" for a
description of certain risks associated with securities in the fourth highest
rating category. The Portfolio is not obligated to dispose of securities that
fall below such ratings due to changes made by the rating agencies subsequent to
purchase of the securities but will dispose of any such securities in order to
limit its holdings of securities rated below Baa by Moody's or BBB by S & P or
Fitch to no more than 5% of its net assets.

It is a fundamental policy of the Portfolio that under normal circumstances at
least 80% of its assets will be invested in Municipal Obligations. Also, at
least 65% of its assets will be invested in bonds. The Portfolio will not invest
more than 25% of its total assets in Municipal Obligations whose issuers are
located in the same state. The Portfolio will also not invest more than 25% of
its assets in private activity bonds of similar projects. It is possible that
the Portfolio from time to time will invest more than 25% of its assets in a
particular segment of the municipal securities market, such as hospital revenue
bonds, housing agency bonds, industrial development bonds or airport bonds, or
in securities the interest on which is paid from revenues of a similar type of
project. In such circumstances, economic, business, political or other changes
affecting one bond (such as proposed legislation affecting the financing of a
project; shortages or price increases of needed materials; or declining markets
or needs for the projects) might also affect other bonds in the same segment,
thereby potentially increasing market risk.

The Portfolio may invest without limit in private activity bonds, although it
does not currently expect to invest more than 20% of its total assets in private
activity bonds. Dividends attributable to interest income on certain types of
private activity bonds issued after August 7, 1986 to finance nongovernmental
activities are a specific tax preference item for purposes of the federal
individual and corporate alternative minimum tax.

When the Portfolio is maintaining a temporary defensive position, it may invest
in short term investments, some of which may not be tax exempt. Securities
eligible for short term investment by the Portfolio are tax exempt notes of
municipal issuers having, at the time of purchase, a

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<PAGE>
rating within the two highest grades of Moody's or S&P or, if not rated, having
an issue of outstanding Municipal Obligations rated within the three highest
grades by Moody's or S&P, and taxable short term instruments having quality
characteristics comparable to those for Municipal Obligations. The Portfolio may
invest in temporary investments for defensive reasons in anticipation of a
market decline. At no time will more than 20% of the Portfolio's total assets be
invested in temporary investments unless the Portfolio has adopted a defensive
investment policy. The Portfolio will purchase tax exempt temporary investments
pending the investment of the proceeds from the sale of the securities held by
the Portfolio or from the purchase of the Portfolio's shares by investors or in
order to have highly liquid securities available to meet anticipated
redemptions. To the extent that the Portfolio holds temporary investments, it
may not achieve its investment objective. The Portfolio may purchase securities
on a when-issued basis, lend its portfolio securities and purchase stock index
futures contracts and write options thereon. See "Certain Securities and
Investment Techniques."

The Portfolio is managed by Matthew Greenwald, Vice President of Oppenheimer
Capital, the parent of Quest for Value Advisors. Mr. Greenwald has been a fixed
income portfolio manager and financial analyst for Oppenheimer Capital since
1989. From 1984-1989 he was a fixed income portfolio manager with Paine Webber's
Mitchell Hutchins Asset Management.

LARGE CAPITALIZATION VALUE PORTFOLIO is advised by Quest for Value Advisors. The
Portfolio seeks, as its investment objective, total return consisting of capital
appreciation and dividend income by investing primarily in a diversified
portfolio of highly liquid equity securities that, in the Advisor's opinion,
have above average price appreciation potential at the time of purchase. For
purposes of the Portfolio's investment policies, equity securities consist of
common and preferred stock and securities such as bonds, rights and warrants
that are convertible into common stock. In general, these securities are
characterized as having above average dividend yields and below average price
earnings ratios relative to the stock market in general, as measured by the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"). Other
factors, such as earnings, the ability of the issuer to generate cash flow in
excess of business needs and to sustain above average profitability, as well as
industry outlook and market share, also are considered. Under normal conditions,
at least 80% of the Portfolio's assets will be invested in common stocks. No
less than 65% of the Portfolio's assets will be invested in common stocks of
issuers with total market capitalization of $1 billion or greater at the time of
purchase. The Portfolio may purchase temporary investments and purchase stock
index futures contracts and purchase and write options thereon. The Portfolio
also may lend its portfolio securities. See "Certain Securities and Investment
Techniques."

The Portfolio is managed by Eileen Rominger, Senior Vice President of
Oppenheimer Capital, the parent of Quest for Value Advisors. Ms. Rominger has
been an analyst and portfolio manager at Oppenheimer Capital since 1981.

LARGE CAPITALIZATION GROWTH PORTFOLIO is advised by Harris Bretall Sullivan &
Smith, Inc. ("Harris Bretall"). The Portfolio seeks capital appreciation by
investing primarily in a diversified portfolio of common stocks that, in the
Advisor's opinion, are characterized by a growth of earnings at a rate faster
than that of the S&P 500. Dividend income is an incidental consideration in the
selection of investments. In selecting securities for the Portfolio, the Advisor
evaluates factors believed to be favorable to long-term capital appreciation
including specific financial characteristics of the issuer such as historical
earnings growth, sales growth, profitability and return on equity. The Advisor
also analyzes the issuer's position within its industry as well as the quality
and experience of the issuer's management. Under normal conditions, at least 80%
of the Portfolio's assets will be invested in common stocks and at least 65% of
the Portfolio's assets will be invested in common stocks of issuers with total
market capitalization of $1 billion or greater at the time of purchase. Although
the Portfolio is authorized to purchase temporary investments and purchase stock
index futures contracts and purchase and

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<PAGE>
write options thereon, its Advisor has no present intention of using such
techniques during the coming year. The Portfolio also may lend its portfolio
securities. See "Certain Securities and Investment Techniques."

Stock selections for the Portfolio will be made by the Strategy and Investment
Committees of Harris Bretall. The Portfolio will be managed by Jack Sullivan and
Gordon Ceresino. Mr. Sullivan is a partner of Harris Bretall and has been
associated with the firm since 1981. Mr. Ceresino is a Vice President of Harris
Bretall and has been associated with the firm since 1991. Prior thereto, he was
Senior Vice President of Capitol Associates and was responsible for sales and
marketing.

SMALL CAPITALIZATION PORTFOLIO is advised by Axe-Houghton Associates, Inc. The
Portfolio seeks, as its investment objective, maximum capital appreciation.
Under normal conditions at least 80% of the Portfolio's assets will be invested
in common stocks, at least 65% of the Portfolio's assets will be invested in
common stock of issuers with total market capitalization of less than $1 billion
and at least one third of the Portfolio's assets will be invested in common
stocks of companies with total market capitalization of $550 million or less at
the time of purchase. Dividend income is not a consideration in the selection of
investments. In selecting investments for the Portfolio, the Advisor seeks small
capitalization growth companies that it believes are undervalued in the
marketplace. These companies typically are under-followed by investment firms
and undervalued relative to their growth prospects. The Portfolio may also
invest in companies that offer the possibility of accelerating earnings growth
due to internal changes such as new product introductions, synergistic
acquisitions or distribution channels or external changes affecting the
marketplace for the company's products and services. External factors can be
demographics, regulatory, legislative, technological, social or economic.
Although the Portfolio is authorized to purchase temporary investments and
purchase stock index futures contracts and purchase and write options thereon,
its Advisor has no present intention of using such techniques during the coming
year. The Portfolio also may lend its portfolio securities. See "Certain
Securities and Investment Techniques."

The Portfolio will be managed by Ellen Adnopoz, Robin Kerr and Porter Sutro. Ms.
Adnopoz and Ms. Kerr are Vice Presidents of Axe-Houghton and have been
associated with the firm since 1988. Mr. Sutro is a Vice President of
Axe-Houghton and has been associated with the firm since 1984. Ms. Adnopoz, Ms.
Kerr and Mr. Sutro will consult with Seth M. Lynn, Jr., the President and Chief
Executive Officer of Axe-Houghton about the Portfolio. Mr. Lynn has been with
the firm since 1984.

INTERNATIONAL EQUITY PORTFOLIO is advised by Ivory & Sime International, Inc.
The investment objective of the Portfolio is long-term capital appreciation. The
Portfolio ordinarily invests at least 80% of its assets in equity securities of
companies domiciled outside the United States. For purposes of the Portfolio's
investment policies, equity securities consist of common and preferred stock and
securities such as bonds, rights and warrants that are convertible into common
stock. The Portfolio has no present intention of investing in bonds other than
bonds convertible into common stock.

Under normal market conditions, at least 65% of the Portfolio's assets will be
invested in securities of issuers domiciled in at least three foreign countries.
The Portfolio may invest 25% or more of its total assets in securities of
issuers domiciled in one country. The Portfolio presently intends to invest more
than 25% of its total assets in Japan. As of June 30, 1994 securities of issuers
domiciled in Japan represented 37.2% of the Europe, Australia, Far East Index.
Accordingly, the investment performance of the Portfolio will be subject to
social, political and economic events occurring in Japan to a greater extent
than those occurring in other foreign countries. Investments may be made in
companies in developed as well as developing countries. It is the present
intention of the Portfolio not to invest more than 20% of its total assets in
securities of issuers located in developing countries. Investing in the equity
markets of developing countries involves exposure to economies that are
generally less diverse and mature, and to

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<PAGE>
political systems that can be expected to have less stability, than those of
developed countries. The Advisor attempts to limit exposure to investments in
developing countries where both liquidity and sovereign risks are high. Although
there is no established definition, a developing country is generally considered
to be a country that is in the initial stages of its industrialization cycle
with per capita gross national product of less than $5,000. Historical
experience indicates that the markets of developing countries have been more
volatile than the markets of developed countries, although securities traded in
the former markets have provided higher rates of return to investors. For a
discussion of the risks associated with investing in foreign securities, see
"Risk Factors--Foreign Securities."

It is expected that the Portfolio will invest primarily in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs") or Global
Depositary Receipts ("GDRs"), which are U.S. dollar-denominated receipts, which
represent and may be converted into the underlying foreign security, typically
issued by domestic banks or trust companies that represent the deposit with
those entities of securities of a foreign issuer. Issuers of the stock of ADRs
or GDRs sponsored by banks or trust companies are not obligated to disclose
material information in the United States and therefore, there may not be a
correlation between such information and the market value of such ADRs or GDRs.
ADRs or GDRs are publicly traded on exchanges or over-the-counter in the United
States. The Portfolio may purchase temporary investments, lend its portfolio
securities and purchase stock index futures contracts and purchase and write
options thereon. See "Certain Securities and Investment Techniques."

The Portfolio will be managed by Noland Carter with the assistance of the
Investment Committee of Ivory & Sime plc and Ivory & Sime plc's geographic
teams. The Investment Committee will assist the portfolio manager with country
allocations and the firm's geographic teams will provide individual stock
selections, which may be modified by the portfolio manager. Mr. Carter has been
Senior Investment Officer-International Investments of Portfolio Management and
a member of the Investment Committee of Ivory & Sime plc since 1993. From 1990
to 1993 he was Executive Director of Investments for Johnson Capital Management
Ltd. Prior thereto, he was Head of International Specialist Equities for Mercury
Asset Management.

Except as indicated, the Portfolios' limitations on investments and investment
policies are non-fundamental and can be changed without a vote of shareholders.

CERTAIN SECURITIES AND INVESTMENT TECHNIQUES

TEMPORARY INVESTMENTS. For temporary defensive purposes during periods when the
Advisor of a Portfolio, other than the U.S. Government Money Market Portfolio,
believes, with the concurrence of the Manager, that pursuing the Portfolio's
basic investment strategy may be inconsistent with the best interests of its
shareholders, the Portfolio may invest up to 100% of its assets in the following
money market instruments: U.S. Government Securities (including those purchases
in the form of custodial receipts), repurchase agreements, certificates of
deposit and bankers' acceptances issued by banks or savings and loan
associations having assets of at least $500 million as of the end of their most
recent fiscal year and high quality commercial paper. In addition, for the same
purposes the Advisor of the International Equity Portfolio may invest in
obligations issued or guaranteed by foreign governments or by any of their
political subdivisions, authorities, agencies or instrumentalities that are
rated at least AA by S&P or Aa by Moody's or, if unrated, are determined by the
Advisor to be of equivalent quality. See "Foreign Securities" below. Each
Portfolio also may hold a portion of its assets in money market instruments or
cash in amounts designed to pay expenses, to meet anticipated redemptions or
pending investments in accordance with its objectives and policies. Any
temporary investments may be purchased on a when-issued basis. A Portfolio's
investment in any other short term debt instruments would be subject to the
Portfolio's investment objectives and policies, and to approval by the Trust's
Board of Trustees.

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<PAGE>
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 Advisor of a Portfolio may, upon the concurrence of the
Manager, 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 an Advisor'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. Consequently, no single
Portfolio should be considered a complete investment program. An investment
among the Portfolios should be regarded as a long term commitment that should be
held through several market cycles. In addition, although the investment
advisors for the Consulting Programs may recommend adjustments in the allocation
of assets among the Portfolios based on, among other things, anticipated market
trends, there can be no assurance that these recommendations can be developed,
transmitted and acted upon in a manner sufficiently timely to avoid market
shifts, which can be sudden and substantial. Participants in Consulting Programs
should note that responsibility for investment recommendations rests solely with
the investment advisor for the program or the client itself and not with the
Trust or the Manager. Investors intending to purchase Portfolio shares through
investment advisory programs should evaluate carefully whether the service is
ongoing and continuous, as well as their investment advisors' ability to
anticipate and respond to market trends.

REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS. Each of the Portfolios
may engage in repurchase agreement and (except for the U.S. Government Money
Market Portfolio) reverse repurchase agreement transactions. Under the terms of
a typical repurchase agreement, a Portfolio would acquire an underlying debt
obligation for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase, and the Portfolio to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Portfolio's holding period. This arrangement results in a fixed
rate of return that is not subject to market fluctuations during the Portfolio's
holding period. A Portfolio may enter into repurchase agreements with respect to
U.S. Government Securities with member banks of the Federal Reserve System and
certain non-bank dealers approved by the Board of Trustees. The International
Equity Portfolio will not engage in repurchase agreements with foreign brokers
or dealers. Under each repurchase agreement, the selling institution is required
to maintain the value of the securities subject to the repurchase agreement at
not less than their repurchase price. The Portfolio's Advisor, acting under the
supervision of the Board of Trustees, reviews on an ongoing basis the value of
the collateral and the creditworthiness of those non-bank dealers with whom the
Portfolio enters into repurchase agreements. A Portfolio will not invest in a
repurchase agreement maturing in more than seven days if the investment,
together with illiquid securities held by the Portfolio, exceeds 15% (10% for
the U.S. Government Money Market Portfolio) of the Portfolio's total assets. See
"Certain Investment Policies." In entering into a repurchase agreement, a
Portfolio bears a risk of loss in the event that the other party to the
transaction defaults on its obligations and the Portfolio is delayed or
prevented from exercising its right to dispose of the underlying securities,
including the risk of a possible decline in the value of the underlying
securities during the period in which the Portfolio seeks to assert its rights
to them, the risk of incurring expenses associated with asserting those rights
and the risk of losing all or a part of the income from the agreement. Under a
reverse repurchase agreement, a Portfolio sells securities and agrees to
repurchase them at a mutually agreed date and price. At the time the Portfolio
enters into a reverse repurchase agreement, it will establish and maintain a
segregated account with an approved custodian containing liquid high grade
securities having a

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value not less than the repurchase price (including accrued interest). Reverse
repurchase agreements involve the risk that the market value of the securities
retained in lieu of sale by the Portfolio may decline more than or appreciate
less than the securities the Portfolio has sold but is obligated to repurchase.
In the event the buyer of securities under a reverse repurchase agreement files
for bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce the Portfolio's
obligation to repurchase the securities and the Portfolio's use of the proceeds
of the reverse repurchase agreements may effectively be restricted pending such
decisions. Reverse repurchase agreements create leverage, a speculative factor,
and will be considered borrowings for purposes of a Portfolio's limitation on
borrowing.

U.S. GOVERNMENT SECURITIES. Each Portfolio may invest in U.S. Government
Securities, which are obligations issued or guaranteed by the U.S. Government,
its agencies, authorities or instrumentalities. Some U.S. Government Securities,
such as U.S. Treasury bills, Treasury notes and Treasury bonds, which differ
only in their interest rates, maturities and time of issuance, are supported by
the full faith and credit of the United States. Others are supported by: (i) the
right of the issuer to borrow from the U.S. Treasury, such as securities of the
Federal Home Loan Bank, (ii) the discretionary authority of the U.S. Government
to purchase the agency's obligations, such as securities of the FNMA; or (iii)
only the credit of the issuer, such as securities of the Student Loan Marketing
Association. No assurance can be given that the U.S. Government will provide
financial support in the future to U.S. Government agencies, authorities or
instrumentalities that are not supported by the full faith and credit of the
United States.

Securities guaranteed as to principal and interest by the U.S. Government, its
agencies, authorities or instrumentalities include: (i) securities for which the
payment of principal and interest is backed by an irrevocable letter of credit
issued by the U.S. Government or any of its agencies, authorities or
instrumentalities; and (ii) participation in loans made to foreign governments
or other entities that are so guaranteed. The secondary market for certain of
these participations is limited and, therefore, may be regarded as illiquid.

U.S. Government Securities may include zero coupon securities that may be
purchased when yields are attractive and/or to enhance portfolio liquidity. Zero
coupon U.S. Government Securities are debt obligations that are issued or
purchased at a significant discount from face value. The discount approximates
the total amount of interest the security will accrue and compound over the
period until maturity or the particular interest payment date at a rate of
interest reflecting the market rate of the security at the time of issuance.
Zero coupon U.S. Government Securities do not require the periodic payment of
interest. These investments benefit the issuer by mitigating its need for cash
to meet debt service, but also require a higher rate of return to attract
investors who are willing to defer receipt of cash. These investments may
experience greater volatility in market value than U.S. Government Securities
that make regular payments of interest. A Portfolio accrues income on these
investments for tax and accounting purposes, which is distributable to
shareholders and which, because no cash is received at the time of accrual, may
require the liquidation of other portfolio securities to satisfy the Portfolio's
distribution obligations, in which case the Portfolio will forego the purchase
of additional income producing assets with these funds. Zero coupon U.S.
Government Securities include STRIPS and CUBES, which are issued by the U.S.
Treasury as component parts of U.S. Treasury bonds and represent scheduled
interest and principal payments on the bonds.

CUSTODIAL RECEIPTS. Each Portfolio other than the U.S. Government Money Market
Portfolio may acquire custodial receipts or certificates, such as CATS, TIGRs
and FICO Strips, underwritten by securities dealers or banks that evidence
ownership of future interest payments, principal payments or both on certain
notes or bonds issued by the U.S. Government, its agencies, authorities or
instrumentalities. The underwriters of these certificates or receipts purchase a
U.S. Government Security and deposit the security in an irrevocable trust or
custodial account with a custodian bank, which then issues receipts or
certificates that evidence ownership

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<PAGE>
of the periodic unmatured coupon payments and the final principal payment on the
U.S. Government Security. Custodial receipts evidencing specific coupon or
principal payments have the same general attributes as zero coupon U.S.
Government Securities, described above. Although typically under the terms of a
custodial receipt a Portfolio is authorized to assert its rights directly
against the issuer of the underlying obligation, the Portfolio may be required
to assert through the custodian bank such rights as may exist against the
underlying issuer. Thus, in the event the underlying issuer fails to pay
principal and/or interest when due, a Portfolio may be subject to delays,
expenses and risks that are greater than those that would have been involved if
the Portfolio had purchased a direct obligation of the issuer. In addition, in
the event that the trust or custodial account in which the underlying security
has been deposited is determined to be an association taxable as a corporation,
instead of a non-taxable entity, the yield on the underlying security would be
reduced in respect of any taxes paid.

LENDING PORTFOLIO SECURITIES. To generate income for the purpose of helping to
meet its operating expenses, each Portfolio other than the U.S. Government Money
Market Portfolio may lend securities to brokers, dealers and other financial
organizations. These loans, if and when made, may not exceed 33 1/3% of a
Portfolio's assets taken at value. A Portfolio's loans of securities will be
collateralized by cash, letters of credit or U.S. Government Securities. The
cash or instruments collateralizing a Portfolio's loans of securities will be
maintained at all times in a segregated account with the Portfolio's custodian,
or with a designated sub-custodian, in an amount at least equal to the current
market value of the loaned securities. In lending securities to brokers, dealers
and other financial organizations, a Portfolio is subject to risks, which, like
those associated with other extensions of credit, include delays in recovery and
possible loss of rights in the collateral should the borrower fail financially.
State Street arranges for each Portfolio's securities loans and manages
collateral received in connection with these loans. See "Management of the
Trust--Administration."

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. To secure prices deemed
advantageous at a particular time, each Portfolio may purchase securities on a
when-issued or delayed-delivery basis, in which case delivery of the securities
occurs beyond the normal settlement period; payment of or delivery of the
securities would be made prior to the reciprocal delivery or payment by the
other party to the transaction. A Portfolio will enter into when-issued or
delayed-delivery transactions for the purpose of acquiring securities and not
for the purpose of leverage. When-issued securities purchased by the Portfolio
may include securities purchased on a "when, as and if issued" basis under which
the issuance of the securities depends on the occurrence of a subsequent event,
such as approval of a merger, corporate reorganization or debt restructuring.
The Portfolio will establish with its custodian, or with a designated
sub-custodian, a segregated account consisting of cash, U.S. Government
Securities or other liquid high grade debt obligations in an amount equal to the
amount of its when-issued or delayed-delivery purchase commitments.

Securities purchased on a when-issued or delayed-delivery basis may expose a
Portfolio to risk because the securities may experience fluctuations in value
prior to their actual delivery. The Portfolio does not accrue income with
respect to a when-issued or delayed-delivery security prior to its stated
delivery date. Purchasing securities on a when-issued or delayed-delivery basis
can involve the additional risk that the yield available in the market when the
delivery takes place may be higher than that obtained in the transaction itself.

FIXED INCOME SECURITIES. The market value of fixed income obligations of the
Portfolios will be affected by general changes in interest rates which will
result in increases or decreases in the value of the obligations held by the
Portfolios. The market value of the obligations held by a Portfolio can be
expected to vary inversely to changes in prevailing interest rates. Investors
also should recognize that, in periods of declining interest rates, a
Portfolio's yield will tend to be somewhat higher than prevailing market rates
and, in periods of rising interest rates, a Portfolio's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net new
money to a Portfolio from the continuous sale of its shares will tend to be
invested in

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<PAGE>
instruments producing lower yields than the balance of its portfolio, thereby
reducing the Portfolio's current yield. In periods of rising interest rates, the
opposite can be expected to occur. In addition, securities in which a Portfolio
may invest may not yield as high a level of current income as might be achieved
by investing in securities with less liquidity, less creditworthiness or longer
maturities.

Ratings made available by S&P and Moody's are relative and subjective and are
not absolute standards of quality. Although these ratings are initial criteria
for the selection of portfolio investments, a Portfolio also will make its own
evaluation of these securities. Among the factors that will be considered are
the long term ability of the issuers to pay principal and interest and general
economic trends.

MUNICIPAL OBLIGATIONS. The term "Municipal Obligations" generally is understood
to include debt obligations issued to obtain funds for various public purposes,
the interest on which is, in the opinion of bond counsel to the issuer, excluded
from gross income for federal income tax purposes. In addition, if the proceeds
from private activity bonds are used for the construction, equipment, repair or
improvement of privately operated industrial or commercial facilities, the
interest paid on such bonds may be excluded from gross income for federal income
tax purposes, although current federal tax laws place substantial limitations on
the size of these issues.

The two principal classifications of Municipal Obligations are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit, and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenues derived from
a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or the specific revenue source, but not from the
general taxing power. Sizable investments in these obligations could involve an
increased risk to the Portfolio should any of the related facilities experience
financial difficulties. Private activity bonds are in most cases revenue bonds
and do not generally carry the pledge of the credit of the issuing municipality.
Included within the revenue bonds category are participations in lease
obligations or installment purchase contracts (hereinafter collectively called
"lease obligations") of municipalities. States and local agencies or authorities
issue lease obligations to acquire equipment and facilities.

Lease obligations may have risks not normally associated with general obligation
or other revenue bonds. Lease obligations and conditional sale contracts (which
may provide for title to the leased asset to pass eventually to the issuer),
have developed as a means for government issuers to acquire property and
equipment without the necessity of complying with the constitutional and
statutory requirements generally applicable for the issuance of debt. 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.

In addition, lease obligations may not have the depth of marketability
associated with other municipal obligations, and as a result, certain of such
lease obligations may be considered illiquid securities. To determine whether or
not the Municipal Bond Portfolio will consider such securities to be illiquid
(the Portfolio may not invest more than 15% of its net assets in illiquid
securities), the following guidelines have been established to determine the
liquidity of a lease obligation. The factors to be considered in making the
determination include: (1) the frequency of trades and quoted prices for the
obligation; (2) the number of dealers willing to purchase or sell the security
and the number of other potential purchasers; (3) the willingness of dealers to
undertake to make a market in the security; and (4) the nature of the
marketplace trades, including the time needed

~ 14 ~
<PAGE>
to dispose of the security, the method of soliciting offers, and the mechanics
of the transfer. There are, of course, variations in the security of Municipal
Obligations, both within a particular classification and between
classifications.

MORTGAGE RELATED SECURITIES. The Investment Quality Bond Portfolio may invest in
mortgage related securities including modified pass-through certificates. There
are several risks associated with mortgage related securities generally. One is
that the monthly cash inflow from the underlying loans may not be sufficient to
meet the monthly payment requirements of the mortgage related security.

Prepayment of principal by mortgagors or mortgage foreclosures will shorten the
term of the underlying mortgage pool for a mortgage related security. Early
returns of principal will affect the average life of the mortgage related
securities remaining in the Portfolio. The occurrence of mortgage prepayments is
affected by factors including the level of interest rates, general economic
conditions, the location and age of the mortgage and other social and
demographic conditions. In periods of rising interest rates, the rate of
prepayment tends to decrease, thereby lengthening the average life of a pool of
mortgage related securities. Conversely, in periods of falling interest rates
the rate of prepayment tends to increase, thereby shortening the average life of
a pool. Reinvestment of prepayments may occur at higher or lower interest rates
than the original investment, thus affecting the yield of the Portfolio. Because
prepayments of principal generally occur when interest rates are declining, it
is likely that the Portfolio will have to reinvest the proceeds of prepayments
at lower interest rates than those at which the assets were previously invested.
If this occurs, the Portfolio's yield will correspondingly decline. Thus,
mortgage related securities may have less potential for capital appreciation in
periods of falling interest rates than other fixed income securities of
comparable maturity, although these securities may have a comparable risk of
decline in market value in periods of rising interest rates. To the extent that
the Portfolio purchases mortgage related securities at a premium, unscheduled
prepayments, which are made at par, will result in a loss equal to any
unamortized premium.

The Investment Quality Bond Portfolio may invest in a type of mortgage-backed
security known as modified pass-through certificates. Each certificate evidences
an interest in a specific pool of mortgages that have been grouped together for
sale and provides investors with payments of interest and principal. The issuer
of modified pass-through certificates guarantees the payment of the principal
and interest whether or not the issuer has collected such amounts on the
underlying mortgage.

The average life of these securities varies with the maturities of the
underlying mortgage instruments (generally up to 30 years) and with the extent
of prepayments or the mortgages themselves. Any such prepayments are passed
through to the certificate holder, reducing the stream of future payments.
Prepayments tend to rise in periods of falling interest rates, decreasing the
average life of the certificate and generating cash which must be invested in a
lower interest rate environment. This could also limit the appreciation
potential of the certificates when compared to similar debt obligations which
may not be paid down at will, and could cause losses on certificates purchased
at a premium or gains on certificates purchased at a discount. Government
National Mortgage Association ("Ginnie Mae") certificates represent pools of
mortgages insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veteran's Administration. The guarantee of
payments under these certificates is backed by the full faith and credit of the
United States. Federal National Mortgage Association ("Fannie Mae") is a
government-sponsored corporation owned entirely by private stockholders. The
guarantee of payments under these instruments is that of Fannie Mae only. They
are not backed by the full faith and credit of the United States but the U.S.
Treasury may extend credit to Fannie Mae through discretionary purchases of its
securities. The U.S. Government has no obligation to assume the liabilities of
Fannie Mae. Federal Home Loan Mortgage Corp. ("Freddie Mac") is a corporate
instrumentality of the United States government whose stock is owned by the
Federal Home Loan Banks. Certificates issued by Freddie Mac

~ 15 ~
<PAGE>
represent interest in mortgages from its portfolio. Freddie Mac guarantees
payments under its certificates but this guarantee is not backed by the full
faith and credit of the United States and Freddie Mac does not have authority to
borrow from the U.S. Treasury.

The coupon rate of these instruments is lower than the interest rate on the
underlying mortgages by the amount of fees paid to the issuing agencies, usually
approximately 1/2 of 1%. Mortgage-backed securities, due to the scheduled
periodic repayment of principal, and the possibility of accelerated repayment of
underlying mortgage obligations, fluctuate in value in a different manner than
other, non-redeemable debt securities.

CMOs are obligations fully collateralized by a portfolio of mortgages or
mortgage related securities. Although the Portfolio is authorized to invest in
CMOs, it has no present intention of doing so.

FUTURES CONTRACTS AND RELATED OPTIONS. Each Portfolio other than the U.S.
Government Money Market Portfolio may enter into futures contracts and purchase
and write (sell) options on these contracts, including but not limited to
interest rate, securities index and foreign currency futures contracts and put
and call options on these futures contracts. These contracts will be entered
into only upon the concurrence of the Manager that such contracts are necessary
or appropriate in the management of the Portfolio's assets. These contracts will
be entered into on exchanges designated by the Commodity Futures Trading
Commission ("CFTC") or, consistent with CFTC regulations, on foreign exchanges.
These transactions may be entered into for bona fide hedging and other
permissible risk management purposes including protecting against anticipated
changes in the value of securities a Portfolio intends to purchase.

So long as Commodities Futures Trading Commission rules so require, a Portfolio
will not enter into any financial futures or options contract unless such
transactions are for bona-fide hedging purposes or for other purposes only if
the aggregate initial margins and premiums required to establish such
non-hedging positions would not exceed 5% of the liquidation value of the
Portfolio's total assets. All futures and options on futures positions will be
covered by owning the underlying security or segregation of assets. With respect
to long positions in a futures contract or option (e.g., futures contracts to
purchase the underlying instrument and call options purchased or put options
written on these futures contracts or instruments), the underlying value of the
futures contract at all times will not exceed the sum of cash, short term U.S.
debt obligations or other high quality obligations set aside in a segregated
account with the Trust's Custodian for this purpose.

A Portfolio may lose the expected benefit of these futures or options
transactions and may incur losses if the prices of the underlying commodities
move in an unanticipated manner. In addition, changes in the value of the
Portfolio's futures and options positions may not prove to be perfectly or even
highly correlated with changes in the value of its portfolio securities.
Successful use of futures and related options is subject to an Advisor's ability
to predict correctly movements in the direction of the securities markets
generally, which ability may require different skills and techniques than
predicting changes in the prices of individual securities. Moreover, futures and
options contracts may only be closed out by entering into offsetting
transactions on the exchange where the position was entered into (or a linked
exchange), and as a result of daily price fluctuation limits there can be no
assurance that an offsetting transaction could be entered into at an
advantageous price at any particular time. Consequently, a Portfolio may realize
a loss on a futures contract or option that is not offset by an increase in the
value of its portfolio securities that are being hedged or a Portfolio may not
be able to close a futures or options position without incurring a loss in the
event of adverse price movements.

GOVERNMENT STRIPPED MORTGAGE RELATED SECURITIES. Although the Investment Quality
Bond Portfolio may invest in certain government stripped mortgage related
securities issued and guaranteed by GNMA, FNMA or FHLMC, it has no present
intention of doing so.

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<PAGE>
RISK FACTORS

MEDIUM AND LOWER RATED AND UNRATED SECURITIES. Securities rated in the fourth
highest category by S&P or Moody's, although considered investment grade, have
speculative characteristics, and changes in economic or other conditions are
more likely to impair the ability of issuers of these securities to make
interest and principal payments than is the case with respect to issuers of
higher grade bonds.

Subsequent to its purchase by a Portfolio, an issue of securities may cease to
be rated or its rating may be reduced below the minimum required for purchase by
the Portfolio. Neither event will require sale of these securities by the
Portfolio, but the Advisor will dispose of any such securities in order to limit
the holdings by a Portfolio of securities rated below Baa by Moody's or BBB by S
& P to no more than 5% of its net assets. It is the intention of the Portfolios
to invest no more than 5% of their respective net assets in debt securities
rated below Baa by Moody's or BBB by S & P (commonly known as "high yield" or
"junk bonds").

NON-PUBLICLY TRADED SECURITIES. Each Portfolio may invest in non-publicly traded
securities, which may be less liquid than publicly traded securities. Although
these securities may be resold in privately negotiated transactions, the prices
realized from these sales could be less than those originally paid by the
Portfolios. In addition, companies whose securities are not publicly traded are
not subject to the disclosure and other investor protection requirements that
may be applicable if their securities were publicly traded.

SMALL CAPITALIZATION COMPANIES. Smaller capitalization companies may experience
higher growth rates and higher failure rates than do larger capitalization
companies. Companies in which the Small Capitalization Portfolio is likely to
invest may have limited product lines, markets or financial resources and may
lack management depth. The trading volume of securities of smaller
capitalization companies is normally less than that of larger capitalization
companies and, therefore, may disproportionately affect their market price,
tending to make them rise more in response to buying demand and fall more in
response to selling pressure than is the case with larger capitalization
companies.

FOREIGN SECURITIES. All the Portfolios except for the U.S. Government Money
Market Portfolio and the Municipal Bond Portfolio may invest in foreign
securities. The Investment Quality Bond Portfolio and the Large Capitalization
Value Portfolio do not intend to invest more than 20% of their respective total
assets in foreign securities. The Large Capitalization Growth Portfolio and the
Small Capitalization Portfolio do not intend to purchase foreign securities in
an amount more than 5% of each Portfolio's total assets. The International
Equity Portfolio expects to invest at least 80% of its assets in foreign
securities. Investing in securities issued by foreign companies and governments
involves considerations and potential risks not typically associated with
investing in obligations issued by the U.S. Government and domestic
corporations. Less information may be available about foreign companies than
about domestic companies and foreign companies generally are not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements comparable to those applicable to domestic
companies. The values of foreign investments are affected by changes in currency
rates or exchange control regulations, restrictions or prohibitions on the
repatriation of foreign currencies, application of foreign tax laws, including
withholding taxes, changes in governmental administration or economic or
monetary policy (in the United States or abroad) or changed circumstances in
dealings between nations. Costs are also incurred in connection with conversions
between various currencies. In addition, foreign brokerage commissions and
custody fees are generally higher than those charged in the United States, and
foreign securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
countries could be affected by other factors not present in the

~ 17 ~
<PAGE>
United States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations and could be subject to extended clearance settlement
periods.

CURRENCY EXCHANGE RATES. A Portfolio's share value may change significantly when
the currencies, other than the U.S. dollar, in which the Portfolio's investments
are denominated strengthen or weaken against the U.S. dollar. Currency exchange
rates generally are determined by the forces of supply and demand in the foreign
exchange markets of investments in different countries as seen from an
international perspective. Currency exchange rates can also be affected
unpredictably by intervention by U.S. or foreign governments or central banks or
by currency controls or political developments in the United States or abroad.

FORWARD CURRENCY CONTRACTS. Each Portfolio that may invest in foreign
currency-denominated securities may hold currencies to meet settlement
requirements for foreign securities and may engage in currency exchange
transactions in order to protect against uncertainty in the level of future
exchange rates between a particular foreign currency and the U.S. dollar or
between foreign currencies in which the Portfolio's securities are or may be
denominated. Forward currency contracts are agreements to exchange one currency
for another--for example, to exchange a certain amount of U.S. dollars for a
certain amount of French francs at a future date. The date (which may be any
agreed-upon fixed number of days in the future), the amount of currency to be
exchanged and the price at which the exchange will take place will be negotiated
with a currency trader and fixed for the term of the contract at the time that
the Portfolio enters into the contract. To assure that a Portfolio's forward
currency contracts are not used to achieve investment leverage, the Portfolio
will segregate cash or high grade securities with its custodian in an amount at
all times equal to or exceeding the Portfolio's commitment with respect to these
contracts.

In hedging specific portfolio positions, a Portfolio may enter into a forward
contract with respect to either the currency in which the positions are
denominated or another currency deemed appropriate by the Portfolio's Advisor.
The amount the Portfolio may invest in forward currency contracts is limited to
the amount of the Portfolio's aggregate investments in foreign currencies. Risks
associated with entering into forward currency contracts include the possibility
that the market for forward currency contracts may be limited with respect to
certain currencies and, upon a contract's maturity, the inability of a Portfolio
to negotiate with the dealer to enter into an offsetting transaction. Forward
currency contracts may be closed out only by the parties entering into an
offsetting contract. In addition, the correlation between movements in the
prices of those contracts and movements in the price of the currency hedged or
used for cover will not be perfect. There is no assurance that an active forward
currency contract market will always exist. These factors will restrict a
Portfolio's ability to hedge against the risk of devaluation of currencies in
which a Portfolio holds a substantial quantity of securities and are unrelated
to the qualitative rating that may be assigned to any particular security. See
the Statement of Additional Information for further information concerning
forward currency contracts. See also "Certain Securities and Investment
Techniques--Futures Contracts and Related Options" on page 16 and "Certain
Investment Policies--Portfolio Turnover" on page 19.

CERTAIN INVESTMENT POLICIES

The Trust on behalf of each Portfolio has adopted certain investment
restrictions that are enumerated in detail in the Statement of Additional
Information. Among other restrictions, each Portfolio may not, with respect to
75% of its total assets taken at market value, invest more than 5% of its total
assets in the securities of any one issuer, except U.S. Government Securities,
or acquire more than 10% of any class of the outstanding voting securities of
any one issuer. In addition, except as described above with respect to the
Municipal Bond Portfolio, each Portfolio may not invest 25% or more of its total
assets in securities of issuers in any one industry. The Trust on behalf of a
Portfolio may borrow money as a temporary measure from banks in an

~ 18 ~
<PAGE>
aggregate amount not exceeding one-third of the value of the Portfolio's total
assets to meet redemptions and for other temporary or emergency purposes not
involving leveraging. A Portfolio may not purchase securities while borrowings
exceed 5% of the value of the Portfolio's assets. A Portfolio will not invest
more than 15% (10% with respect to the U.S. Government Money Market Portfolio)
of the value of its net assets in securities that are illiquid, including
certain government stripped mortgage related securities, repurchase agreements
maturing in more than seven days and that cannot be liquidated prior to maturity
and securities that are illiquid by virtue of the absence of a readily available
market. Securities that have legal or contractual restrictions on resale but
have a readily available market are deemed not illiquid for this purpose. The
Portfolios each may purchase securities which are not registered under the
Securities Act of 1933 ("1933 Act") but which can be sold to "qualified
institutional buyers" in accordance with Rule 144A under the 1933 Act. Any such
security will not be considered illiquid so long as it is determined by the
Board of Trustees or the Portfolio's Adviser, acting under guidelines approved
and monitored by the Board, which has the ultimate responsibility for any
determination regarding liquidity, that an adequate trading market exists for
that security. This investment practice could have the effect of increasing the
level of illiquidity in each of the Portfolios during any period that qualified
institutional buyers become uninterested in purchasing these restricted
securities. The ability to sell to qualified institutional buyers under Rule
144A is a recent development and it is not possible to predict how this market
will develop. The Board will carefully monitor any investments by each of the
Portfolios in these securities.

To comply with state securities laws, each Portfolio has agreed to limit its
investments in restricted securities (excluding 144A securities) to 10% of their
respective total assets, to limit its investments in the securities of
unseasoned issuers, which have been in operation for less than three years
(including their predecessors), to no more than 5% of their respective assets
and to limit their aggregate investment in restricted securities (including 144A
securities) and unseasoned issuers to no more than 15% of their respective total
assets.

The investment restrictions listed above as well as the Portfolios' investment
objectives are fundamental policies and accordingly may not be changed with
respect to any Portfolio without the approval of a majority of the outstanding
shares of that Portfolio, as defined in the Investment Company Act of 1940 (the
"1940 Act"). Unless otherwise specifically stated, however, the investment
policies and practices of each Portfolio are not fundamental and may be changed
by the Board of Trustees.

PORTFOLIO TURNOVER

Active trading will increase a Portfolio's rate of turnover, certain transaction
expenses and the incidence of short term capital gains taxable as ordinary
income. An annual turnover rate of 100% would occur when all the securities held
by the Portfolio are replaced one time during a period of one year. The Advisor
of the International Equity Portfolio anticipates that the annual turnover in
that Portfolio will not be in excess of 100% during its first year of
operations. The Advisor of the Small Capitalization Portfolio anticipates that
the turnover in that Portfolio will not be in excess of 150% during its first
year of operations. The Advisors of each of the other Portfolios anticipate that
the annual turnover in those Portfolios will not exceed 80% during their first
year of operations. The U.S. Government Money Market Portfolio's turnover is
expected to be zero for regulatory reporting purposes.

MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES

Overall responsibility for management and supervision of the Trust and the
Portfolios rests with the Trust's Board of Trustees. The Trustees approve all
significant agreements between the Trust and the persons and companies that
furnish services to the Trust and the Portfolios,

~ 19 ~
<PAGE>
including agreements with the Trust's distributor, custodian, transfer agent,
the Manager, Advisors and administrator. Two of the Trustees and all of the
Trust's executive officers are affiliated with the Manager, Quest for Value
Advisors and/or their affiliates. The Statement of Additional Information
contains background information regarding each Trustee and executive officer of
the Trust.

INVESTMENT MANAGER

Saratoga Capital Management, a registered investment advisor, located at Two
World Financial Center, New York, NY 10080-6116, serves as the Trust's Manager.

Saratoga Capital Management is a Delaware general partnership which is owned by
certain executives of Saratoga Capital Management and by Oppenheimer Capital.
Oppenheimer Capital, which is also the parent of Quest for Value Advisors, has
been a registered investment advisor since 1968 with total assets under
management of approximately $28.8 billion on March 31, 1994.

The Trust has entered into an investment management agreement (the "Management
Agreement") with the Manager which, in turn, has entered into an advisory
agreement ("Advisory Agreement") with each Advisor selected for the Portfolios.
It is the Manager's responsibility to select, subject to the review and approval
of the Board of Trustees, the Advisors who have distinguished themselves by able
performance in their respective areas of expertise in asset management and to
review their continued performance.

Subject to the supervision and direction of the Trust's Board of Trustees, the
Manager provides to the Trust investment management evaluation services
principally by performing initial due diligence on prospective Advisors for each
Portfolio and thereafter monitoring Advisor performance. In evaluating
prospective Advisors, the Manager considers, among other factors, each Advisor's
level of expertise, relative performance and consistency of performance to
investment discipline or philosophy; personnel and financial strength; and
quality of service and client communications. The Manager has responsibility for
communicating performance expectations and evaluations to the Advisors and
ultimately recommending to the Board of Trustees of the Trust whether the
Advisors' contracts should be renewed, modified or terminated. The Manager
provides reports to the Board of Trustees regarding the results of its
evaluation and monitoring functions. The Manager is also responsible for
conducting all operations of the Trust except those operations contracted to the
Advisors, custodian, transfer agent and administrator. Each Portfolio pays the
Manager a fee for its services that is computed daily and paid monthly at the
annual rate specified below of the value of the average net assets of the
Portfolios. The Manager pays a portion of its fee to each Advisor for the
advisory services provided to the Portfolio that is computed daily and paid
monthly at the annual rate specified below of the value of the Portfolio's
average daily net assets:

<TABLE>
<CAPTION>
PORTION
OF THE
MANAGER'S
MANAGER'S FEE PAID
PORTFOLIO FEE TO THE ADVISOR
- ------------------------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
U.S. Government Money Market Portfolio............................................... .475% .125%
Investment Quality Bond Portfolio.................................................... .55% .20%
Municipal Bond Portfolio............................................................. .55% .20%
Large Capitalization Value Portfolio................................................. .65% .30%
Large Capitalization Growth Portfolio................................................ .65% .30%
Small Capitalization Portfolio....................................................... .65% .30%
International Equity Portfolio....................................................... .75% .40%
</TABLE>

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<PAGE>
Investors should be aware that the Manager may be subject to a conflict of
interest when making decisions regarding the retention and compensation of
particular Advisors. However, the Manager's decisions, including the identity of
an Advisor and the specific amount of the Manager's compensation to be paid to
the Advisor, are subject to review and approval by a majority of the Board of
Trustees and separately by a majority of the Trustees who are not affiliated
with the Manager or any of its affiliates. These decisions are also subject to
the approval of the shareholders of the Portfolio involved.

ADVISORS

The Advisors have agreed to the foregoing fees, which are generally lower than
the fees they charge to institutional accounts for which they serve as
investment advisor and perform all administrative functions associated with
serving in that capacity in recognition of the reduced administrative
responsibilities they have undertaken with respect to the Portfolios. Subject to
the supervision and direction of the Manager and, ultimately, the Board of
Trustees, each Advisor's responsibilities are to manage the securities held by
the Portfolio it serves in accordance with the Portfolio's stated investment
objective and policies, make investment decisions for the Portfolio and place
orders to purchase and sell securities on behalf of the Portfolio.

The following sets forth certain information about each of the Advisors:

Quest for Value Advisors ("Quest"), a registered investment adviser, located at
One World Financial Center, New York, NY 10281, serves as Advisor to the
Municipal Bond Portfolio and Large Capitalization Value Portfolio. Quest is a
majority owned subsidiary of Oppenheimer Capital, a registered investment
adviser, founded in 1968. Oppenheimer Financial Corp., a holding company, holds
a 33% interest in Oppenheimer Capital, and Oppenheimer Capital, L.P., a Delaware
limited partnership whose units are traded on the New York Stock Exchange and of
which Oppenheimer Financial Corp. is the sole general partner, owns the
remaining 67% interest. As of March 31, 1994 Quest had assets under management
of approximately $5.7 billion and Oppenheimer Capital and its subsidiary Quest
had assets under management of approximately $28.8 billion.

Fox Asset Management, Inc. ("Fox"), a registered investment adviser, serves as
Advisor to the Investment Quality Bond Portfolio. Fox was formed in 1985. Fox is
owned by its current employees, with a controlling interest held by J. Peter
Skirkanich, President, Managing Director and Chairman of Fox's Investment
Committee. Fox is located at 44 Sycamore Avenue, Little Silver, NJ 07739. As of
March 31, 1994, assets under management by Fox were approximately $1.1 billion.

Harris Bretall Sullivan & Smith, Inc. ("Harris Bretall"), a registered
investment advisor, serves as Advisor to the Large Capitalization Growth
Portfolio. The firm was founded in 1971 and is owned by W. Graeme Bretall,
President and Director, John J. Sullivan, Director and Treasurer and Henry
Smith, Director. Located at One Post Street, San Francisco, CA 94104, the firm
managed assets of approximately $2.7 billion as of March 31, 1994.

Axe-Houghton Associates, Inc. ("Axe-Houghton"), a registered investment adviser,
serves as Advisor to the Small Capitalization Portfolio. The firm was founded in
1984 and is a wholly-owned subsidiary of Hoenig Group Inc., a public company
whose subsidiaries are engaged in securities and investment management
activities. Axe-Houghton is located at Royal Executive Park, 4 International
Drive, Rye Brook, N.Y. 10573. As of March 31, 1994 assets under management at
Axe-Houghton were approximately $1.3 billion.

Sterling Capital Management Company ("Sterling"), a registered investment
adviser, is the Advisor to the U.S. Government Money Market Portfolio. Sterling
is a North Carolina corporation formed in 1970 and located at One First Union
Center, 301 S. College Street, Suite 3200, Charlotte, NC 28202. Sterling is a
wholly-owned subsidiary of United Asset Management

~ 21 ~
<PAGE>
Corporation and provides investment management services to corporations, pension
and profit-sharing plans, trusts, estates and other institutions and
individuals. As of March 31, 1994, Sterling had approximately $1.4 billion in
assets under management. Since 1982, Sterling has been involved with the
distribution of the North Carolina Capital Management Trust, a money market
mutual fund offered exclusively to public units in the state, the first such
fund to be registered with the Securities and Exchange Commission. As of March
31, 1994, the asset value of this fund was approximately $1.4 billion.

Ivory & Sime International, Inc. ("ISI"), a registered investment adviser, is
the Advisor to the International Equity Portfolio and, in connection therewith,
has entered into a sub-investment advisory agreement with Ivory & Sime plc of
Edinburgh, Scotland. Pursuant to such sub-investment advisory agreement, Ivory &
Sime plc performs investment advisory and portfolio transaction services for
such Portfolio. While Ivory & Sime plc is responsible for the day-to-day
management of the Portfolio's assets, ISI reviews investment performance,
policies and guidelines, facilitates communication between Ivory & Sime plc and
the Manager and maintains certain books and records. As compensation for its
services as investment adviser, the Manager pays ISI a monthly fee at the annual
rate of .40% of the average daily net assets of the International Equity
Portfolio. As compensation for its services, Ivory & Sime plc receives from ISI
78% of the net monthly fees paid by the Manager to ISI pursuant to the
Investment Advisory Agreement between the Manager and ISI.

ISI was organized in 1978 with 50% of its voting stock owned by each of Jamison,
Eaton & Wood, Inc. and Ivory & Sime plc. ISI offers clients in the United States
the services of Ivory & Sime plc in global securities markets. Ivory & Sime plc,
founded in 1895, is one of the leading independent investment managers in the
United Kingdom. As of March 31, 1994, the firm and its affiliates managed in
excess of $5.8 billion of global equity investments. ISI is located at 39 Main
Street, Chatham, NJ 07928, and Ivory & Sime plc is located at 1 Charlotte
Square, Edinburgh, Scotland EH24DZ. Ivory & Sime plc is a public limited company
listed on the London Stock Exchange. As of July 29, 1994, approximately 26% of
Ivory & Sime's outstanding shares were held by Caledonia Investments.

ADMINISTRATION

State Street Bank and Trust Company ("State Street"), located at One Heritage
Drive, North Quincy, Massachusetts 02171, calculates the net asset value of the
Portfolios' shares and creates and maintains the Trust's financial records
required by Section 31 of the Investment Company Act of 1940.

Quest for Value Advisors provides administrative services and manages the
administrative affairs of the Trust pursuant to an Administration Agreement with
the Trust. Such services include the preparation of proxy statements and reports
filed with federal and state securities commissions (except to the extent that
the participation of independent accountants and attorneys is, in the opinion of
Quest for Value Advisors, necessary or desirable), preparation of materials for
regular and special meetings of the Board of Trustees of the Trust, responding
to shareholders' inquiries relating to the Trust and supervising the
determination of the net asset value of the Trust's Portfolios. For these
services, each Portfolio will pay Quest for Value Advisors an annual fee of
$42,000, provided that the Portfolio's average daily net assets do not exceed
$80 million. In the event that a Portfolio's average daily net assets exceed $80
million, an additional fee of .05% of average daily net assets in excess of $80
million shall be payable by the Portfolio.

EXPENSES OF THE PORTFOLIOS

Each Portfolio bears its own expenses, which generally include all costs not
specifically borne by the Manager, the Advisors, State Street and Quest for
Value Advisors as Administrator to the Trust. Included among a Portfolio's
expenses are: costs incurred in connection with the

~ 22 ~
<PAGE>
Portfolio's organization; investment management and administration fees; fees
for necessary professional and brokerage services; fees for any pricing service;
costs of the determination of net asset value; the costs of regulatory
compliance; and costs associated with maintaining the Trust's legal existence
and shareholder relations. The Trust's agreement with the Manager provides that
the Manager will reduce its fees to a Portfolio to the extent required by
applicable state laws for certain expenses that are described in the Statement
of Additional Information.

PORTFOLIO TRANSACTIONS

To the extent consistent with the applicable provisions of the 1940 Act and the
rules and exemptions adopted by the SEC under the 1940 Act, the Board of
Trustees of the Trust has determined that brokerage transactions for a Portfolio
may be executed through affiliated broker-dealers if, in the judgment of the
Advisor, the use of an affiliated broker-dealer is likely to result in price and
execution at least as favorable as those of other qualified broker-dealers. When
selecting broker-dealers, the Advisors may consider their record of sales of
shares of the Portfolios.

PURCHASE OF SHARES
GENERAL

Purchases of shares of a Portfolio by a participant in a Consulting Program must
be made through an entity having a sales agreement with Quest for Value
Distributors ("Consulting Brokers"), the Trust's general distributor and an
affiliate of the Manager and Quest for Value Advisors, or directly through Quest
for Value Distributors.

Shares of the Portfolio are available to participants in Consulting Programs and
to other investors and investment advisory services. 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 choices available.

INVESTMENT ADVISORY PROGRAMS. 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 conforms to such risk
tolerance and objectives in a recommendation; and providing on a periodic basis,
a report to the investor containing an analysis and evaluation of the investor's
account and recommending any appropriate changes in the allocation of assets
among the Portfolios. The investment advisors 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.

The investment advisors in the Consulting Programs may use the Manager's SMART
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 following administrative services to the investment
advisers for the Consulting Programs: the preparation, printing and processing
of investment questionnaires and investment literature and other client
communications.

The fee 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.

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<PAGE>
Investors should be aware that the Manager receives a fee from the investment
advisor to each participant in a Consulting Program for services rendered to the
investment advisor in connection with the investment advisory program. This fee
does not vary based on the Portfolios recommended for the participant's
investments. Also, the Manager serves as the Trust's Manager with responsibility
for identifying, retaining, supervising and compensating each Portfolio's
Advisor under the supervision of the Trust's Board of Trustees and receives a
fee from each Portfolio. Although the portion of the fee paid by each Portfolio
that is retained by the Manager is the same for each Portfolio, Quest for Value
Advisors, an affiliate of the Manager, acts as the Advisor for two of the
Portfolios. Consequently, to the extent investors' funds are allocated to such
Portfolios, the Manager's affiliates will realize greater financial benefits
than if the funds were invested in Portfolios not advised by Quest for Value
Advisors.

OTHER ADVISORY PROGRAMS

Shares of the Portfolios are also available for purchase by certain registered
investment advisors (other than the investment advisors 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 advisors offering the programs. Registered
investment advisors interested in utilizing the Portfolios for the purposes
described above should call 800-807-FUND (800-807-3863).

CONTINUOUS OFFERING

For participants in Consulting Programs, shares of the Portfolios may be
purchased from Consulting Brokers only after the completion and processing of
such documentation as may be required by the Consulting Broker for the Program.
The offering price is the net asset value per share next determined after
receipt of an order by Quest for Value Distributors. Shareholders will not
receive share certificates because the Trust does not issue share certificates.

The Trust offers an Automatic Investment Plan under which purchase orders may be
placed periodically for Portfolio shares in an amount not less than $100. 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
800-807-FUND (800-807-3863).

The minimum initial investment in the Trust is $10,000 and the minimum
investment in any individual Portfolio (other than the U.S. Government Money
Market Portfolio) is $250; there is no minimum investment for the U.S.
Government Money Market Portfolio. The minimum subsequent investment in the
Trust is $100 except that there is no minimum for employee benefit plans and
there is no minimum subsequent investment for any Portfolio. The Trust reserves
the right at any time to vary the initial and subsequent investment minimums.

The sale of shares will be suspended during any period when the determination of
net asset value is suspended and may be suspended by the Board of Trustees of
the Trust whenever the Board judges it to be in the best interest of the Trust
to do so. Quest for Value Distributors, in its sole discretion, may accept or
reject any purchase order.

Quest for Value Distributors will from time to time provide compensation to
dealers in connection with sales of shares of the Trust including promotional
gifts (including gift certificates, dinners and other items), financial
assistance to dealers in connection with conferences, sales or training programs
for their employees, seminars for the public and advertising campaigns.

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<PAGE>
REDEMPTION OF SHARES
REDEMPTION IN GENERAL

Shares of a Portfolio may be redeemed at no charge on any day that the Portfolio
calculates its net asset value as described below under "Net Asset Value."
Redemption requests received in proper form prior to the close of regular
trading on the NYSE will be effected at the net asset value per share determined
on that day. Redemption requests received after the close of regular trading on
the NYSE will be effected at the net asset value next determined. A Portfolio is
required to transmit redemption proceeds for credit to the shareholder's account
at no charge within seven days after receipt of a redemption request. A
shareholder who pays for Portfolio shares by personal check will be credited
with the proceeds of a redemption of those shares when the purchase check has
been collected, which may take up to 15 days. Shareholders who anticipate the
need for more immediate access to their investment should purchase shares by
Federal funds or bank wire or by a certified or cashier's check.

Redemption requests may be given to the shareholder's Consulting Broker who is
responsible for transmitting them to the Trust's Transfer Agent or directly to
the Transfer Agent, if the shareholder purchased shares directly from Quest for
Value Distributors. In order to be effective, a redemption request of a
shareholder other than an individual may require the submission of documents
commonly required to assure the safety of a particular account.

The agreement relating to participation in a Consulting Program between a client
and the investment advisor 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.

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 distributions in kind of readily marketable
portfolio securities in lieu of cash. Redemptions failing to meet this threshold
must be made in cash. Shareholders receiving distributions in kind of portfolio
securities may incur brokerage commissions when subsequently disposing of those
securities.

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 or less as a result of
redemptions, but not as a result of a fluctuation in a Portfolio's net asset
value 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. Investors should be aware that 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.

NET ASSET VALUE

Each Portfolio's net asset value per share is calculated by State Street on each
day, Monday through Friday, except on days on which the NYSE is closed. The NYSE
is currently scheduled to

~ 25 ~
<PAGE>
be closed on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas, and on the preceding
Friday when one of those holidays falls on a Saturday or on the subsequent
Monday when one of those holidays falls on a Sunday.

Net asset value per share is determined as of the close of trading on the NYSE
and is computed by dividing the value of a Portfolio's net assets by the total
number of its shares outstanding. Generally, a Portfolio's investments are
valued at market value or, in the absence of a market value, at fair value as
determined by or under the direction of the Board of Trustees.

Securities that are primarily traded on foreign exchanges are generally valued
for purposes of calculating a Portfolio's net asset value at the preceding
closing values of the securities on their respective exchanges, except that,
when an occurrence subsequent to the time a value was so established is likely
to have changed that value, the fair market value of those securities will be
determined by consideration of other factors by or under the direction of the
Board of Trustees. A security that is primarily traded on a domestic or foreign
stock exchange is valued at the last sale price on that exchange or, if no sales
occurred during the day, at the current quoted bid price. All portfolio
securities held by the U.S. Government Money Market Portfolio and short term
dollar-denominated investments of the other Portfolios that mature in 60 days or
less are valued on the basis of amortized cost (which involves valuing an
investment at its cost and, thereafter, assuming a constant amortization to
maturity of any discount or premium, regardless of the effect of fluctuating
interest rates on the market value of the investment) when the Board of Trustees
has determined that amortized cost represents fair value. An option that is
written by the Fund is generally valued at the last sale price or, in the
absence of the last sale price, the last offer price. An option that is
purchased by the Portfolio is generally valued at the last sale price or, in the
absence of the last sale price, the last bid price. The value of a futures
contact is equal to the unrealized gain or loss on the contract that is
determined by marking the contract to the current settlement price for a like
contract on the valuation date of the futures contract. A settlement price may
not be used if the market makes a limit move with respect to a particular
futures contract if the securities underlying the futures contract experience
significant price fluctuations after the determination of the settlement price.
When a settlement price cannot be used, futures contracts will be valued at
their fair market value as determined by or under the direction of the Board of
Trustees.

All assets and liabilities initially expressed in foreign currency values will
be converted into U.S. dollar values at the mean between the bid and offered
quotations of the currencies against U.S. dollars as last quoted by any
recognized dealer. If the bid and offered quotations are not available, the rate
of exchange will be determined in good faith by or under the direction of by the
Board of Trustees. In carrying out the Board's valuation policies, State Street
may consult with an independent pricing service retained by the Trust. Further
information regarding the Portfolio's valuation policies is contained in the
Statement of Additional Information.

EXCHANGE PRIVILEGE

Shares of a Portfolio may be exchanged without payment of any exchange fee
(except as set forth below) for shares of another Portfolio at their respective
net asset values.

An exchange of shares 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. Shareholders exchanging shares of a Portfolio for shares of
another Portfolio should review the disclosure provided herein relating to the
exchanged-for shares carefully prior to making an exchange. The exchange
privilege is available to shareholders residing in any state in which Portfolio
shares being acquired may be legally sold.

~ 26 ~
<PAGE>
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 Securities and Exchange
Commission.

Quest for Value Distributors and the Trust's transfer agent will employ
reasonable procedures for telephone redemptions and exchanges to confirm that
the instructions received from shareholders or their account representatives are
genuine, and if they do not, Quest for Value Distributors or the transfer agent
may be liable for any losses due to unauthorized or fraudulent instructions.
Shareholders will be required to provide their name, address, social security
number and other identifying information. Account representatives must identify
themselves and their firm and Quest for Value Distributors will confirm that
such firm has a valid selling agreement with Quest for Value Distributors and
that the representative is authorized to act on behalf of the firm.

Because excessive trading (including short-term "market timing" trading can
limit a Portfolio's performance, each Portfolio may refuse any exchange orders
(1) if they appear to be market-timing transactions involving significant
portions of a Portfolio's assets or (2) from any shareholder account if the
shareholder or his or her broker-dealer has been advised that previous use of
the exchange privilege is considered excessive. Accounts under common ownership
or control, including those with the same taxpayer ID number and those
administered so as to redeem or purchase shares based upon certain predetermined
market indicators, will be considered one account for this purpose.

DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS

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 each 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 net
asset value) 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. Dividends attributable
to the net investment income of the U.S. Government Money Market Portfolio, the
Municipal Bond Portfolio and the Investment Quality Bond Portfolio will be
declared daily and paid monthly. Shareholders of those Portfolios receive
dividends from the day following the purchase up to and including the date of
redemption. Dividends attributable to the net investment income of the remaining
Portfolios are declared and paid annually. Distributions of any net realized
long term and short term capital gains earned by a Portfolio will be made
annually.

TAXES

As each Portfolio will be treated as a separate entity for federal income tax
purposes, the amounts of net investment income and net realized capital gains
subject to tax will be determined separately for each Portfolio (rather than on
a Trust-wide basis).

Each Portfolio intends to qualify each year as a regulated investment company
for federal income tax purposes. The requirements for qualification (i) may
cause a Portfolio, among other things, to restrict the extent of its short term
trading or its transactions in warrants, currencies, options, futures or forward
contracts and (ii) will cause each of the Portfolios to maintain a diversified
asset portfolio.

A regulated investment company will not be subject to federal income tax on its
net investment income and its capital gains that it distributes to shareholders,
so long as it meets certain overall distribution requirements and other
conditions under the Code. Each Portfolio intends to satisfy

~ 27 ~
<PAGE>
these overall distribution requirements and any other required conditions.
Dividends declared by a Portfolio in October, November or December of any
calendar year and payable to shareholders of record on a specified date in such
a month shall be deemed to have been received by each shareholder on December 31
of such calendar year and to have been paid by the Portfolio not later than such
December 31 provided that such dividend is actually paid by the Portfolio during
January of the following year.

Dividends derived from a Portfolio's taxable net investment income and
distributions of a Portfolio's net realized short term capital gains (including
short term gains from investments in tax exempt obligations) will be taxable to
shareholders as ordinary income for federal income tax purposes, regardless of
how long shareholders have held their Portfolio shares and whether the dividends
or distributions are received in cash or reinvested in additional shares.
Distributions of net realized long term capital gains will be taxable to
shareholders as long term capital gains for federal income tax purposes,
regardless of how long a shareholder has held his Portfolio shares and whether
the distributions are received in cash or reinvested in additional shares.
Dividends and distributions paid by the U.S. Government Money Market Portfolio,
the Investment Quality Bond Portfolio and the Municipal Bond Portfolio and
distributions of capital gains paid by all the Portfolios will not qualify for
the dividend received deduction for corporations. As a general rule, dividends
paid by a Portfolio, to the extent derived from dividends attributable to
certain types of stock issued by U.S. corporations, will qualify for the
dividend received deduction for corporations which hold shares in a Portfolio
for more than 45 days. Some states, if certain asset and diversification
requirements are satisfied, permit shareholders to treat their portions of a
Portfolio's dividends that are attributable to interest on U.S. Treasury
securities and certain U.S. Government Securities as income that is exempt from
state and local income taxes. Dividends attributable to repurchase agreement
earnings are, as a general rule, subject to state and local taxation.

Dividends paid by the Municipal Bond Portfolio that are derived from interest
earned on qualifying tax-exempt obligations are expected to be "exempt-interest"
dividends that shareholders may exclude from their gross incomes for federal
income tax purposes if the Portfolio satisfies certain asset percentage
requirements. To the extent that the Portfolio invest in bonds, the interest on
which is a specific tax preference item for federal income tax purposes
("AMT-Subject Bonds"), any exempt-interest dividends derived from interest on
AMT-Subject Bonds will be a specific tax preference item for purposes of the
federal individual and corporate alternative minimum taxes. Dividends
distributed by the Municipal Bond Portfolio may not be exempt from state or
local taxation. Shareholders will receive notification annually stating the
portion of the Municipal Bond Portfolio's tax-exempt income attributable to
issuers in each state. You should contact your tax advisor if you have any
questions, particularly with regard to state and local taxes.

Net investment income or capital gains earned by the Portfolios investing in
foreign securities may be subject to foreign income taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries that entitle the Portfolios to a reduced rate of tax or exemption from
tax on this related income and gains. It is impossible to determine the
effective rate of foreign tax in advance since the amount of these Portfolios'
assets to be invested within various countries is not known. The Portfolios
intend to operate so as to qualify for treaty-reduced rates of tax where
applicable. Furthermore, if a Portfolio qualifies as a regulated investment
company, if certain distribution requirements are satisfied, and if more than
50% of the value of the Portfolio's assets at the close of the taxable year
consists of stock or securities of foreign corporations, the Portfolio may
elect, for U.S. federal income tax purposes, to treat foreign income taxes paid
by the Portfolio that can be treated as income taxes under U.S. income tax
principles as paid by its shareholders. The Trust anticipates that the
International Equity Portfolio will qualify for and make this election in most,
but not necessarily all, of its taxable years. If a Portfolio were to make an
election, an amount equal to the foreign income taxes paid

~ 28 ~
<PAGE>
by the Portfolio would be included in the income of its shareholders and the
shareholders would be entitled to credit their portions of this amount against
their U.S. tax liabilities, if any, or to deduct such portions from their U.S.
taxable income, if any. Shortly after any year for which it makes an election, a
Portfolio will report to its shareholders, in writing, the amount per share of
foreign tax that must be included in each shareholder's gross income and the
amount which will be available for deduction or credit. No deduction for foreign
taxes may be claimed by a shareholder who does not itemize deductions. Certain
limitations will be imposed on the extent to which the credit (but not the
deduction) for foreign taxes may be claimed.

As noted above, shareholders who are participants in Consulting Programs or
other investment advisory services will pay an investment advisory fee out of
their own assets. For most shareholders who are individuals, this fee will be
treated as a "miscellaneous itemized deduction" for federal income tax purposes.
Under current federal income tax law, an individual's miscellaneous itemized
deductions for any taxable year shall be allowed as a deduction only to the
extent that the aggregate of these deductions exceeds 2% of adjusted gross
income.

As discussed above, an exchange of shares in a Portfolio for shares in another
Portfolio, including exchanges by participants in a Consulting Program, is
treated for federal income tax purposes as a redemption (sale) of shares and
taxable gain or loss may be realized.

Statements as to the tax status of each shareholder's dividends and
distributions are mailed annually. Shareholders will also receive, if
appropriate, various written notices after the close of the Portfolios' taxable
year with respect to certain foreign taxes paid by the Portfolios and certain
dividends and distributions that were, or were deemed to be, received by
shareholders from the Portfolios during the Portfolios' prior taxable year.
Shareholders should consult with their own tax advisors with specific reference
to their own tax situations.

CUSTODIAN AND TRANSFER AGENT

State Street Bank and Trust Company is located at One Heritage Drive, North
Quincy, Massachusetts 02171 and serves as the Custodian of the Trust's
investments and the Trust's transfer agent. Cash balances of the Portfolios with
the Custodian in excess of $100,000 are unprotected by Federal deposit
insurance. Such uninsured balances may at times be substantial.

PERFORMANCE OF THE PORTFOLIOS
YIELD

The Trust may, from time to time, include the yield and effective yield of the
U.S. Government Money Market Portfolio in advertisements or reports to
shareholders or prospective investors. Current yield for the U.S. Government
Money Market Portfolio will be based on income received by a hypothetical
investment over a given seven-day period (less expenses accrued during the
period), and then "annualized" (i.e., assuming that the seven-day yield would be
received for 52 weeks, stated in terms of an annual percentage return on the
investment). "Effective yield" for the U.S. Government Money Market Portfolio
will be calculated in a manner similar to that used to calculate yield, but will
reflect the compounding effect of earnings on reinvested dividends.

For the Investment Quality Bond Portfolio and the Municipal Bond Portfolio, from
time to time, the Trust may advertise the thirty-day "yield" and, with respect
to the Municipal Bond Portfolio, an "equivalent taxable yield." The yield of a
Portfolio refers to the income generated by an investment in the Portfolio over
the thirty-day period identified in the advertisement and is computed by
dividing the net investment income per share earned by the Portfolio during the
period by the net asset value per share on the last day of the period. This
income is "annualized"

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<PAGE>
by assuming that the amount of income is generated each month over a one-year
period and is compounded semi-annually. The annualized income is then shown as a
percentage of the net asset value.

EQUIVALENT TAXABLE YIELD

The equivalent taxable yield of the Municipal Bond Portfolio demonstrates the
yield on a taxable investment necessary to produce an after-tax yield equal to
the Portfolio's tax-exempt yield. It is calculated by increasing the yield shown
for the Portfolio, calculated as described above, to the extent necessary to
reflect the payment of specified tax rates. Thus, the equivalent taxable yield
always will exceed the Portfolio's yield.

TOTAL RETURN

From time to time, the Trust may advertise a Portfolio's (other than the U.S.
Government Money Market Portfolio's) "average annual total return" over various
periods of time. This total return figure shows the average percentage change in
value of an investment in the Portfolio from the beginning date of the measuring
period to the ending date of the measuring period. The figure reflects changes
in the price of the Portfolio's shares and assumes that any income, dividends
and/or capital gains distributions made by the Portfolio during the period are
reinvested in shares of the Portfolio. Figures will be given for recent one-,
five-and ten-year periods (if applicable) and may be given for other periods as
well (such as from commencement of the Portfolio's operations or on a
year-by-year basis). When considering "average" total return figures for periods
longer than one year, investors should note that Portfolio's annual total return
for any one year in the period might have been greater or less than the average
for the entire period. A Portfolio also may use "aggregate" total return figures
for various periods, representing the cumulative change in value of an
investment in the Portfolio for the specific period (again reflecting changes in
the Portfolio's share price and assuming reinvestment of dividends and
distributions). Aggregate total returns may be shown by means of schedules,
charts or graphs, and may indicate subtotals of the various components of total
return (that is, the change in value of initial investment, income dividends and
capital gains distributions).

It is important to note that yield and total return figures are based on
historical earnings and are not intended to indicate future performance. The
Statement of Additional Information describes the method used to determine a
Portfolio's yield and total return. Shareholders may make inquiries regarding a
Portfolio, including current yield quotations or total return figures, to any
Consulting Broker or the Trust at 800-807-FUND (800-807-3863).

In reports or other communications to shareholders or in advertising material, a
Portfolio may compare its performance with that of other mutual funds as listed
in the rankings prepared by Lipper Analytical Services, Inc., Morningstar or
similar independent services that monitor the performance of mutual funds or
with other appropriate indices of investment securities, such as the Lehman
Brothers Government/Corporate Bond Index, the S&P 500, the S&P/Barra Growth
Index and S&P/Barra Value Index, the EAFE Index and the Russell 2000 Index. The
performance information also may include evaluations of the Portfolios published
by nationally recognized ranking services and by financial publications that are
nationally recognized, such as BUSINESS WEEK, FORBES, FORTUNE, INSTITUTIONAL
INVESTOR, MORNINGSTAR, BARRON'S, INVESTOR'S BUSINESS DAILY, THE WALL STREET
JOURNAL, USA TODAY, THE NEW YORK TIMES and MONEY.

ADDITIONAL INFORMATION

The Trust was organized as an unincorporated business trust under the laws of
Delaware on April 8, 1994 and is a trust fund commonly known as a "business
trust."

The shareholders of the Portfolios are each entitled to a full vote for each
full share of beneficial interest (par value $.001 per share) held and
fractional votes for fractional shares. Shares of each

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<PAGE>
Portfolio are entitled to vote as a class to the extent required by the
provisions of the Investment Company Act of 1940 or as otherwise permitted by
the Trustees. When issued, shares of each Portfolio are fully paid and have no
preemptive, conversion or other subscription rights. The shares do not have
cumulative voting rights.

It is the intention of the Trust not to hold Annual Meetings of Shareholders.
The Trustees may call Special Meetings of Shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Master Trust
Agreement. Shareholders have certain rights, including the right to call a
meeting upon a vote of the Trust's outstanding shares for the purpose of voting
on the removal of one or more Trustees. The Trust may from time to time add
additional Portfolios to the Trust or with approval of the shareholders of an
existing Portfolio, if necessary, terminate one or more of the Portfolios.

SHAREHOLDER INQUIRIES

All inquiries regarding the Trust should be directed to Saratoga Capital
Management at 800-807-FUND (800-807-3863).

Saratoga Capital Management provided the initial capital for the Trust by
purchasing 100,000 shares of the U.S. Government Money Market Portfolio of the
Trust for $100,000 on August 19, 1994 (constituting 100% of the outstanding
shares of the Trust) and may be deemed to control the Trust until such time as
it owns less than 25% of the outstanding shares of the Trust.

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<PAGE>
APPENDIX

Set forth below is historical performance data relating to each of the Advisors.
See "Management of the Trust--Advisors" in the Prospectus. The data is provided
to illustrate past performance in managing portfolios with similar objectives as
measured against specified market indices. All returns quoted are time weighted
total rates of return which include the impact of capital appreciation as well
as the reinvestment of interest and dividends. Investors should not consider
this performance data as an indication of the future performance of any of the
Portfolios.

All information relies on data supplied by the Advisors or from statistical
services, reports or other sources believed by the Manager to be reliable.
However, such information has not been verified and is unaudited. Performance
figures for each Advisor do not reflect all of the Advisors' assets under
management and may not reflect the performance of all accounts managed by the
Advisors.

Performance figures reflected herein are after (net) of advisory fees, as
indicated, and net of transaction costs. The figures do not reflect the
assessment of any fees for the Consulting Programs or the operating expenses of
the Portfolios. See "Summary of Trust Expenses" in the Prospectus. The net
effect of the deduction of the operating expenses of the Portfolios and the fees
for the Consulting Programs on annualized performance, including the compounded
effect over time, varies by the size of the fee and the account's investment
performance, and may be substantial. The account sizes reflected in the
performance data below have been determined by each individual Advisor based on
the manner in which it prepares performance data generally. Investors should be
aware that because each Portfolio will elect to qualify as a regulated
investment company under the Internal Revenue Code, each Portfolio will not be
subject to taxes on its net investment income and capital gains to the extent
that the Portfolio so qualifies. See "Dividends, Distributions and Taxes" in the
Prospectus.

~ A-1 ~
<PAGE>
FOX ASSET MANAGEMENT
INVESTMENT QUALITY BOND MANAGEMENT
ANNUALIZED PERFORMANCE (After Fees):

<TABLE>
<CAPTION>
LEHMAN
INTERMEDIATE
GOVERNMENT/
FOX ASSET CORPORATE BOND
TIME PERIOD MANAGEMENT(1) INDEX(2)
- ------------- ---------------- ----------------
<S> <C> <C> <C>
7 Years 1987-1993 11.94% 8.93%
5 Years 1989-1993 11.67 10.46
3 Years 1991-1993 11.92 10.13
1 Year 1993 10.66 8.73
</TABLE>

1.Fox Asset Management's results are based on a dollar-weighted composite of
tax-exempt, fully discretionary accounts, with at least 3 months of management
experience and whose investment objectives are similar to that of the
Investment Quality Bond Portfolio and using techniques similar to those that
will be used for the Investment Quality Bond Portfolio. Prior to July 1, 1992,
accounts in the composite were given equal weight. The results are net of
advisory fees and commissions, and assume the reinvestment of interest. As of
December 31, 1993, Fox Asset Management had $1,125,000,000 under management,
$445,000,000 of which used investment objectives and techniques similar to
that of the Investment Quality Bond Portfolio. The composite results above
consist of all of the tax-exempt managed accounts which used this investment
strategy, except for those accounts which have not been managed for a full 3
months or which did not meet a certain minimum account size threshold of
$1,000,000 ($300,000 prior to July 1, 1992; no minimum threshold prior to
January 1, 1988).

2.The Lehman Intermediate Government/Corporate Bond Index is composed of the
bonds in the Lehman Government/ Corporate Bond Index that have maturities
between 1 and 9.99 years. The Lehman Government/Corporate Bond Index consists
of approximately 5,400 issues. The securities must be investment grade (BAA or
higher) with amounts outstanding in excess of $1 million and have at least one
year to maturity. Total return comprises price appreciation/ depreciation and
income as a percentage of the original investment. The indexes are rebalanced
monthly by market capitalization.

QUEST FOR VALUE ADVISORS
MUNICIPAL BOND MANAGEMENT
ANNUALIZED PERFORMANCE (After Fees):

<TABLE>
<CAPTION>
LEHMAN
BROTHERS
QUEST FOR MUNICIPAL
TIME PERIOD VALUE(1) BOND INDEX(2)
- ------------- ------------ -------------
<S> <C> <C> <C>
3 Years 1991-1993 12.06 % 11.07%
1 Year 1993 13.04 13.04
</TABLE>

1.The results set forth above are those of the Quest for Value National Tax
Exempt Fund, an open-end diversified management investment company managed by
Quest for Value Advisors whose investment objectives and techniques are
similar to that of the Municipal Bond Portfolio. The results are net of
advisory fees (0.5% of the average daily net assets of the Quest for Value
National Tax Exempt Fund), and commissions and assume the reinvestment of
dividends but do not reflect the deduction of an initial sales load. As of
December 31, 1993, Quest for Value Advisors had $5.2 billion under management,
$113 million of which comprise the Quest for Value National Tax Exempt Fund.

Quest for Value Advisors is a subsidiary of Oppenheimer Capital. As of
December 31, 1993, Quest for Value Advisors and Oppenheimer Capital had
combined assets under management of $29.1 billion.

2.The Lehman Brothers Municipal Bond Index consists of approximately 25,000
municipal bonds which are selected to be representative of the long-term,
investment grade tax-exempt bond market. The bonds selected for the index have
the following characteristics: a minimum credit rating of at least Baa; an
original issue of at least $50 million; at least $3 million of the issue
outstanding; issued within the last five years; and a maturity of at least one
year.

~ A-2 ~
<PAGE>
QUEST FOR VALUE ADVISORS
LARGE CAPITALIZATION VALUE MANAGEMENT
ANNUALIZED PERFORMANCE (After Fees):

<TABLE>
<CAPTION>
QUEST FOR S & P/
VALUE FUND, S & P BARRA
TIME PERIOD INC.(1) 500(2) VALUE(3)
- ------------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
10 Years 1984-1993 12.56 % 14.94% 15.30%
7 Years 1987-1993 11.52 13.45 13.19
5 Years 1989-1993 13.27 14.50 13.55
3 Years 1991-1993 18.60 15.63 17.12
1 Year 1993 6.56 9.99 18.60
</TABLE>

1.The results set forth above are those of the Class A shares of the Quest for
Value Fund, Inc., an open-end diversified management investment company
managed by Quest for Value Advisors whose investment objectives and techniques
are similar to that of the Large Capitalization Value Portfolio. The results
are net of advisory fees (1% of the average daily net assets of the Quest for
Value Fund, Inc.), and commissions and net of a 12b-1 fee (.50% of the average
daily net assets of Class A shares of the Quest for Value Fund, Inc.), and
assume the reinvestment of dividends but do not reflect the deduction of an
initial sales load. As of December 31, 1993, Quest for Value Advisors had $5.2
billion under management, $249 million of which comprise the Quest for Value
Fund, Inc.

Quest for Value Advisors is a subsidiary of Oppenheimer Capital. As of
December 31, 1993, Quest for Value Advisors and Oppenheimer Capital had
combined assets under management of $29.1 billion.

2.The Standard & Poors 500 is a capital weighted index representing the
aggregate market value of the common equity of 500 stocks primarily traded on
the NYSE. These 500 stocks are composed of 400 industrial, 40 utility, 40
financial, and 20 transportation companies. The weight of each stock in the
index is proportional to its price times its shares outstanding. The Standard
& Poors 500 is an unmanaged index and includes the reinvestment of all
dividends.

3.The S&P/Barra Value Index is constructed by dividing the stocks in the S&P 500
Index according to price-to-book ratios. This unmanaged Index contains stocks
with lower price-to-book ratios and is market capitalization weighted.

HARRIS BRETALL SULLIVAN
& SMITH
LARGE CAPITALIZATION GROWTH MANAGEMENT
ANNUALIZED PERFORMANCE (After Fees):

<TABLE>
<CAPTION>
S & P/
HARRIS S & P BARRA
TIME PERIOD BRETALL(1) 500(2) GROWTH(3)
- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
7 Years 1987-1993 14.45% 13.45% 13.38%
5 Years 1989-1993 14.61 14.50 15.10
3 Years 1991-1993 16.35 15.63 13.92
1 Year 1993 3.52 9.99 1.68
</TABLE>

1.Harris, Bretall Sullivan & Smith's results are based on a dollar-weighted
composite of tax-exempt, fully discretionary, institutional accounts, with at
least 3 months of management experience and whose investment objectives and
techniques are similar to that of the Large Capitalization Growth Portfolio.
The results are net of advisory fees and commissions and assume the
reinvestment of dividends. As of December 31, 1993, Harris, Bretall Sullivan &
Smith had $2.9 billion under management, $1.6 billion of which used investment
objectives and techniques similar to that of the Large Capitalization Growth
Portfolio. The composite results above consisted of all of the managed
accounts which used this investment strategy, except for those accounts which
have not been managed for a full 3 months.

3.The S&P/Barra Growth Index is constructed by dividing the stocks in the S&P
500 Index according to price-to-book ratios. This unmanaged Index contains
stocks with higher price-to-book ratios and is market capitalization weighted.

~ A-3 ~
<PAGE>
AXE-HOUGHTON ASSOCIATES
SMALL CAPITALIZATION MANAGEMENT
ANNUALIZED PERFORMANCE (After Fees):

<TABLE>
<CAPTION>
AXE-
HOUGHTON RUSSELL
TIME PERIOD ASSOCIATES(1),(2) 2000(3)
- ------------- ----------------- -----------
<S> <C> <C> <C>
10 Years 1984-1993 18.33 % 10.90%
7 Years 1987-1993 19.47 11.87
5 Years 1989-1993 26.69 13.98
3 Years 1991-1993 33.35 27.17
1 Year 1993 31.33 18.91
</TABLE>

1.The composite used in these performance statistics represents a
dollar-weighted aggregate of all discretionary, fee-paying accounts for
tax-exempt organizations managed by Axe-Houghton Associates, Inc. whose
investment objectives are similar to those of the Small Capitalization
Portfolio during the period August 1992 through December 31, 1993. Data for
periods prior to August 1992 reflect the performance of such accounts while
under the management of an affiliated firm which transferred such accounts to
Axe-Houghton Associates, Inc. in August 1992. The individuals with primary
responsibility for the management of such accounts prior to August 1992
continue to function in the same capacities at Axe-Houghton Associates, Inc.
As of December 31, 1993, Axe-Houghton Associates, Inc. had approximately
$1,300,000,000 under management, $70,000,000 of which had investment
objectives similar to those of the Small Capitalization Portfolio. The
composite, which contains fewer than five accounts, does not include any
accounts managed for less than a full calendar quarter. Axe-Houghton presently
does not manage assets of any investment companies registered under the
Investment Company Act of 1940 (the "Act") and qualified under Subchapter M of
the Internal Revenue Code of 1986, as amended.

2.Performance was calculated net of commissions and fees based on actual fees
billed during the periods, which ranged from .20% to 1.0% of the assets under
management, depending upon, among other things, the fee schedule in effect at
the time and the size of the account.

3.The Russell 2000 Index is comprised of the 2,000 smallest U.S. domiciled
publicly traded common stocks which are included in the Russell 3000 Index.
The common stocks included in the Russell 2000 Index represent approximately
10% of the U.S. equity market as measured by market capitalization. The
Russell 3000 Index is an unmanaged index of the 3,000 largest U.S. domiciled
publicly traded common stocks by market capitalization representing
approximately 98% of the U.S. publicly traded equity market. The Russell 2000
Index is an unmanaged index whose performance reflects reinvested dividends.

IVORY & SIME
INTERNATIONAL EQUITY MANAGEMENT
ANNUALIZED PERFORMANCE (After Fees):

<TABLE>
<CAPTION>
MORGAN STANLEY
CAPITAL
INTERNATIONAL
TIME PERIOD IVORY & SIME(1) INDEX EAFE(2)
- ------------- ----------------- ---------------
<S> <C> <C> <C>
3 Years 1991-1993 13.27% 8.17 %
1 Year 1993 29.88 31.58
</TABLE>

1.Ivory & Sime PLCs results are based on a dollar-weighted composite of fully
discretionary, separately managed accounts, with at least 6 months of
management experience and whose investment objectives and techniques are
similar to that of the International Equity Portfolio. The results are net of
advisory fees and commissions and assume the reinvestment of dividends. As of
December 31, 1993, Ivory & Sime PLC had $5,800,000,000 under management,
$672,000,000 of which used investment objectives and techniques similar to
that of the International Equity Portfolio. The composite results above
consisted of 100% of the managed accounts which used this investment strategy.
The only accounts using this investment strategy which are not included in the
composite were not managed for a full 6 months.

2.The Europe, Australia, Far East Index (EAFE) is a widely recognized index
prepared by Morgan Stanley Capital International. This unmanaged index
consists of non-U.S. companies which are listed on one of twenty foreign
markets and assumes the reinvestment of dividends. The Gross Domestic Product
(GDP) version of the index is used above.

~ A-4 ~
<PAGE>
PROSPECTUS

LOGO

TRUST MANAGER:
SARATOGA CAPITAL MANAGEMENT
TWO WORLD FINANCIAL CENTER
NEW YORK, NY 10080
(800) 807- FUND
(3863)

TRANSFER AGENT:
STATE STREET BANK AND TRUST COMPANY
BOSTON, MA

GENERAL DISTRIBUTOR:
QUEST FOR VALUE DISTRIBUTORS
P.O. BOX 3567
CHURCH STREET STATION
NEW YORK, NY 10277-1296
(800) 807- FUND
(3863)

- - 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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE STATEMENT OF
ADDITIONAL INFORMATION OR THE TRUST'S OFFICIAL SALES LITERATURE IN CONNECTION
WITH THE OFFERING OF SHARES, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY
PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
<PAGE>
The Saratoga Advantage Trust

Statement of Additional Information

INCOME PORTFOLIOS:

U. S. Government Money Market Portfolio

Investment Quality Bond Portfolio

Municipal Bond Portfolio

EQUITY PORTFOLIOS:

Large Capitalization Value Portfolio

Large Capitalization Growth Portfolio

Small Capitalization Portfolio

International Equity Portfolio

Two World Financial Center
New York, New York 10080-6116
800-807-FUND (800-807-3863).

This Statement of Additional Information (the "Additional Statement") is not
a Prospectus. Investors should understand that this Additional Statement
should be read in conjunction with the Trust's Prospectus dated August 25,
1994, as supplemented May 12, 1995 (the "Prospectus"), which may be obtained
by written request to Saratoga Capital Management at the address or phone
listed above.

The date of this Additional Statement is May 12, 1995

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INVESTMENT OF THE TRUST'S ASSETS ...................................... 3

INVESTMENT RESTRICTIONS ............................................... 14

PRINCIPAL HOLDERS OF SECURITIES AND
CONTROL PERSONS OF THE PORTFOLIOS ..................................... 15

TRUSTEES AND OFFICERS ................................................. 15

MANAGEMENT AND OTHER SERVICES ......................................... 19

INVESTMENT ADVISORY SERVICES .......................................... 21

DETERMINATION OF NET ASSET VALUE ...................................... 25

PORTFOLIO YIELD AND TOTAL RETURN INFORMATION .......................... 28

TAXES ................................................................. 34

ADDITIONAL INFORMATION ................................................ 36

APPENDIX A - RATINGS .................................................. A-1

FINANCIAL STATEMENTS .................................................. B-1
</TABLE>

<PAGE>

INVESTMENT OF THE TRUST'S ASSETS

The investment objective and policies of each Portfolio are described in
the Prospectus. A further description of each Portfolio's investments and
investment methods appears below.

COLLATERALIZED MORTGAGE OBLIGATIONS. In addition to securities issued by
Ginnie Mae, Fannie Mae and Freddie Mac, another type of mortgage-backed
security is the "collateralized mortgage obligation," which is secured by
groups of individual mortgages but is similar to a conventional bond where
the investor looks only to the issuer for payment of principal and interest.
Although the obligations are recourse obligations to the issuer, the issuer
typically has no significant assets, other than assets pledged as collateral
for the obligations, and the market value of the collateral, which is
sensitive to interest rate movements, may affect the market value of the
obligations. A public market for a particular collateralized mortgage
obligation may or may not develop and thus, there can be no guarantee of
liquidity of an investment in such obligations.

INFORMATION ON TIME DEPOSITS AND VARIABLE RATE NOTES. The Portfolios may
invest in fixed time deposits, whether or not subject to withdrawal
penalties; however, investment in such deposits which are subject to
withdrawal penalties, other than overnight deposits, are subject to the 15%
limit on illiquid investments set forth in the Prospectus for each Portfolio.

The commercial paper obligations which the Portfolios may buy are
unsecured and may include variable rate notes. The nature and terms of a
variable rate note (i.e., a "Master Note") permit a Portfolio to invest
fluctuating amounts at varying rates of interest pursuant to a direct
arrangement between a Portfolio as lender, and the issuer, as borrower. It
permits daily changes in the amounts borrowed. The Portfolio has the right
at any time to increase, up to the full amount stated in the note agreement,
or to decrease the amount outstanding under the note. The issuer may prepay
at any time and without penalty any part of or the full amount of the note.
The note may or may not be backed by one or more bank letters of credit.
Because these notes are direct lending arrangements between the Portfolio and
the issuer, it is not generally contemplated that they will be traded;
moreover, there is currently no secondary market for them. Except as
specifically provided in the Prospectus there is no limitation on the type of
issuer from whom these notes will be purchased; however, in connection with
such purchase and on an ongoing basis, a Portfolio's Advisor will consider
the earning power, cash flow and other liquidity ratios of the issuer, and
its ability to pay principal and interest on demand, including a situation in
which all holders of such notes made demand simultaneously. A Portfolio will
not invest more than 5% of its total assets in variable rate notes. Variable
rate notes are subject to the Portfolio's investment restriction on illiquid
securities unless such notes can be put back to the issuer on demand within
seven days.

CONVERTIBLE SECURITIES. As specified in the Prospectus, certain of the
Portfolios may invest in fixed-income securities which are convertible into
common stock. Convertible securities rank senior to common stocks in a
corporation's capital structure and, therefore, entail less risk than the
corporation's common stock. The value of a convertible security is a
function of its "investment value" (its value as if

<PAGE>

it did not have a conversion privilege), and its "conversion value" (the
security's worth if it were to be exchanged for the underlying security, at
market value, pursuant to its conversion privilege).

To the extent that a convertible security's investment value is greater
than its conversion value, its price will be primarily a reflection of such
investment value and its price will be likely to increase when interest rates
fall and decrease when interest rates rise, as with a fixed-income security
(the credit standing of the issuer and other factors may also have an effect
on the convertible security's value). If the conversion value exceeds the
investment value, the price of the convertible security will rise above its
investment value and, in addition, the convertible security will sell at some
premium over its conversion value. (This premium represents the price
investors are willing to pay for the privilege of purchasing a fixed-income
security with a possibility of capital appreciation due to the conversion
privilege.) At such times the price of the convertible security will tend
to fluctuate directly with the price of the underlying equity security.
Convertible securities may be purchased by the Portfolios at varying price
levels above their investment values and/or their conversion values in
keeping with the Portfolios' objectives.

INSURED BANK OBLIGATIONS. The Federal Deposit Insurance Corporation
("FDIC") insures the deposits of federally insured banks and savings and loan
associations (collectively referred to as "banks") up to $100,000. A
Portfolio may, within the limits set forth in the Prospectus, purchase bank
obligations which are fully insured as to principal by the FDIC. Currently,
to remain fully insured as to principal, these investments must be limited to
$100,000 per bank; if the principal amount and accrued interest together
exceed $100,000, the excess principal and accrued interest will not be
insured. Insured bank obligations may have limited marketability. Unless the
Board of Trustees determines that a readily available market exists for such
obligations, a Portfolio will treat such obligations as subject to the 15%
limit for illiquid investments set forth in the Prospectus unless such
obligations are payable at principal amount plus accrued interest on demand
or within seven days after demand.

WHEN-ISSUED SECURITIES. All Portfolios may take advantage of offerings of
eligible portfolio securities on a "when-issued" basis, i.e., delivery of and
payment for such securities take place sometime after the transaction date on
terms established on such date. Normally, settlement on U.S. Government
securities takes place within ten days. A Portfolio only will make
when-issued commitments on eligible securities with the intention of actually
acquiring the securities. If a Portfolio chooses to dispose of the right to
acquire a when-issued security (prior to its acquisition), it could, as with
the disposition of any other Portfolio obligation, incur a gain or loss due
to market fluctuation. No when-issued commitments will be made if, as a
result, more than 15% of the net assets of a Portfolio would be so committed.

HEDGING. Certain Portfolios may use certain Hedging Instruments as
described, and subject to the restrictions stated, in the Prospectus. To
engage in short hedging, a Portfolio would: (i) sell financial futures, (ii)
purchase puts on such futures or on individual securities held by it
("Portfolio securities") or securities indexes; or (iii) write calls on
Portfolio securities or on financial futures or securities indexes. To
engage in long hedging, a Portfolio would: (i) purchase financial futures, or
(ii) purchase calls or write puts on such futures or on Portfolio securities
or securities indexes. Additional information about the Hedging Instruments
a Portfolio may use is provided below.

<PAGE>

FINANCIAL FUTURES. No price is paid or received upon the purchase of a
financial future. Upon entering into a futures transaction, a Portfolio will
be required to deposit an initial margin payment equal to a specified
percentage of the contract value. Initial margin payments will be deposited
with a Portfolio's custodian bank in an account registered in the futures
commission merchant's name; however the futures commission merchant can gain
access to that account only under specified conditions. As the future is
marked to market to reflect changes in its market value, subsequent payments,
called variation margin, will be made to or from the futures commission
merchant on a daily basis. Prior to expiration of the future, if the
Portfolio elects to close out its position by taking an opposite position, a
final determination of variation margin is made, additional cash is required
to be paid by or released to the Portfolio, and any loss or gain is realized
for tax purposes. Although financial futures by their terms call for the
actual delivery or acquisition of the specified debt security, in most cases
the obligation is fulfilled by closing out the position. All futures
transactions are effected through a clearing house associated with the
exchange on which the contracts are traded. At present, no Portfolio intends
to enter into financial futures and options on such futures if after any such
purchase, the sum of initial margin deposits on futures and premiums paid on
futures options would exceed 5% of a Portfolio's total assets. This
limitation is not a fundamental policy.

ADDITIONAL INFORMATION ON PUTS AND CALLS. When a Portfolio writes a call,
it receives a premium and agrees to sell the callable securities to a
purchaser of a corresponding call during the call period (usually not more
than 9 months) at a fixed exercise price (which may differ from the market
price of the underlying securities) regardless of market price changes during
the call period. If the call is exercised, the Portfolio forgoes any
possible profit from an increase in market price over the exercise price. A
Portfolio may, in the case of listed options, purchase calls in "closing
purchase transactions" to terminate a call obligation. A profit or loss will
be realized, depending upon whether the net of the amount of option
transaction costs and the premium received on the call written is more or
less than the price of the call subsequently purchased. A profit may be
realized if the call lapses unexercised, because the Portfolio retains the
underlying security and the premium received. Sixty percent of any such
profits are considered long-term gains and forty percent are considered
short-term gains for tax purposes. If, due to a lack of a market, a
Portfolio could not effect a closing purchase transaction, it would have to
hold the callable securities until the call lapsed or was exercised. A
Portfolio's Custodian, or a securities depository acting for the Custodian,
will act as the Portfolio's escrow agent, through the facilities of the
Options Clearing Corporation ("OCC") in connection with listed calls, as to
the securities on which the Portfolio has written calls, or as to other
acceptable escrow securities, so that no margin will be required for such
transactions. OCC will release the securities on the expiration of the calls
or upon the Portfolio's entering into a closing purchase transaction.

When a Portfolio purchases a call (other than in a closing purchase
transaction), it pays a premium and has the right to buy the underlying
investment from a seller of a corresponding call on the same investment
during the call period (or on a certain date for OTC options) at a fixed
exercise price. A Portfolio benefits only if the call is sold at a profit or
if, during the call period, the market price of the underlying investment is
above the call price plus the transaction costs and the premium paid for the
call and the call is exercised. If a call is not exercised or sold (whether
or not at a profit), it will become worthless at its expiration date and the
Portfolio will lose its premium payment and the right to purchase the
underlying investment.

<PAGE>

With OTC options, such variables as expiration date, exercise price and
premium will be agreed upon between the Portfolio and the transacting dealer,
without the intermediation of a third party such as the OCC. If a
transacting dealer fails to make delivery on the U.S. Government securities
underlying an option it has written, in accordance with the terms of that
option as written, a Portfolio could lose the premium paid for the option as
well as any anticipated benefit of the transaction. The Portfolios will
engage in OTC option transactions only with primary U.S. Government
securities dealers recognized by the Federal Reserve Bank of New York. In
the event that any OTC option transaction is not subject to a forward price
at which the Portfolio has the absolute right to repurchase the OTC option
which it has sold, the value of the OTC option purchased and of the Portfolio
assets used to "cover" the OTC option will be considered "illiquid
securities" and will be subject to the 15% limit on illiquid securities. The
"formula" on which the forward price will be based may vary among contracts
with different primary dealers, but it will be based on a multiple of the
premium received by the Portfolio for writing the option plus the amount, if
any, of the option's intrinsic value, i.e., current market value of the
underlying securities minus the option's strike price.

A put option gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying investment at the exercise price during the
option period (or on a certain date for OTC options). The investment
characteristics of writing a put covered by segregated liquid assets equal to
the exercise price of the put are similar to those of writing a covered call.
The premium paid on a put written by a Portfolio represents a profit, as
long as the price of the underlying investment remains above the exercise
price. However, a Portfolio has also assumed the obligation during the
option period to buy the underlying investment from the buyer of the put at
the exercise price, even though the value of the investment may fall below
the exercise price. If the put expires unexercised, the Portfolio (as
writer) realizes a gain in the amount of the premium. If the put is
exercised, the Portfolio must fulfill its obligation to purchase the
underlying investment at the exercise price, which will usually exceed the
market value of the investment at that time. In that case, the Portfolio may
incur a loss upon disposition, equal to the sum of the sale price of the
underlying investment and the premium received minus the sum of the exercise
price and any transaction costs incurred.

When writing put options, to secure its obligation to pay for the
underlying security, a Portfolio will maintain in a segregated account at its
Custodian liquid assets with a value equal to at least the exercise price of
the option. As a result, the Portfolio forgoes the opportunity of trading
the segregated assets or writing calls against those assets. As long as the
Portfolio's obligation as a put writer continues, the Portfolio may be
assigned an exercise notice by the broker-dealer through whom such option was
sold, requiring the Portfolio to purchase the underlying security at the
exercise price. A Portfolio has no control over when it may be required to
purchase the underlying security, since it may be assigned an exercise notice
at any time prior to the termination of its obligation as the writer of the
put. This obligation terminates upon the earlier of the expiration of the
put, or the consummation by the Portfolio of a closing purchase transaction
by purchasing a put of the same series as that previously sold. Once a
Portfolio has been assigned an exercise notice, it is thereafter not allowed
to effect a closing purchase transaction.

A Portfolio may effect a closing purchase transaction to realize a profit
on an outstanding put option it has written or to prevent an underlying
security from being put to it. Furthermore, effecting

<PAGE>

such a closing purchase transaction will permit the Portfolio to write
another put option to the extent that the exercise price thereof is secured
by the deposited assets, or to utilize the proceeds from the sale of such
assets for other investments by the Portfolio. The Portfolio will realize a
profit or loss from a closing purchase transaction if the cost of the
transaction is less or more than the premium received from writing the option.

When a Portfolio purchases a put, it pays a premium and has the right to
sell the underlying investment at a fixed exercise price to a seller of a
corresponding put on the same investment during the put period if it is a
listed option (or on a certain date if it is an OTC option). Buying a put on
securities or futures held by it permits a Portfolio to attempt to protect
itself during the put period against a decline in the value of the underlying
investment below the exercise price. In the event of a decline in the
market, the Portfolio could exercise, or sell the put option at a profit that
would offset some or all of its loss on the Portfolio securities. If the
market price of the underlying investment is above the exercise price and as
a result, the put is not exercised, the put will become worthless at its
expiration date and the purchasing Portfolio will lose the premium paid and
the right to sell the underlying securities; the put may, however, be sold
prior to expiration (whether or not at a profit). Purchasing a put on
futures or securities not held by it permits a Portfolio to protect its
Portfolio securities against a decline in the market to the extent that the
prices of the future or securities underlying the put move in a similar
pattern to the prices of the securities in the Portfolio's portfolio.

An option position may be closed out only on a market which provides
secondary trading for options of the same series, and there is no assurance
that a liquid secondary market will exist for any particular option. A
Portfolio's option activities may affect its turnover rate and brokerage
commissions. The exercise of calls written by a Portfolio may cause the
Portfolio to sell from its Portfolio securities to cover the call, thus
increasing its turnover rate in a manner beyond the Portfolio's control. The
exercise of puts on securities or futures will increase portfolio turnover.
Although such exercise is within the Portfolio's control, holding a put might
cause a Portfolio to sell the underlying investment for reasons which would
not exist in the absence of the put. A Portfolio will pay a brokerage
commission every time it purchases or sells a put or a call or purchases or
sells a related investment in connection with the exercise of a put or a call.

REGULATORY ASPECTS OF HEDGING INSTRUMENTS. Transactions in options by a
Portfolio are subject to limitations established (and changed from time to
time) by each of the exchanges governing the maximum number of options which
may be written or held by a single investor or group of investors acting in
concert, regardless of whether the options were written or purchased on the
same or different exchanges or are held in one or more accounts or through
one or more different exchanges or through one or more brokers. Thus, the
number of options which a Portfolio may write or hold may be affected by
options written or held by other investment companies and discretionary
accounts of the Portfolio's Advisor, including other investment companies
having the same or an affiliated investment adviser. An exchange may order
the liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.

Due to requirements under the Act when a Portfolio sells a future, it will
maintain in a segregated account or accounts with its custodian bank, cash or
readily marketable short-term (ma-
7

<PAGE>

turing in one year or less) debt instruments in an amount equal to the market
value of such future, less the margin deposit applicable to it.

The Trust and each Portfolio must operate within certain restrictions as
to its positions in futures and options thereon under a rule ("CFTC Rule")
adopted by the Commodity Futures Trading Commission ("CFTC") under the
Commodity Exchange Act (the "CEA"), which excludes the Trust and each
Portfolio from registration with the CFTC as a "commodity pool operator" (as
defined under the CEA). Under those restrictions, a Portfolio may not enter
into any financial futures or options contract unless such transactions are
for bona fide hedging purposes, or for other purposes only if the aggregate
initial margins and premiums required to establish such non-hedging positions
would not exceed 5% of the liquidation value of its assets. Each Portfolio
may use futures and options thereon for bona fide hedging or for other
purposes within the meaning and intent of the applicable provisions of the
CEA.

TAX ASPECTS OF HEDGING INSTRUMENTS. Each Portfolio in the Trust intends
to qualify as a "regulated investment company" under the Internal Revenue
Code. One of the tests for such qualification is that at least 90% of its
gross income must be derived from dividends, interest and gains from the sale
or other disposition of securities. Another test is that less than 30% of
its gross income must be derived from gains realized on the sale of
securities held for less than three months. In connection with the 90% test,
recent amendments to the Internal Revenue Code specify that income from
options, futures and other gains derived from investments in securities is
qualifying income under the 90% test. Due to the 30% limitation, each
Portfolio will limit the extent to which it engages in the following
activities, but will not be precluded from them: (i) selling investments,
including futures, held for less than three months, whether or not they were
purchased on the exercise of a call held by the Portfolio; (ii) writing or
purchasing calls on investments held less than three months; (iii) purchasing
calls or puts which expire in less than three months; (iv) effecting closing
transactions with respect to calls or puts purchased less than three months
previously; and (v) exercising puts or calls held by a Portfolio for less
than three months.

Regulated futures contracts, options on broad-based stock indices, options
on stock index futures, certain other futures contracts and options thereon
(collectively, "Section 1256 contracts") held by a Portfolio at the end of
each taxable year may be required to be "marked to market" for federal income
tax purposes (that is, treated as having been sold at that time at market
value). Any unrealized gain or loss taxed pursuant to this rule will be
added to realized gains or losses recognized on Section 1256 contracts sold
by a Portfolio during the year, and the resulting gain or loss will be deemed
to consist of 60% long-term capital gain or loss and 40% short-term capital
gain or loss. A Portfolio may elect to exclude certain transactions from the
mark-to-market rule although doing so may have the effect of increasing the
relative proportion of short-term capital gain (taxable as ordinary income)
and/or increasing the amount of dividends that must be distributed annually
to meet income distribution requirements, currently at 98%.

It should also be noted that under certain circumstances, the acquisition
of positions in hedging instruments may result in the elimination or
suspension of the holding period for tax purposes of other assets held by a
Portfolio with the result that the relative proportion of short-term capital
gains (taxable
8

<PAGE>

as ordinary income) could increase and the amount of dividends qualifying for
the dividends received deduction could decrease.

POSSIBLE RISK FACTORS IN HEDGING. In addition to the risks with respect
to futures and options discussed in the Prospectus and above, there is a risk
in selling futures that the prices of futures will correlate imperfectly with
the behavior of the cash (i.e., market value) prices of a Portfolio's
securities. The ordinary spreads between prices in the cash and futures
markets are subject to distortions due to differences in the natures of those
markets. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship between
the cash and futures markets. Second, the liquidity of the futures market
depends on participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus producing
distortion. Third, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements
in the securities market. Therefore, increased participation by speculators
in the futures market may cause temporary price distortions.

When a Portfolio uses appropriate Hedging Instruments to establish a
position in the market as a temporary substitute for the purchase of
individual securities (long hedging) by buying futures and/or calls on such
futures or on a particular security, it is possible that the market may
decline. If the Portfolio then concludes not to invest in such securities at
that time because of concerns as to possible further market decline or for
other reasons, it will realize a loss on the Hedging Instruments that is not
offset by a reduction in the price of the securities purchased.

TYPE OF SECURITIES IN WHICH THE INTERNATIONAL EQUITY PORTFOLIO MAY INVEST.
As discussed in the Prospectus, the International Equity Portfolio seeks to
achieve its investment objectives through investment primarily in equity
securities. It is expected that the Portfolio will invest principally in
American Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs")
and European Depositary Receipts ("EDRs") although it also may invest
directly in equity securities. Generally, ADRs and GDRs in registered form
are U.S. dollar denominated securities designed for use in the U.S.
securities markets, which represent and may be converted into the underlying
foreign security. EDRs are typically issued in bearer form and are designed
for use in the European securities markets. Issuers of the stock of ADRs not
sponsored by such underlying issuers are not obligated to disclose material
information in the United States and, therefore, there may not be a
correlation between such information and the market value of such ADRs. The
Portfolio also may purchase shares of investment companies or trusts which
invest principally in securities in which the Portfolio is authorized to
invest. The return on the Portfolio's investments in investment companies
will be reduced by the operating expenses, including investment advisory and
administrative fees, of such companies. The Portfolio's investment in an
investment company may require the payment of a premium above the net asset
value of the investment company's shares, and the market price of the
investment company thereafter may decline without any change in the value of
the investment company's assets. The Portfolio will not invest in any
investment company or trust unless it is believed that the potential benefits
of such investment are sufficient to warrant the payment of any such premium.
Under the Act, the Portfolio may not invest more than 10% of its assets in
investment companies or more than 5% of its total assets

<PAGE>

in the securities of any one investment company, nor may it own more than 3%
of the outstanding voting securities of any such company. To the extent the
Portfolio invests in securities in bearer form it may be more difficult to
recover securities in the event such securities are lost or stolen.

If the Portfolio invests in an entity which is classified as a "passive
foreign investment company" ("PFIC") for U.S. tax purposes, the application
of certain technical tax provisions applying to such companies could result
in the imposition of federal income tax with respect to such investments at
the Portfolio level which could not be eliminated by distributions to
shareholders. The U.S. Treasury has issued proposed regulations which
establish a mark-to-market regime that allows a regulated investment company
("RIC") to avoid most, if not all, of the difficulties posed by the PFIC
rules. In any event, it is not anticipated that any taxes on the Portfolio
with respect to investments in PFIC's would be significant.

PRIVATE PLACEMENTS. The Portfolios may invest in securities which are
subject to restriction on resale because they have not been registered under
the Securities Act of 1933, or which are otherwise not readily marketable.
These securities are generally referred to as private placements or
restricted securities. Limitations on the resale of such securities may have
an adverse effect on their marketability, and may prevent the Portfolios from
disposing of them promptly at reasonable prices. A Portfolio may have to
bear the expense of registering such securities for resale and risk the
substantive delays in effecting such registration. However, as described in
the Prospectus, the Portfolios may avail themselves of recently adopted
regulatory changes to the Securities Act of 1933 ("Rule 144A") which permit
the Portfolios to purchase securities which have been privately placed and
resell such securities to certain qualified institutional buyers without
restriction. Since it is not possible to predict with assurance exactly how
this market for restricted securities sold and offered under Rule 144A will
develop, the Board of Trustees will carefully monitor the Portfolios'
investments in these securities, focusing on such important factors, among
others, as valuation, liquidity and availability of information. This
investment practice could have the effect of increasing the level of
illiquidity in the Portfolios to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these restricted
securities.

Securities of foreign issuers often have not been registered in the U.S.
Accordingly, if a Portfolio wishes to sell unregistered foreign securities in
the U.S. it will avail itself of Rule 144A.

FOREIGN CURRENCY TRANSACTIONS. When a Portfolio agrees to purchase or
sell a security in a foreign market it will generally be obligated to pay or
entitled to receive a specified amount of foreign currency and will then
generally convert dollars to that currency in the case of a purchase or that
currency to dollars in the case of a sale. The Portfolios will conduct their
foreign currency exchange transactions either on a spot basis (i.e., cash) at
the spot rate prevailing in the foreign currency exchange market, or through
entering into forward foreign currency contracts ("forward contracts") to
purchase or sell foreign currencies. A Portfolio may enter into forward
contracts in order to lock in the U.S. dollar amount it must pay or expects
to receive for a security it has agreed to buy or sell. A Portfolio may also
enter into forward currency contracts with respect to the Portfolio's
portfolio positions when it believes that a particular currency may change
unfavorably compared to the U.S. dollar. A forward 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 agreed upon by
the parties,

<PAGE>

at a price set at the time of the contract. These contracts are traded in
the interbank market conducted directly between currency traders (usually
large, commercial banks) and their customers. A forward contract generally
has no deposit requirement, and no commissions are charged at any stage for
trades.

A Portfolio's custodian bank will place cash, U.S. Government securities
or debt securities in a separate account of the Portfolio in an amount equal
to the value of the Portfolio's total assets committed to the consummation of
any such contract in such account and if the value of the securities placed
in the separate account declines, additional cash or securities will be
placed in the account on a daily basis so that the value of the account will
equal the amount of the Portfolio's commitments with respect to such forward
contracts. If, rather than cash, portfolio securities are used to secure
such a forward contract, on the settlement of the forward contract for
delivery by the Portfolio of a foreign currency, the Portfolio may either
sell the portfolio security and make delivery of the foreign currency, or it
may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an "offsetting" contract obligating it to
purchase, on the same settlement date, the same amount of foreign currency.

The Portfolios may effect currency hedging transactions in foreign
currency futures contracts, exchange-listed and over-the-counter call and put
options on foreign currency futures contracts and on foreign currencies. The
use of forward futures or options contracts will not eliminate fluctuations
in the underlying prices of the securities which the Portfolios own or intend
to purchase or sell. They simply establish a rate of exchange for a future
point in time. Additionally, while these techniques tend to minimize the
risk of loss due to a decline in the value of the hedged currency, their use
tends to limit any potential gain which might result from the increase in
value of such currency. In addition, such transactions involve costs and may
result in losses.

Although each Portfolio values its assets daily in terms of U.S. dollars,
it does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. It will, however, do so from time to time, and
investors should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize
a profit based on the spread between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to the Portfolio at one rate, while offering a lesser rate of
exchange should the Portfolio desire to resell that currency to the dealer.

Under Internal Revenue Code Section 988, special rules are provided for
certain transactions in a currency other than the taxpayer's functional
currency (i.e., unless certain special rules apply, currencies other than the
U.S. dollar). In general, foreign currency gains or losses from forward
contracts, futures contracts that are not "regulated futures contracts", and
from unlisted options will be treated as ordinary income or loss under Code
Section 988. Also, certain foreign exchange gains or losses derived with
respect to fixed-income securities are also subject to Section 988 treatment.
In general, therefore, Code Section 988 gains or losses will increase or
decrease the amount of the Portfolio's investment company taxable income
available to be distributed to shareholders as ordinary income, rather than
increasing or decreasing the amount of the Portfolio's net capital gain.
Additionally, if Code Section 988 losses exceed other investment company
taxable income during a taxable year, a Portfolio would not be able to make
any ordinary income distributions.

<PAGE>

FOREIGN CUSTODY. Rules adopted under the Act permit each Portfolio to
maintain its securities and cash in the custody of certain eligible banks and
securities depositories. The Portfolios' portfolios of securities of issuers
located outside of the U.S. will be held by their sub-custodians who will be
approved by the Trustees in accordance with such Rules. Such determination
will be made pursuant to such Rules following a consideration of a number of
factors, including, but not limited to, the reliability and financial
stability of the institution; the ability of the institution to perform
custodial services for the Trust; the reputation of the institution in its
national market; the political and economic stability of the country in which
the institution is located; and the risks of potential nationalization or
expropriation of the Portfolio's assets. However, no assurances can be given
that the Trustees' appraisal of the risks in connection with foreign
custodial arrangements will always be correct or that expropriation,
nationalization, freezes (including currency blockage), or confiscations of
assets that would affect assets of the Portfolios will not occur, and
shareholders bear the risk of losses arising from those or other similar
events.

ADDITIONAL RISKS. Securities in which the Portfolios may invest are
subject to the provisions of bankruptcy, insolvency and other laws affecting
the rights and remedies of creditors and shareholders, such as the federal
Bankruptcy Code, and laws, if any, which may be enacted by Congress or the
state legislatures extending the time for payment of principal or interest,
or both or imposing other constraints upon enforcement of such obligations.

RATINGS OF CORPORATE AND MUNICIPAL DEBT OBLIGATIONS. Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P") and Fitch
Municipal Division ("Fitch") are private services that provide ratings of the
credit quality of debt obligations, including issues of corporate and
municipal securities. A description of the range of ratings assigned to
corporate and municipal securities by Moody's, S&P and Fitch is included in
Appendix A to this Statement of Additional Information. The Investment
Quality Bond Portfolio and the Municipal Bond Portfolio may use these ratings
in determining whether to purchase, sell or hold a security. These ratings
represent Moody's, S&P's and Fitch's opinions as to the quality of the
securities that they undertake to rate. It should be emphasized, however,
that ratings are general and are not absolute standards of quality.
Consequently, securities with the same maturity, interest rate and rating may
have different market prices. Subsequent to its purchase by the Investment
Quality Bond Portfolio or the Municipal Bond Portfolio, an issue of
securities may cease to be rated or its rating may be reduced below the
minimum rating required for purchase by the Portfolio. The advisers to the
Municipal Bond Portfolio and the Investment Quality Bond Portfolio will
consider such an event in determining whether the Portfolio should continue
to hold the obligation but will dispose of such securities in order to limit
the holdings of debt securities rated below investment grade to less than 5%
of the assets of the respective Portfolio.

Opinions relating to the validity of municipal securities and to the
exemption of interest thereon from federal income tax (and also, when
available, from the federal alternative minimum tax) are rendered by bond
counsel to the issuing authorities at the time of issuance. Neither the
Municipal Bond Portfolio nor the Portfolio's Advisor will review the
proceedings relating to the issuance of municipal securities or the basis for
such opinions. An issuer's obligations under its municipal securities are
subject to the provisions of bankruptcy, insolvency and other laws affecting
the rights and remedies of creditors (such as the federal bankruptcy laws)
and federal, state and local laws that may be enacted to extend the time for
payment of principal or interest, or both, or to impose other constraints
upon
12

<PAGE>

enforcement of such obligations. There also is the possibility that, as a
result of litigation or other conditions, the power or ability of issuers to
meet their obligations for the payment of principal of and interest on their
municipal securities may be materially adversely affected.

MUNICIPAL NOTES. For liquidity purposes, pending investment in municipal
bonds, or on a temporary or defensive basis due to market conditions, the
Municipal Bond Portfolio may invest in tax-exempt short-term debt obligations
(maturing in one year or less). These obligations, known as "municipal
notes," include tax, revenue and bond anticipation notes, construction loan
notes and tax-exempt commercial paper which are issued to obtain funds for
various public purposes; the interest from these Notes is also exempt from
federal income taxes. The Municipal Bond Portfolio will limit its
investments in municipal notes to those which are rated, at the time of
purchase, within the two highest grades assigned by Moody's or the two
highest grades assigned by S&P or Fitch, or if unrated, which are of
comparable quality in the opinion of the Advisor.

MUNICIPAL BONDS. Municipal bonds include debt obligations of a state, a
territory, or a possession of the United States, or any political subdivision
thereof (e.g., counties, cities, towns, villages, districts, authorities) or
the District of Columbia issued to obtain funds for various purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation,
schools, streets and water and sewer works. Other public purposes for which
municipal bonds may be issued include the refunding of outstanding
obligations, obtaining funds for general operating expenses and the obtaining
of funds to loan to public or private institutions for the construction of
facilities such as education, hospital and housing facilities. In addition,
certain types of private activity bonds may be issued by or on behalf of
public authorities to obtain funds to provide privately-operated housing
facilities, sports facilities, convention or trade show facilities, airport,
mass transit, port or parking facilities, air or water pollution control
facilities and certain local facilities for water supply, gas, electricity or
sewage or solid waste disposal. Such obligations are included within the
term municipal bonds if the interest paid thereon is at the time of issuance,
in the opinion of the issuer's bond counsel, exempt from federal income tax.
The current federal tax laws, however, substantially limit the amount of such
obligations that can be issued in each state.

The two principal classifications of municipal bonds are "general
obligation" and limited obligation or "revenue" bonds. General obligation
bonds are secured by the issuer's pledge of its faith, credit and taxing
power for the payment of principal and interest, whereas revenue bonds are
payable only from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise tax or
other specific revenue source. Private activity bonds that are municipal
bonds are in most cases revenue bonds and do not generally constitute the
pledge of the credit of the issuer of such bonds. The credit quality of
private activity revenue bonds is usually directly related to the credit
standing of the industrial user involved. There are, in addition, a variety
of hybrid and special types of municipal obligations as well as numerous
differences in the collateral security of municipal bonds, both within and
between the two principal classifications described above.

<PAGE>

INVESTMENT RESTRICTIONS

The Trust's significant investment restrictions applicable to each
Portfolio are described in the Prospectus. The following are also
fundamental policies and, together with the restrictions and other
fundamental policies described in the Prospectus, cannot be changed without
the vote of a majority of the outstanding voting securities of that
Portfolio, as defined in the Act. Such a majority is defined as the lesser
of (a) 67% or more of the shares of the Portfolio present at a meeting of
shareholders of the Trust, if the holders of more than 50% of the outstanding
shares of the Portfolio are present or represented by proxy or (b) more than
50% of the outstanding shares of the Portfolio. For purposes of the
following restrictions and those contained in the Prospectus: (i) all
percentage limitations apply immediately after a purchase or initial
investment; and (ii) any subsequent change in any applicable percentage
resulting from market fluctuations or other changes in the amount of total
assets does not require elimination of any security from a Portfolio.

Under these additional restrictions, each Portfolio cannot: (a) Invest in
physical commodities or physical commodity contracts or speculate in
financial commodity contracts, but all Portfolios are authorized to purchase
and sell financial futures contracts and options on such futures contracts
exclusively for hedging and other non-speculative purposes to the extent
specified in the Prospectus; (b) Invest in real estate or real estate limited
partnerships (direct participation programs); however, each Portfolio may
purchase securities of issuers which engage in real estate operations and
securities which are secured by real estate or interests therein; (c)
Purchase securities on margin (except for such short-term loans as are
necessary for the clearance of purchases of Portfolio securities) or make
short sales of securities except "against the box" (collateral arrangements
in connection with transactions in futures and options are not deemed to be
margin transactions); (d) Underwrite securities of other companies except in
so far as the Portfolio may be deemed to be an underwriter under the
Securities Act of 1933 in disposing of a security; (e) Invest more than 10%
of its assets in securities of other investment companies or more than 5% of
its assets in the securities of one investment company or more than 3% of the
outstanding voting securities of such company, except in connection with a
merger, consolidation, reorganization or acquisition of assets; (f) Invest in
interests in oil, gas or other mineral exploration or development programs or
leases; (g) Purchase warrants if as a result the Portfolio would then have
either more than 5% of its total assets (determined at the time of
investment) invested in warrants or more than 2% of its total assets invested
in warrants not listed on the New York or American Stock Exchange; (h) Invest
in securities of any issuer if any officer or trustee of the Trust or any
officer or director of any of the Advisers owns more than 1/2 of 1% of the
outstanding securities of such issuer, and such officers, trustees and
directors who own more than 1/2 of l% own in the aggregate more than 5% of
the outstanding securities of such issuer; (i) Pledge its assets or assign or
otherwise encumber its assets in excess of 33 1/3% of its net assets (taken
at market value at the time of pledging) and then only to secure borrowings
effected within the limitations set forth in the Prospectus; (j) Invest for
the purpose of exercising control or management of another company; (k) Issue
senior securities as defined in the Act except insofar as the Portfolio may
be deemed to have issued a senior security by reason of: (a) entering into
any repurchase agreement; (b) borrowing money in accordance with restrictions
described above; or (c) lending Portfolio securities; and (l) make loans to
any person or individual except that Portfolio securities may be loaned by
all Portfolios within the limitations set forth in the Prospectus.

<PAGE>

In addition each Portfolio may not with respect to 75% of its assets,
invest more than 5% of the value of its total assets in the securities of any
one issuer.

PRINCIPAL HOLDERS OF
SECURITIES AND CONTROL PERSONS OF THE PORTFOLIOS

The following table sets forth the name, address and percentage of
ownership of each person that to the knowledge of the Trust owns of record or
beneficially 5 percent or more of the shares of any of the Portfolios as of
April 19, 1995.

<TABLE>
<CAPTION>
PORTFOLIO NAME AND ADDRESS OF 5% OWNER PERCENTAGE OF OWNERSHIP
<S> <C> <C>
Municipal Bond Saratoga Capital Management 36.38%
Portfolio 33 Maiden Lane
New York, NY 10038

Small Capitalization American Medical Association 67.97%
Portfolio Pension Trust
515 North State Street
Chicago, IL 60610-4320

Small Capitalization Nationsbank 5.33%
Portfolio Trust Company NA
Custodian for
United Jewish Account
730 15th Street NW
Washington, DC 20005-1012

Investment Quality Stifel Nicolaus 5.57%
Bond Portfolio Custodian for
Stephen Paul Bey IRA
500 North Broadway
St Louis, MO 63102-2110
</TABLE>

TRUSTEES AND OFFICERS

The trustees and officers of the Trust, and their principal occupations
during the past five years, are set forth below. Trustees who are
"interested persons," as defined in the Act, are denoted by an asterisk. As
of April 21, 1995, the trustees and officers of the Trust as a group owned
1.7% of the outstanding shares of the Large Capitalization Value Portfolio,
3.2% of the outstanding shares of the Large Capitalization Growth Portfolio,
1.1% of the outstanding shares of the Small Capitalization Portfolio, 6.4% of
the outstanding shares of the International Equity Portfolio, 3.5% of the
outstanding shares of the U.S. Government Money Market Portfolio and less
than 1% of the outstanding shares of the Investment Quality Bond and the
Municipal Bond Portfolios.

<PAGE>

JOSEPH M. LA MOTTA, CHAIRMAN OF THE BOARD OF TRUSTEES*
One World Financial Center
New York, NY 10281

President of Oppenheimer Capital and Chairman of Quest for Value Advisors,
registered investment advisors; Chairman of the Board and President of Quest
Cash Reserves, Inc., Quest for Value Accumulation Trust, Quest for Value
Family of Funds, Quest for Value Fund, Inc., Quest for Value Global Equity
Fund, Inc. and Quest for Value Global Funds, Inc., open-end investment
companies, and Quest for Value Dual Purpose Fund, Inc., a closed-end
investment company.

BRUCE E. VENTIMIGLIA, PRESIDENT AND TRUSTEE*
Two World Financial Center
New York, NY 10080-6116

Chairman, President and Chief Executive Officer of Saratoga Capital
Management; Senior Vice President of Oppenheimer Capital and Quest for Value
Advisors since 1992; prior thereto, Senior Vice President of Prudential
Securities, Inc.

LACY B. HERRMANN, TRUSTEE
380 Madison Avenue, Suite 2300
New York, New York 10017

President and Chairman of the Board of Aquila Management Corporation (since
1984) and of Incap Management Corporation (since 1982), the sponsoring
organizations and Administrator and/or Sub-Advisor to the following open-end
investment companies, and Chairman of the Board of Trustees and President of
each: Churchill Cash Reserves Trust (since 1985), Short Term Asset Reserves
(since 1984), Cash Assets Trust (since 1984), U.S. Treasuries Cash Assets
Trust (since 1988), Tax-Free Cash Assets Trust (since 1988), Prime Cash Fund
(since 1982), Oxford Cash Management Fund (1982-1988) and Trinity Liquid
Assets Trust (1982-1985), each of which is a money market fund, and of
Churchill Tax-Free Fund of Kentucky (since 1986), Tax-Free Fund of Colorado
(since 1986), Tax-Free Trust of Oregon (since 1985), Tax-Free Trust of
Arizona (since 1985), and Hawaiian Tax-Free Trust (since 1984), Tax Free Fund
for Utah (since 1992) and Narragensett Insured Tax Free Income Fund (since
1992), each of which is a tax-free municipal bond fund; Aquila Rocky Mountain
Equity Fund (since 1994), an equity fund, Vice President, Director,
Secretary, and formerly Treasurer of Aquila Distributors, Inc. (since 1981),
distributor of most of the above funds; President and Chairman of the Board
of Trustees of Capital Cash Management Trust ("CCMT") a money market fund
(since 1981) and an Officer and Trustee/Director of its predecessors (since
1974); President and Director of STCM Management Company, Inc., sponsor and
Sub-Advisor to CCMT; General Partner of Tamarack Associates (1966-1984), a
private investment partnership and Chairman of the Board and President of
various of its subsidiaries through 1986. Director of Quest Cash Reserves,
Inc., Quest for Value Fund, Inc., Quest for Value Global Equity Fund, Inc.
and Quest for Value Global Funds, Inc.,

<PAGE>

Trustee of Quest for Value Accumulation Trust and Quest for Value Family of
Funds, each of which is an open-end investment company.

GEORGE LOFT, TRUSTEE
51 Herrick Road
Sharon, Connecticut 06069

Private Investor; Director of Quest Cash Reserves, Inc., Quest for Value
Fund, Inc., Quest for Value Global Equity Fund, Inc. and Quest for Value
Global Funds, Inc., Trustee of Quest for Value Accumulation Trust and Quest
for Value Family of Funds,, all of which are open-end investment companies,
and Director of the Quest for Value Dual Purpose Fund, Inc., a closed-end
investment company.

PATRICK H. MCCOLLOUGH, TRUSTEE
One Michigan Avenue Building
120 North Washington Square
Lansing, Michigan 48933

Partner with the law firm of Cawthorne, McCollough & Cavanagh since 1987;
Michigan State Senator from 1971 to 1978 and 1982 to 1986.

JAY ABBES, VICE PRESIDENT

Managing Director and Chief Marketing Officer of Saratoga Capital Management;
prior thereto, he was President of Advisor Marketing Associates, Inc., a
marketing consulting firm.

MARIA CAMACHO, ASSISTANT SECRETARY

Assistant Vice President of Oppenheimer Capital since 1994 and Registrations
Department Administrator with Oppenheimer Capital since 1989; Assistant
Secretary of Quest For Value Fund, Inc., Quest For Value Family of Funds,
Quest For Value Global Equity Fund, Inc., Quest For Value Global Funds, Inc.
and Quest Cash Reserves, Inc., open-end investment companies.

THOMAS E. DUGGAN, ASSISTANT SECRETARY

General Counsel and Secretary, Oppenheimer Capital and Quest for Value
Advisors, Secretary of Quest for Value Dual Purpose Fund, Inc., a closed-end
investment company; Assistant Secretary of Quest Cash Reserves, Inc., Quest
for Value Accumulation Trust, Quest for Value Family of Funds, Quest for
Value Fund, Inc., Quest for Value Global Equity Fund, Inc. and Quest for
Value Global Funds, Inc., open-end investment companies; formerly Senior Vice
President and Associate General Counsel of Oppenheimer & Co., Inc.

<PAGE>

DEBORAH KABACK, SECRETARY

Senior Vice President, Oppenheimer Capital; Secretary of Quest Cash Reserves,
Inc., Quest for Value Accumulation Trust, Quest for Value Family of Funds and
Quest for Value Fund, Inc., Quest for Value Global Equity Fund, Inc. and
Quest for Value Global Funds, Inc., open-end investment companies, and
Assistant Secretary of Quest for Value Dual Purpose Fund, Inc., a closed-end
investment company.

SCOTT KANE, VICE PRESIDENT

Managing Director and Chief Financial Officer of Saratoga Capital Management;
prior thereto, he was Vice President of Prudential Securities, Inc.

LESLIE KLEIN, ASSISTANT TREASURER

Vice President, Oppenheimer Capital; Assistant Treasurer of Quest Cash
Reserves, Inc., Quest for Value Accumulation Trust, Quest for Value Family
of Funds and Quest for Value Fund, Inc., Quest for Value Global Equity Fund,
Inc. and Quest for Value Global Funds, Inc., open-end investment companies,
and Quest for Value Dual Purpose Fund, Inc., a closed-end investment company.

SHELDON M. SIEGEL, TREASURER

Managing Director and Treasurer, Oppenheimer Capital; Treasurer of Quest for
Value Advisors; Treasurer of Quest Cash Reserves, Inc., Quest for Value
Accumulation Trust, Quest for Value Family of Funds and Quest for Value Fund,
Inc., Quest for Value Global Equity Fund Inc., and Quest for Value Global
Funds, Inc., open-end investment companies, and Quest for Value Dual Purpose
Fund, Inc., a closed-end investment company.

STEPHEN VENTIMIGLIA, VICE PRESIDENT

Vice Chairman and Chief Investment Officer of Saratoga Capital Management;
prior thereto, he was First Vice President and Senior Portfolio Manager of
Prudential Securities, Inc.

REMUNERATION OF OFFICERS AND TRUSTEES. All officers of the Trust are
officers of Saratoga Capital Management or Oppenheimer Capital and receive no
salary or fee from the Trust. Until a Portfolio has net assets of $25
million, no trustees fees will be paid by that Portfolio. When a Portfolio
has net assets of at least $25 million but not more than $50 million, the
Trustees, other than Mr. La Motta and Mr. Ventimiglia, will be paid an annual
fee of $1,750 plus $250 for each trustees' meeting attended and $100 for each
committee meeting attended. When a Portfolio has net assets in excess of $50
million, the Trustees, other than Mr. La Motta and Mr. Ventimiglia, will be
paid an annual fee of $3,500 plus $500 for each trustees' meeting attended
and $100 for each committee meeting attended. The following table sets forth
the aggregate compensation paid by the Trust to each of the Trustees during
the period September 2, 1994 (commencement of operations) to February 28,
1995 and the aggregate compensation paid to each of the Trustees by all of
the funds in the Advisor's Fund Complex during each such fund's 1994 fiscal
year.

<PAGE>

<TABLE>
<CAPTION>
Name of Trustee of the Aggregate Pension or Estimated Annual Total Compensation
Trust Compensation from Retirement Benefits Benefits upon from the Trust and the
the Trust Accrued as Part of Retirement Quest Fund Complex
Trust Expenses
<S> <C> <C> <C> <C>
Lacy Herrmann 0 0 0 67.350
Joseph La Motta 0 0 0 0
George Loft 0 0 0 74,800
Patrick McCollough 0 0 0 0
Bruce Ventimiglia 0 0 0 0
</TABLE>

Mr. Herrmann earned directors fees with respect to 18 investment companies
in the Advisor's Fund Complex and the fees earned by Mr. Loft were with
respect to 19 investment companies in the Advisor's Fund Complex. During
such periods Mr. Herrmann and Mr. Loft received fees from three investment
companies for which they no longer serve as directors and which are no longer
part of the Advisor's Fund Complex but for which the Advisor currently serves
as subadviser. In addition, during such periods, Mr. Loft and Mr. Herrmann
each served as director with respect to 3 investment companies (in addition
to the Trust's seven portfolios) in the Advisor's Fund Complex for which they
received no fees. For the purpose of this paragraph, a portfolio of an
investment company organized in series form is considered to be an investment
company.

MANAGEMENT AND OTHER SERVICES

The manager of the Trust is Saratoga Capital Management, Inc. (Saratoga or
the Manager), Two World Financial Center, New York, New York 10080-6116. See
"Management of the Trust" in the Prospectus.

Pursuant to the Management Agreement with the Trust (the Management
Agreement), Saratoga, subject to the supervision of the Trustees and in
conformity with the stated policies of the Trust, manages both the operations
of the Trust and reviews the performance of the Advisers, and makes
recommendations to the Trustees with respect to the retention and renewal of
contracts.

The following table sets forth the annual management fee rates payable by
each Portfolio to Saratoga pursuant to the Management Agreement, expressed as
a percentage of the Portfolio's average daily net assets:

<TABLE>
<CAPTION>
Total Amount
Management Retained by
PORTFOLIO FEE MANAGER
<S> <C> <C>
Large Capitalization Growth Portfolio 0.65% 0.35%

Large Capitalization Value Portfolio 0.65% 0.35%
</TABLE>

<PAGE>

<TABLE>
<S> <C> <C>
Small Capitalization Portfolio 0.65% 0.35%

International Equity Portfolio 0.75% 0.35%

Investment Quality Bond Portfolio 0.55% 0.35%

Municipal Bond Portfolio 0.55% 0.35%

U.S. Government Money Market Portfolio 0.475% 0.35%
</TABLE>

The fee is computed daily and payable monthly. The Management Agreement also
provides that, in the event the expenses of the Trust (including the fees of
Saratoga, but excluding interest, taxes, brokerage commissions, litigation
and indemnification expenses and other extraordinary expenses not incurred in
the ordinary course of the Trust's business) for any fiscal year exceed the
lowest applicable annual expense limitation established and enforced pursuant
to the statutes or regulations of any jurisdiction in which the Trust's
shares are qualified for offer and sale, the compensation due to Saratoga
will be reduced by the amount of such excess. Currently the Trust believes
that the most restrictive expense limitation of state securities commissions
is 2% of the Trust's average daily net assets up to $30 million, 2% of the
next $70 million of such assets and 1% of such assets in excess of $100
million. During the period September 2, 1994 (commencement of operations) to
February 28, 1995, the Manager voluntarily waived its management fees and
assumed all other operating expenses of the Portfolios.

Expenses not expressly assumed by Saratoga under the Management Agreement
or by Quest for Value Advisors under the Administration Agreement are paid by
the Trust. The fees payable to each Advisor pursuant to the Investment
Advisory Agreements between each Advisor and Saratoga with respect to the
Portfolios are paid for by Saratoga. Under the terms of the Management
Agreement, the Trust is responsible for the payment of the following
expenses: (a) the fees payable to the Manager, (b) the fees and expenses of
Trustees who are not affiliated persons of the Manager or the Trust's
Advisors, (c) the fees and certain expenses of the Custodian and Transfer and
Dividend Disbursing Agent, including the cost of maintaining certain required
records of the Trust and of pricing the Trust's shares, (d) the charges and
expenses of legal counsel and independent accountants for the Trust, (e)
brokerage commissions and any issue or transfer taxes chargeable to the Trust
in connection with its securities transactions, (f) all taxes and corporate
fees payable by the Trust to governmental agencies, (g) the fees of any trade
association of which the Trust may be a member, (h) the cost of share
certificates representing shares of the Trust, (i) the cost of fidelity and
liability insurance, (j) the fees and expenses involved in registering and
maintaining registration of the Trust and of its shares with the SEC,
qualifying its shares under state securities laws, including the preparation
and printing of the Trust's registration statements and prospectuses for such
purposes, (k) all expenses of shareholders and Trustees meetings (including
travel expenses of trustees and officers of the Trust who are directors,
officers or employees of the Manager or Advisors) and of preparing, printing
and mailing reports, proxy statements and prospectuses to shareholders in the
amount necessary for distribution to the shareholders and (j) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Trust's business.

The Management Agreement provides that Saratoga will not be liable for any
error of judgment or for any loss suffered by the Trust in connection with
the matters to which the

<PAGE>

Management Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard of duty. The
Management Agreement will continue in effect for a period of more than two
years from the date of execution only so long as such continuance is
specifically approved at least annually in conformity with the Act. The
Management Agreement was approved by the Trustees of the Trust including all
of the Trustees who are not parties to the contract or interested persons of
any such party as defined in the Act on July 25, 1994 and by the sole
shareholder of the Trust on August 22, 1994.

ADMINISTRATION AGREEMENT. Quest for Value Advisors ("Quest") acts as the
Trust's Administrator pursuant to an Administration Agreement which was
approved by the Trust's trustees on July 25, 1994 and its initial shareholder
on August 22, 1994. The Administration Agreement will remain in effect for
two years from the date of its execution and may be continued annually
thereafter if approved in accordance with the requirements of the Act.

INVESTMENT ADVISORY SERVICES

As noted in the Prospectus, subject to the supervision and direction of
the Manager and, ultimately, the Trustees, each Advisor manages the
securities held by the Portfolio it serves in accordance with the Portfolio's
stated investment objectives and policies, makes investment decisions for the
Portfolio and places orders to purchase and sell securities on behalf of the
Portfolio.

The Advisory Agreements were approved by the Trustees including a majority
of the Trustees who are not parties to such contract or interested persons of
any such parties, on July 25, 1994 and were approved by the sole shareholder
of the Trust on August 22, 1994.

Each Advisory Agreement provides that it will terminate in the event of
its assignment (as defined in the Act). Each Advisory Agreement may be
terminated by the Trust, Saratoga, or by vote of a majority of the
outstanding voting securities of the Trust, upon written notice to the
Advisor, or by the Advisor upon at least 100 days' written notice. Each
Advisory Agreement provides that it will continue in effect for a period of
more than two years from its execution only so long as such continuance is
specifically approved at least annually in accordance with the requirements
of the Act.

ADVISORS. The Advisors have agreed to the following fees, which are
generally lower than the fees they charge to institutional accounts for which
they serve as investment adviser.

<TABLE>
Portion
Paid By
Total Manager
Management To The
PORTFOLIO FEE ADVISOR
<S> <C> <C>

Large Capitalization Growth Portfolio 0.65% 0.30%

Large Capitalization Value Portfolio 0.65% 0.30%

Small Capitalization Portfolio 0.65% 0.30%
</TABLE>

<PAGE>

<TABLE>
<S> <C> <C>
International Equity Portfolio 0.75% 0.40%

Investment Quality Bond Portfolio 0.55% 0.20%

Municipal Bond Portfolio 0.55% 0.20%

U.S. Government Money Market Portfolio 0.475% 0.125%
</TABLE>

Subject to the supervision and direction of the Manager and, ultimately,
the Trustees, each Adviser's responsibilities are limited to managing the
securities held by the Portfolio it serves in accordance with the Portfolio's
stated investment objective and policies, making investment decisions for the
Portfolio and placing orders to purchase and sell securities on behalf of the
Portfolio.

PORTFOLIO TRANSACTIONS. Each Advisor is responsible for decisions to buy
and sell securities, futures contracts and options thereon, the selection of
brokers, dealers and futures commission merchants to effect the transactions
and the negotiation of brokerage commissions, if any. As most, if not all,
purchases made by the Income Portfolios are principal transactions at net
prices, those Portfolios pay no brokerage commissions; however, prices of
debt obligations reflect mark-ups and mark-downs which constitute
compensation to the executing dealer. Each Portfolio will pay brokerage
commissions on transactions in listed options and equity securities. Prices
of portfolio securities purchased from underwriters of new issues include a
commission or concession paid by the issuer to the underwriter, and prices of
debt securities purchased from dealers include a spread between the bid and
asked prices. Each Advisor seeks to obtain prompt execution of orders at the
most favorable net price. Transactions may be directed to dealers during the
course of an underwriting in return for their brokerage and research
services, which are intangible and on which no dollar value can be placed.
There is no formula for such allocation. The research information may or may
not be useful to one or more of the Portfolios and/or other accounts of the
Advisors; information received in connection with directed orders of other
accounts managed by the Advisors or its affiliates may or may not be useful
to one or more of the Portfolios. Such information may be in written or oral
form and includes information on particular companies and industries as well
as market, economic or institutional activity areas. It serves to broaden
the scope and supplement the research activities of the Advisors, to make
available additional views for consideration and comparison, and to enable
the Advisors to obtain market information for the valuation of securities
held in a Portfolio's assets.

Sales of shares of each Portfolio, subject to applicable rules covering
the Distributor's activities in this area, will also be considered as a
factor in the direction of portfolio transactions to dealers, but only in
conformity with the price, execution and other considerations and practices
discussed above. A Portfolio will not purchase any securities from or sell
any securities to a broker that is affiliated with any of the Advisors (an
"affiliated broker") that is acting as principal for its own account. Each
of the Advisors currently serves as investment manager to a number of
clients, including other investment companies, and may in the future act as
investment manager or advisor to others. It is the practice of each Advisor
to cause purchase or sale transactions to be allocated among the Portfolios
and others whose assets it manages in such manner as it deems equitable. In
making such allocations among the Portfolios and other client accounts, the
main factors considered are the respective investment objectives, the
relative size of Portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held and the opinions of the persons
22

<PAGE>

responsible for managing the Portfolios of each Portfolio and other client
accounts. When orders to purchase or sell the same security on identical
terms are placed by more than one of the Portfolios and/or other advisory
accounts managed by an Advisor or its affiliates, the transactions are
generally executed as received, although a Portfolio or advisory account that
does not direct trades to a specific broker ("free trades") usually will have
its order executed first. Purchases are combined where possible for the
purpose of negotiating brokerage commissions, which in some cases might have
a detrimental effect on the price or volume of the security in a particular
transaction as far as the Portfolio is concerned. Orders placed by accounts
that direct trades to a specific broker will generally be executed after the
free trades. All orders placed on behalf of the Portfolio are considered
free trades. However, having an order placed first in the market does not
necessarily guarantee the most favorable price.

Subject to the above considerations, an affiliated broker may act as a
securities broker or futures commission merchant for the Trust. In order for
an affiliate of an Advisor or Saratoga to effect any Portfolio transactions
for the Trust, the commissions, fees or other remuneration received by an
affiliated broker must be reasonable and fair compared to the commissions,
fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold
during a comparable period of time. This standard would allow an affiliated
broker to receive no more than the remuneration which would be expected to be
received by an unaffiliated broker in a commensurate arm's-length
transaction. Furthermore, the Trustees, including a majority of the Trustees
who are not "interested" persons, have adopted procedures which are
reasonably designed to provide that any commissions, fees or other
remuneration paid to an affiliated broker are consistent with the foregoing
standard.

In accordance with Rule 11a2-2(T) under the Securities Exchange Act of
1934, an affiliated broker may not retain compensation for effecting
transactions on a national securities exchange for the Trust unless the Trust
has expressly authorized the retention of such compensation in a written
contract executed by the Trust and an affiliated broker, as the case may be.
Rule 11a2-2(T) provides that an affiliated broker must furnish to the Trust
at least annually a statement setting forth the total amount of all
compensation retained by such affiliated broker for transactions effected by
the Trust during the applicable period. Brokerage transactions with an
affiliated broker are also subject to such fiduciary standards as may be
imposed by applicable law.

The following tables present information as to the allocation of brokerage
commissions by the Portfolios of the Trust during the period September 2,
1994 (commencement of operations) to February 28, 1995 to Hoenig & Co, Inc.
("Hoenig"), which is an affiliated person of Axe-Houghton Associates, Inc.,
and Oppenheimer & Co., Inc. ("Opco"), which is an affiliated person of Quest
for Value Advisors.

<PAGE>

<TABLE>

Brokerage Total Amount of Transactions where
Commissions Paid to Brokerage Commissions Paid to
Hoenig Hoenig

Total
Name of Brokerage Dollar % Dollar Amounts %
Portfolio Commissions Amounts
Paid
<S> <C> <C> <C> <C> <C>
Small
Capitalization $2,954 $2,328 78.8% $1,221,377 76.4%
Portfolio

Investment
Quality 317 317 100% 344,690 100%
Bond
Portfolio*

<FN>

* Most transactions for the Investment Quality Bond Portfolio are on a
principal basis. Transactions with Hoenig & Co, Inc. are on an agency basis
since principal transactions between the Portfolio and an affiliated broker
are restricted by the Investment Company act of 1940.

</TABLE>

<TABLE>

Brokerage Commissions Paid Total Amount of Transactions where
to Opco Brokerage Commissions Paid to Opco
Total
Name of Brokerage
Portfolio Commissions Dollar Amount % Dollar Amount %
Paid
<S> <C> <C> <C> <C> <C>
Large
Capitalization $2,297 $1,737 75.6% $1,324,279 80.2%
Value Portfolio
</TABLE>

During the period September 2, 1994 (commencement of operations) to
February 28, 1995, the Investment Quality Bond Portfolio acquired notes of
Lehman Brothers, Inc., one of the Portfolio's regular broker-dealers. The
value of the Portfolio's holdings of Lehman Brothers Inc. was $52,457 at
February 28, 1995.

<PAGE>

DETERMINATION OF NET ASSET VALUE

The net asset value per share of each Portfolio is determined each day the
New York Stock Exchange (the "Exchange") is open, as of the close of the
regular trading session of the Exchange that day (currently 4:00 p.m. Eastern
Time), by dividing the value of a Portfolio's net assets by the number of its
shares outstanding.

The Exchange's most recent annual announcement (which is subject to
change) states that it will close on New Year's Day, President's Day, Good
Friday, Memorial Day, July 4, Labor Day, Thanksgiving and Christmas Day. It
may also close on other days.

Securities listed on a national securities exchange or designated national
market system securities are valued at the last reported sale price on that
day, or, if there has been no sale on such day or on the previous day on
which the Exchange was open (if a week has not elapsed between such days),
then the value of such security is taken to be the reported bid price at the
time as of which the value is being ascertained. Securities actively traded
in the over-the-counter market but not designated as national market system
securities are valued at the last quoted bid price. Any securities or other
assets for which current market quotations are not readily available are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision and responsibility of the
Trust's Board of Trustees. The value of a foreign security is determined in
its national currency and that value is then converted into its US dollar
equivalent at the foreign exchange rate in effect on the date of valuation.

The Trust's Board of Trustees has approved the use of nationally
recognized bond pricing services for the valuation of each Portfolio's debt
securities. The services selected create and maintain price matrices of U.S.
Government and other securities from which individual holdings are valued
shortly after the close of business each trading day. Debt securities not
covered by the pricing services are valued upon bid prices obtained from
dealers who maintain an active market therein or, if no readily available
market quotations are available from dealers, such securities (including
restricted securities and OTC options) are valued at fair value under the
Board's procedures. Short-term (having a maturity of 60 days or less) debt
securities are valued at amortized cost.

Puts and calls are valued at the last sales price therefor, or, if there
are no transactions, at the last reported sales price that is within the
spread between the closing bid and asked prices on the valuation date.
Futures are valued based on their daily settlement value. When a Portfolio
writes a call, an amount equal to the premium received is included in the
Portfolio's Statement of Assets and Liabilities as an asset, and an
equivalent deferred credit is included in the liability section. The
deferred credit is adjusted ("marked-to-market") to reflect the current
market value of the call. If a call written by a Portfolio is exercised, the
proceeds on the sale of the underlying securities are increased by the
premium received. If a call or put written by a Portfolio expires on its
stipulated expiration date or if a Portfolio enters into a closing
transaction, it will realize a gain or loss depending on whether the premium
was more or less than the transaction costs, without regard to unrealized
appreciation or depreciation on the underlying securities. If a put held by
a Portfolio is exercised by it, the amount the Portfolio receives on its sale
of the underlying investment is reduced by the amount of the premium paid by
the Portfolio.

25
<PAGE>

The U.S. Government Money Market Portfolio utilizes the amortized cost
method in valuing its portfolio securities for purposes of determining the
net asset value of the shares of the Portfolio. The Portfolio utilizes the
amortized cost method in valuing its portfolio securities even though the
portfolio securities may increase or decrease in market value, generally, in
connection with changes in interest rates. The amortized cost method of
valuation involves valuing a security at its cost adjusted by a constant
amortization to maturity of any discount or premium, regardless of the impact
of fluctuating interest rates on the market value of the instrument. While
this method provides certainty in valuation, it may result in periods during
which value, as determined by amortized cost, is higher or lower than the
price the Portfolio would receive if it sold the instrument. During such
periods, the yield to investors in the Portfolio may differ somewhat from
that obtained in a similar company which uses mark to market values from all
its portfolio securities. For example, if the use of amortized cost resulted
in a lower (higher) aggregate portfolio value on a particular day, a
prospective investor in the Portfolio would be able to obtain a somewhat
higher (lower) yield than would result from investment in such a similar
company and existing investors would receive less (more) investment income.
The purpose of this method of calculation is to facilitate the maintenance of
a constant net asset value per share of $1.00.

The Portfolio's use of the amortized cost method to value its portfolio
securities and the maintenance of the per share net asset value of $1.00 is
permitted pursuant to Rule 2a-7 of the Act (the "Rule"), and is conditioned
on its compliance with various conditions including: (a) the Trustees are
obligated, as a particular responsibility within the overall duty of care
owed to the Portfolio's shareholders, to establish procedures reasonably
designed, taking into account current market conditions and the Portfolio's
investment objectives, to stabilize the net asset value per share as computed
for the purpose of distribution and redemption at $1.00 per share; (b) the
procedures include (i) calculation, at such intervals as the Trustees
determine are appropriate and as are reasonable in light of current market
conditions, of the deviation, if any, between net asset value per share using
amortized cost to value portfolio securities and net asset value per share
based upon available market quotations with respect to such portfolio
securities; (ii) periodic review by the Trustees of the amount of deviation
as well as methods used to calculate it; and (iii) maintenance of written
records of the procedures, the Trustees' considerations made pursuant to them
and any actions taken upon such considerations; (c) the Trustees should
consider what steps should be taken, if any, in the event of a difference of
more than 1/2 of 1% between the two methods of valuation; and (d) the
Trustees should take such action as they deem appropriate (such as shortening
the average portfolio maturity, realizing gains or losses or as provided by
the Agreement and Declaration of Trust, reducing the number of the
outstanding shares of the Portfolio to eliminate or reduce to the extent
reasonably practicable material dilution or other unfair results to investors
or existing shareholders). Any reduction of outstanding shares will be
effected by having each shareholder proportionately contribute to the
Portfolio's capital the necessary shares that represent the amount of excess
upon such determination. Each shareholder will be deemed to have agreed to
such contribution in these circumstances by investment in the Portfolio.

The Rule further requires that the Portfolio limit its investments to U.S.
dollar-denominated instruments which the Trustees determine present minimal
credit risks and which are Eligible Securities (as defined below). The Rule
also requires the Portfolio to maintain a dollar-weighted average portfolio
maturity (not more than 90 days) appropriate to its objective of maintaining
a stable net asset value of $1.00 per share and precludes the purchase of any
instrument with remaining maturity of more
26

<PAGE>

than thirteen months. Should the disposition of a portfolio security result
in a dollar-weighted average portfolio maturity of more than 90 days, the
Portfolio would be required to invest its available cash in such a manner as
to reduce such maturity to 90 days or less as soon as reasonably practicable.

Generally, for purposes of the procedures adopted under the Rule, the
maturity of a portfolio instrument is deemed to be the period remaining
(calculated from the trade date or such other date on which the Portfolio's
interest in the instrument is subject to market action) until the date noted
on the face of the instrument as the date on which the principal amount must
be paid, or in the case of an instrument called for redemption, the date on
which the redemption payment must be made.

A variable rate obligation that is subject to a demand feature is deemed
to have a maturity equal to the longer of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand. A floating rate instrument that is
subject to a demand feature is deemed to have a maturity equal to the period
remaining until the principal amount can be recovered through demand.

An Eligible Security is defined in the Rule to mean a security which: (a)
has a remaining maturity of thirteen months or less; (b) (i) is rated in the
two highest short-term rating categories by any two nationally recognized
statistical rating organizations ("NRSROs") that have issued a short-term
rating with respect to the security or class of debt obligations of the
issuer, or (ii) if only one NRSRO has issued a short-term rating with respect
to the security, then by that NRSRO; (c) was a long-term security at the time
of issuance whose issuer has outstanding a short-term debt obligation which
is comparable in priority and security and has a rating as specified in
clause (b) above; or (d) if no rating is assigned by any NRSRO as provided in
clauses (b) and (c) above, the unrated security is determined by the Board to
be of comparable quality to any such rated security.

As permitted by the Rule, the Trustees have delegated to the Portfolio's
Advisor, subject to the Trustees' oversight pursuant to guidelines and
procedures adopted by the Trustees, the authority to determine which
securities present minimal credit risks and which unrated securities are
comparable in quality to rated securities.

If the Trustees determine that it is no longer in the best interests of
the Portfolio and its shareholders to maintain a stable price of $1.00 per
share, or if the Trustees believe that maintaining such price no longer
reflects a market-based net asset value per share, the Trustees have the
right to change from an amortized cost basis of valuation to valuation based
on market quotations. The Trust will notify shareholders of any such change.

The Portfolio will manage its portfolio in an effort to maintain a
constant $1.00 per share price, but it cannot assure that the value of its
shares will never deviate from this price. Since dividends from net
investment income are declared and reinvested on a daily basis, the net asset
value per share, under ordinary circumstances, is likely to remain constant.
Otherwise, realized and unrealized gains and losses will not be distributed
on a daily basis but will be reflected in the Portfolio's net asset value.
The amounts of such gains and losses will be considered by the Trustees in
determining the action to be taken to maintain the Trust's $1.00 per share
net asset value. Such action may include distribution at any time of part or
all of the then accumulated undistributed net realized capital gains, or
reduction or

<PAGE>

elimination of daily dividends by an amount equal to part or all of the then
accumulated net realized capital losses. However, if realized losses should
exceed the sum of net investment income plus realized gains on any day, the
net asset value per share on that day might decline below $1.00 per share.
In such circumstances, the Trust may reduce or eliminate the payment of daily
dividends for a period of time in an effort to restore the Trust's $1.00 per
share net asset value. A decline in prices of securities could result in
significant unrealized depreciation on a mark to market basis. Under these
circumstances the Portfolio may reduce or eliminate the payment of dividends
and utilize a net asset value per share as determined by using available
market quotations or reduce the number of its shares outstanding.

PORTFOLIO YIELD AND TOTAL RETURN INFORMATION

PERFORMANCE INFORMATION

U.S. GOVERNMENT MONEY MARKET PORTFOLIO

CURRENT YIELD AND EFFECTIVE YIELD. The Trust may from time to time
advertise the current yield and effective annual yield of the U.S. Government
Money Market Portfolio calculated over a 7-day period. The yield quoted will
be the simple annualized yield for an identified seven calendar day period.
The yield calculation will be based on a hypothetical account having a
balance of exactly one share at the beginning of the seven-day period. The
base period return will be the change in the value of the hypothetical
account during the seven-day period, including dividends declared on any
shares purchased with dividends on the share but excluding any capital
changes. The yield will vary as interest rates and other conditions
affecting money market instruments change. Yield also depends on the
quality, length of maturity and type of instruments in the Portfolio, and its
operating expenses. The Portfolio may also prepare an effective annual yield
computed by compounding the unannualized seven-day period return as follows:
by adding 1 to the unannualized 7-day period return, raising the sum to a
power equal to 365 divided by 7, and subtracting 1 from the result.

365/7
Effective Yield = [(base period return +1) ]-1]

Other Portfolios

YIELDS. Yield information may be useful to investors in reviewing a
Portfolio's performance. However, a number of factors should be considered
before using yield information as a basis for comparison with other
investments. An investment in any of the Portfolios of the Trust is not
insured; yield is not guaranteed and normally will fluctuate on a daily
basis. The yield for any given past period is not an indication or
representation of future yields or rates of return. Yield is affected by
Portfolio quality, Portfolio maturity, type of instruments held and operating
expenses. When comparing a Portfolio's yield with that of other investments,
investors should understand that certain other in-vestment alternatives such
as money-market instruments or bank accounts provide fixed yields and also
that bank accounts may be insured.

<PAGE>

The Trust may from time to time advertise the yield of a Portfolio as
calculated over a 30-day period. This yield will be computed by dividing the
Trust's net investment income per share earned during this 30-day period by
the maximum offering price per share on the last day of this period. The
average number of shares used in determining the net investment income per
share will be the average daily number of shares outstanding during the
30-day period that were eligible to receive dividends. In accordance with
regulations of the Securities and Exchange Commission, income will be
computed by totaling the interest earned on all debt obligations during the
30-day period and subtracting from that amount the total of all expenses
incurred during the period, which include management and distribution fees.
The 30-day yield is then annualized on a bond-equivalent basis assuming
semi-annual reinvestment and compounding of net investment income, as
described in the Prospectus. Yield is calculated according to the following
formula:
x
YIELD = 2(-- + 1)(6) - 1
cd
Where:

x = daily net investment income, based upon the subtraction of
daily accrued expenses from daily accrued income of the Portfolio.
Income is accrued daily for each day of the indicated period based
upon yield-to-maturity of each obligation held in the Portfolio as
of the day before the beginning of any thirty-day period or as of
contractual settlement date for securities acquired during the
period. Mortgage and other receivables-backed securities calculate
income using coupon rate and outstanding principal amount.

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.

d = the maximum offering price per share on the last day of the period.

Yield does not reflect capital gains or losses, non-recurring or irregular
income. Gain or loss attributable to actual monthly paydowns on mortgage or
other receivables-backed obligations purchased at a discount or premium is
reflected as an increase or decrease in interest income during the period.

TAX EQUIVALENT YIELD is computed by dividing that portion of the current
yield (computed as described above) which is tax exempt by 1 minus a stated
tax rate and adding the quotient to that portion, if any, of the yield of the
Portfolio that is not tax exempt.

E
TAX EQUIVALENT YIELD = --- + t
1-P
Where: E = tax exempt yield
P = stated income tax rate
t = taxable yield

The Municipal Bond Portfolio may advertise tax-equivalent yields at
varying assumed tax rates.

<PAGE>

AVERAGE ANNUAL TOTAL RETURN

The Trust may from time to time advertise the average annual total return
of a Portfolio. Average annual total return is computed by finding the
average annual compounded rates of return over the 1, 5 and 10 year periods
that would equate the initial amount invested to the ending redeemable value
according to the following formula:

P (1+t)(n) = ERV

Where: P = a hypothetical initial investment of $1,000
t = average annual total return
n = number of years
ERV = ending redeemable value of P at the end of each period

Total return information may be useful to investors in reviewing a
Portfolio's performance. However, certain factors should be considered
before using this information as a basis for comparison with alternate
investments. No adjustment is made for taxes payable on distributions. The
total return for any given past period is not an indication or representation
by the Portfolio of future rates of return on its shares.

Total returns quoted in advertising reflect all aspects of a Portfolio's
return including the effect of reinvesting dividends and capital gain
distributions, and any change in a Portfolio's net asset value per share over
the period. Average annual returns are calculated by determining the growth
or decline in value of a hypothetical investment in a Portfolio over a stated
period, and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant over the period. For example, a cumulative return of 100%
over ten years would produce an average annual return of 7.18%, which is the
steady annual return that would equal 100% growth on a compounded basis in
ten years.

AGGREGATE TOTAL RETURN

The Trust may from time to time advertise the aggregate total return of a
Portfolio. A Portfolio's aggregate total return figures represent the
cumulative change in the value of an investment in the Portfolio for the
specified period and are computed by the following formula:

ERV - P
--------
P

Where: P = a hypothetical initial payment of $1000.

ERV = Ending Redeemable Value of a hypothetical $1,000 investment made at
the beginning of the 1, 5, or 10 year period at the end of the 1, 5 or 10
year period (or fractional portion thereof).

<PAGE>

Unaveraged or cumulative total returns reflect the simple change in value
of an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount and may be
calculated for a single investment, a series of investments and/or a series
of redemptions over any time period. Total returns and other performance
information may be quoted numerically or in a table, graph or similar
illustration.

The aggregate total return on an investment made in shares of the
Portfolios for the period September 1, 1994 to February 28, 1995 is as
follows:

<TABLE>
<CAPTION>
Aggregate Total Return for period September 1,
Name of Portfolio 1994 (commencement of operations) to February
28, 1995*
<S> <C>
Large Capitalization Value Portfolio 5.51%
Large Capitalization Growth Portfolio 5.84%
Small Capitalization Portfolio 1.14%
International Equity Portfolio -13.72%
Investment Quality Bond Portfolio 1.75%
Municipal Bond Portfolio .61%
</TABLE>

* The annualization of interim performance may have a tendency to distort
performance as it imputes a level of continuous performance which may have a
positive or negative effect. Accordingly, only inception to date aggregate
total return for each Portfolio is shown in the table above. Total return
shown in the table above reflects the waiver of management fees and the
assumption of all expenses by the Manager. Without such waivers and expense
assumptions, the total return for each Portfolio would have been lower.

<TABLE>
<CAPTION>
YIELD FOR 30-DAY PERIOD

Portfolio Yield for 30 Day Period Ended February 28, 1995*
<S> <C>
Investment Quality Bond Portfolio 7.00%
Municipal Bond Portfolio 5.80%
</TABLE>

* Reflects the waiver of management fees and assumption of all operating
expenses by the Manager. Without such waivers and assumptions, the yields
would have been zero and there would have been no distributions.

TAX EQUIVALENT YIELD FOR 30 DAY PERIOD
for the 30 day period ended
February 28, 1995*
Portfolio At Federal Income At Federal Income At Federal Income At Federal Income
Tax Rate of 28% Tax Rate of 31% Tax Rate of 36% Tax Rate of 39.6%
<S> <C> <C> <C> <C>
</TABLE>

<PAGE>

<TABLE>
<S> <C> <C> <C> <C>
Municipal
Bond
Portfolio 8.06% 8.41% 9.06% 9.60%
</TABLE>

* During the 30 day period ended February 28, 1995, the Manager waived the
management fee and absorbed all expenses of the Municipal Bond Portfolio.
Without such waiver and expense absorption, the yield for the Municipal Bond
Portfolio would have been zero.

<TABLE>
<CAPTION>
YIELD FOR SEVEN DAY PERIOD

Yield for seven day period ended February 28, 1995*
Portfolio Current Effective
<S> <C> <C>
U.S. Government Money
Market Portfolio 5.95% 6.13%
</TABLE>

* During the seven day period ended February 28, 1995, the Manager waived
the entire management fee and absorbed all operating expenses. Without such
waiver and expense absorption, the current yield and effective yield would
have been zero.

From time to time the Portfolios may refer in advertisements to rankings
and performance statistics published by (1) recognized mutual fund
performance rating services including but not limited to Lipper Analytical
Services, Inc. and Morningstar, Inc., (2) recognized indexes including but
not limited to the Standard & Poors Composite Stock Price Index, Russell 2000
Index, Dow Jones Industrial Average, Consumer Price Index, EAFE Index, Lehman
Brothers Government/Corporate Bond Index, the S & P Barra/ Growth Index, and
(3) Money Magazine and other financial publications including but not limited
to magazines, newspapers and newsletters. Performance statistics may include
yields, total returns, measures of volatility, standard deviation or other
methods of portraying performance based on the method used by the publishers
of the information. In addition, comparisons may be made between yields on
certificates of deposit and U.S. government securities and corporate bonds,
and between value stocks and growth stocks, and may refer to current or
historic financial or economic trends or conditions.

The performance of the Portfolios may be compared to the performance of
other mutual funds in general, or to the performance of particular types of
mutual funds. These comparisons may be expressed as mutual fund rankings
prepared by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual funds.
Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or redemption
fees into consideration, and is prepared without regard to tax consequences.
In addition to the mutual fund rankings, performance may be compared to
mutual fund performance indices prepared by Lipper.

From time to time, a Portfolio's performance also may be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the Portfolio may quote Morningstar, Inc., in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance.

<PAGE>

Saratoga Capital Management or Quest for Value Distributors may provide
information designed to help individuals understand their investment goals
and explore various financial strategies such as general principles of
investing, such as asset allocation, diversification, risk tolerance; goal
setting; and a questionnaire designed to help create a personal financial
profile.

Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills, the U.S. rate
of inflation (based on CPI), and combinations of various capital markets.
The performance of these capital markets is based on the returns of different
indices.

Saratoga Capital Management or Quest for Value Distributors may use the
performance of these capital markets in order to demonstrate general
risk-versus-reward investment scenarios. Performance comparisons may also
include the value of a hypothetical investment in any of these capital
markets. The risks associated with the security types in any capital market
may or may not correspond directly to those of the Portfolios. The
Portfolios may also compare performance to that of other compilations or
indices that may be developed and made available in the future.

In advertising materials, Quest for Value Distributors may reference or
discuss its products and services, which may include: other Quest funds;
retirement investing; brokerage products and services; the effects of
dollar-cost averaging and saving for college; and the risks of market timing.
In addition, Quest for Value Distributors may quote financial or business
publications and periodicals, including model portfolios or allocations, as
they relate to fund management, investment philosophy, and investment
techniques. Quest for Value Distributors may also reprint, and use as
advertising and sales literature, articles from re:Quest, a quarterly
magazine provided free of charge to Quest fund shareholders.

The Portfolios may present their fund number, Quotron number, CUSIP
number, and discuss or quote their current portfolio manager.

Volatility. The Portfolios may quote various measures of volatility and
benchmark correlation in advertising. In addition, the Portfolios may
compare these measures to those of other funds. Measures of volatility seek
to compare a fund's historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.

Momentum Indicators indicate the Portfolios price movements over specific
periods of time. Each point on the momentum indicator represents the
Portfolio's percentage change in price movements over that period.
The Portfolios may advertise examples of the effects of periodic
investment plans, including the principle of dollar cost averaging. In such
a program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when

33
<PAGE>

prices are low. While such a strategy does not assure a profit or guard
against a loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their ability
to continue purchasing shares during periods of low price levels.

The Portfolios may be available for purchase through retirement plans or
other programs offering deferral of or exemption from income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 28% rate. An equivalent tax-deferred investment would have an
after-tax value of $2,100 after ten years, assuming tax was deducted at a 31%
rate from the tax-deferred earnings at the end of the ten-year period.

TAXES

THE MUNICIPAL BOND PORTFOLIO

Because the Municipal Bond Portfolio will distribute exempt-interest
dividends, interest on indebtedness incurred by a shareholder to purchase or
carry shares of the Municipal Bond Portfolio is not deductible for Federal
income tax purposes. If a shareholder of the Municipal Bond Portfolio
receives exempt-interest dividends with respect to any share and if such
share is held by the shareholder for six months or less, then any loss on the
sale or exchange of such share may, to the extent of such exempt-interest
dividends, be disallowed. In addition, the Code may require a shareholder,
if he or she receives exempt-interest dividends, to treat as taxable income a
portion of certain otherwise non-taxable social security and railroad
retirement benefit payments. Furthermore, that portion of any
exempt-interest dividend paid by the Municipal Bond Portfolio which
represents income derived from private activity bonds held by the Portfolio
may not retain its tax-exempt status in the hands of a shareholder who is a
"substantial user" of a facility financed by such bonds, or a "related
person" thereof. Moreover, as noted in the Prospectus, some of the Municipal
Bond Portfolio's dividends may be a specific preference item or a component
of an adjustment item, for purposes of the Federal individual and corporate
alternative minimum taxes. In addition, the receipt of dividends and
distributions from the Municipal Bond Portfolio also may affect a foreign
corporate shareholder's Federal "branch profits" tax liability and a
Subchapter S corporate shareholder's Federal "excess net passive income" tax
liability. Shareholders should consult their own tax advisors as to whether
they are (a) substantial users with respect to a facility or related to such
users within the meaning of the Code or (b) subject to a Federal alternative
minimum tax, the Federal environmental tax, the Federal branch profits tax or
the Federal excess net passive income tax.

Each shareholder of the Municipal Bond Portfolio will receive after the
close of the calendar year an annual statement as to the Federal income tax
status of his or her dividends and distributions from the Portfolio for the
prior calendar year. These statements also will designate the amount of
exempt-interest dividends that is a specified preference item for purposes of
the Federal individual and

<PAGE>

corporate alternative minimum taxes. Each shareholder of the Municipal Bond
Portfolio will also receive a report of the percentage and source on a
state-by-state basis of interest income on municipal obligations received by
the Portfolio during the preceding year. Shareholders should consult their
tax advisors as to any other state and local taxes that may apply to these
dividends and distributions. In the event that the Municipal Bond Portfolio
derives taxable net investment income, it intends to designate as taxable
dividends the same percentage of each day's dividend as its actual taxable
net investment income bears to its total taxable net investment income earned
on that day. Therefore, the percentage of each day's dividend designated as
taxable, if any, may vary from day to day.

ALL PORTFOLIOS

As described above and in the Prospectus, the Portfolios may invest in
futures contracts and options. Each Portfolio anticipates that these
investment activities will not prevent the Trust from qualifying as a
regulated investment company. As a general rule, these investment activities
will increase or decrease the amount of long-term and short-term capital
gains or losses realized by a Portfolio and, accordingly, will affect the
amount of capital gains distributed to the Portfolio's shareholders.

Any net long-term capital gains realized by a Portfolio will be
distributed annually as described in the Prospectus. Such distributions
("capital gain dividends") will be taxable to shareholders as long-term
capital gains, regardless of how long a shareholder has held shares of the
Portfolio and will be designated as capital gain dividends in a written
notice mailed by the Portfolio to shareholders after the close of the
Portfolio's taxable year. If a shareholder receives a capital gain dividend
with respect to any share and if the share has been held by the shareholder
for six months or less, then any loss (to the extent not disallowed pursuant
to the other six-month rule described above relating to exempt-interest
dividends) on the sale or exchange of such share will be treated as a
long-term capital loss to the extent of the capital gain dividend.

If a shareholder fails to furnish a correct taxpayer identification
number, fails to fully report dividend or interest income or fails to certify
that he or she has provided a correct taxpayer identification number and that
he or she is not subject to backup withholding, then the shareholder may be
subject to a 31% "backup withholding tax," with respect to (a) taxable
dividends and distributions, and (b) the proceeds of any redemptions of
shares of a Portfolio. An individual's taxpayer identification number is his
or her social security number. The backup withholding tax is not an
additional tax and will be credited against a taxpayer's regular Federal
income tax liability.

From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on municipal securities. Similar proposals may be introduced in the
future. If such a proposal were enacted, the availability of municipal
securities for investment by the Municipal Bond Portfolio could be affected.
In that event the Board of Trustees of the Trust would reevaluate the
investment objections and policies of the Municipal Bond Portfolio.

The foregoing is only a summary of certain tax considerations generally
affecting the Portfolios, and is not intended as a substitute for careful tax
planning. Individuals are often exempt from state and local personal income
taxes on distributions of tax-exempt interest income derived from obligations
of issuers located in the state in which they reside when these distributions
are received directly from these issuers, but are usually subject to such
taxes on income derived from obligations of

<PAGE>

issuers located in other jurisdictions. The discussion does not purport to
deal with all of the Federal, state and local tax consequences applicable to
an investment in the Municipal Bond Portfolio, or to all categories of
investors, some of which may be subject to special rules. Shareholders are
urged to consult their tax advisors with specific reference to their own tax
situations.

ADDITIONAL INFORMATION

DESCRIPTION OF THE TRUST. The Trust was formed under the laws of Delaware
on April 8, 1994. It is not contemplated that regular annual meetings of
shareholders will be held. Shareholders of each Portfolio have the right,
upon the declaration in writing or vote by two-thirds of the outstanding
shares of the Portfolio, to remove a Trustee. The Trustees will call a
meeting of shareholders to vote on the removal of a Trustee upon the written
request of the record holders (for at least six months) of 10% of its
outstanding shares. In addition, 10 shareholders holding the lesser of
$25,000 or 1% of a Portfolio's outstanding shares may advise the Trustees in
writing that they wish to communicate with other shareholders of that
Portfolio for the purpose of requesting a meeting to remove a Trustee. The
Trustees will then either give the applicants access to the Portfolio's
shareholder list or mail the applicants' communication to all other
shareholders at the applicants' expense.

When issued, shares of each class are fully paid and have no preemptive,
conversion or other subscription rights. Each class of shares represents
identical interests in the applicable Portfolio's investment Portfolio. As
such, they have the same rights, privileges and preferences, except with
respect to: (a) the designation of each class, (b) the effect of the
respective sales charges, if any, for each class, (c) the distribution fees
borne by each class, (d) the expenses allocable exclusively to each class,
(e) voting rights on matters exclusively affecting a single class and (f) the
exchange privilege of each class. Upon liquidation of the Trust or any
Portfolio, shareholders of each class of shares of a Portfolio are entitled
to share pro rata in the net assets of that class available for distribution
to shareholders after all debts and expenses have been paid. The shares do
not have cumulative voting rights.

The assets received by the Trust on the sale of shares of each Portfolio
and all income, earnings, profits and proceeds thereof, subject only to the
rights of creditors, are allocated to each Portfolio, and constitute the
assets of such Portfolio. The assets of each Portfolio are required to be
segregated on the Trust's books of account. Expenses not otherwise
identified with a particular Portfolio will be allocated fairly among two or
more Portfolios by the Board of Trustees. The Trust's Board of Trustees has
agreed to monitor the Portfolio transactions and management of each of the
Portfolios and to consider and resolve any conflict that may arise.

The Agreement and Declaration of Trust contains an express disclaimer of
shareholder liability for each Portfolio's obligations, and provides that
each Portfolio shall indemnify any shareholder who is held personally liable
for the obligations of that Portfolio. It also provides that each Portfolio
shall assume, upon request, the defense of any claim made against any
shareholder for any act or obligation of that Portfolio and shall satisfy any
judgment thereon.

<PAGE>

POSSIBLE ADDITIONAL PORTFOLIO SERIES. If additional Portfolios are
created by the Board of Trustees, shares of each such Portfolio will be
entitled to vote as a group only to the extent permitted by the 1940 Act (see
below) or as permitted by the Board of Trustees.

Under Rule 18f-2 of the 1940 Act, any matter required to be submitted to a
vote of shareholders of any investment company which has two or more series
outstanding is not deemed to have been effectively acted upon unless approved
by the holders of a "majority" (as defined in that Rule) of the voting
securities of each series affected by the matter. Such separate voting
requirements do not apply to the election of trustees or the ratification of
the selection of accountants. Approval of an investment management or
distribution plan and a change in fundamental policies would be regarded as
matters requiring separate voting by each Portfolio. The Rule contains
provisions for cases in which an advisory contract is approved by one or
more, but not all, series. A change in investment policy may go into effect
as to one or more series whose holders so approve the change even though the
required vote is not obtained as to the holders of other affected series.

INDEPENDENT AUDITORS. KPMG Peat Marwick LLP, 345 Park Avenue, New York,
New York 10154, are the independent auditors of the Trust and of each
Portfolio; their services include auditing the annual financial statements
and financial highlights of each Portfolio as well as other related services.

CUSTODIAN, TRANSFER AGENT AND SHAREHOLDER SERVICING AGENT. State Street
Bank and Trust Company acts as transfer agent, shareholder servicing agent
and custodian of the assets of the Trust.

DISTRIBUTION OPTIONS. Shareholders may change their distribution options
by giving the Transfer Agent three days prior notice in writing.

TAX INFORMATION. The Federal tax treatment of the Portfolios' dividends
and distributions is explained in the Prospectus under the heading "Tax
Status." A Portfolio will be subject to a nondeductible 4% excise tax to the
extent that it fails to distribute by the end of any calendar year
substantially all its ordinary income for that year and capital gains for the
one year period ending on October 31 of that year.

OTHER. Oppenheimer Capital, an affiliate of Saratoga Capital Management,
is the parent of Quest for Value Advisors and a leading institutional
investment manager with over $29 billion in assets under management, and has
been an investment advisor to the American Medical Association's pension fund
since the 1960's.

RETIREMENT PLANS. Quest for Value Distributors may print advertisements
and brochures concerning retirement plans, lump sum distributions and 401-k
plans. These materials may include descriptions of tax rules, strategies for
reducing risk and descriptions of the 401-k program offered by Quest for
Value Distributors. From time to time hypothetical investment programs
illustrating various tax-deferred investment strategies will be used in
brochures, sales literature, and omitting prospectuses. The following
examples illustrate the general approaches that will be followed. These
hypotheticals will be modified with different investment amounts, reflecting
the amounts that can be invested in

<PAGE>

different types of retirement programs, different assumed tax rates, and
assumed rates of return. They should not be viewed as indicative of past or
future performance of any Quest for Value products.

<PAGE>

EXAMPLES
<TABLE>
<CAPTION>

Benefits of Long Term Tax-Free Compounding - Benefits of Long Term Tax-Free Compounding -
Single Sum Periodic Investment
Amount of Contribution:$100,000 Amount Invested Annually: $2,000
Rates of Return Rates of Return
Years 8.00% 10.00% 12.00% Years 8.00% 10.00% 12.00%
Value at end Value at End
<S> <C> <C> <C> <S> <C> <C> <C>
5 $ 146,933 $ 161,051 $ 176,234 5 $ 12,672 $ 13,431 $ 14,230
10 $ 215,892 $ 259,374 $ 310,585 10 $ 31,291 $ 35,062 $ 39,309
15 $ 317,217 $ 417,725 $ 547,357 15 $ 58,649 $ 69,899 $ 83,507
20 $ 466,096 $ 672,750 $ 964,629 20 $ 98,846 $126,005 $161,397
25 $ 684,848 $1,083,471 $1,700,006 25 $157,909 $216,364 $298,668
30 $1,006,266 $1,744,940 $2,995,992 30 $244,692 $361,887 $540,585
</TABLE>

Comparison of Taxable and Tax-Free Investing -- Periodic Investments
(Assumed Tax Rate : 28%)
Amount of Annual Contribution (Pre-Tax):$2,000 Annual Contribution (After Tax): $1,440
Tax Deferred Rates of Return Fully Taxed Rates of Return
Years 8.00% 10.00% 12.00% Years 5.76% 7.20 8.64%
Value at end Value at End
<S> <C> <C> <C> <C> <C> <C> <C>
5 $ 12,672 $ 13,431 $ 14,230 5 $ 8,544 $ 8,913 $ 9,296
10 $ 31,291 $ 35,062 $ 39,309 10 $ 19,849 $ 21,531 $ 23,364
15 $ 58,649 $ 69,899 $ 83,507 15 $ 34,807 $ 39,394 $ 44,654
20 $ 98,846 $126,005 $161,397 20 $ 54,598 $ 64,683 $ 76,874
25 $157,909 $216,364 $298,668 25 $ 80,785 $100,485 $125,635
30 $244,692 $361,887 $540,585 30 $115,435 $151,171 $199,429
</TABLE>

<TABLE>
<CAPTION>
Comparison of Tax Deferred Investing
-- Deducting Taxes at End
(Assumed Tax Rate at End: 28%)
Amount of Annual Contribution: $2,000
Tax Deferred Rates of Return
Years 8.00% 10.00% 12.00%
Value at End
<S> <C> <C> <C>
5 $ 11,924 $ 12,470 $ 13,046
10 $ 28,130 $ 30,485 $ 33,903
15 $ 50,627 $ 58,728 $ 68,525
20 $ 82,369 $101,924 $127,406
25 $127,694 $169,782 $229,041
30 $192,978 $277,359 $406,021
</TABLE>

<PAGE>

APPENDIX A -- RATINGS

DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:

Aaa. Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of these issues.

Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.

A. Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.

Baa. Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.

Ba. Bonds which are rated Ba are judged to have speculative elements;
their future payments cannot be considered as well assured. Often the
protection of interest and principal may be very moderate and thereby not
well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.

B. Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.

Moody's applies the numerical modifiers 1, 2, and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue
ranks in the lower end of its generic rating category.

A-1

<PAGE>

DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS

Aaa. Bonds which are rated Aaa are judged to be of the best quality and
carry the smallest degree of investment risk. Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.

Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. They are rated lower than the Aaa bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which made the long-term risks appear somewhat larger than
in Aaa securities.

A. Bonds which are rated A are judged to be upper medium grade
obligations. Security for principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
sometime in the future.

Baa. Bonds which are rated Baa are considered as medium grade
obligations, i.e.; they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.

Ba. Bonds which are rated Ba are judges to have speculative elements
and their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times. Uncertainty of position
characterizes bonds in this class.

B. Bonds which are rated B generally lack the characteristics of a
desirable investment. Assurance of interest and principal payments or of
other terms of the contract over long periods may be small.

Caa. Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be elements of danger present with respect to
principal or interest.

DESCRIPTION OF S&P CORPORATE BOND RATINGS:

AAA. Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

A-2

<PAGE>

AA. Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.

A. Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher
rated categories.

BBB. Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.

BB and B. Bonds rated BB and B are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB represents a lower degree of
speculation than B. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.

DESCRIPTION OF S&P'S MUNICIPAL BOND RATINGS

AAA. Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
The AA rating may be modified by the addition of a plus or minus sign to show
relative standing within the AA rating category.

A. Debt rated A is regarded as safe. This rating differs from the two
higher ratings because, with respect to general obligation bonds, there is
some weakness which, under certain adverse circumstances, might impair the
ability of the issuer to meet debt obligations at some future date. With
respect to revenue bonds, debt service coverage is good but not exceptional
and stability of pledged revenues could show some variations because of
increased competition or economic influences in revenues.

BBB. Bonds rated BBB are regarded as having adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
capacity than for bonds in the A category.

BB. Debt rated BB has less near-term vulnerability to default than
other speculative grade debt, however, it faces major ongoing uncertainties
or exposure to adverse business, financial or
A-3

<PAGE>

economic conditions which could lead to inadequate capacity to meet timely
interest and principal payment.

B. Debt rated B has a greater vulnerability to default but presently has
the capacity to meet interest and principal payments. Adverse business,
financial or economic conditions would likely impair capacity or willingness
to pay interest and repay principal.

CCC. Debt rated CCC has a current identifiable vulnerability to default
and is dependent upon favorable business, financial and economic conditions
to meet timely payments of principal. In the event of adverse business,
financial or economic conditions, it is not likely to have the capacity to
pay interest and repay principal.

DESCRIPTION OF FITCH'S MUNICIPAL BOND RATINGS.

Debt rated "AAA", the highest rating by Fitch, is considered to be of the
highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.

Debt rated "AA" is regarded as very high credit quality. The obligor's
ability to pay interest and repay principal is very strong.

Debt rated "A" is of high credit quality. The obligor's ability to pay
interest and repay principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and circumstances than
debt with higher ratings.

Debt rated "BBB" is of satisfactory credit quality. The obligor's ability
to pay interest and repay principal is adequate, however a change in economic
conditions may adversely affect timely payment.

Debt rated "BB" is considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes, however, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.

Debt rated "B" is considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.

Debt rated "CCC" has certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.

A-4

<PAGE>

Plus (+) and minus (-) signs are used with a rating symbol (except AAA) to
indicate the relative position within the category.

DESCRIPTION OF MOODY'S RATINGS OF STATE AND MUNICIPAL NOTES AND OTHER
SHORT-TERM LOANS

Moody's ratings for state and municipal notes and other short-term loans
are designated "Moody's Investment Grade" ("MIG"). Such ratings recognize
the differences between short-term credit risk and long-term risk. A
short-term rating designated VMIG may also be assigned on an issue having a
demand feature. Factors affecting the liquidity of the borrower and
short-term cyclical elements are critical in short-term borrowing. Symbols
used will be as follows:

MIG-1/VMIG-1. This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

MIG-2/VMIG-2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

DESCRIPTION OF S&P'S RATINGS OF STATE AND MUNICIPAL NOTES AND OTHER
SHORT-TERM LOANS

Standard & Poor's tax exempt note ratings are generally given to such
notes that mature in three years or less. The two higher rating categories
are as follows:

SP-1. Very strong or strong capacity to pay principal and interest.
These issues determined to possess overwhelming safety characteristics will
be given a plus (+) designation.

SP-2. Satisfactory capacity to pay principal and interest.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

Commercial paper rated Prime-1 by Moody's are judged by Moody's to be of
the best quality. Their short-term debt obligations carry the smallest
degree of investment risk. Margins of support for current indebtedness are
large or stable with cash flow and asset protection well assured. Current
liquidity provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available. While protective
elements may change over the intermediate or longer term, such changes are
most unlikely to impair the fundamentally strong position of short-term
obligations.

Issuers (or related supporting institutions) rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more
A-5

<PAGE>

subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

Commercial paper rated A by S&P have the following characteristics.
Liquidity ratios are better than industry average. Long-term debt rating is
A or better. The issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow are in an upward trend. Typically,
the issuer is a strong company in a well-established industry and has
superior management. Issuers rated A are further refined by use of numbers
1, 2, and 3 to denote relative strength within this highest classification.
Those issuers rated A-1 that are determined by S&P to possess overwhelming
safety characteristics are denoted with a plus (+) sign designation.

Fitch's commercial paper ratings represent Fitch's assessment of the
issuer's ability to meet its obligations in a timely manner. The assessment
places emphasis on the existence of liquidity. Ratings range from F-1+ which
represents exceptionally strong credit quality to F-4 which represents weak
credit quality.

Duff & Phelps' short-term ratings apply to all obligations with maturities
of under one year, including commercial paper, the uninsured portion of
certificates of deposit, unsecured bank loans, master notes, bankers
acceptances, irrevocable letters of credit and current maturities of
long-term debt. Emphasis is placed on liquidity. Ratings range from Duff 1+
for the highest quality to Duff 5 for the lowest, issuers in default. Issues
rated Duff 1+ are regarded as having the highest certainty of timely payment.
Issues rated Duff 1 are regarded as having very high certainty of timely
payment.

A-6

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Shareholder and Board of Trustees of
The Saratoga Advantage Trust:

We have audited the accompanying statements of assets and liabilities of The
Saratoga Advantage Trust (comprising, respectively, the U.S. Government Money
Market, Investment Quality Bond, Municipal Bond, Large Capitalization Value,
Large Capitalization Growth, Small Capitalization and International Equity
Portfolios) as of August 19, 1994. These statements of assets and
liabilities are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these statements of assets and
liabilities based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the statements of assets and
liabilities are free of material misstatement. An audit of a statement of
assets and liabilities includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall statement of assets and liabilities presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the statements of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of each of
the respective portfolios constituting The Saratoga Advantage Trust as of
August 19, 1994 in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

New York, New York
August 22, 1994

B-1

<PAGE>

THE SARATOGA ADVANTAGE TRUST
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 19, 1994

U.S. Large Large
Government Investment Capital- Capital- Small Inter-
Money Quality Municipal ization ization Capitali- national
Market Bond Bond Value Growth zation Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS

Cash . . . . . . . . . . . . . . . . . . $ 100,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Deferred organization expenses
(note 1) . . . . . . . . . . . . . . . 45,000 45,000 45,000 45,000 45,000 45,000 45,000
---------- ---------- --------- --------- -------- -------- --------
Total assets . . . . . . . . . . . . . 145,000 45,000 45,000 45,000 45,000 45,000 45,000
---------- ---------- --------- --------- -------- -------- --------

LIABILITIES

Payable to Saratoga Capital Management
(note 1) . . . . . . . . . . . . . . . $ 45,000 $ 45,000 $ 45,000 $ 45,000 $ 45,000 $ 45,000 $ 45,000
---------- ---------- --------- --------- -------- -------- --------
Total liabilities. . . . . . . . . . . 45,000 45,000 45,000 45,000 45,000 45,000 45,000
---------- ---------- --------- --------- -------- -------- --------

NET ASSETS

Net Assets (shares of beneficial
interest, par value $.001 per share.
Unlimited shares authorized;
100,000, 0,0,0,0,0 and 0,
shares outstanding, respectively) . . . $ 100,000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- --------- --------- -------- -------- --------
---------- ---------- --------- --------- -------- -------- --------

Net asset value and initial offering
prices per share. . . . . . . . . . . . $ 1.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
---------- ---------- --------- --------- -------- -------- --------
---------- ---------- --------- --------- -------- -------- --------

</TABLE>

B-2

<PAGE>

THE SARATOGA ADVANTAGE TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 19, 1994

NOTE 1 - ORGANIZATION

The Saratoga Advantage Trust (the "Trust") was organized on April 8, 1994
as a Delaware Business Trust and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company. The Trust has
had no operations through August 19, 1994 other than those relating to
organizational matters, and the sale and issuance of 100,000 shares (the
"Original Shares") of the U.S. Government Money Market Portfolio (one of seven
Portfolios of the Trust), to Saratoga Capital Management on August 19, 1994 at
an aggregate purchase price of $100,000 to provide the initial capital of the
Trust. The six other Portfolios of the Trust are the Investment Quality Bond,
the Municipal Bond, the Large Capitalization Value, the Large Capitalization
Growth, the Small Capitalization and the International Equity Portfolios.

Saratoga Capital Management has advanced certain organizational and start-
up expenses of the Trust and estimates them to total $315,000. Expenses
specifically identifiable to a particular Portfolio will be borne by that
Portfolio. Other expenses are allocated to each Portfolio pro-rata or on another
reasonable basis. Organization expenses have been deferred and will be amortized
on a straight-line basis over a five year period beginning with the commencement
of operations. If during the five year period beginning with the commencement of
operations, any of the Original Shares of the Trust are redeemed, by any holder
thereof, the proceeds from such redemptions will be reduced by the pro-rata
share (based on the proportionate share of the Original Shares redeemed to the
total number of Original Shares outstanding at the time of the redemption) of
the unamortized deferred organization expenses as of the date of such
redemption.

B-3

<PAGE>

NOTE 2 - MANAGEMENT AGREEMENT

Saratoga Capital Management is the Manager of the Portfolios. Each of the
Portfolios is provided with the discretionary advisory services of an Advisor
identified, retained, supervised and compensated by the Manager. The Manager
pays a portion of its fee to each Advisor for the advisory services provided to
their respective Portfolio.

Fees payable by the Trust pursuant to the Management Agreement are payable
monthly, computed as a percentage of each Portfolio's average daily net assets
as of the close of business each day at the following annual rates: U.S.
Government Money Market Portfolio - .475%; Investment Quality and Municipal Bond
Portfolios - .55%; Large Capitalization Value, Large Capitalization Growth and
Small Capitalization Portfolios - .65%; and International Equity Portfolio -
.75%.

NOTE 3 - ADMINISTRATION AGREEMENT

The Trust has entered into an administration agreement (the "Administration
Agreement") with Quest for Value Advisors (the "Administrator"), to provide
administrative services and to manage the business affairs of the Trust.

Fees payable by each Portfolio pursuant to the Administration Agreement are
$42,000 annually, provided that the Portfolio's average daily net assets do not
exceed $80 million. In the event that a Portfolio's average daily net assets
exceed $80 million, an additional fee of .05% of average daily net assets in
excess of $80 million shall be payable by the Portfolio. Fees are accrued daily
and payable monthly.

Under the terms of the Administration Agreement, the Administrator
maintains certain of the Trust's books and records and monitors the activities
of the entities providing services to the Trust including the Custodian and the
Transfer Agent. In addition, the Administrator furnishes such office space,
facilities, equipment, clerical help and bookkeeping, and legal services as the
Trust may reasonably require in the conduct of its business, including the
preparation of proxy statements and reports required to be filed with federal
and state securities commissions (except insofar as the participation or
assistance of independent accountants and attorneys is, in the opinion of the
Administrator, necessary or desirable). The Administrator also bears the cost of
telephone service, heat, light, power and other utilities provided to the Trust.
The Administrator pays the salaries of all personnel including officers of the
Trust who are employees of the Administrator.

NOTE 4 - TAXES

The Trust intends to comply in its initial year and thereafter with the
requirements of the Internal Revenue Code necessary to qualify as a regulated
investment company and as such will not be subject to Federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders.

B-4

<PAGE>

THE SARATOGA ADVANTAGE TRUST

SEMI - ANNUAL REPORT (UNAUDITED)

FEBRUARY 28, 1995

B-5
<PAGE>

THE SARATOGA ADVANTAGE TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED)
FEBRUARY 28, 1995

PRINCIPAL
AMOUNT VALUE
--------- ------------
<C> <S> <C>
FEDERAL HOME LOAN BANK-38.7%
$330,000 5.85%, 3/08/95............................................. $329,624
395,000 5.87%, 3/14/95............................................. 394,163
------------
Total Federal Home Loan Bank
(cost--$723,787)........................................... $723,787
------------

FEDERAL HOME LOAN MORTGAGE CORPORATION-36.1%
$214,000 5.85%, 3/02/95............................................. $213,965
390,000 5.90%, 3/02/95............................................. 389,936
70,000 5.90%, 3/08/95............................................. 69,920
------------
Total Federal Home Loan Mortgage Corporation
(cost--$673,821)........................................... $673,821
------------

FEDERAL NATIONAL MORTGAGE ASSOCIATION-21.6%
$405,000 5.87%, 3/27/95
(cost--$403,283)........................................... $403,283
------------

Total Investments
(cost--$1,800,891)...................................... 96.4% $1,800,891

Other Assets in Excess of
Other Liabilities........................................ 3.6 66,597
------------ ------------

TOTAL NET ASSETS .......................................... 100.0% $1,867,488
------------ ------------
------------ ------------

B-6

<PAGE>

THE SARATOGA ADVANTAGE TRUST
INVESTMENT QUALITY BOND PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED)
FEBRUARY 28, 1995

PRINCIPAL
AMOUNT VALUE
--------- ------------
CORPORATE NOTES & BONDS - 19.0%
AUTOMOTIVE - 2.3%
$25,000 Ford Motor Credit Co.
7.75%, 10/01/99 ........................................... $25,019
------------
ENERGY- 3.2%
10,000 Amoco Canada Petroleum Co.
7.25%, 12/01/02 ........................................... 9,799
25,000 E.I. Dupont De Nemours & Co.
8.50%, 2/15/03 ............................................ 26,059
------------
35,858
------------
MISCELLANEOUS FINANCIAL SERVICES - 4.8%
50,000 Lehman Brothers, Inc.
9.875%, 10/15/00 .......................................... 52,457
------------

UTILITIES - 8.7%
100,000 Tennessee Valley Authority
6.875%, 1/15/02 ........................................... 96,374
------------
Total Corporate Notes & Bonds
(cost -- $208,767)......................................... $209,708
------------

U.S. TREASURY NOTES - 78.1%
$180,000 4.75%, 10/31/98 ........................................... $167,119
400,000 6.50%, 11/30/96 ........................................... 398,564
300,000 6.75%, 5/31/99 ............................................ 296,766
------------
Total U.S. Treasury Notes
(cost -- $851,667)......................................... $862,449
------------

Total Investments
(cost--$1,060,434)........................................ 97.1% $1,072,157

Other Assets in Excess of
Other Liabilities......................................... 2.9 31,856
------------ ------------

TOTAL NET ASSETS............................................ 100.0% $1,104,013
------------ ------------
------------ ------------

B-7

<PAGE>

THE SARATOGA ADVANTAGE TRUST
MUNICIPAL BOND PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED)
FEBRUARY 28, 1995

PRINCIPAL
AMOUNT VALUE
--------- ------------
MUNICIPAL NOTES & BONDS - 90.1%
ALABAMA - 4.6%
POLLUTION CONTROL - 2.3%
$10,000 Alabama Water Pollution Control Authority
Pollution Control Revenue
6.25%, 8/15/14............................................. $10,143
------------

WATER/SEWER - 2.3%
10,000 Montgomery, Alabama Waterworks and Sewer
Systems Revenue (Series B)
6.30%, 9/01/10............................................. 10,215
------------
20,358
------------
CALIFORNIA - 4.5%
EDUCATION - 2.3%
10,000 California State Public Works
Various Community College Projects
6.00%, 12/01/12............................................ 10,091
------------

WATER/SEWER - 2.2%
10,000 San Francisco, California Public Utilities
Community Water Revenue (Series A)
6.00%, 11/01/15............................................ 9,836
------------
19,927
------------
CONNECTICUT - 4.6%
HOUSING
20,000 Connecticut State Housing Finance Authority
Housing Mortgage Financing Program
6.50%, 5/15/18............................................. 20,156
------------

FLORIDA - 7.4%
EDUCATION - 2.3%
10,000 Dade County Florida School Board
Certificates of Participation (Series A)
6.00%, 5/01/14............................................. 10,056
------------

GENERAL OBLIGATION - 1.1%
5,000 Florida State Board of Education Capital Outlay
6.625%, 6/01/17............................................ 5,237
------------

TURNPIKE/TOLL - 4.0%
20,000 Orlando & Orange County, Florida
Expressway Authority Revenue (Series A)
5.00%, 7/01/17............................................. 17,599
------------
32,892
------------
ILLINOIS - 2.1%
HEALTH/HOSPITAL
10,000 Illinois Health Facilities Authority Revenue
Lutheran Health System (Series A)
6.00%, 4/01/18 ............................................ 9,020
------------

IOWA - 11.9%
WATER/SEWER
50,000 West Des Moines, Iowa
Water Revenue Bonds
6.80%, 12/01/13 ........................................... 52,509
------------

B-8

<PAGE>

THE SARATOGA ADVANTAGE TRUST
MUNICIPAL BOND PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
FEBRUARY 28, 1995

PRINCIPAL
AMOUNT VALUE
--------- ------------

MASSACHUSETTS - 9.9%
GENERAL OBLIGATION - 2.2%
$10,000 Boston, Massachusetts
General Obligation Bonds (Series B)
5.875%, 8/01/12............................................ $9,962
------------

HOUSING - 2.3%
10,000 Massachusetts State Housing Finance Agency
Single Family
6.35%, 6/01/17 ............................................ 9,969
------------

WATER/SEWER - 5.4%
Massachusetts State Water Resources Authority
15,000 5.50%, 11/01/15 (Series B)................................. 13,949
10,000 5.75%, 8/01/10 (Series A).................................. 9,939
------------
23,888
------------
43,819
------------
NEW JERSEY - 2.3%
WATER/SEWER
10,000 Gloucester County, New Jersey
Utilities Authority Sewer Revenue
6.125%, 1/01/13............................................ 10,098
------------

NEW YORK - 18.2%
GENERAL OBLIGATION - 4.5%
20,000 New York City
General Obligation Bonds (Series B)
7.00%, 10/01/19............................................ 20,052
------------

HEALTH/HOSPITAL - 2.3%
10,000 New York State Medical Care Facilities
Mental Health Services (Series F)
6.25%, 2/15/10 ............................................ 9,980
------------

HOUSING - 4.6%
20,000 New York State Mortgage Agency Revenue Bonds (Series A)
6.875%, 4/01/17 ........................................... 20,446
------------

SALES TAX - 2.3%
10,000 New York State Local Government Assistance Corp.
6.25%, 4/01/18 ............................................ 10,013
------------

TURNPIKE/TOLL - 4.5%
10,000 New York State Thruway Authority
Service Contract Revenue
6.00%, 4/01/10 ............................................ 9,834

10,000 Triborough Bridge & Tunnel Authority
Service Contract Revenue
6.00%, 1/01/15 ............................................ 10,019
------------
19,853
------------
80,344
------------
PUERTO RICO - 2.3%
POWER/UTILITY
10,000 Puerto Rico Electric Power Authority
Power Revenue (Series R)
6.25%, 7/01/17............................................. 10,048
------------

B-9

<PAGE>

THE SARATOGA ADVANTAGE TRUST
MUNICIPAL BOND PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
FEBRUARY 28, 1995

PRINCIPAL
AMOUNT VALUE
--------- ------------
TEXAS - 14.0%
CORRECTIONAL FACILITIES - 2.3%
$10,000 East Texas Criminal Justice Facilities
City of Henderson Project
6.125%, 11/01/14........................................... $10,128
------------

EDUCATION - 5.8%
10,000 University of Texas
Permanent University Funding (Series A)
6.25%, 7/01/13............................................. 10,163
15,000 University of Texas Revenue Bonds (Series B)
6.75%, 8/15/13............................................. 15,667
------------
25,830
------------
GENERAL OBLIGATION - 5.9%
25,000 San Antonio, Texas
General Obligation Bonds
6.625%, 8/01/14............................................ 26,001
------------
61,959
------------
WASHINGTON - 2.4%
POWER/UTILITY
10,000 Washington State Public Power Supply Systems (Series B)
7.25%, 7/01/12............................................. 10,699
------------

WYOMING - 5.9%
HOUSING
25,000 Wyoming Community Development
Authority Housing Revenue
6.65%, 12/01/06............................................ 26,203
------------

<S> <C> <C>
Total Investments
(cost--$387,160)......................................... 90.1% $398,032

Other Assets in Excess of
Other Liabilities........................................ 9.9 43,931
------------- ------------

Total Net Assets............................................ 100.0% $441,963
------------- ------------
------------- ------------
</TABLE>

B-10

<PAGE>

THE SARATOGA ADVANTAGE TRUST
LARGE CAPITALIZATION VALUE PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED)
FEBRUARY 28, 1995

PRINCIPAL
AMOUNT VALUE
--------- ------------
<C> <S> <C>
SHORT-TERM CORPORATE
NOTES - 10.1%
MISCELLANEOUS FINANCIAL SERVICES
$215,000 Federal National Mortgage Association
5.84%, 3/07/95
(cost-$214,791)............................................ $214,791
------------
SHARES
---------
COMMON STOCKS - 83.0%
AEROSPACE - 10.2%
1,820 AlliedSignal, Inc. ........................................... $69,160
3,100 Coltec Industries, Inc.* ..................................... 53,087
1,700 McDonnell Douglas Corp. ...................................... 95,200
------------
217,447
------------
BANKING - 6.8%
2,100 Citicorp...................................................... 94,500
1,335 Mellon Bank Corp. ............................................ 50,897
------------
145,397
------------
CHEMICALS - 5.5%
780 Hercules, Inc. ............................................... 34,222
1,050 Monsanto Co. ................................................. 83,212
------------
117,434
------------
CONGLOMERATES - 4.4%
1,700 General Electric Co. ......................................... 93,288
------------

CONSUMER PRODUCTS - 5.7%
1,760 Hasbro, Inc. ................................................. 55,440
3,000 Mattel, Inc. ................................................. 67,125
------------
122,565
------------
DRUGS & MEDICAL PRODUCTS - 2.0%
840 Becton Dickinson & Co. ....................................... 44,100
------------

ELECTRONICS - 3.1%
1,580 Arrow Electronics, Inc.* ..................................... 65,570
------------

HEALTH/HOSPITAL - 2.9%
1,500 Columbia/HCA Healthcare Corp. ................................ 62,063
------------

INSURANCE - 14.2%
600 American International Group, Inc. ........................... 62,250
2,210 EXEL Ltd. .................................................... 94,201
250 General Reinsurance Corp. .................................... 32,562
1,680 Progressive Corp., Ohio....................................... 65,310
1,160 UNUM Corp. ................................................... 49,300
------------
303,623
------------
MISCELLANEOUS FINANCIAL SERVICES - 8.8%
2,300 Countrywide Credit Industries, Inc. .......................... 37,375
1,150 Federal Home Loan Mortgage Corp. ............................. 66,700
600 Federal National Mortgage Assoc. ............................. 46,275
1,310 John Alden Financial Corp. ................................... 37,663
------------
188,013
------------
RAILROAD - 3.1%
1,000 Norfolk Southern Corp. ....................................... 66,125
------------

B-11

<PAGE>

THE SARATOGA ADVANTAGE TRUST
LARGE CAPITALIZATION VALUE PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
FEBRUARY 28, 1995

SHARES VALUE
--------- ------------
RETAIL - 10.8%
2,750 May Department Stores Co. .................................... $100,375
1,000 Mercantile Stores Co., Inc. .................................. 41,625
2,100 Penney (J. C.) & Co., Inc. ................................... 90,038
------------
232,038
------------
TECHNOLOGY - 3.2%
850 Intel Corp. .................................................. 67,787
------------

TOBACCO/BEVERAGES/FOOD PRODUCTS - 2.3%
580 PepsiCo, Inc. ................................................ 22,693
980 Sara Lee Corp. ............................................... 25,725
------------
48,418
------------
Total Common Stocks
(cost--$1,633,772)......................................... $1,773,868
------------

<S> <C> <C>
Total Investments
(cost--$1,848,563)....................................... 93.1% $1,988,659

Other Assets in Excess of
Other Liabilities........................................ 6.9 148,519
------------- ------------

Total Net Assets............................................ 100.0% $2,137,178
------------- ------------
------------- ------------

<FN>

----------------------------------------------

* Non-income producing security.
</TABLE>

B-12

<PAGE>

THE SARATOGA ADVANTAGE TRUST
LARGE CAPITALIZATION GROWTH PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED)
FEBRUARY 28, 1995

SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - 90.7%
BANKING - 6.8%
930 BankAmerica Corp. ............................................ $44,756
885 NationsBank Corp. ............................................ 44,140
1,740 Norwest Corp. ................................................ 44,805
------------
133,701
------------
CHEMICALS - 4.2%
700 Great Lakes Chemical Corp. ................................... 42,088
1,425 Morton International, Inc. ................................... 41,681
------------
83,769
------------
COMPUTER SERVICES - 9.2%
1,420 Adobe Systems, Inc. .......................................... 50,765
1,200 Autodesk, Inc. ............................................... 47,100
1,235 Cisco Systems, Inc.*.......................................... 41,681
1,020 Sybase, Inc.*................................................. 41,565
------------
181,111
------------
CONGLOMERATES - 2.2%
800 General Electric Co. ......................................... 43,900
------------

DRUGS/MEDICAL PRODUCTS - 6.9%
665 Amgen, Inc.*.................................................. 45,885
1,205 Genzyme Corp. ................................................ 46,694
10 Genzyme Corp. - Tissue Repair................................. 40
1,030 Merck & Co., Inc. ............................................ 43,646
------------
136,265
------------
ELECTRONICS - 4.6%
2,575 American Power Conversion Corp.*.............................. 46,189
390 Hewlett - Packard Co. ........................................ 44,850
------------
91,039
------------
ENTERTAINMENT - 2.2%
805 The Walt Disney Co. .......................................... 42,967
------------

FOOD SERVICES - 2.3%
2,255 Brinker International, Inc.*.................................. 44,818
------------

INSURANCE - 4.2%
390 American International Group, Inc. ........................... 40,463
985 United Healthcare Corp. ...................................... 42,355
------------
82,818
------------
MACHINERY/ENGINEERING - 2.3%
1,350 Stewart & Stevenson Services, Inc. ........................... 44,550
------------

MANUFACTURING - 2.2%
850 Tyco International Ltd. ...................................... 44,306
------------

MEDIA/BROADCASTING - 6.7%
480 Capital Cities/ABC, Inc. ..................................... 42,480
815 Gannet Company, Inc. ......................................... 44,825
805 Tribune Co. .................................................. 44,979
------------
132,284
------------
MISCELLANEOUS FINANCIAL SERVICES - 8.9%
1,070 Dean Witter, Discover and Co. ................................ 43,201
1,415 Equifax, Inc. ................................................ 43,688
640 First Financial Management Corp. ............................. 44,240
1,000 Schwab (Charles) Corp. ....................................... 44,375
------------
175,504
------------

B-13

<PAGE>

THE SARATOGA ADVANTAGE TRUST
LARGE CAPITALIZATION GROWTH PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
FEBRUARY 28, 1995

SHARES VALUE
--------- ------------
RETAIL - 12.5%
1,385 Albertson's, Inc. ............................................ $42,589
1,270 Gap, Inc. .................................................... 41,275
895 Home Depot, Inc. ............................................. 40,163
1,755 Office Depot, Inc.*........................................... 41,023
1,677 Staples, Inc.*................................................ 40,667
175 Stride Rite Corp. ............................................ 2,253
1,430 Toys "R" Us, Inc.*............................................ 39,861
------------
247,831
------------
SECURITY/INVESTIGATION - 2.1%
1,470 Sensormatic Electronics Corp. ................................ 41,711
------------

TECHNOLOGY - 13.4%
1,075 Cabletron Systems, Inc.*...................................... 42,597
2,170 Electronic Arts, Inc.*........................................ 46,655
565 Intel Corp. .................................................. 45,059
675 Microsoft Corp.*.............................................. 42,525
760 Motorola, Inc. ............................................... 43,700
1,305 Silicon Graphics, Inc.*....................................... 45,186
------------
265,722
------------

<S> <C> <C>
Total Investments
(cost--$1,686,043)....................................... 90.7% $1,792,296

Other Assets in Excess of
Other Liabilities........................................ 9.3 184,179
------------- ------------

TOTAL NET ASSETS............................................ 100.0% $1,976,475
------------- ------------
------------- ------------

<FN>

-------------------------

*Non-income producing security.

</TABLE>

B-14

<PAGE>

THE SARATOGA ADVANTAGE TRUST
SMALL CAPITALIZATION PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED)
FEBRUARY 28, 1995

SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - 89.3%
AIRLINES - 1.2%
1,300 ValuJet Airlines, Inc. *...................................... $37,537
------------

AUTOMOTIVE - 3.4%
3,000 Wabash National Corp. ........................................ 106,500
------------

BUILDING & CONSTRUCTION - 3.8%
5,000 Cavalier Homes, Inc. ......................................... 59,375
5,200 Southern Energy Homes, Inc. *................................. 58,500
------------
117,875
------------
COMPUTER SERVICES - 3.6%
4,200 Metatec Corp. (Class A) *..................................... 54,600
3,000 Minnesota Educational Computing Corp. *....................... 58,500
------------
113,100
------------
CONSUMER PRODUCTS - 1.8%
4,400 Inbrand Corp. *............................................... 55,000
------------

DRUGS & MEDICAL PRODUCTS - 6.0%
1,400 Omnicare, Inc. ............................................... 68,075
2,000 Respironics, Inc. *........................................... 59,750
1,800 Steris Corp. *................................................ 59,625
------------
187,450
------------
ELECTRONICS - 2.0%
4,000 Methode Electronics, Inc. (Class A)........................... 63,000
------------

HEALTHCARE SERVICES - 6.3%
2,000 Integrated Health Services, Inc. ............................. 76,500
2,400 MedPartners, Inc. *........................................... 42,000
3,000 Sun Healthcare Group, Inc. *.................................. 76,875
------------
195,375
------------
HOUSEHOLD PRODUCTS - 1.7%
1,400 Department 56, Inc. *......................................... 54,250
------------

LEISURE - 5.8%
2,200 Cobra Golf, Inc. *............................................ 71,638
1,600 Coleman Co., Inc. *........................................... 56,400
2,000 Harley-Davidson, Inc. ........................................ 54,000
------------
182,038
------------
LODGING - 7.5%
3,200 Hospitality Franchise Systems, Inc. *......................... 90,800
3,430 LaQuinta Inns, Inc. .......................................... 85,321
2,800 ShoLodge, Inc. *.............................................. 58,100
------------
234,221
------------
MANUFACTURING - 1.8%
3,200 Special Devices, Inc. *....................................... 54,400
------------

MISCELLANEOUS FINANCIAL SERVICES - 1.5%
1,260 Green Tree Financial Corp. ................................... 48,195
------------

PERSONNEL SERVICES - 6.5%
1,600 Alternative Resources Corp. *................................. 54,000
3,000 Norrell Corp. ................................................ 59,250
2,600 Olsten Corp. ................................................. 89,375
------------
202,625
------------

B-15

<PAGE>

THE SARATOGA ADVANTAGE TRUST
SMALL CAPITALIZATION PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
FEBRUARY 28, 1995

SHARES VALUE
--------- ------------
PRINTING/PUBLISHING - 5.0%
1,600 Scholastic Corp. *............................................ $80,800
3,000 Thomas Nelson, Inc. .......................................... 73,500
------------
154,300
------------
RECREATION - 3.7%
2,400 Players International, Inc. *................................. 57,600
3,600 Sodak Gaming, Inc. *.......................................... 57,600
------------
115,200
------------
RETAIL - 12.3%
2,000 Barnes & Noble, Inc. *........................................ 59,000
2,000 Kohl's Corp. *................................................ 82,000
2,000 Micro Warehouse, Inc. *....................................... 57,500
2,600 Sunglass Hut International, Inc. *............................ 71,175
2,800 The Men's Wearhouse, Inc. *................................... 57,050
2,400 Tractor Supply Co. *.......................................... 55,800
------------
382,525
------------
TECHNOLOGY - 7.9%
2,400 California Microwave, Inc. *.................................. 70,200
2,600 Digital Link Corp. *.......................................... 61,100
2,600 Electronic Arts, Inc. *....................................... 55,900
2,400 Spectrian Corp. *............................................. 58,500
------------
245,700
------------
TELECOMMUNICATIONS - 5.6%
3,000 ALC Communications Corp. *.................................... 88,500
2,800 Century Telephone Enterprises................................. 87,150
------------
175,650
------------
TRANSPORTATION - 1.9%
3,000 Rural/Metro Corp. *........................................... 57,750
------------

<S> <C> <C>
Total Investments
(cost--$2,689,178)....................................... 89.3% $2,782,691

Other Assets in Excess of
Other Liabilities........................................ 10.7 334,029
------------- ------------

TOTAL NET ASSETS............................................ 100.0% $3,116,720
------------- ------------
------------- ------------

<FN>

---------------------------------------------
* Non-income producing security.

</TABLE>

B-16

<PAGE>

THE SARATOGA ADVANTAGE TRUST
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED)
FEBRUARY 28, 1995

SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS - 77.9%
ARGENTINA - 0.3%
TELECOMMUNICATIONS
200 Telefonica de Argentina ADR................................... $3,725
------------

BRAZIL - 0.3%
TELECOMMUNICATIONS
130 Telecomunicacoes Brasileiras Sponsored ADR.................... 3,705
------------

CHILE - 0.5%
METALS/MINING
290 Embotelladora Andina SA ADR................................... 6,960
------------

FINLAND - 1.4%
TELECOMMUNICATIONS
265 Nokia Corp. ADR............................................... 18,735
------------

FRANCE - 3.5%
AUTOMOTIVE - 1.2%
334 Valeo SA Sponsored ADR........................................ 15,930
------------

OIL/GAS - 1.0%
396 Elf Acquitaine ADR............................................ 14,197
------------

TOBACCO/BEVERAGES/FOOD PRODUCTS - 1.3%
566 LVMH Moet Hennessy Louis Vuitton ADR.......................... 18,183
------------
48,310
------------
GERMANY - 2.8%
BANKING - 1.4%
40 Deutsche Bank AG ADR.......................................... 19,599
------------

MACHINERY - 1.4%
65 Mannesmann AG ADR............................................. 18,821
------------
38,420
------------
HONG KONG - 3.9%
CONGLOMERATES - 0.9%
560 Hutchison Whampoa Ltd. ADR.................................... 11,879
------------

REAL ESTATE - 3.0%
3,000 Cheung Kong Holdings Ltd. ADR................................. 13,077
4,000 Hopewell Holdings Ltd. Sponsored ADR.......................... 15,262
2,000 Sun Hung Kai Properties Ltd. ADR.............................. 13,452
------------
41,791
------------
53,670
------------
INDONESIA - 2.1%
TELECOMMUNICATIONS
800 Indonesian Satellite ADR *.................................... 28,500
------------

ITALY - 1.2%
TELECOMMUNICATIONS
585 Stet Societa Finanziaria Telefonica Sponsored ADR............. 16,236
------------

JAPAN - 37.4%
BANKING - 6.3%
209 Mitsubishi Trust & Banking Corp. ADR.......................... 29,611
230 Sakura Bank Ltd. ADR.......................................... 27,591
160 Sumitomo Bank Ltd. ADR........................................ 29,122
------------
86,324
------------

B-17

<PAGE>

THE SARATOGA ADVANTAGE TRUST
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
FEBRUARY 28, 1995

SHARES VALUE
--------- ------------
JAPAN (cont'd)
BUILDING & CONSTRUCTION - 3.8%
248 Asahi Glass ADR............................................... $27,442
380 Taisei Construction Ltd. ADR.................................. 24,443
------------
51,885
------------
CONGLOMERATES - 1.9%
1,190 Mitsubishi Corp. Sponsored ADR................................ 25,598
------------

ELECTRONICS - 8.9%
210 Kyocera Corp. ADR............................................. 27,300
270 Secom Ltd. ADR................................................ 28,592
175 Sharp Corp. ADR............................................... 24,975
495 Sony Corp. ADR................................................ 21,594
870 Victor Co. Japan Ltd. ADR..................................... 19,254
------------
121,715
------------
MANUFACTURING - 1.8%
180 Bridgestone Corp. ADR......................................... 24,572
------------

METALS/MINING - 1.7%
650 Kawasaki Steel Corp. Sponsored ADR............................ 23,258
------------

MISCELLANEOUS FINANCIAL SERVICES - 1.9%
145 Nomura Securities Ltd. ADR.................................... 25,042
------------

Paper Products - 1.8%
259 OJI Paper Ltd. ADR............................................ 24,749
------------

Photography - 1.7%
315 Canon, Inc. ADR............................................... 23,586
------------

Real Estate - 1.5%
199 Mitsubishi Estate Co. Ltd. ADR................................ 20,065
------------

Retail - 1.9%
144 Ito-Yokado Co. Ltd. ADR....................................... 26,064
------------

Telecommunications - 2.1%
795 Nippon Telegraph & Telephone Corp. ADR *...................... 29,216
------------

Textiles/Apparel - 2.1%
425 Asahi Chemical Industries Ltd. ADR............................ 28,085
------------
510,159
------------
LUXEMBURG - 1.1%
Banking
1,285 Espirito Santo Financial Holdings ADR......................... 14,938
------------

MALAYSIA - 1.3%
Entertainment
2,000 Genting Berhad SH Malay ADR................................... 17,313
------------

NETHERLANDS - 2.6%
Printing/Publishing
470 Wolters Kluwer NV Sponsored ADR............................... 35,215
------------

SPAIN - 1.4%
Banking
1,630 Banco Central Hispanoamer SA ADR.............................. 18,541
------------

B-18

<PAGE>

THE SARATOGA ADVANTAGE TRUST
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
FEBRUARY 28, 1995

SHARES VALUE
--------- ------------
SWEDEN - 1.3%
CONSUMER PRODUCTS
366 Electrolux AB ADR............................................. $18,483
------------

SWITZERLAND - 1.5%
DRUGS & MEDICAL PRODUCTS
365 Roche Holdings Ltd. Sponsored ADR............................. 20,120
------------

UNITED KINGDOM - 15.3%
BANKING - 1.4%
500 Barclays Plc. ADR............................................. 19,313
------------

CONGLOMERATES - 2.4%
2,500 BET Plc. ADR.................................................. 16,563
840 BTR Plc. ADR.................................................. 16,646
------------
33,209
------------
DRUGS & MEDICAL PRODUCTS - 1.3%
870 Glaxo Plc. ADR................................................ 17,509
------------

LEISURE - 1.1%
1,270 Rank Organisation Plc. ADR.................................... 15,081
------------

MANUFACTURING - 2.3%
3,300 Blue Circle Industries Plc. Sponsored ADR..................... 13,350
1,200 Tomkins Plc. ADR.............................................. 17,700
------------
31,050
------------
OIL/GAS - 1.2%
250 Shell Transport & Trading Plc. ADR............................ 16,750
------------

PRINTING/PUBLISHING - 1.1%
2,300 Bowater Plc. ADR.............................................. 14,375
------------

TELECOMMUNICATIONS - 1.3%
1,000 Cable & Wireless Plc. ADR..................................... 17,875
------------

TEXTILES/APPAREL - 1.0%
1,700 Coats Viyella Plc. ADR........................................ 14,265
------------

TOBACCO/BEVERAGES/FOOD PRODUCTS - 2.2%
1,100 B A T Industries Plc. ADR..................................... 14,575
948 Bass Plc. ADR................................................. 15,050
------------
29,625
------------
209,052
------------

<S> <C> <C>
Total Investments
(cost--$1,169,847)....................................... 77.9% $1,062,082

Other Assets in Excess of
Other Liabilities........................................ 22.1 301,329
------------- ------------

TOTAL NET ASSETS............................................ 100.0% $1,363,411
------------- ------------
------------- ------------

<FN>
---------------------------------------------
*Non-income producing security.

See accompanying notes to financial statements.
</TABLE>

B-19

<PAGE>

FEBRUARY 28, 1995
- -------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>

----------- ------------ --------- -------------- -------------- ------------- ----------
U.S. Large Large Inter-
Government Investment Municipal Capitalization Capitalization Small national
Money Market Quality Bond Bond Value Growth Capitalization Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ------------ --------- -------------- -------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost--$1,800,891,
$1,060,434, $387,160, $1,848,563,
$1,686,043, $2,689,178, and
$1,169,847, respectively . . . . . . . .$1,800,891 $1,072,157 $398,032 $1,988,659 $1,792,296 $2,782,691 $1,062,082
Cash. . . . . . . . . . . . . . . . . . . 19,531 -- 24,886 98,769 159,006 332,325 214,637
Deferred organization expenses. . . . . . 60,314 60,314 60,314 60,314 60,314 60,314 60,314
Receivable from manager . . . . . . . . . 56,770 56,229 59,150 60,360 63,455 64,968 59,098
Receivable for shares of beneficial
interest sold . . . . . . . . . . . . . 46,165 44,478 12,037 74,875 90,275 204,518 124,505
Receivable for investments sold . . . . . -- 101,078 -- -- -- 165,649 --
Interest receivable . . . . . . . . . . . -- 18,172 6,109 -- -- -- --
Dividends receivable. . . . . . . . . . . -- -- -- 3,123 2,057 613 990
Foreign tax receivable. . . . . . . . . . -- -- -- -- -- -- 46
---------- --------- -------- ---------- ---------- ---------- --------
Total Assets. . . . . . . . . . . . . 1,983,671 1,352,428 560,528 2,286,100 2,167,403 3,611,078 1,521,672
---------- --------- -------- ---------- ---------- ---------- --------

LIABILITIES
Deferred organization payable.. . . . . . 66,199 66,199 66,199 66,199 66,199 66,199 66,199
Administration fee payable. . . . . . . . 20,769 20,769 20,769 20,769 20,769 20,769 20,769
Payable for shares of beneficial
interest redeemed . . . . . . . . . . -- 44,379 -- 29,119 9,278 17,348 --
Payable for investments purchase. . . . . -- 43,919 -- -- 58,779 352,627 39,600
Due to custodian. . . . . . . . . . . . . -- 44,304 -- -- -- -- --
Other payables and accrued expenses . . . 29,215 28,845 31,597 32,835 35,903 37,415 31,693
---------- --------- -------- ---------- ---------- ---------- --------
Total Liabilities . . . . . . . . . . 116,183 248,415 118,565 148,922 190,928 494,358 158,261
---------- --------- -------- ---------- ---------- ---------- --------

NET ASSETS
Par value . . . . . . . . . . . . . . . . 1,867 112 45 203 187 309 158
Paid-in-surplus . . . . . . . . . . . . . 1,865,621 1,095,302 435,681 1,989,369 1,869,663 3,001,457 1,497,276
Accumulated undistributed net investment
income. . . . . . . . . . . . . . . . . -- -- -- 9,262 2,793 976 1,038
Accumulated net realized gain(loss)
on investments . . . . . . . . . . . . . -- (3,124) (4,635) (1,752) (2,421) 20,465 (27,296)
Net unrealized appreciation (depreciation)
on investments . . . . . . . . . . . . -- 11,723 10,872 140,096 106,253 93,513 (107,765)
---------- --------- -------- ---------- ---------- ---------- ---------
Total Net Assets . . . . . . . . . .$1,867,488 $1,104,013 $441,963 $2,137,178 $1,976,475 $3,116,720 $1,363,411
---------- --------- -------- ---------- ---------- ---------- ---------
---------- --------- -------- ---------- ---------- ---------- ---------

Shares of beneficial interest
outstanding . . . . . . . . . . . . . . 1,867,488 111,894 45,170 203,464 187,076 308,686 158,115
---------- --------- -------- ---------- ---------- ---------- ---------
Net asset value and offering price
per share . . . . . . . . . . . . . . . $1.00 $9.87 $9.78 $10.50 $10.57 $10.10 $8.62
---------- --------- -------- ---------- ---------- ---------- ---------
---------- --------- -------- ---------- ---------- ---------- ---------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

B-20

<PAGE>

FOR THE PERIOD SEPTEMBER 2, 1994 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28,
1995
- -------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------ ------------ --------- -------------- -------------- -------------- -----------
U.S. Large Large Inter-
Government Investment Municipal Capitalization Capitalization Small national
Money Market Quality Bond Bond Value Growth Capitalization Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ --------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends . . . . . . . . . . . . . . $ -- $ -- $ -- $8,947 $4,588 $4,094 $2,153
Interest. . . . . . . . . . . . . . . 22,042 22,259 7,580 6,857 -- -- --
-------- -------- -------- ------ ------ ------- ------
Total investment income. . . . . . . 22,042 22,259 7,580 15,804 4,588 4,094 2,153
-------- -------- -------- ------ ------ ------- ------
OPERATING EXPENSES
Management fees (note 2a) . . . . . . 1,875 1,976 759 3,481 3,336 4,986 3,101
Administration fees (note 2c).. . . . 20,769 20,769 20,769 20,769 20,769 20,769 20,769
Transfer and dividend disbursing
agent fees. . . . . . . . . . . . . 19,200 19,200 19,200 19,200 19,200 19,200 19,200
Amortization of deferred organization
expenses (note 1c) . . . . . . . . . 6,599 6,599 6,599 6,599 6,599 6,599 6,599
Auditing fees . . . . . . . . . . . . 3,734 3,734 4,178 3,734 3,734 3,734 4,723
Reports and notices to shareholders . 2,473 2,473 2,473 2,473 2,473 2,473 2,473
Custodian fees. . . . . . . . . . . . 1,895 1,569 4,281 5,392 8,535 9,700 3,343
Legal fees. . . . . . . . . . . . . . 742 742 742 742 742 742 742
Registration fees . . . . . . . . . . 598 383 148 692 644 991 489
Miscellaneous . . . . . . . . . . . . 760 760 760 760 760 760 760
-------- -------- -------- ------ ------ ------- ------
Total operating expenses . . . . . . 58,645 58,205 59,909 63,842 66,792 69,954 62,199
Less: Management fees waived and
expense reimbursements (note 2a) . . (58,645) (58,205) (59,909) (63,842) (66,792) (69,954) (62,199)
-------- -------- -------- ------ ------ ------- ------
Net operating expenses. . . . . . . 0 0 0 0 0 0 0
-------- -------- -------- ------ ------ ------- ------
Net investment income . . . . . . . . 22,042 22,259 7,580 15,804 4,588 4,094 2,153
-------- -------- -------- ------ ------ ------- ------
REALIZED AND UNREALIZED
GAIN(LOSS) ON INVESTMENTS-NET
Net realized gain (loss) on
investments . . . . . . . . . . . . -- (3,124) (4,635) (1,752) (2,421) 20,465 (27,296)
Net unrealized appreciation
(depreciation) on investments. . . . -- 11,723 10,872 140,096 106,253 93,513 (107,765)
-------- -------- -------- ------ ------ ------- -------
Net realized gain (loss) and unrealized
appreciation (depreciation on
investments . . . . . . . . . . . . -- 8,599 6,237 138,344 103,832 113,978 (135,061)
-------- -------- -------- ------- ------- ------- ------

Net increase (decrease) in net assets
resulting from operations. . . . . $22,042 $30,858 $13,817 $154,148 $108,420 $118,072 ($132,908)
-------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- ---------

</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENT

B-21

<PAGE>

<TABLE>
<CAPTION>
------------ ------------ --------- -------------- -------------- -------------- -----------
U.S. Large Large Inter-
Government Investment Municipal Capitalization Capitalization Small national
Money Market Quality Bond Bond Value Growth Capitalization Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ --------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income . . . . . . . $22,042 $22,259 $7,580 $15,804 $4,588 $4,094 $2,153
Net realized gain (loss) on
investments. . . . . . . . . . . . -- (3,124) (4,635) (1,752) (2,421) 20,465 (27,296)
Net unrealized appreciation
(depreciation) on investments. . . -- 11,723 10,872 140,096 106,253 93,513 (107,765)
------------ ------------ --------- -------------- -------------- -------------- -----------
Net increase (decrease) in net
assets resulting from operations. 22,042 30,858 13,817 154,148 108,420 118,072 (132,908)
------------ ------------ --------- -------------- -------------- -------------- -----------

DIVIDENDS TO SHAREHOLDERS
Net investment income . . . . . . . (22,042) (22,259) (7,580) (6,542) (1,795) (3,118) (1,115)
------------ ------------ --------- -------------- -------------- -------------- -----------

SHARE TRANSACTIONS OF BENEFICIAL
INTERESTS
Net proceeds from sales . . . . . . 1,792,893 1,426,420 571,243 2,305,675 2,451,207 3,211,324 1,700,192
Reinvestment of dividends . . . . . 21,923 20,817 7,520 6,455 1,761 2,947 1,106
Cost of shares redeemed . . . . . . (47,328) (351,823) (143,037) (322,558) (583,118) (212,505) (203,864)
------------ ------------ --------- -------------- -------------- -------------- -----------
Net increase in net assets from
share transactions of beneficial
interest. . . . . . . . . . . . . 1,767,488 1,095,414 435,726 1,989,572 1,869,850 3,001,766 1,497,434
------------ ------------ --------- -------------- -------------- -------------- -----------
Total increase in net assets . . 1,767,488 1,104,013 441,963 2,137,178 1,976,475 3,116,720 1,363,411

NET ASSETS
Beginning of period . . . . . . . . 100,000 0 0 0 0 0 0
------------ ------------ --------- -------------- -------------- -------------- -----------
End of period (including
undistributed net investment
income of $0, $0, $0, $9.262.
$2,793, $976 and $1,038,
respectively . . . . . . . . . . . $1,867,488 $1,104,013 $441,963 $2,137,178 $1,976,475 $3,116,720 $1,363,411
------------ ------------ --------- -------------- -------------- -------------- -----------
------------ ------------ --------- -------------- -------------- -------------- -----------

SHARES OF BENEFICIAL INTEREST
ISSUED AND REDEEMED
Issued . . . . . . . . . . . . . . 1,792,893 145,663 59,744 234,648 244,543 330,073 180,775
Issued from reinvestment of
dividends. . . . . . . . . . . . 21,923 2,132 786 669 176 304 118
Redeemed . . . . . . . . . . . . . (47,328) (35,901) (15,360) (31,853) (57,643) (21,691) (22,778)

------------ ------------ --------- -------------- -------------- -------------- -----------
Net increase . . . . . . . . . . 1,767,488 111,894 45,170 203,464 187,076 308,686 158,115
------------ ------------ --------- -------------- -------------- -------------- -----------
------------ ------------ --------- -------------- -------------- -------------- -----------

DIVIDENDS PER SHARE
Net investment income. . . . . . . $0.024 $0.298 $0.271 $0.047 $0.013 $0.014 $0.009
------------ ------------ --------- -------------- -------------- -------------- -----------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

B-22

<PAGE>

FEBRUARY 28, 1995
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Saratoga Advantage Trust (the "Trust") was organized on April 8, 1994
as a Delaware Business Trust and is registered under the Investment Company Act
of 1940, as amended, as a diversified, open - end management investment company.
The Trust consists of seven Portfolios: the U.S. Government Money Market
Portfolio; the Investment Quality Bond Portfolio; the Municipal Bond Portfolio;
the Large Capitalization Value Portfolio; the Large Capitalization Growth
Portfolio; the Small Capitalization Portfolio and the International Equity
Portfolio. Saratoga Capital Management (the "Manager") serves as the Trusts'
manager. Each of the Portfolios are provided with discretionary advisory
services of an Adviser identified, retained, supervised and compensated by the
Manager. The following serve as Advisers (the "Advisers") to their respective
portfolio(s): Quest for Value Advisors - Municipal Bond and Large Capitalizaton
Value; Fox Asset Management, Inc. - Investment Quality Bond; Harris Bretall
Sullivan & Smith, Inc. - Large Capitalization Growth; Axe - Houghton Associates,
Inc. - Small Capitalization; Sterling Capital Management Company - U.S.
Government Money Market and Ivory & Sime International, Inc. - International
Equity. Quest for Value Advisors (the "Administrator") provides the Trust with
administrative services. Quest for Value Distributors (the "Distributor") serves
as the Trusts' distributor. The Manager, Administrator and Distributor are all
affiliates of Oppenheimer Capital. On August 19, 1994, U.S. Government Money
Market issued 100,000 shares to the Manager for $100,000 to provide the initial
capital for the Trust.
The following is a summary of significant accounting policies consistently
followed by each Portfolio in the preparation of its financial statements:

(a) VALUATION OF INVESTMENTS

Investment securities listed on a national securities exchange and
securities traded in the over - the - counter National Market System are valued
at the last reported sale price on the valuation date; if there are no such
reported sales, the securities are valued at the last quoted bid price. Other
securities traded over - the - counter and not part of the National Market
System are valued at the last quoted bid price. Investment debt securities
(other than short - term obligations) are valued each day by an independent
pricing service approved by the Board of Trustees using methods which include
current market quotations from a major market maker in the securities and trader
- - reviewed "matrix" prices. Short - term debt securities having a remaining
maturity of sixty days or less are valued at amortized cost or amortized value,
which approximates market value. Any securities or other assets for which market
quotations are not readily available are valued at their fair value as
determined in good faith under procedures established by the Trusts' Board of
Trustees. The ability of issuers of debt securities held by the portfolios to
meet their obligations may be affected by economic or political developments in
a specific state, industry or region. U.S. Government Money Market values all of
its securities on the basis of amortized cost which approximates market value.

(b) FEDERAL INCOME TAX

It is each Portfolio's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable and tax - exempt income to
shareholders; accordingly, no federal income tax provision is required.

In connection with the Trusts' organization, each Portfolio incurred
approximately $67,000 in costs. These costs have been deferred and are being
amortized to expense on a straight - line basis over sixty months from
commencement of operations.

(d) SECURITY TRANSACTIONS AND OTHER INCOME

Security transactions are accounted for on the trade date. In determining
the gain or loss from the sale of securities, the cost of securities sold is
determined on the basis of identified cost. Dividend income is recorded on the
ex - dividend date and interest income is accrued as earned. Discounts or
premiums on debt securities purchased are accreted or amortized to interest
income over the lives of the respective securities.

(e) DIVIDENDS AND DISTRIBUTIONS

The following table summarizes each Portfolio's dividend and capital gain
declaration policy:

INCOME SHORT-TERM LONG-TERM
DIVIDENDS CAPITAL GAINS CAPITAL GAINS
------------------------------------------
<S> <C> <C> <C>
U.S. Government Money Market daily * annually annually
Investment Quality Bond daily * annually annually
Municipal Bond daily * annually annually
Large Capitalization Value annually annually annually
Large Capitalization Growth annually annually annually
Small Capitalization annually annually annually
International Equity annually annually annually
* paid monthly
</TABLE>

Each Portfolio records dividends and distributions to its shareholders on the
ex - dividend date.

(f) ALLOCATION OF EXPENSES

Expenses specifically identifiable to a particular Portfolio are borne by
that Portfolio. Other expenses are allocated to each Portfolio based on its net
assets in relation to the total net assets of all the applicable Portfolios or
another reasonable basis.

2. MANAGEMENT FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS WITH AFFILIATES

(a) The management fees, payable monthly to the Manager, are computed daily
at the following annual rates of each Portfolios' average daily net assets:
.475% for U.S. Government Money Market; .55% for Investment Quality Bond and
Municipal Bond; .65% for Large Capitalization Value, Large Capitalization Growth
and Small Capitalization; and .75% for International Equity.
For the period September 2, 1994 (commencement of operations) to February
28, 1995, the Manager has voluntarily waived all management fees and reimbursed
the Portfolios for all other operating expenses.
(b) The Manager pays a portion of its management fees to the Advisers at
the following annual rates of each Portfolios' average daily net assets: .125%
for U.S. Government Money Market; .20% for Investment Quality Bond and Municipal
Bond; .30% for Large Capitalization Value, Large Capitalization Growth and Small
Capitalization and .40% for International Equity.

B-23

<PAGE>

FEBRUARY 28, 1995
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

(c) The administration fee is accrued daily and payable monthly to the
Administrator at an annual rate of $42,000 for each Portfolio, provided that
each Portfolio's net assets do not exceed $80 million. In the event that a
Portfolio's net assets exceed $80 million, an additional fee of .05% of net
assets in excess of $80 million shall be payable by the Portfolio.
For the period September 2, 1994 (commencement of operations) to February
28, 1995 each Portfolio accrued $20,769 in administrative fees.
(d) Total brokerage commissions paid by Investment Quality Bond, Large
Capitalization Value and Small Capitalization were $317, $2,297 and $2,954,
respectively. Oppenheimer & Co., Inc., an affiliate of the Manager, received
$1,737 from Large Capitalization Value and Hoenig & Co., Inc. an affiliate of
Axe-Houghton Associates, Inc., received $317 and $2,328 from Investment Quality
Bond and Small Capitalization, respectively, for the period September 2, 1994
(commencement of operations) to February 28, 1995.

3. PURCHASE AND SALES OF SECURITIES

For the period September 2, 1994 (commencement of operations) to February
28, 1995, purchases and sales of investment securities, other than short - term
securities, were as follows:

<TABLE>
<CAPTION>
PURCHASES SALES
---------- --------
<S> <C> <C>
Investment Quality Bond $1,244,046 $182,849
Municipal Bond 499,162 107,441
Large Capitalization Value 1,660,208 24,685
Large Capitalization Growth 1,756,563 68,087
Small Capitalization 3,383,831 717,218
International Equity 1,316,526 119,383
</TABLE>

For the period September 2, 1994 (commencement of operations) to February 28,
1995, U.S. Government Money Market had purchases and sales/maturities of
short-term securities of $9,423,849 and $7,645,000, respectively.

4. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES

At February 28, 1995, the composition of unrealized appreciation (depreciation)
of investment securities and the cost of investments for Federal income tax
purposes were as follows:

<TABLE>
<CAPTION>
APPRECIATION (DEPRECIATION) NET TAX COST
---------------------------------------------------
<S> <C> <C> <C> <C>
Investment Quality Bond $12,704 ($981) $11,723 $1,060,434
Municipal Bond 10,996 (124) 10,872 387,160
Large Capitalization Value 144,870 (4,774) 140,096 1,848,563
Large Capitalization Growth 142,637 (36,384) 106,253 1,686,043
Small Capitalization 142,735 (49,222) 93,513 2,689,178
International Equity 7,178 (114,943) (107,765) 1,169,847
</TABLE>

5. AUTHORIZED SHARES OF BENEFICIAL INTEREST AND PAR VALUE PER SHARE

Each Portfolio has unlimited shares of beneficial interest authorized with
$.001 par value per share.

B-24

<PAGE>

FINANCIAL HIGHLIGHTS (For a share outstanding throughout each period)
(unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT DIVIDENDS DIVIDENDS RATIOS
-------------------------------- ------------ ----------------------------------
Net
Realized
and Dividends to Ratio of Net Ratio of Net
Net Asset Unrealized Total Shareholders Net Asset Net Assets Operating Investment
Value, Net Gain from from Net Value, End of Expenses Income Portfolio
Beginning Investment (Loss as) Investment Investment End of Total Period to Average to Average Turnover
of Period Income Investment Operations Income Period Return* (000's) Net Assets Net Assets Rate

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SEPTEMBER 2, 1994 (2) TO
FEBRUARY 28 $1.000 (3) $0.024 $0.000 $0.024 ($0.024) $1.000 2.47% $1,867 0.00%(1,4,5) 5.58%(1,4,5) --
(1) DURING THE PERIOD PRESENTED ABOVE, SARATOGA CAPITAL MANAGEMENT HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED THE
PORTFOLIO FOR ALL OF ITS OPERATING EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE ANNUALIZED RATIO OF
NET OPERATING EXPENSES TO AVERAGE DAILY NET ASSETS AND THE ANNUALIZED RATIO OF NET INVESTMENT LOSS TO AVERAGE DAILY NET ASSETS
WOULD HAVE BEEN 14.85% AND (9.27%), RESPECTIVELY.

INVESTMENT QUALITY BOND PORTFOLIO
SEPTEMBER 2, 1994 (2) TO
FEBRUARY 28 $10.00 (3) $0.30 ($0.13) $0.17 ($0.30) $9.87 1.75% $1,104 0.00%(1,4,5) 6.19%(1,4,5) 26%
(1) DURING THE PERIOD PRESENTED ABOVE, SARATOGA CAPITAL MANAGEMENT HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED THE
PORTFOLIO FOR ALL OF ITS OPERATING EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE ANNUALIZED RATIO OF
NET OPERATING EXPENSES TO AVERAGE DAILY NET ASSETS AND THE ANNUALIZED RATIO OF NET INVESTMENT LOSS TO AVERAGE DAILY NET ASSETS
WOULD HAVE BEEN 16.20% AND (10.01%), RESPECTIVELY.

MUNICIPAL BOND PORTFOLIO
SEPTEMBER 2, 1994 (2) TO
FEBRUARY 28 $10.00 (3) $0.27 ($0.22) $0.05 ($0.27) $9.78 0.61% $442 0.00%(1,4,5) 5.50%(1,4,5) 38%
(1) DURING THE PERIOD PRESENTED ABOVE, SARATOGA CAPITAL MANAGEMENT HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED THE
PORTFOLIO FOR ALL OF ITS OPERATING EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE ANNUALIZED RATIO OF
NET OPERATING EXPENSES TO AVERAGE DAILY NET ASSETS AND THE ANNUALIZED RATIO OF NET INVESTMENT LOSS TO AVERAGE DAILY NET ASSETS
WOULD HAVE BEEN 43.43% AND (37.93%), RESPECTIVELY.

LARGE CAPITALIZATION VALUE PORTFOLIO
SEPTEMBER 2, 1994 (2) TO
FEBRUARY 28 $10.00 (3) $0.14 $0.41 $0.55 ($0.05) $10.50 5.51% $2,137 0.00%(1,4,5) 2.95%(1,4,5) 3%
(1) DURING THE PERIOD PRESENTED ABOVE, SARATOGA CAPITAL MANAGEMENT HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED THE
PORTFOLIO FOR ALL OF ITS OPERATING EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE ANNUALIZED RATIO OF
NET OPERATING EXPENSES TO AVERAGE DAILY NET ASSETS AND THE ANNUALIZED RATIO OF NET INVESTMENT LOSS TO AVERAGE DAILY NET ASSETS
WOULD HAVE BEEN 11.92% AND (8.97%), RESPECTIVELY.

LARGE CAPITALIZATION GROWTH PORTFOLIO
SEPTEMBER 2, 1994 (2) TO
FEBRUARY 28 $10.00 (3) $0.04 $0.54 $0.58 ($0.01) $10.57 5.84% $1,976 0.00%(1,4,5) 0.89%(1,4,5) 7%
(1) DURING THE PERIOD PRESENTED ABOVE, SARATOGA CAPITAL MANAGEMENT HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED THE
PORTFOLIO FOR ALL OF ITS OPERATING EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE ANNUALIZED RATIO OF
NET OPERATING EXPENSES TO AVERAGE DAILY NET ASSETS AND THE ANNUALIZED RATIO OF NET INVESTMENT LOSS TO AVERAGE DAILY NET ASSETS
WOULD HAVE BEEN 13.01% AND (12.12%), RESPECTIVELY.

SMALL CAPITALIZATION PORTFOLIO
SEPTEMBER 2, 1994 (2) TO
FEBRUARY 28 $10.00 (3) $0.03 $0.08 $0.11 ($0.01) $10.10 1.14% $3,117 0.00%(1,4,5) 0.53%(1,4,5) 43%
(1) DURING THE PERIOD PRESENTED ABOVE, SARATOGA CAPITAL MANAGEMENT HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED THE
PORTFOLIO FOR ALL OF ITS OPERATING EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE ANNUALIZED RATIO OF
NET OPERATING EXPENSES TO AVERAGE DAILY NET ASSETS AND THE ANNUALIZED RATIO OF NET INVESTMENT LOSS TO AVERAGE DAILY NET ASSETS
WOULD HAVE BEEN 9.08% AND (8.55%), RESPECTIVELY.

INTERNATIONAL EQUITY PORTFOLIO
SEPTEMBER 2, 1994 (2) TO
FEBRUARY 28 $10.00 (3) $0.02 ($1.39) ($1.37) ($0.01) $8.62 (13.72%) $1,363 0.00%(1,4,5) 0.52%(1,4,5) 16%
(1) DURING THE PERIOD PRESENTED ABOVE, SARATOGA CAPITAL MANAGEMENT HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED THE
PORTFOLIO FOR ALL OF ITS OPERATING EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE ANNUALIZED RATIO OF
NET OPERATING EXPENSES TO AVERAGE DAILY NET ASSETS AND THE ANNUALIZED RATIO OF NET INVESTMENT LOSS TO AVERAGE DAILY NET ASSETS
WOULD HAVE BEEN 15.04% AND (14.52%), RESPECTIVELY.

- -----------------------------------------------------------------------
<FN>
(2) COMMENCEMENT OF OPERATIONS.
(3) OFFERING PRICE.
(4) AVERAGE DAILY NET ASSETS FOR THE PERIOD ENDED FEBRUARY 28, 1995 WERE $800,530, $728,607, $279,695, $1,086,072, $1,040,838,
$1,555,429 AND $838,426 FOR U.S. GOVERNMENT MONEY MARKET, INVESTMENT QUALITY BOND, MUNICIPAL BOND, LARGE CAPITALIZATION VALUE,
LARGE CAPITALIZATION GROWTH, SMALL CAPITALIZATION AND INTERNATIONAL EQUITY, RESPECTIVELY.
(5) ANNUALIZED.

* Assumes reinvestment of all dividends. Aggregate (not annualized) total return is shown for any period shorter than one year.

</TABLE>

B-25

<PAGE>

PART C OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

Financial Statements:

Included in the Prospectus:

Financial Highlights

Included in Part B:

Audited Financials: Statement of Assets and Liabilities
August 19, 1994

Unaudited Financials:
Schedules of Investments, Statements of Assets and Liabilities,
Statements of Operations, Statements of Changes in Net Assets, Notes to
Financial Statements and Financial Highlights for the period September
2, 1994 (commencement of operations) to February 28, 1995.

Included in Part C:

None

Exhibits:
- --------

(1)(a) Agreement and Declaration of Trust.
(b) Amendment No. 1 to the Agreement and Declaration of Trust.

(2) By-laws of Registrant.

(3) Not Applicable.

(4) Not Applicable.

(5) (a) Management Agreement.

(b) (1) Investment Advisory Agreement between Saratoga Capital
Management and Sterling Capital Management Company with respect
to the US Government Money Market Portfolio.

(b) (2) Investment Advisory Agreement between Saratoga Capital
Management and Fox Asset Management, Inc. with respect to the
Investment Quality Bond Portfolio.

C-1

<PAGE>

(b) (3) Investment Advisory Agreement between Saratoga Capital
Management and Quest for Value Advisors with respect to the
Municipal Bond Portfolio.

(b) (4) Investment Advisory Agreement between Saratoga Capital
Management and Quest for Value Advisors with respect to the Large
Capitalization Value Portfolio.

(b) (5) Investment Advisory Agreement between Saratoga Capital
Management and Harris Bretall Sullivan & Smith Inc. with respect
to the Large Capitalization Growth Portfolio.

(b) (6) Investment Advisory Agreement between Saratoga Capital
Management and Axe-Houghton Associates, Inc. with respect to the
Small Capitalization Portfolio.

(b) (7) Investment Advisory Agreement between Saratoga Capital
Management and Ivory & Sime International, Inc. with respect
to the International Equity Portfolio.

(b) (8) Sub-Investment Advisory Agreement between Ivory & Sime
International, Inc. and Ivory & Sime plc with respect to the
International Equity Portfolio.

(6) (a) General Distributor's Agreement.

(b) Soliciting Dealer Agreement.

(7) Not Applicable.

(8) Custodian Contract.

(9) Administration Agreement.

(10) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will when
sold be legally issued, fully paid and non-assessable.

(11) Consent of Independent Accountants.

(12) Not Applicable.

(13) Agreement relating to initial capital.

(14) Not Applicable.

(15) Not Applicable.

C-2

<PAGE>

(16) Schedule for Computation of Performance Calculations.

ITEM 25.PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

No person is presently controlled by or under common control with
the Registrant.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

Number of Record
Holders as of
Title of Class April 19, 1995
-------------- --------------

SHARES OF BENEFICIAL INTEREST
U.S. Government Money Market Portfolio...........................225
Investment Quality Bond Portfolio................................178
Municipal Bond Portfolio..........................................65
Large Capitalization Value Portfolio.............................302
Large Capitalization Growth Portfolio............................295
Small Capitalization Portfolio...................................315
International Equity Portfolio...................................278

ITEM 27. INDEMNIFICATION

See Article VI of the Registrant's Agreement and Declaration of Trust.

A determination that a trustee or officer is entitled to
indemnification may be made by a reasonable
determination, based upon a review of the facts, that the
person was not liable by reason of Disabling Conduct (as
defined in the Agreement and Declaration of Trust) by (a)
a vote of a majority of a quorum of Trustees who are
neither interested persons of the Trust (as defined under
the Investment Company Act of 1940) nor parties to the
proceeding or (b) an independent legal counsel in a
written opinion. Expenses including counsel and
accountants fees (but excluding amounts paid in
satisfaction of judgments,in compromise or as fines or
penalties) may be advanced pending final disposition of
the proceeding provided that the officer or trustee shall
have undertaken to repay the amounts to the Trust if it
is ultimately determined that indemnification is not
authorized under the Agreement and Declaration of Trust
and (i) such person shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses
arising by reason of any lawful advances or (iii) a majority
of a quorum of disinterested Trustees who are not party to the
proceeding, or an independent legal counsel in a written opinion,
shall have determined based on review of readily available facts
that there is reason to believe that the officer or trustee
ultimately will be found entitled to indemnification.

C-3

<PAGE>

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS

See "Management of the Trust" in the Prospectus and
"Investment Advisory Services" in the Additional
Statement regarding the business of the investment
advisers. For information as to the business,
profession, vocation or employment of a substantial
nature of each of the officers and directors of the
investment advisers, reference is made to the Form ADV of
Sterling Capital Management Company, File No. 801-
8776, the Form ADV of Axe-Houghton Associates, Inc., File
No 801-21166, the Form ADV of Fox Asset Management,
Inc., File. 801-26397, the Form ADV of Ivory & Sime
International, Inc., File No. 801-13750, the Form ADV of
Harris Bretall Sullivan & Smith, Inc. File No. 801-7369
and the Form ADV of Quest for Value Advisors, File No.
801-27180, filed under the Investment Advisers Act of
1940, and Schedules D and F thereto, incorporated herein
by reference.

ITEM 29. PRINCIPAL UNDERWRITER

(a) Quest for Value Distributors acts as
principal underwriter for the Registrant, Quest for Value
Dual Purpose Fund, Inc., Quest for Value Fund, Inc.,
Quest for Value Global Equity Fund, Inc., Quest for Value
Global Funds, Inc., Quest Cash Reserves, Inc., Quest for
Value Family of Funds and Quest for Value Accumulation
Trust.

(b) Set forth below is certain information
pertaining to the partners and officers of Quest for
Value Distributors, Registrant's Principal Underwriter;
THE PRINCIPAL BUSINESS ADDRESS OF MR. MURATORE AND MR.
CARINE IS TWO WORLD FINANCIAL CENTER, NEW YORK, NY,
10080; THE PRINCIPAL BUSINESS ADDRESS OF MR. SIEGEL AND
MR. DUGGAN IS ONE WORLD FINANCIAL CENTER, NEW YORK, NEW
YORK 10281.

<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
- --------------------------- ---------------------- ----------------------
<S> <C> <C>

Oppenheimer Capital General Partner None

Oppenheimer Financial Corp. General Partner None

Peter Muratore President None

Sheldon Siegel Treasurer Treasurer

Thomas E. Duggan Secretary Assistant Secretary

Arthur G. Carine. Jr. Chief Operating Officer None

</TABLE>

C-4

<PAGE>

ITEM 30. LOCATION OF REQUIRED RECORDS -- RULE 31A-1

State Street Bank and Trust Company
One Heritage Drive
North Quincy, Mass. 01271

Will maintain records required by Rule 31a-1(b)(1), (b)(2), (b)(3),
(b)(5), (b)(6), (b)(7) and (b)(8).

Quest for Value Advisors
One World Financial Center
New York, NY 10281

Will maintain records required by Rule 31a-1(b)(4) and (b)(11) and
(b)(9) and (b)(10) with respect to the Municipal Bond and the Large
Capitalization Value Portfolio.

Records required by 31a-1(b)(9) and (b)(10) will be maintained on
behalf of the following portfolios by their respective Advisors:

Investment Quality Bond Fox Asset Management, Inc.
Portfolio 44 Sycamore Avenue
Little Silver, NJ 07739

Large Capitalization Harris Bretall Sullivan & Smith, Inc.
Growth Portfolio One Post Street
San Francisco, CA 94104

Small Capitalization Axe-Houghton Associates, Inc.
Portfolio Royal Executive Park
4 International Drive
Rye Brook, New York 10573

U.S. Government Sterling Capital Management Company
Money Market Portfolio One First Union Center
301 S College Street
Suite 3200
Charlotte, N.C. 282202

International Equity Ivory & Sime plc
Portfolio 1 Charlotte Square
Edinburgh Scotland EH24 DZ

ITEM 31. MANAGEMENT SERVICES

Not Applicable.

C-5

<PAGE>

ITEM 32. UNDERTAKINGS

(a) Not applicable.

(b) Registrant hereby undertakes to file a post-effective amendment
containing financial statements for Registrant, which need not
be certified, within four to six months from the effective date of
the Registrant's registration statement under the Securities
Act of 1933.

(c) Registrant hereby undertakes to assist shareholder communication
in accordance with the provisions of Section 16 of the Investment
Company Act of 1940 and to call a meeting of shareholders for the
purpose of voting upon the question of the removal of a Trustee or
Trustees when requested in writing to do so by the holders of at
least 10% of the Registrant's outstanding shares of beneficial
interest.

C-6
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
registration statement to be signed on its behalf by the undersigned thereto
duly authorized in the City of New York, and State of New York on the 5th day
of May, 1995.

THE SARATOGA ADVANTAGE TRUST

Bruce Ventimiglia
----------------------------
Bruce Ventimiglia, President
(Principal Executive Officer)
Attest:

Deborah Kaback
- --------------------------
Deborah Kaback, Secretary

Pursuant to the requirements of the Securities Act of 1933 this
registration statement has been signed below by the following persons in the
capacities and on the date indicated:

Date

Bruce Ventimiglia May 5, 1995
- --------------------------------------- -------------------
Bruce Ventimiglia, President,
Principal Executive Officer and Trustee

Joseph M. La Motta May 5, 1995
- --------------------------------------- -------------------
Joseph M. La Motta
Chairman of the Board and Trustee

Sheldon Siegel May 5, 1995
- --------------------------------------- -------------------
Officer and Chief Accounting Officer

Lacy B. Herrmann May 5, 1995
- --------------------------------------- -------------------
Lacy B. Herrmann, Trustee

George Loft May 5, 1995
- --------------------------------------- -------------------
George Loft, Trustee

Patrick H. McCollough May 5, 1995
- --------------------------------------- -------------------
Patrick H. McCollough, Trustee

C-7

<PAGE>

THE SARATOGA ADVANTAGE TRUST

INDEX TO EXHIBITS

EXHIBIT NO.

(1)(a) Agreement and Declaration of Trust.
(b) Amendment No. 1 to the Agreement and Declaration of Trust.

(2) By-laws of Registrant.

(5)(a) Management Agreement.

(b) (1) Investment Advisory Agreement between Saratoga Capital
Management and Sterling Capital Management Company with respect
to the US Government Money Market Portfolio.

(b) (2) Investment Advisory Agreement between Saratoga Capital
Management and Fox Asset Management, Inc. with respect to the
Investment Quality Bond Portfolio.

(b) (3) Investment Advisory Agreement between Saratoga Capital
Management and Quest for Value Advisors with respect to the
Municipal Bond Portfolio.

(b) (4) Investment Advisory Agreement between Saratoga Capital
Management and Quest for Value Advisors with respect to the Large
Capitalization Value Portfolio.

(b) (5) Investment Advisory Agreement between Saratoga Capital
Management and Harris Bretall Sullivan & Smith Inc. with respect
to the Large Capitalization Growth Portfolio.

(b) (6) Investment Advisory Agreement between Saratoga Capital
Management and Axe-Houghton Associates, Inc. with respect to the
Small Capitalization Portfolio.

(b) (7) Investment Advisory Agreement between Saratoga Capital
Management and Ivory & Sime International, Inc. with respect to
the International Equity Portfolio.

(b) (8) Sub-Investment Advisory Agreement between Ivory & Sime
International, Inc. and Ivory & Sime plc with respect to the
International Equity Portfolio.

(6) (a) General Distributor's Agreement.

(b) Soliciting Dealer Agreement.

<PAGE>

(8) Custodian Contract.

(9) Administration Agreement.

(10) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will
when sold be legally issued, fully paid and non-assessable.

(11) Consent of Independent Accountants.

(13) Agreement relating to initial capital.

(16) Schedule for Computation of Performance Calculations.

(27) (a) Saratoga U.S. Government Portfolio Financial Data
Schedule

(b) Saratoga Investment Quality Bond Portfolio
Financial Data Schedule

(d) Saratoga Large Capitalization Value Portfolio
Financial Data Schedule

(e) Saratoga Large Capitalization Growth Portfolio
Financial Data Schedule

(f) Saratoga Small Capitalization Portfolio
Financial Data Schedule

(g) Saratoga International Equity Portfolio
Financial Data Schedule

<PAGE>

THE SARATOGA ADVANTAGE TRUST
MASTER TRUST AGREEMENT

<PAGE>

TABLE OF CONTENTS
-----------------

<S> <C>
ARTICLE I NAME AND DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1.1 Name and Principal Office. . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

(a) "Act". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) "By-Laws". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(c) "class". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) "Commission" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(e) "Declaration of Trust" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(f) "Fundamental Policies" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) "Majority of the Outstanding Voting Shares". . . . . . . . . . . . . . . . 2
(h) "1940 Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(i) "person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(j) "Prospectus" and "Statement of Additional
Information" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(k) "Shareholder". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(l) "Shares" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(m) "Sub-Trust" or "Series". . . . . . . . . . . . . . . . . . . . . . . . . . 2
(n) "Trust". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(o) "Trustees" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE II PURPOSE OF TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE III THE TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Section 3.1 Number, Designation, Election, Term, etc.. . . . . . . . . . . . . . . . . . . . 3

(a) Trustees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Election and Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Resignation and Retirement.. . . . . . . . . . . . . . . . . . . . . . . . 3
(e) Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(f) Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(g) Effect of Death, Resignation, etc. . . . . . . . . . . . . . . . . . . . . 4
(h) No Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

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<PAGE>

Section 3.2 Powers of Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

(a) Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Disposition of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Ownership Powers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Subscription.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Form of Holding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(f) Reorganization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(g) Voting Trusts, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(h) Compromise.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(i) Partnerships, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(j) Borrowing and Security.. . . . . . . . . . . . . . . . . . . . . . . . . . 7
(k) Guarantees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(l) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(m) Pensions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(n) Distribution Plans.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Section 3.3 Certain Contracts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

(a) Management.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Advisory.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Administration.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Distribution.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Custodian and Depositary.. . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) Transfer and Dividend Disbursing Agency. . . . . . . . . . . . . . . . . . 8
(g) Shareholder Servicing. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(h) Accounting.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Section 3.4 Payment of Trust Expenses and Compensation of Trustees. . . . . . . . . . . . . 9

Section 3.5 Ownership of Assets of the Trust. . . . . . . . . . . . . . . . . . . . . . . . 10

Section 3.6 Action by Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE IV SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Section 4.1 Description of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Section 4.2 Establishment and Designation of Sub-Trusts and Classes . . . . . . . . . . . . 12

(a) Assets Belonging to Sub-Trusts.. . . . . . . . . . . . . . . . . . . . . . 12
(b) Liabilities Belonging to Sub-Trusts. . . . . . . . . . . . . . . . . . . . 13

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<PAGE>
(c) Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Liquidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(e) Voting.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(f) Redemption by Shareholder. . . . . . . . . . . . . . . . . . . . . . . . . 15
(g) Redemption by Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(h) Net Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(i) Transfer.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(j) Equality.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(k) Fractions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(l) Conversion Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(m) Class Differences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Section 4.3 Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Section 4.4 Investments in the Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Section 4.5 No Pre-emptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Section 4.6 Status of Shares and Limitation of Personal Liability . . . . . . . . . . . . . 17

Section 4.7 No Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE V SHAREHOLDERS' VOTING POWERS AND MEETINGS. . . . . . . . . . . . . . . . . . . . 18

Section 5.1 Voting Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 5.2 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 5.3 Record Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 5.4 Quorum and Required Vote. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 5.5 Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 5.6 Inspection of Records.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Section 5.7 Additional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE VI LIMITATION OF LIABILITY; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . 20

Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice. . . . . . . . . . . 20

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<PAGE>

Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety . . . . . . . . . 20

Section 6.3 Indemnification of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 21

Section 6.4 Indemnification of Trustees, Officers, etc. . . . . . . . . . . . . . . . . . . 21

Section 6.5 Compromise Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Section 6.6 Indemnification Not Exclusive, etc. . . . . . . . . . . . . . . . . . . . . . . 22

Section 6.7 Liability of Third Persons Dealing with Trustees. . . . . . . . . . . . . . . . 23

Section 6.8 Discretion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Section 7.1 Duration and Termination of Trust.. . . . . . . . . . . . . . . . . . . . . . . 23

Section 7.2 Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Section 7.3 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Section 7.4 Filing of Copies; References; Headings. . . . . . . . . . . . . . . . . . . . . 25

Section 7.5 Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Section 7.6 Registered Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Section 7.7 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

</TABLE>

-iv-
<PAGE>

MASTER TRUST AGREEMENT

AGREEMENT AND DECLARATION OF TRUST made this ____ day of April, 1994,
by the Trustees hereunder, and by the holders of shares of beneficial
interest to be issued hereunder as hereinafter provided.

WITNESSETH

WHEREAS this Trust has been formed to carry on the business of an
investment company; and

WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate series, each separate series to be a Sub-Trust
hereunder, and to issue classes of Shares of any Sub-Trust or divide Shares
of any Sub-Trust into two or more classes, all in accordance with the
provisions hereinafter set forth; and

WHEREAS the Trustees have agreed to manage all property coming into
their hands as trustees of a Delaware business trust in accordance with the
provisions of the Delaware Business Trust Act (12 DEL. C. Section 3801, ET
SEQ.), as from time to time amended and including any successor statute of
similar import (the "Act"), and the provisions hereinafter set forth.

NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same
upon the following terms and conditions for the benefit of the holders from
time to time of shares of beneficial interest in this Trust and the
Sub-Trusts created hereunder as hereinafter set forth.

ARTICLE I

NAME AND DEFINITIONS

SECTION 1.1 NAME AND PRINCIPAL OFFICE. This Trust shall be known as
"The Saratoga Advantage Trust" and the Trustees shall conduct the business of
the Trust under that name or any other name or names as they may from time to
time determine. The principal office of the Trust shall be located at such
location as the Trustees may from time to time determine.

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<PAGE>

SECTION 1.2 DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided:

(A) "ACT" shall have the meaning given to it in the recitals of this
Declaration of Trust;

(B) "BY-LAWS" shall mean the By-Laws of the Trust as amended from
time to time;

(C) "CLASS" refers to any class of Shares of any Series or Sub-Trust
established and designated under or in accordance with the provisions of
Article IV;

(D) "COMMISSION" shall have the meaning given it in the 1940 Act;

(E) "DECLARATION OF TRUST" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time;

(F) "FUNDAMENTAL POLICIES" shall mean the investment objectives,
policies and restrictions set forth in the Prospectus or Statement of
Additional Information and designated therein as policies or restrictions
that may be changed only upon a vote of the Shareholders;

(G) "MAJORITY OF THE OUTSTANDING VOTING SHARES" of the Trust or
Sub-Trust shall mean the vote, at the annual meeting, if any, or a special
meeting of Shareholders duly called, (A) of 67 per centum or more of the
Shares of the Trust or Sub-Trust present at such meeting, if holders of more
than 50 per centum of the outstanding Shares of the Trust or Sub-Trust are
present or represented by proxy; or (B) of more than 50 per centum of the
outstanding voting Shares of the Trust or Sub-Trust, whichever is the less;

(H) "1940 ACT" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;

(I) "PERSON" means a natural person, corporation, limited liability
company, trust, association, partnership (whether general, limited or
otherwise), joint venture or any other entity;

(J) "PROSPECTUS" and "STATEMENT OF ADDITIONAL INFORMATION" shall mean
the currently effective Prospectus and Statement of Additional Information of
the Trust under the Securities Act of 1933, as amended;

(K) "SHAREHOLDER" means a beneficial owner of record of Shares;

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<PAGE>

(L) "SHARES" refers to the transferable units of interest into which
the beneficial interest in the Trust and each Sub-Trust of the Trust and/or
any class of any Sub-Trust (as the context may require) shall be divided from
time to time;

(M) "SUB-TRUST" OR "SERIES" refers to a series of Shares established
and designated under or in accordance with the provisions of Article IV;

(N) "TRUST" refers to the Delaware business trust established by this
Declaration of Trust, inclusive of each and every Sub-Trust established
hereunder; and

(O) "TRUSTEES" refers to the trustees of the Trust and of each
Sub-Trust hereunder named herein or elected in accordance with Article III.

ARTICLE II

PURPOSE OF TRUST

The purposes of the Trust are (i) to operate as an investment company
and to offer Shareholders of the Trust and each Sub-Trust of the Trust one or
more investment programs primarily in securities and debt instruments, and
(ii) to engage in such activities that are necessary, suitable, incidental or
convenient to the accomplishment of the foregoing.

ARTICLE III

THE TRUSTEES

SECTION 3.1 NUMBER, DESIGNATION, ELECTION, TERM, ETC.

(P) TRUSTEES. The initial Trustees hereof shall be Joseph LaMotta and
Bruce Ventimiglia.

(Q) NUMBER. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase or decrease the number of Trustees
to a number other than the number theretofore determined. No decrease in the
number of Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his term, but the number of Trustees may be
decreased in conjunction with the removal of a Trustee pursuant to subsection
(e) of this Section 3.1.

(R) ELECTION AND TERM. Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a trustee of the Trust and of each
Sub-Trust hereunder during the lifetime of this Trust and until its
termination as hereinafter provided except as such Trustee sooner dies,
resigns, retires or is removed or

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<PAGE>

incapacitated. Subject to Section 16(a) of the 1940 Act, the Trustees may
elect successors and may, pursuant to Section 3.1(f) hereof, appoint Trustees
to fill vacancies.

(S) RESIGNATION AND RETIREMENT. Any Trustee may resign his trust or
retire as a trustee of the Trust, by written instrument signed by him and
delivered to the other Trustees or to any officer of the Trust, and such
resignation or retirement shall take effect upon such delivery or upon such
later date as is specified in such instrument and shall be effective as to
the Trust and each Sub-Trust hereunder.

(T) REMOVAL. Any Trustee may be removed with or without cause at any
time: (i) by written instrument, signed by at least two-thirds of the number
of Trustees in office immediately prior to such removal, specifying the date
upon which such removal shall become effective; or (ii) by vote of
Shareholders holding not less than two-thirds of the Shares then outstanding,
cast in person or by proxy at any meeting duly called for the purpose; or
(iii) by a written declaration signed by Shareholders holding not less than
two-thirds of the Shares then outstanding and filed with the minutes of the
Trust. Any such removal shall be effective as to the Trust and each
Sub-Trust hereunder.

(U) VACANCIES. Any vacancy or anticipated vacancy resulting from any
reason, including, without limitation, the death, resignation, retirement,
removal or incapacity of any of the Trustees, or resulting from an increase
in the number of Trustees by the other Trustees may (but so long as there are
at least two remaining Trustees, need not unless required by the 1940 Act) be
filled by a majority of the remaining Trustees, subject to the provisions of
Section 16(a) of the 1940 Act, through the appointment in writing of such
other person as such remaining Trustees in their discretion shall determine
and such appointment shall be effective upon the written acceptance of the
person named therein to serve as a trustee of the Trust and agreement by such
person to be bound by the provisions of this Declaration of Trust, except
that any such appointment in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees to be effective at
a later date shall be deemed effective upon the effective date of said
retirement, resignation or increase in number of Trustees.

(V) EFFECT OF DEATH, RESIGNATION, ETC. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall
cause a Trustee to cease to be a trustee of the Trust but shall not operate
to annul or terminate the Trust or any Sub-Trust hereunder or to revoke or
terminate any existing agency or contract created or entered into pursuant to
the terms of this Declaration of Trust.

(W) NO ACCOUNTING. Except to the extent required by the 1940 Act or
under circumstances which would justify his removal for cause, no person
ceasing to be a trustee of the Trust as a result of his death, resignation,
retirement, removal or

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<PAGE>

incapacity (nor the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.

SECTION 3.2 POWERS OF TRUSTEES. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. The Trustees in all
instances shall act as principals, and are and shall be free from the control
of the Shareholders. The Trustees shall have full power and authority to do
any and all acts and to make and execute any and all contracts and
instruments that they may consider necessary or appropriate in connection
with the management of the Trust. The Trustees shall not be bound or limited
by present or future laws or customs with regard to investment by trustees or
fiduciaries, but shall have full authority and absolute power and control
over the assets of the Trust and the business of the Trust to the same extent
as if the Trustees were the sole owners of the assets of the Trust and the
business in their own right, including such authority, power and control to
do all acts and things as they, in their sole discretion, shall deem proper
to accomplish the purposes of this Trust. Without limiting the foregoing, the
Trustees may adopt By-Laws not inconsistent with this Declaration of Trust
providing for the conduct of the business and affairs of the Trust and may
amend and repeal them to the extent that such By- Laws do not reserve that
right to the Shareholders; they may from time to time in accordance with the
provisions of Section 4.1 hereof establish Sub-Trusts, each such Sub-Trust to
operate as a separate and distinct investment medium and with separately
defined investment objectives and policies and distinct investment purposes;
they may from time to time in accordance with the provisions of Section 4.1
hereof establish Series or establish classes of Shares of any Series or
Sub-Trust or divide the Shares of any Series or Sub-Trust into classes; they
may as they consider appropriate designate employees and agents who may be
denominated as officers with titles, including, but not limited to,
"president," "vice-president," "treasurer," "secretary," "assistant
secretary," "assistant treasurer," "managing director," "chairman" and "vice
chairman" and who in such capacity may act for and on behalf of the Trust, as
and to the extent authorized by the Trustees, and appoint and terminate
agents and consultants and hire and terminate employees, any one or more of
the foregoing of whom may be a Trustee, and may provide for the compensation
of all of the foregoing; they may appoint from their own number, and
terminate, any one or more committees consisting of two or more Trustees,
including, without limitation, an executive committee, which may, when the
Trustees are not in session and subject to the 1940 Act, exercise some or all
of the power and authority of the Trustees as the Trustees may determine; in
accordance with Section 3.3 they may employ one or more managers, advisers,
administrators, depositaries and custodians and may authorize any depositary
or custodian to employ subcustodians or agents and to deposit all or any part
of such assets in a system or systems for the central handling of securities
and debt instruments, retain transfer, dividend, accounting or Shareholder
servicing agents or any of the foregoing, provide for the distribution of
Shares by the Trust through one

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or more distributors, principal underwriters or otherwise, and, subject to
Section 5.3, set record dates or times for the determination of Shareholders
or various of them with respect to various matters; they may compensate or
provide for the compensation of the Trustees, officers, managers, advisers,
administrators, custodians, other agents, consultants and employees of the
Trust or the Trustees on such terms as they deem appropriate; and in general
they may delegate to any officer of the Trust, to any committee of the
Trustees and to any employee, manager, adviser, administrator, distributor,
depositary, custodian, transfer and dividend disbursing agent, or any other
agent or consultant of the Trust such authority, powers, functions and duties
as they consider desirable or appropriate for the conduct of the business and
affairs of the Trust, including, without limitation, the power and authority
to act in the name of the Trust and any Sub-Trust and of the Trustees, to
sign documents and to act as attorney-in-fact for the Trustees.

Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority for and on behalf of the Trust and each separate Sub-Trust
established hereunder consistent with the Fundamental Policies:

(X) INVESTMENTS. To invest and reinvest cash and other property, and
to hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;

(Y) DISPOSITION OF ASSETS. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;

(Z) OWNERSHIP POWERS. To vote or give assent, or exercise any rights
of ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person
or persons such power and discretion with relation to securities, debt
instruments or property as the Trustees shall deem proper;

(AA) SUBSCRIPTION. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;

(BB) FORM OF HOLDING. To hold any security, debt instrument or
property in a form not indicating any trust, whether in bearer, unregistered
or other negotiable form, or in the name of the Trustees or of the Trust or
of any Sub-Trust or in the name of a custodian, subcustodian or other
depositary or a nominee or nominees or otherwise;

(CC) REORGANIZATION, ETC. To consent to or participate in any plan for
the reorganization, consolidation or merger of any corporation or issuer, any
security or

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debt instrument of which is or was held in the Trust; to consent to any
contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;

(DD) VOTING TRUSTS, ETC. To join with other holders of any securities or
debt instruments in acting through a committee, depositary, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depositary or
trustee as the Trustees shall deem proper;

(EE) COMPROMISE. To compromise, arbitrate or otherwise adjust claims
in favor of or against the Trust or any Sub-Trust or any matter in
controversy, including, without limitation, claims for taxes;

(FF) PARTNERSHIPS, ETC. To enter into joint ventures, general or
limited partnerships, limited liability companies and any other combinations
or associations;

(GG) BORROWING AND SECURITY. To borrow funds and to mortgage and
pledge the assets of the Trust or any part thereof to secure obligations
arising in connection with such borrowing;

(HH) GUARANTEES, ETC. To endorse or guarantee the payment of any notes
or other obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof; and to
mortgage and pledge the Trust property or any part thereof to secure any of
or all such obligations;

(II) INSURANCE. To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the conduct of
the business, including, without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, consultants, investment advisers,
managers, administrators, distributors, principal underwriters, or
independent contractors, or any thereof (or any person connected therewith),
of the Trust individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or omitted by
any such person in any such capacity, including any action taken or omitted
that may be determined to constitute negligence, whether or not the Trust
would have the power to indemnify such person against such liability;

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(JJ) PENSIONS, ETC. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing
such retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust; and

(KK) DISTRIBUTION PLANS. To adopt on behalf of the Trust or any
Sub-Trust, including with respect to any class thereof, a plan of
distribution and related agreements thereto pursuant to the terms of Rule
12b-1 of the 1940 Act and to make payments from the assets of the Trust or
the relevant Sub-Trust or Sub-Trusts pursuant to said Rule 12b-1 Plan.

SECTION 3.3 CERTAIN CONTRACTS. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present
and future law or custom in regard to delegation of powers by trustees
generally, the Trustees and a manager on behalf of the Trustees may, at any
time and from time to time and without limiting the generality of their
powers and authority otherwise set forth herein, enter into with any one or
more persons (a "Contracting Party"), to provide for the performance and
assumption of some or all of the following services, duties and
responsibilities to, for or on behalf of the Trust and/or any Sub-Trust,
and/or the Trustees, and to provide for the performance and assumption of
such other services, duties and responsibilities in addition to those set
forth below as the Trustees or a manager on behalf of the Trustees may
determine appropriate:

(LL) MANAGEMENT. Subject to the general supervision of the Trustees
and in conformity with any policies of the Trustees with respect to the
management of the Trust and each Sub-Trust (including each class thereof), to
manage all or any part of the operations of the Trust and each Sub-Trust:

(MM) ADVISORY. Subject to the general supervision of the Trustees and
in conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to manage
such investments and assets, make investment decisions with respect thereto,
and to place purchase and sale orders for portfolio transactions relating to
such investments and assets;

(NN) ADMINISTRATION. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with respect to
the operations of the Trust and each Sub-Trust (including each class
thereof), to supervise all or any part of the operations of the Trust and
each Sub-Trust, and to provide all or any part of the administrative and
clerical personnel, office space and office equipment and services

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appropriate for the efficient administration and operations of the Trust and
each Sub-Trust;

(OO) DISTRIBUTION. To distribute the Shares of the Trust and each
Sub-Trust (including any classes thereof), to be principal underwriter of
such Shares, and/or to act as agent of the Trust and each Sub-Trust in the
sale of Shares and the acceptance or rejection of orders for the purchase of
Shares;

(PP) CUSTODIAN AND DEPOSITARY. To act as depositary for and to
maintain custody of the property of the Trust and each Sub-Trust and
accounting records in connection therewith;

(QQ) TRANSFER AND DIVIDEND DISBURSING AGENCY. To maintain records of
the ownership of outstanding Shares, the issuance and redemption and the
transfer thereof, and to disburse any dividends declared by the Trustees and
in accordance with the policies of the Trustees and/or the instructions of
any particular Shareholder to reinvest any such dividends;

(RR) SHAREHOLDER SERVICING. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and

(SS) ACCOUNTING. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties,
Shareholders or otherwise.

The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or
in addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940
Act relating to the standard of duty of and the rights to indemnification of
the Contracting Party and others, as the Trustees may determine. Nothing
herein shall preclude, prevent or limit the Trust or a Contracting Party from
entering into sub-contractual arrangements relating to any of the matters
referred to in Sections 3.3(a) through (h) hereof.

The fact that:

(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate of any Contracting
Party or any Contracting Party or any parent or affiliate thereof is a
Shareholder or has an interest in the Trust or any Sub-Trust, or

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(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other persons or have
other business or interests,

shall not affect the validity of any contract for the performance and
assumption of services, duties and responsibilities to, for or of the Trust
or any Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee
or officer of the Trust from voting upon or executing the same or create any
liability or accountability to the Trust, any Sub-Trust or its Shareholders,
provided that in the case of any relationship or interest referred to in the
preceding clause (i) on the part of any Trustee or officer of the Trust
either (x) the material facts as to such relationship or interest have been
disclosed to or are known by the Trustees not having any such relationship or
interest and the contract involved is approved in good faith by a majority of
such Trustees not having any such relationship or interest (even though such
unrelated or disinterested Trustees are less than a quorum of all of the
Trustees), (y) the material facts as to such relationship or interest and as
to the contract have been disclosed to or are known by the Shareholders
entitled to vote thereon and the contract involved is specifically approved
in good faith by a vote of a Majority of the Outstanding Voting Shares of the
Trust, or (z) the specific contract involved is fair to the Trust as of the
time it is authorized, approved or ratified by the Trustees or by the
Shareholders.

SECTION 3.4 PAYMENT OF TRUST EXPENSES AND COMPENSATION OF TRUSTEES.
The Trustees are authorized to pay or to cause to be paid out of the
principal or income of the Trust or any Sub-Trust, or partly out of principal
and partly out of income, and to charge or allocate the same to, between or
among such one or more of the Sub-Trusts and/or one or more classes of Shares
thereof that may be established and designated pursuant to Article IV, as the
Trustees deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, any Sub-Trust and/or any
class of Shares thereof, or in connection with the management thereof,
including, without limitation, the Trustees' compensation and such expenses
and charges for the services of the Trust's officers, employees, investment
adviser, administrator, distributor, principal underwriter, auditor, counsel,
depositary, custodian, transfer agent, dividend disbursing agent, accounting
agent, Shareholder servicing agent, and such other agents, consultants, and
independent contractors and such other expenses and charges as the Trustees
may deem necessary or proper to incur. Without limiting the generality of any
other provision hereof, the Trustees shall be entitled to reasonable
compensation from the Trust for their services as trustees of the Trust and
may fix the amount of such compensation.

SECTION 3.5 OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the
assets of the Trust and of each Sub-Trust shall at all times be considered as
vested in the Trust.

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SECTION 3.6 ACTION BY TRUSTEES. Except as otherwise provided by the
1940 Act or other applicable law, this Declaration of Trust or the By-Laws,
any action to be taken by the Trustees on behalf of or with respect to the
Trust or any Sub-Trust or class thereof may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum, consisting of at least
one-half of the Trustees then in office, being present), within or without
Delaware, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other at the same time, and participation by such
means shall constitute presence in person at a meeting, or by written
consents of a majority of the Trustees then in office (or such larger or
different number as may be required by the 1940 Act or other applicable law).

ARTICLE IV

SECTION 4.1 DESCRIPTION OF SHARES. The beneficial interest in the
Trust shall be divided into Shares, all with $.001 par value, but the
Trustees shall have the authority from time to time to issue Shares in one or
more Series (each of which Series of Shares shall represent the beneficial
interest in a separate and distinct Sub-Trust of the Trust, including,
without limitation, each Sub-Trust specifically established and designated in
Section 4.2), as they deem necessary or desirable. For all purposes under
this Declaration of Trust or otherwise, including, without limitation, (i)
with respect to the rights of creditors, and (ii) for purposes of
interpreting the relevant rights of each Sub-Trust and the Shareholders of
each Sub-Trust, each Sub-Trust established hereunder shall be deemed to be a
separate trust. Notice of the limitation of liabilities of a Sub-Trust shall
be set forth in the certificate of trust of the Trust, and debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to a particular Sub-Trust shall be enforceable against
the assets of such Sub-Trust only, and not against the assets of the Trust
generally. The Trustees shall have exclusive power, without the requirement
of Shareholder approval, to establish and designate such separate and
distinct Sub-Trusts, and to fix and determine the relative rights and
preferences as between the shares of the separate Sub-Trusts as to right of
redemption and the price, terms and manner of redemption, special and
relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion rights, and conditions under
which the several Sub-Trusts shall have separate voting rights or no voting
rights.

In addition, the Trustees shall have exclusive power, without the
requirement of Shareholder approval, to issue classes of Shares of any
Sub-Trust or divide the Shares of any Sub-Trust into classes, each class
having such different dividend, liquidation, voting and other rights as the
Trustees may determine in their sole discretion, and may establish and
designate the specific classes of Shares of each Sub-Trust. The fact that

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a Sub-Trust shall have initially been established and designated without any
specific establishment or designation of classes (i.e., that all Shares of
such Sub-Trust are initially of a single class), or that a Sub-Trust shall
have more than one established and designated class, shall not limit the
authority of the Trustees to establish and designate separate classes, or one
or more further classes, of said Sub-Trust without approval of the holders of
the initial class thereof, or previously established and designated class or
classes thereof, provided that the establishment and designation of such
further separate classes would not adversely affect the rights of the holders
of the initial or previously established and designated class or classes.

The number of authorized Shares and the number of Shares of each
Sub-Trust or class thereof that may be issued is unlimited, and the Trustees
may issue Shares of any Sub-Trust or class thereof for such consideration and
on such terms as they may determine (or for no consideration if pursuant to a
Share dividend or split-up), all without action or approval of the
Shareholders. All Shares when so issued on the terms determined by the
Trustees shall be fully paid and non-assessable (but may be subject to
mandatory contribution back to the Trust as provided in subsection (h) of
Section 4.2). The Trustees may classify or reclassify any unissued Shares or
any Shares previously issued and reacquired of any Sub-Trust or class thereof
into one or more Sub-Trusts or classes thereof that may be established and
designated from time to time. The Trustees may hold as treasury Shares,
reissue for such consideration and on such terms as they may determine, or
cancel, at their discretion from time to time, any Shares of any Sub-Trust or
class thereof reacquired by the Trust.

The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders
of Shares entitled to be treated as such, to the extent provided or referred
to in Section 5.3.

The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective (i) upon the execution by a majority of the
then Trustees of an instrument setting forth such establishment and
designation of the relative rights and preferences of the Shares of such
Sub-Trust or class, (ii) upon the execution of an instrument in writing by an
officer of the Trust pursuant to the vote of a majority of the Trustees, or
(iii) as otherwise provided in either such instrument. At any time that
there are no Shares outstanding of any particular Sub-Trust or class
previously established and designated, the Trustees may by an instrument
executed by a majority of their number (or by an instrument executed by an
officer of the Trust pursuant to the vote of a majority of the Trustees)
abolish that Sub-Trust or class and the establishment and designation
thereof. Each instrument establishing and designating any Sub-Trust shall
have the status of an amendment to this Declaration of Trust.

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Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Sub-Trust (including any classes thereof) of the Trust to the
same extent as if such person were not a Trustee, officer or other agent of
the Trust; and the Trust may issue and sell or cause to be issued and sold
and may purchase Shares of any Sub-Trust (including any classes thereof) from
any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or
purchase of Shares of such Sub-Trust (including any classes thereof)
generally.

SECTION 4.2 ESTABLISHMENT AND DESIGNATION OF SUB-TRUSTS AND CLASSES.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Sub-Trusts, the Trustees hereby establish
and designate eight Sub-Trusts: The "U.S. Government Money Market
Portfolio," the "Investment Quality Bond Portfolio," the "Total Return Bond
Portfolio," the "Municipal Bond Portfolio," the "Large Capitalization Value
Portfolio," the "Large Capitalization Growth Portfolio," the "Small
Capitalization Portfolio" and the "International Equity Portfolio," each of
which consists of a single class of Shares. The Shares of such Sub-Trusts
and any Shares of any further Sub-Trust or class thereof that may from time
to time be established and designated by the Trustees shall (unless the
Trustees otherwise determine with respect to some further Sub-Trust at the
time of establishing and designating the same) have the following relative
rights and preferences:

(TT) ASSETS BELONGING TO SUB-TRUSTS. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust or any
classes thereof, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall be held by the Trustees in
trust for the benefit of the holders of Shares of that Sub-Trust or class
thereof and shall irrevocably belong to that Sub-Trust (and be allocable to
any classes thereof) for all purposes, and shall be so recorded upon the
books of account of the Trust. Separate and distinct records shall be
maintained for each Sub-Trust and the assets associated with a Sub-Trust
shall be held and accounted for separately from the other assets of the
Trust, or any other Sub-Trust. Such consideration, assets, income, earnings,
profits, and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds, in whatever form the same may be,
together with any General Items (as hereinafter defined) allocated to that
Sub-Trust as provided in the following sentence, are herein referred to as
"assets belonging to" that Sub-Trust (and allocable to any classes thereof).
In the event that there are any assets, income, earnings, profits, and
proceeds thereof, funds or payments which are not readily identifiable as
belonging to any particular Sub-Trust (collectively "General Items"), the
Trustees shall allocate such General Items to and among any one or more of
the
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Sub-Trusts established and designated from time to time in such manner and on
such basis as they, in their sole discretion, deem fair and equitable; and
any General Items so allocated to a particular Sub-Trust shall belong to that
Sub-Trust (and be allocable to any classes thereof). Each such allocation by
the Trustees shall be conclusive and binding upon the holders of all Shares
of all Sub-Trusts (including any classes thereof) for all purposes.

(UU) LIABILITIES BELONGING TO SUB-TRUSTS. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves belonging to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any
particular Sub-Trust shall be allocated and charged by the Trustees to and
among any one or more of the Sub-Trusts established and designated from time
to time in such manner and on such basis as the Trustees in their sole
discretion shall determine. In addition, the liabilities in respect of a
particular class of Shares of a particular Sub-Trust and all expenses, costs,
charges and reserves belonging to that class of Shares, and any general
liabilities, expenses, costs, charges or reserves of that particular
Sub-Trust which are not readily identifiable as belonging to any particular
class of Shares of that Sub-Trust shall be allocated and charged by the
Trustees to and among any one or more of the classes of Shares of that
Sub-Trust established and designated from time to time in such manner and on
such basis as the Trustees in their sole discretion shall determine. The
liabilities, expenses, costs, charges and reserves allocated and so charged
to a Sub-Trust or class thereof are herein referred to as "liabilities
belonging to" that Sub-Trust or class thereof. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders, creditors and any other persons
dealing with the Trust or any Sub-Trust (including any classes thereof) for
all purposes. Any creditor of any Sub-Trust may look only to the assets of
that Sub-Trust to satisfy such creditor's debt.

The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and
which items as capital; and each such determination and allocation shall be
conclusive and binding upon the Shareholders.

(VV) DIVIDENDS. Dividends and distributions on Shares of a particular
Sub-Trust or any class thereof may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise pursuant to a
standing resolution or resolutions adopted only once or with such frequency
as the Trustees may determine, to the holders of Shares of that Sub-Trust or
class, from such of the income and capital gains, accrued or realized, from
the assets belonging to that Sub-Trust, or in the case of a class, belonging
to that Sub-Trust and allocable to that class, as the Trustees may determine,
after providing for actual and accrued liabilities belonging to that
Sub-Trust

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or class. All dividends and distributions on Shares of a particular
Sub-Trust or class thereof shall be distributed pro rata to the holders of
Shares of that Sub-Trust or class in proportion to the number of Shares of
that Sub-Trust or class held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that
in connection with any dividend or distribution program or procedure the
Trustees may determine that no dividend or distribution shall be payable on
Shares as to which the Shareholder's purchase order and/or payment have not
been received by the time or times established by the Trustees under such
program or procedure. Such dividends and distributions may be made in cash
or Shares of that Sub-Trust or class or a combination thereof as determined
by the Trustees or pursuant to any program that the Trustees may have in
effect at the time for the election by each Shareholder of the mode of the
making of such dividend or distribution to that Shareholder. Any such
dividend or distribution paid in Shares will be paid at the net asset value
thereof as determined in accordance with subsection (h) of this Section 4.2.

The Trustees shall have full discretion to determine which items shall
be treated as income and which items as capital; and each such determination
and allocation shall be conclusive and binding upon the Shareholders.

Inasmuch as the computation of net income and gains for federal income
tax purposes may vary from the computation thereof on the books of the Trust,
the above provision shall be interpreted to give the Trustees the power in
their discretion to distribute for any fiscal year as ordinary dividends and
as capital gains distributions, respectively, additional amounts sufficient
to enable the Trust to avoid or reduce liability for taxes.

(WW) LIQUIDATION. In the event of the liquidation or dissolution of
the Trust, subject to Section 7.1 hereof, the holders of Shares of each
Sub-Trust or any class thereof that has been established and designated shall
be entitled to receive, when and as declared by the Trustees, the excess of
the assets belonging to that Sub-Trust, or in the case of a class, belonging
to that Sub-Trust and allocable to that class, over the liabilities belonging
to that Sub-Trust or class. The assets so distributable to the holders of
Shares of any particular Sub-Trust or class thereof shall be distributed
among such holders in proportion to the number of Shares of that Sub-Trust or
class thereof held by them and recorded on the books of the Trust. The
liquidation of any particular Sub-Trust or class thereof may be authorized at
any time by vote of a majority of the Trustees then in office.

(XX) VOTING. On each matter submitted to a vote of the Shareholders,
each holder of a Share shall be entitled to one vote for each whole Share
standing in his name on the books of the Trust irrespective of the Series
thereof or class thereof and all Shares of all Series and classes thereof
shall vote together as a single class; provided, however, that as to any
matter (i) with respect to which a separate vote of

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one or more Series or classes thereof is required by the 1940 Act or the
provisions of the writing establishing and designating the Sub-Trust or
class, such requirements as to a separate vote by such Series or class
thereof shall apply in lieu of all Shares of all Series and classes thereof
voting together; and (ii) as to any matter which the Trustees have determined
affects the interests of one or more particular Series or classes thereof,
only the holders of Shares of the one or more affected Series or classes
shall be entitled to vote, and each such Series or class shall vote as a
separate class.

(YY) REDEMPTION BY SHAREHOLDER. Each Shareholder of a particular
Sub-Trust or any class thereof shall have the right at such times as may be
permitted by the Trust to require the Trust to redeem all or any part of his
Shares of that Sub-Trust or class thereof at a redemption price equal to the
net asset value per Share of that Sub-Trust or class thereof next determined
in accordance with subsection (h) of this Section 4.2 after the Shares are
properly tendered for redemption, subject to any contingent deferred sales
charge or redemption charge in effect at the time of redemption. Payment of
the redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may,
subject to the requirements of the 1940 Act, make payment wholly or partly in
securities or other assets belonging to the Sub-Trust of which the Shares
being redeemed are part at the value of such securities or assets used in
such determination of net asset value.

Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust or class thereof to require the Trust to redeem Shares of that
Sub-Trust during any period or at any time when and to the extent permissible
under the 1940 Act.

(ZZ) REDEMPTION BY TRUST. Each Share of each Sub-Trust or class
thereof that has been established and designated is subject to redemption by
the Trust at the redemption price which would be applicable if such Share was
then being redeemed by the Shareholder pursuant to subsection (f) of this
Section 4.2: (i) at any time, in the sole discretion of the Trustees, or (ii)
upon such other conditions as may from time to time be determined by the
Trustees and set forth in the then current Prospectus of the Trust. Upon
such redemption the holders of the Shares so redeemed shall have no further
right with respect thereto other than to receive payment of such redemption
price.

(AAA) NET ASSET VALUE. The net asset value per Share of any Sub-Trust
shall be (i) in the case of a Sub-Trust whose Shares are not divided into
classes, the quotient obtained by dividing the value of the net assets of
that Sub-Trust (being the value of the assets belonging to that Sub-Trust
less the liabilities belonging to that Sub-Trust) by the total number of
Shares of that Sub-Trust outstanding, and (ii) in the case of a class of
Shares of a Sub-Trust whose Shares are divided into classes, the quotient
obtained by dividing the value of the net assets of that Sub-Trust allocable
to
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such class (being the value of the assets belonging to that Sub-Trust
allocable to such class less the liabilities belonging to such class) by the
total number of Shares of such class outstanding; all determined in
accordance with the methods and procedures, including, without limitation,
those with respect to rounding, established by the Trustees from time to time.

The Trustees may determine to maintain the net asset value per Share of
any Sub-Trust at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declarations of income attributable to that Sub-Trust as dividends
payable in additional Shares of that Sub-Trust at the designated constant
dollar amount and for the handling of any losses attributable to that
Sub-Trust. Such procedures may provide that in the event of any loss each
Shareholder shall be deemed to have contributed to the capital of the Trust
attributable to that Sub-Trust his pro rata portion of the total number of
Shares required to be cancelled in order to permit the net asset value per
Share of that Sub-Trust to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Shareholder of the Trust shall be
deemed to have agreed, by his investment in any Sub-Trust with respect to
which the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss.

(BBB) TRANSFER. All Shares of each particular Sub-Trust or class
thereof shall be transferable, but transfers of Shares of a particular
Sub-Trust or class thereof will be recorded on the Share transfer records of
the Trust applicable to that Sub-Trust or class only at such times as
Shareholders shall have the right to require the Trust to redeem Shares of
that Sub-Trust or class and at such other times as may be permitted by the
Trustees.

(CCC) EQUALITY. Except as provided herein or in the instrument
designating and establishing any class of Shares or any Sub-Trust, each Share
of each particular Sub-Trust or class thereof shall represent an equal
proportionate interest in the assets belonging to that Sub-Trust, or in the
case of a class, belonging to that Sub-Trust and allocable to that class,
subject to the liabilities belonging to that Sub-Trust or class, and each
Share of any particular Sub-Trust or class shall be equal to each other Share
of that Sub-Trust or class; but the provisions of this sentence shall not
restrict any distinctions permissible under subsection (c) of this Section
4.2 that may exist with respect to dividends and distributions on Shares of
the same Sub-Trust or class. The Trustees may from time to time divide or
combine the Shares of any particular Sub-Trust or class into a greater or
lesser number of Shares of that Sub-Trust or class without thereby changing
the proportionate beneficial interest in the assets belonging to that
Sub-Trust or class or in any way affecting the rights of Shares of any other
Sub-Trust or class.

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(DDD) FRACTIONS. Any fractional Share of any Sub-Trust or class, if
any such fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole Share of that Sub-Trust or class, including
rights and obligations with respect to voting, receipt of dividends and
distributions, redemption of Shares, and liquidation of the Trust.

(EEE) CONVERSION RIGHTS. Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to provide that
holders of Shares of any Sub-Trust or class thereof shall have the right to
convert said Shares into Shares of one or more other Sub-Trust or class
thereof in accordance with such requirements and procedures as may be
established by the Trustees.

(FFF) CLASS DIFFERENCES. Subject to Section 4.1, the relative rights
and preferences of the classes of any Sub-Trust may differ in such other
respects as the Trustees may determine to be appropriate in their sole
discretion, provided that such differences are set forth in the instrument
establishing and designating such classes and executed by a majority of the
Trustees (or by an instrument executed by an officer of the Trust pursuant to
a vote of a majority of the Trustees).

SECTION 4.3 OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust and each class thereof that has been established and designated.
No certificates certifying the ownership of Shares need be issued except as
the Trustees may otherwise determine from time to time. The Trustees may
make such rules as they consider appropriate for the issuance of Share
certificates, the use of facsimile signatures, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who
are the Shareholders and as to the number of Shares of each Sub-Trust and
class thereof held from time to time by each such Shareholder.

SECTION 4.4 INVESTMENTS IN THE TRUST. The Trustees may accept
investments in the Trust and each Sub-Trust from such persons and on such
terms and for such consideration, not inconsistent with the provisions of the
1940 Act, as they from time to time authorize. The Trustees may authorize
any distributor, principal underwriter, custodian, transfer agent or other
person to accept orders for the purchase of Shares that conform to such
authorized terms and to reject any purchase orders for Shares whether or not
conforming to such authorized terms.

SECTION 4.5 NO PRE-EMPTIVE RIGHTS. Shareholders shall have no
pre-emptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or any Sub-Trust.

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SECTION 4.6 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights
provided in this Declaration of Trust. Every Shareholder by virtue of
acquiring Shares shall be held to have expressly assented and agreed to the
terms hereof and to have become a party hereto. The death, incapacity,
dissolution, termination or bankruptcy of a Shareholder during the
continuance of the Trust shall not operate to dissolve or terminate the Trust
or any Sub-Trust thereof nor entitle the representative of such Shareholder
to an accounting or to take any action in court or elsewhere against the
Trust or the Trustees, but only to the rights of such Shareholder under this
Trust. Ownership of Shares shall not entitle the Shareholder to any title in
or to the whole or any part of the Trust property or right to call for a
partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust shall have
any power to bind personally any Shareholder, nor except as specifically
provided herein to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at any
time personally agree to pay. The Shareholders shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.

SECTION 4.7 NO APPRAISAL RIGHTS. Shareholders shall have no right to
demand payment for their shares or to any other rights of dissenting
shareholders in the event the Trust participates in any transaction which
would give rise to appraisal or dissenters' rights by a shareholder of a
corporation organized under the General Corporation Law of the State of
Delaware, or otherwise.

ARTICLE V

SHAREHOLDERS' VOTING POWERS AND MEETINGS

SECTION 5.1 VOTING POWERS. The Shareholders shall have power to vote
only (i) for the removal of Trustees as provided in Section 3.1, (ii) with
respect to any contract with a Contracting Party as provided in Section 3.3
as to which Shareholder approval is required by the 1940 Act, (iii) with
respect to any termination or reorganization of the Trust to the extent and
as provided in Sections 7.1 and 7.2, (iv) with respect to any amendment of
this Declaration of Trust to the extent and as provided in Section 7.3, and
(v) with respect to such additional matters relating to the Trust as may be
required by the 1940 Act, this Declaration of Trust, the By-Laws or any
registration of the Trust with the Commission (or any successor agency) or
any state, or as the Trustees may consider necessary or desirable. Shares
may be voted in person or by proxy. Proxies may be given orally or in writing
or pursuant to any computerized or mechanical data gathering process
specifically approved by the Trustees. A proxy with respect to Shares held
in the name of two or more persons shall be valid if

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executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of
them. A proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration of Trust or the By-Laws to be taken
by Shareholders.

SECTION 5.2 MEETINGS. Unless otherwise required by the 1940 Act or
other applicable law, no annual or regular meeting of Shareholders will be
held. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the
vote or authority of the Shareholders as herein provided or upon any other
matter deemed by the Trustees to be necessary or desirable. Written notice
of any meeting of Shareholders shall be given or caused to be given by the
Trustees by mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust. The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the
Trust when requested to do so in writing by Shareholders holding not less
than 10% of the Shares then outstanding. If the Trustees shall fail to call
or give notice of any meeting of Shareholders for a period of 30 days after
written application by Shareholders holding at least 10% of the Shares then
outstanding requesting a meeting be called for any other purpose requiring
action by the Shareholders as provided herein or in the By-Laws, then
Shareholders holding at least 10% of the Shares then outstanding may call and
give notice of such meeting, and thereupon the meeting shall be held in the
manner provided for herein in case of call thereof by the Trustees.

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SECTION 5.3 RECORD DATES. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to participate in any dividend or
distribution, or for the purpose of any other action, the Trustees may from
time to time close the transfer books for such period, not exceeding 30 days
(except at or in connection with the termination of the Trust), as the
Trustees may determine; or without closing the transfer books the Trustees
may fix a date and time not more than 90 days prior to the date of any
meeting of Shareholders or other action as the date and time of record for
the determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to be treated as Shareholders of record for purposes
of such other action, and any Shareholder who was a Shareholder at the date
and time so fixed shall be entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes
of such other action, even though he has since that date and time disposed of
his Shares, and no Shareholder becoming such after that date and time shall
be so entitled to vote at such meeting or any adjournment thereof or to be
treated as a Shareholder of record for purposes of such other action.

SECTION 5.4 QUORUM AND REQUIRED VOTE. Except as otherwise provided by
the 1940 Act or other applicable law, thirty percent of the Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
meeting of Shareholders, whether or not a quorum is present, may be adjourned
for any lawful purpose provided that no meeting shall be adjourned for more
than six months beyond the originally scheduled meeting date. Any adjourned
session or sessions may be held, within a reasonable time after the date set
for the original meeting without the necessity of further notice. A majority
of the Shares voted, at a meeting of which a quorum is present, shall decide
any questions, except when a different vote is required by any provision of
the 1940 Act or other applicable law or by this Declaration of Trust or the
By-Laws.

SECTION 5.5 ACTION BY WRITTEN CONSENT. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may
be taken without a meeting if a majority of Shareholders entitled to vote on
the matter (or such larger proportion thereof as shall be required by the
1940 Act or by any express provision of this Declaration of Trust or the
By-Laws) consent to the action in writing and such written consents are filed
with the records of the meetings of Shareholders. Such consent shall be
treated for all purposes as a vote taken at a meeting of Shareholders.

SECTION 5.6 INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of a Delaware corporation under the General Corporation Law of
the State of Delaware.

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SECTION 5.7 ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.

ARTICLE VI

LIMITATION OF LIABILITY; INDEMNIFICATION

SECTION 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Sub-Trust with which such
person dealt for payment under such credit, contract or claim; and neither
the Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past, present or future, nor any other
Sub-Trust shall be personally liable therefor. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing
whatsoever executed or done by or on behalf of the Trust, any Sub-Trust or
the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only by or for the Trust
(or the Sub-Trust) or the Trustees and not personally. The Trustees and the
Trust's officers, employees and agents shall not be liable to the Trust or
the Shareholders; provided however, that nothing in this Declaration of Trust
shall protect any Trustee or officer, employee or agent against any liability
to the Trust or the Shareholders to which such Trustee or officer, employee
or agent would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer, employee or agent.

Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice
that the same was executed or made by or on behalf of the Trust or by them as
trustees or trustee of the Trust or as officers or officer and not
individually and that the obligations of such instrument are not binding upon
any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, or the particular Sub-Trust in question, as
the case may be, but the omission thereof shall not operate to bind any
Trustees or Trustee or officers or officer or Shareholders or Shareholder
individually or otherwise invalidate any such note, bond, contract,
instrument, certificate or undertaking.

SECTION 6.2 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretion
hereunder shall be binding upon everyone interested. A Trustee shall be
liable to the Trust and the Shareholders for his own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall not be
liable for errors of judgment or mistakes of fact or law. Subject to

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the foregoing, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee,
consultant, manager, adviser, administrator, depositary, distributor or
principal underwriter, custodian or transfer, dividend disbursing,
Shareholder servicing or accounting agent of the Trust, nor shall any Trustee
be responsible for the act or omission of any other Trustee; (b) the Trustees
may take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as trustees of the
Trust, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice; and (c) in discharging
their duties, the Trustees, when acting in good faith, shall be entitled to
rely upon the books of account of the Trust and upon written reports made to
the Trustees by any officer appointed by them, any independent public
accountant, and (with respect to the subject matter of the contract involved)
any officer, partner or responsible employee of a Contracting Party appointed
by the Trustees pursuant to Section 3.3. The Trustees as such shall not be
required to give any bond or surety or any other security for the performance
of their duties. To the extent that, at law or in equity, a Trustee has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to a Shareholder, any such Trustee acting under this Declaration of
Trust shall not be liable to the Trust or to any such Shareholder for the
Trustee's good faith reliance on the provisions of this Declaration of Trust.
The provisions of this Declaration of Trust, to the extent that they restrict
the duties and liabilities of a Trustee otherwise existing at law or in
equity, are agreed by the Shareholders to replace such other duties and
liabilities of such Trustee.

SECTION 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or
held to be personally liable for any obligation or liability of the Trust
solely by reason of being or having been a Shareholder and not because of
such Shareholder's acts or omissions or for some other reason, the Trust on
behalf of said Sub-Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment
thereon, and, to the fullest extent permitted by law, the Shareholder or
former Shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets of
said Sub-Trust estate to be held harmless from and indemnified against all
loss and expense arising from such liability.

SECTION 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. To the fullest
extent permitted by law, the Trust shall indemnify (from the assets of the
Sub-Trust or Sub-Trusts in question) each of its Trustees, officers,
employees or agents (including persons who serve at the Trust's request as
trustees, officers, employees or agents of another organization in which the
Trust has any interest as a shareholder, creditor or otherwise
[hereinafter referred to as a "Covered Person"]) against all liabilities,
including, without limitation, amounts paid in satisfaction of judgments, in
compromise

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or as fines and penalties, and expenses, including reasonable accountants'
and counsel fees, incurred by any Covered Person in connection with the
defense or disposition of any action, suit or other proceeding, whether
civil, criminal, administrative or investigative, before any court or
administrative or legislative body, in which such Covered Person may be or
may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director, trustee, employee
or agent, except with respect to any matter as to which it has been
determined that such Covered Person had acted with willful misfeasance, bad
faith, gross negligence or reckless disregard of such Covered Person's duties
(such conduct referred to hereafter as "Disabling Conduct"). A determination
that the Covered Person is entitled to indemnification may be made by (i) a
final decision on the merits by a court or other body before whom the
proceeding was brought that the person to be indemnified was not liable by
reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative or investigative proceeding against a Covered Person for
insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the Covered Person was
not liable by reason of Disabling Conduct by (a) a vote of a majority of a
quorum of Trustees who are neither "interested persons" of the Trust as
defined in Section 2(a)(19) of the 1940 Act nor parties to the proceeding, or
(b) an independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by any such Covered Person (but
excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time from funds attributable to
the Sub-Trust in question in advance of the final disposition of any such
action, suit or proceeding, provided that the Covered Person shall have
undertaken to repay the amounts so paid to the Sub-Trust in question if it is
ultimately determined that indemnification of such expenses is not authorized
under this Article VI and (i) the Covered Person shall have provided security
for such undertaking, (ii) the Trust shall be insured against losses arising
by reason of any lawful advances, or (iii) a majority of a quorum of the
disinterested Trustees who are not a party to the proceeding, or an
independent legal counsel in a written opinion, shall have determined, based
on a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the Covered Person ultimately
will be found entitled to indemnification.

SECTION 6.5 COMPROMISE PAYMENT. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding, or (b) by an independent
legal counsel in a written opinion. Approval by the Trustees pursuant to
clause (a) or by independent legal counsel pursuant to clause (b) shall not
prevent the recovery from any Covered Person of any amount paid to such
Covered Person in accordance with any of such clauses as indemnification if
such Covered

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Person is subsequently adjudicated by a court of competent jurisdiction to
have been liable to the Trust or its Shareholders by reason of the Covered
Person's willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties.

SECTION 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or
affect any other rights to which any such Covered Person may be entitled. As
used in this Article VI, "Covered Person" shall include such person's heirs,
successors, executors and administrators, an "interested Covered Person" is
one against whom the action, suit or other proceeding in question or another
action, suit or other proceeding on the same or similar grounds is then or
has been pending or threatened, and a "disinterested" person is a person
against whom none of such actions, suits or other proceedings or another
action, suit or other proceeding on the same or similar grounds is then or
has been pending or threatened. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other
than Trustees and officers, and other persons may be entitled by contract or
otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.

SECTION 6.7 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No
person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the Trustees
or to see to the application of any payments made or property transferred to
the Trust or upon its order.

SECTION 6.8 DISCRETION. Whenever in this Declaration of Trust the
Trustees are permitted or required to make a decision (a) in their "sole
discretion," "sole and absolute discretion," "full discretion" or
"discretion," or under a similar grant of authority or latitude, the Trustees
shall be entitled to consider such interests and factors as they desire, and
may consider their own interests, or (b) in their "good faith" or under
another express standard, the Trustees shall act under such express standard
and shall not be subject to any other or different standards imposed by this
Declaration of Trust or by law or any other agreement contemplated herein.
Each Shareholder and Trustee hereby agrees that any standard of care or duty
imposed in this Declaration of Trust or any other agreement contemplated
herein or under the Act or any other applicable law, rule or regulation shall
be modified, waived or limited in each case as required to permit the
Trustees to act under this Declaration of Trust or any other agreement
contemplated herein and to make any decision pursuant to the authority
prescribed in this Declaration of Trust.

ARTICLE VII

MISCELLANEOUS

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SECTION 7.1 DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust or class thereof shall operate to
terminate the Trust. The Trust may be terminated at any time by a majority
of the Trustees then in office subject to a favorable vote of a Majority of
the Outstanding Voting Shares of the Trust.

Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may
be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets
to distributable form in cash, securities or other property, or any
combination thereof, and distribute the proceeds to the Shareholders, in
conformity with the provisions of subsection (d) of Section 4.2.

SECTION 7.2 REORGANIZATION. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Sub-Trusts, to another trust, partnership, limited liability company,
association, corporation or other entity organized under the laws of any
state of the United States, or to the Trust to be held as assets belonging to
another Sub-Trust of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Sub-Trust of the
Trust, Shares of such other Sub-Trust or any class thereof) with such
transfer either (1) being made subject to, or with the assumption by the
transferee of, the liabilities belonging to each Sub-Trust the assets of
which are so transferred, or (2) not being made subject to, or not with the
assumption of, such liabilities; provided, however, that no assets belonging
to any particular Sub-Trust shall be so transferred unless the terms of such
transfer shall have first been approved at a meeting called for the purpose
by the affirmative vote of the holders of a Majority of the Outstanding
Voting Shares of that Sub-Trust. Following such transfer, the Trustees shall
distribute such cash, shares or other securities among the Shareholders of
the Sub-Trust (taking into account the differences among the classes of
Shares thereof, if any) the assets belonging to which have been so
transferred; and if all of the assets of the Trust have been so transferred,
the Trust shall be terminated.

The Trust, or any one or more Sub-Trusts, may, either as the successor,
survivor, or non-survivor, (1) consolidate with one or more other trusts,
partnerships, limited liability companies, associations, corporations or
other entities organized under the laws of the State of Delaware or any other
state of the United States, to form a new consolidated trust, partnership,
limited liability company, association, corporation or other entity under the
laws of which any one of the constituent entities is organized, or (2) merge
into or transfer a substantial portion of its assets to one or more other
trusts, partnerships, limited liability companies, associations, corporations
or other entities organized under the laws of the State of Delaware or any
other state of the United States, or have one or more such trusts,
partnerships, limited liability companies,

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associations, corporations or other entities merged into or transfer a
substantial portion of its assets to it, any such consolidation, merger or
transfer to be upon such terms and conditions as are specified in an
agreement and plan of reorganization entered into by the Trust, or one or
more Sub-Trusts as the case may be, in connection therewith. Any such
consolidation, merger or transfer shall require the affirmative vote of the
holders of a Majority of the Outstanding Voting Shares of the Trust (or each
Sub-Trust affected thereby, as the case may be), except that such affirmative
vote of the Shareholder shall not be required if the Trust (or Sub-Trust
affected thereby, as the case may be) shall be the survivor of such
consolidation or merger or transferee of such assets.

SECTION 7.3 AMENDMENTS. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right
to amend this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability of any
Shareholder or Trustee or repeal the prohibition of assessment upon the
Shareholders without the express consent of each Shareholder or Trustee
involved. Subject to the foregoing, the provisions of this Declaration of
Trust (whether or not related to the rights of Shareholders) may be amended
at any time, so long as such amendment does not adversely affect the rights
of any Shareholder with respect to which such amendment is or purports to be
applicable and so long as such amendment is not in contravention of
applicable law, including the 1940 Act, by an instrument in writing signed by
a majority of the then Trustees (or by an officer of the Trust pursuant to
the vote of a majority of such Trustees). Any amendment to this Declaration
of Trust that adversely affects the rights of Shareholders may be adopted at
any time by an instrument in writing signed by a majority of the then
Trustees (or by an officer of the Trust pursuant to a vote of a majority of
such Trustees) when authorized to do so by the vote in accordance with
subsection (e) of Section 4.2 of Shareholders holding a majority of the
Shares entitled to vote. Subject to the foregoing, any such amendment shall
be effective as provided in the instrument containing the terms of such
amendment or, if there is no provision therein with respect to effectiveness,
upon the execution of such instrument and of a certificate (which may be a
part of such instrument) executed by a Trustee or officer of the Trust to the
effect that such amendment has been duly adopted.

SECTION 7.4 FILING OF COPIES; REFERENCES; HEADINGS. The original or a
copy of this instrument and of each amendment hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust
as to whether or not any such amendments have been made, as to the identities
of the Trustees and officers, and as to any matters in connection with the
Trust hereunder; and, with the same effect as if it were the original, may
rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein,"
"hereof" and "hereunder" shall be deemed to refer to this instrument as a
whole as the same may be

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<PAGE>

amended or affected by any such amendments. The masculine gender shall
include the feminine and neuter genders. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument.
This instrument may be executed in any number of counterparts each of which
shall be deemed an original.

SECTION 7.5 APPLICABLE LAW. This Declaration of Trust is created under
and is to be governed by and construed and administered according to the laws
of the State of Delaware. The Trust shall be of the type referred to in
Section 3801 of the Act and of the type commonly called a business trust,
and, without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust.

SECTION 7.6 REGISTERED AGENT. RL&F Service Corp. of One Rodney
Square, 10th Floor, 10th and King Streets, City of Wilmington, County of New
Castle, Delaware 19801 is hereby designated as the initial registered agent
for service of process on the Trust in Delaware. The address of the
registered office of the Trust in the State of Delaware is c/o RL&F Service
Corp., One Rodney Square, 10th Floor, 10th and King Streets, City of
Wilmington, County of New Castle, Delaware 19801.

SECTION 7.7 INTEGRATION. This Declaration of Trust constitutes the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements and understandings pertaining
thereto.

IN WITNESS WHEREOF, the undersigned hereunto set their hand and seal
for themselves and their assigns, as of the day and year first above written.

------------------------------
Joseph LaMotta

------------------------------
Bruce Ventimiglia

<PAGE>

AMENDMENT NO. 1 TO THE AGREEMENT AND DECLARATION TRUST OF
THE SARATOGA ADVANTAGE TRUST

This Amendment No. 1 (this "Amendment") to the Agreement and
Declaration of Trust of The Saratoga Advantage Trust (the "Trust"), dated
as of April 4, 1994 (the "Trust Agreement"), is entered as of July 25, 1994.

WITNESSETH

WHEREAS, the Trust has been formed to carry on the business of an
investment company;

WHEREAS, under Section 3.1(b) of the Trust Agreement, the Trustees (as
defined in the Trust Agreement) may increase the number of Trustees to a
number other than the number theretofore determined;

WHEREAS, Joseph La Motta and Bruce Ventimiglia, as the initial Trustees,
desire to increase the number of Trustees from two to five by naming George
Loft, Lacy B. Herrmann and Patrick H. McCollough as Trustees;

WHEREAS, George Loft, Lacy B. Herrmann and Patrick H. McCollough have
agreed to serve as Trustees; and

WHEREAS, pursuant to Section 7.3 of the Trust Agreement, Joseph La
Motta, Bruce Ventimiglia, George Loft, Lacy B. Herrmann and Patrick H.
McCollough desire to amend the Trust Agreement to reflect that the Trustees
are Joseph La Motta, Bruce Ventimiglia, George Loft, Lacy B. Herrmann and
Patrick H. McCollough.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the receipt and sufficiency of
which are hereby

<PAGE>

acknowledged, and upon the terms and subject to the
conditions hereinafter set forth, the parties hereto do hereby agree as
follows:

1. AMENDMENT. Section 3.1(a) of the Trust Agreement is hereby amended
in its entirety to read as follows:

"(a) TRUSTEES. The Trustees hereof shall be Joseph La Motta,
Bruce Ventimiglia, George Loft, Lacy B. Herrmann and Patrick H. McCollough."

2. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.

3. FULL FORCE AND EFFECT. Except to the extent modified hereby, the
Trust Agreement shall remain in full force and effect.

4. COUNTERPARTS. This Amendment may be executed in counterparts, all
of which together shall constitute one agreement binding on all parties
hereto, notwithstanding that all such parties are not signatories to the
original or same counterpart.

5. EFFECTIVENESS. This Amendment shall be effective upon its execution
by Joseph La Motta, Bruce Ventimiglia, George Loft, Lacy B. Herrmann and
Patrick H. McCollough.

6. GOVERNING LAW. This Amendment shall be interpreted in accordance
with the laws of the State of Delaware (without regard to conflict of laws
principles), all rights and remedies being governed by such laws.

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.

------------------------------------

JOSEPH LA MOTTA

------------------------------------

BRUCE VENTIMIGLIA

------------------------------------

GEORGE LOFT

------------------------------------

LACY B. HERRMANN

------------------------------------

PATRICK H. MCCOLLOUGH

<PAGE>

BY-LAWS

THE SARATOGA ADVANTAGE TRUST

ARTICLE 1

AGREEMENT AND DECLARATION
OF TRUST AND PRINCIPAL OFFICE

1.1 AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be
subject to the Master Trust Agreement, as from time to time in effect (the
"Declaration of Trust"), of The Saratoga Advantage Trust, the Delaware business
trust established by the Declaration of Trust (the "Trust").

1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of the
Trust shall be located at 2 World Financial Center, New York, New York 10080.

ARTICLE 2

MEETINGS OF TRUSTEES

2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be
held without call or notice at such places either within or without the State
of Delaware and at such times as the Trustees may from time to time determine,
provided that notice of the first regular meeting following any such
determination shall be given to absent Trustees.

2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be
held at any time and at any place designated in the call of the meeting when
called by the Chairman of the Board, the Vice Chairman of the Board, the
President or the Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Secretary or an Assistant Secretary
or by the officer of the Trustees calling the meeting.

<PAGE>

2.3 NOTICE. It shall be sufficient notice to a Trustee of a
special meeting to send notice by mail at least forty-eight hours or by
telegram at least twenty-four hours before the meeting addressed to the
Trustee at his or her usual or last known business or residence address or to
give notice to him or her in person or by telephone at least twenty-four hours
before the meeting. Notice of a meeting need not be given to any Trustee if a
written waiver of notice, executed by him or her before or after the meeting,
is filed with the records of the meeting, or to any Trustee who attends the
meeting without protesting prior thereto or at its commencement the lack of
notice to him or her. Neither notice of a meeting nor a waiver of a notice
need specify the purposes of the meeting.

2.4 QUORUM; ADJOURNMENT; VOTE REQUIRED FOR ACTION. At any meeting
of the Trustees a majority of the Trustees then in office shall constitute a
quorum. Any meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice. At the adjourned
meeting, the Trustees may transact any business which might have been transacted
at the original meeting. Except in cases where the Declaration of Trust or
these By-Laws otherwise provide, the vote of a majority of the Trustees present
at a meeting at which a quorum is present shall be the act of the Trustees.

2.5 PARTICIPATION BY TELEPHONE. One or more of the Trustees or of
any committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.

ARTICLE 3

OFFICERS

3.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall
be a Chairman, a Vice Chairman, a President, a Treasurer, a Secretary and such
other officers, including Vice Presidents, if any, as the Trustees from time
to time may in their discretion elect. The Trust may also have such agents as
the Trustees from time to time may in their discretion appoint. The Chairman
and Vice Chairman shall be Trustees and may but need not be a beneficial owner
of the Trust (a "Shareholder"); and any other officer may be but none need be a
Trustee or Shareholder. Any two or more offices may be held by the same person.

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<PAGE>

3.2 ELECTION. The Chairman, the Vice Chairman, the President, the
Treasurer and the Secretary shall be elected annually by the Trustees at a
meeting held within the first four months of the Trust's fiscal year. The
meeting at which the officers are elected shall be known as the annual meeting
of Trustees. Other officers, if any, may be elected or appointed by the
Trustees at said meeting or at any other time. Vacancies in any office may be
filled at any time.

3.3 TENURE. The Chairman, the Vice Chairman, the President, the
Treasurer and the Secretary shall hold office until the next annual meeting of
the Trustees and until their respective successors are chosen and qualified, or
in each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.

3.4 POWERS. Subject to the other provisions of these By-Laws,
each officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Delaware
business corporation and such other duties and powers as the Trustees may from
time to time designate.

3.5 CHAIRMAN; PRESIDENT. Unless the Trustees otherwise provide,
the Chairman, or, if there is none, or in the absence of the Chairman, the Vice
Chairman, or, if there is none, or in the absence of the Vice Chairman, the
President shall preside at all meetings of the Shareholders and of the Trustees.
Unless the Trustees otherwise provide, the Vice Chairman shall be the chief
executive officer and the President shall be the chief operating officer.

3.6 VICE PRESIDENT. The Vice President, or if there be more
than one Vice President, the Vice Presidents in the order determined by the
Trustees (or if there be no such determination, then in the order of their
election) shall in the absence of the President or in the event of his or her
inability or refusal to act, perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the President. The Vice Presidents shall perform such other duties and
have such other powers as the Trustees may from time to time prescribe.

3.7 TREASURER. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers, books of account and

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<PAGE>

accounting records of the Trust, and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the President.

3.8 ASSISTANT TREASURER. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order determined by the
Trustees (or if there be no such determination, then in the order of their
election), shall, in the absence of the Treasurer or in the event of his or her
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Trustees may from time to time prescribe.

3.9 SECRETARY. The Secretary shall record all proceedings of the
Shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the Shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting, shall record the proceedings thereof in the aforesaid
books.

3.10 ASSISTANT SECRETARY. The Assistant Secretary, or if there be
more than one, the Assistant Secretaries in the order determined by the Trustees
(or if there be no determination, then in the order of their election), shall,
in the absence of the Secretary or in the event of his or her inability or
refusal to act, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as the Trustees may
from time to time prescribe.

3.11 RESIGNATIONS AND REMOVALS. Any Trustee or officer may
resign at any time by written instrument signed by him or her and delivered to
the Chairman, the Vice Chairman, the President or the Secretary or to a
meeting of the Trustees. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. The Trustees may remove
any officer elected by them with or without cause. Except to the extent
expressly provided in a written agreement with the Trust, no Trustee or
officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or
any right to damages on account of such removal.

ARTICLE 4

COMMITTEES

-4-

<PAGE>

4.1 GENERAL. The Trustees, by vote of a majority of the Trustees
then in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or
duties shall keep records of its meetings and shall report its action to the

-5-

<PAGE>

Trustees. The Trustees shall have power to rescind any action of any committee,
but no such rescission shall have retroactive effect.

ARTICLE 5

REPORTS

5.1 GENERAL. The Trustees and officers shall render reports at
the time and in the manner required by the Declaration of Trust or any
applicable law. Officers and committees shall render such additional reports
as they may deem desirable or as may from time to time be required by the
Trustees.

ARTICLE 6

FISCAL YEAR

6.1 GENERAL. The fiscal year of the Trust shall be fixed by
resolution of the Trustees.

ARTICLE 7

SEAL

7.1 GENERAL. The seal of the Trust shall consist of a
flat-faced die with the word "Delaware", together with the name of the Trust
and the year of its organization cut or engraved thereon, but, unless
otherwise required by the Trustees, the seal shall not be necessary to be
placed on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the Trust.

ARTICLE 8

EXECUTION OF PAPERS

8.1 GENERAL. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other manner, all
deeds, leases, contracts, notes and other obligations made by the Trustees
shall be signed by the President, any Vice President or by the Treasurer and
need not bear the seal of the Trust.

-6-

<PAGE>

ARTICLE 9

ISSUANCE OF SHARE CERTIFICATES

9.1 SHARE CERTIFICATES. In lieu of issuing certificates for
shares of the Trust, the Trustees or the transfer agent may either issue
receipts therefor or may keep accounts upon the books of the Trust for the
record holders of such shares, who shall in either case be deemed, for all
purposes hereunder, to be the holders of certificates for such shares as if
they had accepted such certificates and shall be held to have expressly
assented and agreed to the terms hereof.

The Trustees may at any time authorize the issuance of share
certificates either in limited cases or to all Shareholders. In that event, a
Shareholder may receive a certificate stating the number of shares owned by him
or her, in such form as shall be prescribed from time to time by the Trustees.
Such certificate shall be signed by the president or a vice president and by the
treasurer or assistant treasurer. Such signatures may be facsimiles if the
certificate is signed by a transfer agent, or by a registrar, other than a
Trustee, officer or employee of the Trust. In case any officer who has signed
or whose facsimile signature has been placed on such certificate shall cease to
be such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he or she were such officer at the time of its issue.

9.2 LOSS OF CERTIFICATES. In case of the alleged loss or
destruction or the mutilation of a share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees shall
prescribe. The Trust may require the owner of the lost, destroyed or
mutilated share certificate, or his or her legal representative, to give the
Trust a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, destruction or mutilation of any
such certificate or the issuance of such new certificate.

9.3 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it
is held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a Shareholder, and entitled to vote
thereon.

9.4 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees
may at any time discontinue the issuance of share certificates and may, by
written notice to each Shareholder, require the surrender of shares
certificates to the

-7-

<PAGE>

Trust for cancellation. Such surrender and cancellation shall not affect the
ownership of shares in the Trust.

ARTICLE 10

DEALINGS WITH TRUSTEES AND OFFICERS

10.1 GENERAL. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he or
she were not a Trustee, officer or agent; and the Trustees may accept
subscriptions to shares or repurchase shares from any firm or company in which
any Trustee, officer or other agent of the Trust may have an interest.

ARTICLE 11

AMENDMENTS TO THE BY-LAWS

11.1 GENERAL. These By-Laws may be amended or repealed, in whole
or in part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.

-8-

<PAGE>

MANAGEMENT AGREEMENT

Agreement dated and effective as of , 1994 between THE
SARATOGA ADVANTAGE TRUST, a Delaware Trust (herein referred to as the
"Trust"), and Saratoga Capital Management, a Delaware general partnership
(the "Manager").

WHEREAS, the Trust is an open-end diversified management investment
company registered with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "1940
Act");

WHEREAS, the Trust is organized in series form and each of the U.S.
Government Money Market Portfolio, the Investment Quality Bond Portfolio, the
Total Return Bond Portfolio, the Municipal Bond Portfolio, the Large
Capitalization Value Portfolio, the Large Capitalization Growth Portfolio,
the Small Capitalization Portfolio and the International Equity Portfolio is
a separately capitalized series ("Portfolio") of shares of beneficial
interest to be issued by the Trust pursuant to the Trust Registration
Statement;

NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the Trust and the Manager agree as follows:

1. APPOINTMENT OF MANAGER. The Manager hereby undertakes and
agrees, upon the terms and conditions herein set

<PAGE>

forth, to (i) supervise the Trust's investment program, including advising
and consulting with the Trust's board of trustees and the investment
advisers for each of the Trust's portfolios (the "Investment Advisers")
regarding the Trust's overall investment strategy and make recommendations to
the Trust's board of trustees regarding the retention by the Portfolios of
the Investment Advisers, (ii) monitor the performance of the Trust's outside
service providers, including the Trust's administrator, transfer agent and
custodian and (iii) pay the salaries, fees and expenses of such of the
Trust's officers, trustees or employees as are directors, officers or
employees of the Manager. In addition, the Manager hereby undertakes and
agrees to appoint investment advisers to the Portfolios to (a) make, in
consultation with the Manager and the Trust's Board of Trustees, certain
investment strategy decisions for the respective Portfolio (b) manage the
investing and reinvesting of the Trust assets, (c) place purchase and sale
orders on behalf of the Trust's Portfolios, and (d) provide research and
statistical data to the Trust in relation to investing and other matters
within the scope of the investment objectives and limitations of the Trust's
Portfolios. The Investment Advisers shall have the sole ultimate discretion
over investment decisions for the Trust's Portfolios.

<PAGE>

2. In connection herewith, the Manager agrees to (i) maintain a
staff within its organization to furnish the above services to the Trust and
to the Investment Advisers and (ii) provide the Trust with persons
satisfactory to the Trust's Board of Trustees to serve as officers and
employees of the Trust. The Manager shall bear all expenses arising out of
its duties hereunder.

Except as otherwise provided in this Agreement and the Advisory
Agreements (as defined below) and the Administration Agreement between the
Trust and Quest for Value Advisors, the Trust shall be responsible for all of
the Trust's expenses and liabilities, including but not limited to
organizational and offering expenses (which include out-of-pocket expenses,
but not overhead or employee costs of the Manager and the Investment
Advisers); expenses for legal, accounting and auditing services; taxes and
governmental fees; dues and expenses incurred in connection with membership
in investment company organizations; costs of printing and distributing
shareholder reports, proxy materials, prospectuses, stock certificates and
distributions of dividends; charges of the Trust's custodians,
sub-custodians, registrars, transfer agents, dividend-paying agents and
dividend reinvestment plan agents; payment for portfolio pricing services to
a pricing agent, if any; costs of the determination of the Portfolios' daily
net asset values; registration and filing fees

<PAGE>

of the Securities and Exchange Commission; expenses of registering or
qualifying securities of the Trust for sale in the various states; freight
and other charges in connection with the shipment of the Trust's portfolio
securities; fees and expenses of non-interested trustees; travel expenses or
an appropriate portion thereof of trustees and officers of the Trust who are
directors, officers or employees of the Manager or the Investment Advisers
to the extent that such expenses relate to attendance at meetings of the
Board of Trustees or any committee thereof; costs of shareholders meetings;
insurance; interest; brokerage costs; fees payable to the Trust's
Administrator pursuant to an Administration Agreement; litigation and other
extraordinary or non-recurring expenses.

3. REMUNERATION. (a) The Trust agrees to pay the Manager, and the Manager
agrees to accept as full compensation for the performance of all its
functions and duties to be performed hereunder, a fee based on the total net
assets of each Portfolio at the end of each business day as set forth on
Schedule A hereto. Determination of net asset value of each Portfolio will
be made in accordance with the policies disclosed in the Trust's registration
statement under the 1940 Act. The fee is payable at the close of business on
the last day of each calendar month and shall be made on the first business
day following such last calendar day. The payment due on such day shall be
computed by

<PAGE>

(1) adding together the results of multiplying (i) the total net assets of
each Portfolio on each day of the month by (ii) the applicable daily fraction
of the annual advisory fee percentage rate of such Portfolio as set forth on
Schedule A hereto and then (2) adding together the total monthly amounts
computed for each Portfolio.

(b) In the event the operating expenses of the Trust, including any
amounts payable to the Manager pursuant to subsection (a) hereof, but
excluding the amount of any interest, taxes, brokerage commissions,
distribution fees, and extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any indemnification
related thereto) paid or payable with respect to a Portfolio for any fiscal
year ending on a date during which this Agreement is in effect, exceed the
most restrictive state law provisions in effect in states where the Shares of
a Portfolio are qualified to be sold, the Manager will pay or refund for the
account of that Portfolio any such excess amount up to the amount of the fee
paid to the Manager under this Agreement for such fiscal year. The Manager
shall have no obligation to reimburse the Trust for any expenses except for
the management fee. Whenever the expenses of a Portfolio exceed a pro rata
portion of the expense limitation stated above, the monthly amount payable to
the Manager with

<PAGE>

respect to that Portfolio will be reduced or postponed in the amount of such
excess.

Compensation of the Investment Advisers for services provided under the
Advisory Agreements is the sole responsibility of the Manager.

1. REPRESENTATIONS AND WARRANTIES. The Manager represents and
warrants that it is duly registered and authorized as an investment adviser
under the Investment Advisers Act of 1940, as amended, and the Manager
agrees to maintain effective all requisite registrations, authorizations and
licenses, as the case may be, until the termination of this agreement.

2. SERVICES NOT DEEMED EXCLUSIVE. The services provided hereunder
by the Manager are not to be deemed exclusive and the Manager and any of
its affiliates or related persons are free to render similar services to
others and to use the research developed in connection with this agreement
for other clients or affiliates. Nothing herein shall be construed as
constituting the Manager an agent of any of the Investment Advisers or of the
Trust.

3. LIMIT OF LIABILITY. The Manager shall exercise its best
judgment in rendering the services in accordance with the terms of this
agreement. The Manager shall not be liable for any error of judgment or
mistake of law or for

<PAGE>

any act or omission or any loss suffered by the Trust in connection with the
matters to which this agreement relates, provided that nothing herein shall
be deemed to protect or purport to protect the Manager against any liability
to the Trust or its shareholders to which the Manager would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or from reckless disregard of its obligations
and duties under this agreement ("disabling conduct"). The Trust will
indemnify the Manager against, and hold it harmless from, any and all losses,
claims, damages, liabilities or expenses (including reasonable counsel fees
and expenses), including but not limited to any amounts paid in satisfaction
of judgments, in compromise or as fines or penalties, not resulting from
disabling conduct. Indemnification shall be made only upon the happening of
one of the following events: (i) a final decision on the merits by a court
or other body before whom the proceeding was brought that the Manager was
not liable by reason of disabling conduct or (ii) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that
the Manager was not liable by reason of disabling conduct by (a) the vote of
a majority of a quorum of trustees of the Trust who are neither "interested
persons" of the Trust nor parties to the proceeding ("disinterested
non-party trustees") or (b) an independent legal counsel in a written

<PAGE>

opinion. The Manager shall be entitled to advances from the Trust for
payment of the reasonable expenses incurred by it in connection with the
matter as to which it is seeking indemnification in the manner and to the
fullest extent permissible under law. Prior to any such advance, the
Manager shall provide to the Trust a written affirmation of its good faith
belief that the standard of conduct necessary for indemnification by the
Trust has been met and a written undertaking to repay any such advance if it
should ultimately be determined that the standard of conduct has not been
met. In addition, at least one of the following additional conditions shall
be met: (a) the Manager shall provide security in form and amount acceptable
to the Trust for its undertaking; (b) the Trust is insured against losses
arising by reason of the advance; or (c) a majority of a quorum of
disinterested non-party trustees or independent legal counsel, in a written
opinion, shall have determined, based on a review of facts readily available
to the Trust at the time the advance is proposed to be made, that there is
reason to believe that the Manager will ultimately be found to be entitled
to indemnification.

4. DURATION AND TERMINATION. This agreement shall become
effective as of the date hereof and shall continue in effect for two years
from the date hereof (unless sooner terminated in accordance with this
agreement) and thereafter for

<PAGE>

successive annual periods, but only so long as such continuance is
specifically approved at least annually with respect to each Portfolio by the
affirmative vote of (i) a majority of the members of the Trust's Board of
Trustees who are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of any such party, cast in person at a meeting
called for the purpose of voting on such approval and (ii) a majority of the
Trust's Board of Trustees or the holders of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the respective Portfolio.

Notwithstanding the above, this agreement may nevertheless be
terminated with respect to one or more Portfolios at any time, without
penalty, by the Trust's Board of Trustees, by vote of holders of a majority
of the outstanding voting securities (as defined in the 1940 Act) of the
respective Portfolio or by the Manager, upon 60 days' written notice
delivered to each party hereto. Any such notice shall be deemed given when
received by the addressee.

8. AMENDMENT OR ASSIGNMENT. This Agreement may be amended only if
such amendment is specifically approved with respect to each Portfolio by (i)
the vote of a majority of the outstanding voting securities of the respective
Portfolio and (ii) a majority of the Trustees, including a majority of those
Trustees who are not parties to this agreement or interested persons of such

<PAGE>

party, cast in person at a meeting called for the purpose of voting on such
approval. This Agreement shall automatically and immediately terminate in
the event of its assignment, as that term is defined in the 1940 Act and the
rules thereunder.

9. SEVERABILITY. If any provisions of this Agreement shall be
held or made unenforceable by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby.

10. DEFINITIONS. As used in this Agreement, the terms
"interested person" and "vote of a majority of the outstanding
securities" shall have the respective meanings set forth in Section 2(a)(19)
and 2(a)(42) of the 1940 Act.

11. NO LIABILITY OF SHAREHOLDERS. This Agreement is executed by
the Trustees of the Trust, not individually, but rather in their capacity as
Trustees under the Declaration of Trust made April 4, 1994. None of the
Shareholders, Trustees, officers, employees, or agents of the Trust shall be
personally bound or liable under this Agreement, nor shall resort be had to
their private property for the satisfaction of any obligation or claim
hereunder but only to the property of the Trust and, if the obligation or
claim relates to the property held by the Trust for the benefit of one or
more but fewer than all Portfolios, then only to the property held for the
benefit of the affected Portfolio.

<PAGE>

12. GOVERNING LAW. This Agreement shall be governed, construed
and interpreted in accordance with the laws of the State of New York,
PROVIDED, HOWEVER, that nothing herein shall be construed as being
inconsistent with the 1940 Act.

13. NOTICES. Any notice hereunder shall be
in writing and shall be delivered in person or by telex or facsimile (followed
by delivery in person) to the parties at the addresses set forth below.

If to the Trust:
Saratoga Advantage Trust
Two World Financial Center
New York, New York 10080
Tel: (212) 374-2010
Fax: (212) 374-2070
Attn: President

If to the Manager:

Saratoga Capital Management
Two World Financial Center
New York, New York 10080
Tel: (212) 374-2010
Fax: (212) 374-2070
Attn: President

with a copy to:

Oppenheimer Capital
200 Liberty Street
New York, New York 10281
Tel: (212) 667-7495
Fax: (212) 667-4119
Attn: General Counsel

or to such other address as to which the recipient shall have informed the
other party in writing.

Unless specifically provided elsewhere, notice given as provided
above shall be deemed to have been given, if by personal

<PAGE>

delivery, on the day of such delivery, and, if by telex or facsimile and
mail, on the date on which such telex or facsimile is sent.

14. COUNTERPARTS. This agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.

15. NOTIFICATION OF CHANGE IN MEMBERSHIP OF PARTNERSHIP. The Manager
agrees to notify the Trust of any change in the membership of the Manager
within a reasonable period of time after such change.

IN WITNESS WHEREOF, the parties hereto caused their duly
authorized signatories to execute this agreement as of the day and year first
written above.

THE SARATOGA ADVANTAGE TRUST

By:-------------------------------
Name:
Title:

SARATOGA CAPITAL MANAGEMENT

By:--------------------------------
Name:
Title:

<PAGE>

Schedule A
----------
to

Management Agreement

between

Saratoga Advantage Trust and Saratoga Capital Management

Annual Fee as a
Percentage of Daily
Name of Series Net Assets
- -------------- --------------------
<S> <C>

U.S. Government Money Market Portfolio .475%

Investment Quality Bond Portfolio .55%

International Equity Portfolio .75%

Small Capitalization Portfolio .65%

Total Return Bond Portfolio .55%

Municipal Bond Portfolio .55%

Large Capitalization Value Portfolio .65%

Large Capitalization Growth Portfolio .65%

</TABLE>

<PAGE>

INVESTMENT ADVISORY AGREEMENT

BETWEEN

SARATOGA CAPITAL MANAGEMENT

AND

STERLING CAPITAL MANAGEMENT COMPANY

REGARDING THE

THE SARATOGA ADVANTAGE TRUST

AGREEMENT made this ____ day of __________, 1994 between Saratoga Capital
Management, a Delaware general partnership (the "Manager") and Sterling Capital
Management Company, a corporation organized under the laws of the State of North
Carolina (the "Advisor").

WHEREAS, the Manager has entered into a Management Agreement (the "Manager's
Agreement") with The Saratoga Advantage Trust (the "Trust"), an open-end
investment company organized in series form with at least seven (7) separate
portfolios, one of which is the U.S. Governement Money Market Portfolio (the
"Portfolio"), a diversified portfolio, pursuant to which the Manager furnishes
continuous investment advice and direction; and

WHEREAS, the Manager's Agreement provides that the Manager may, at its own
expense, contract for such advisory and research services as it deems necessary
or desirable to fulfill such obligations; and

WHEREAS, the Advisor is registered under the Investment Advisers Act of 1940;
and

WHEREAS, the Manager desires to retain the Advisor to provide continuous
investment management and direction concerning the Portfolio and the Advisor is
willing to provide such management;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the Manager and the Advisor as follows:

<PAGE>

1. APPOINTMENT. The Manager hereby retains the Advisor to manage the
Portfolio, subject to the provisions of the Trust registration statement and the
Portfolio's prospectus and overall supervision by the Manager and the Trust's
Board of Trustees. The Manager will continue to have general responsibility for
all services to be provided to the Trust pursuant to the Manager's Agreement and
will oversee and review the Advisor's performance of its duties under this
Agreement. The day-to-day management of the Portfolio's assets will be the
responsibility of the Advisor.

2. EXPENSES. The Advisor assumes as its own expense, or agrees to pay the
cost of, all services provided by it pursuant to Paragraph 1, above, provided
that it will not be responsible for any expenses specifically assumed by the
Trust pursuant to the Manager's Agreement. The Advisor will, for all purposes
herein, be deemed to be an independent contractor and will, except as expressly
provided or authorized (herein or otherwise) have no authority to act for or on
behalf of the Trust in any way or otherwise be deemed to be an agent of the
Trust.

3. INVESTMENT ACTIVITIES.

(a) The Advisor will direct the investment of the Portfolio's assets on a
discretionary basis in accordance with applicable law and the investment
objectives, policies and restrictions set forth in the then-current Prospectus
and Statement of Additional Information relating to the Portfolio contained in
its Registration Statement under the Investment Company Act of 1940 and the
Securities Act of 1933, as amended; in accordance with the investment
objectives, policies and restrictions from time to time prescribed by the Board
of Trustees of the Trust (the "Board"), and communicated by the Manager to the
Advisor and; subject to such further reasonable limitations as the Manager may
from time to time impose by written notice to the Advisor. The Advisor hereby
acknowledges that it has carefully reviewed the Prospectus, Statement of
Additional Information, Declaration of Trust and By-laws, if any, of the Trust
and it agrees that it will make investments solely for the purpose of achieving
the stated investment objectives of the Portfolio.

(b) The Advisor hereby specifically acknowledges and represents:

(i) The Advisor has provided the Manager with full information regarding the
Advisor's historical track record of investment performance.

(ii) The Advisor has carefully reviewed the portions of the Prospectus and
Statement of Additional Information stating the Advisor's historical track
record of investment performance and investment methodology and that all
representations made therein are accurate and true and there are no material
omissions.

Saratoga Advantage Trust Agreement Page 2

<PAGE>

(iii) The Advisor will direct the investment of the Portfolio's assets in
the same manner in which the Advisor has directed the investment of the assets
which produced the historical track record of investment performance as stated
in the Prospectus and Statement of Additional Information. The Advisor
represents that nothing contained in Paragraph 3(a) or elsewhere in this
Agreement, the Prospectus, or the Statement of Additional Information is
inconsistent with the Advisor directing the investment of the Portfolio's assets
in said manner.

(c) The Advisor will place orders to purchase and sell securities (and where
appropriate commodity futures contracts and other investments) for the
Portfolio.

4. BROKERAGE.

(a) The Advisor agrees that it will place orders pursuant to its investment
determinations for the Portfolio either directly with the issuer or with brokers
or dealers selected by it in accordance with the standards specified in
Subparagraphs 4(b) and 4(c) below. The Advisor may place orders for the
Portfolio with affiliates or interested parties of the Trust or the Manager in
accordance with Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder, Section 17(e) of the Act and Rule 17e-1 thereunder and
other applicable laws and regulations.

(b) In placing orders with brokers and dealers, the Advisor will use its best
efforts to seek the best overall terms available. In assessing the best overall
terms available for any portfolio transaction, the Advisor will consider all
factors it deems relevant including, but not limited to, the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and on a continuing basis.

(c) In selecting brokers or dealers to execute a particular transaction and in
evaluating the best overall terms available, the Advisor may consider the
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) provided to the Trust.

5. COMPENSATION.

(a) As compensation for services performed and costs assumed hereunder, the
Manager agrees to pay the Advisor a fee that is computed daily and paid monthly
at the annual rate of ___basis points per annum on net assets (the "Portfolio
Advisory Fee"), reduced in the same percentage as the Manager when the Manager
reduces its fee to the Portfolio.

Page 3

<PAGE>

(b) The Portfolio Advisory Fee shall accrue as of the date that the Portfolio
commences investment operations. Upon any termination of this Agreement the
Portfolio Advisory Fee will cease to accrue as of the termination date specified
in the notice of termination to the Advisor. Accrued Portfolio Advisory Fees
will be paid to the Advisor upon receipt by the Manager of its fees for the same
accrual period from the Portfolio.

(c) For the purpose of determining fees payable to the Advisor, the value of
the Trust's net assets shall be computed at the times and in the manner
specified in the Trust's Prospectus and/or the Statement of Additional
Information.

6. DURATION AND TERMINATION.

(a) This Agreement will become effective as of the date hereof and, unless
sooner terminated as herein provided, shall remain in effect for two years from
said date subject to the approval of the Portfolio's shareholders. Thereafter,
this Agreement will continue in effect from year to year, subject to its
termination provisions and all other terms and conditions hereof if such
continuation shall be specifically approved at least annually by the Board and
by the vote of a majority of the Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party or by vote of a majority
of the outstanding voting securities of the Portfolio. The Advisor shall
furnish to the Manager or to the Board, promptly upon request, such information
as may reasonably be necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.

(b) This Agreement may not be amended, transferred, sold or in any manner
hypothecated or pledged by the Advisor without the affirmative vote of a
majority of the outstanding voting securities of the Portfolio. The manager may
immediately terminate this Agreement without notice to any party in the event of
its assignment by the Advisor.

(c) This Agreement may be terminated at any time, without the payment of any
penalty, by the Manager, by the Board or by vote of a majority of the
outstanding voting securities of the Portfolio, upon written notice to the
Advisor. This Agreement may be terminated by the Advisor upon 100 days written
notice to the Manager and the Trust.

7. INFORMATION TO BE PROVIDED TO THE MANAGER AND THE TRUST.

(a) The Advisor will keep the Manager and the Trust immediately informed of all
developments materially affecting the Portfolio, the Advisor's ability to direct
the investment of the Portfolio and/or the perception of the Advisor as an
appropriate source of investment advice and shall, on the Advisor's own
initiative, furnish immediately to the Manager and the Trust such information as
is appropriate for this purpose.

Page 4

<PAGE>

The information deemed appropriate for the purpose of this Subparagraph
includes, but is not limited to, any matters with regard to: the personnel of
the Advisor, the investment policies or discipline of the Advisor, the financial
condition of the Advisor, the historical investment performance of the Advisor,
changes or amendments to any federal, state, or local registration statements or
other licensing documents, the securities of the Portfolio and any and all
matters reasonably related to the Manager's retention of the Advisor.

(b) The Advisor agrees that it will immediately notify the Manager and the
Trust in the event that the Advisor or any of its affiliates: (i) becomes
subject to a statutory disqualification that prevents the Advisor from serving
as investment advisor pursuant to this Agreement; or (ii) is or expects to
become the subject of an administrative proceeding or enforcement action by the
SEC or other regulatory authority. The Advisor has provided the information
about itself set forth in the Trust's Registration Statement and has reviewed
the entire description of its operations, duties and responsibilities as stated
therein and acknowledges that they are true and correct and contain no material
misstatement or omission, and it further agrees to notify the Manager and the
Trust's Administrator immediately of any material fact known to the Advisor
respecting or relating to the Advisor that is not contained in the Prospectus or
Statement of Additional Information of the Trust, or any amendment or supplement
thereto, or any statement contained therein that becomes untrue in any material
respect.

(c) The Advisor represents that it is an investment adviser registered under
the Investment Advisers Act of 1940 and other applicable laws and that the
statements contained in the Advisor's registration under the Investment Advisers
Act of 1940 on Form ADV, as of the date hereof, are true and correct and do not
omit any material facts required to be stated therein or necessary in order to
make the statements therein not misleading. The Advisor agrees to maintain the
completeness and accuracy of its registration on Form ADV in accordance with all
legal requirements relating to that Form and to timely provide the Manager with
an amended or changed copy whenever such copy is required to be filed. The
Advisor acknowledges that it is an "investment advisor" to the Portfolio within
the meaning of the Investment Company Act of 1940 and the Investment Advisers
Act of 1940.

(d) The Advisor will make available promptly upon the Manager's request such
reports as the Manager may reasonably use in discharging its duties under the
Manager's Agreement, which reports may be distributed by the Manager to the
Board. A representative of the Advisor will attend, at the request of the
Manager, regular quarterly meetings of the Board, meetings of the Trust's
shareholders and special meetings upon reasonable notice.

Page 5

<PAGE>

(e) The Advisor will maintain and keep current and preserve on behalf of the
Trust all records required by the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
as well as those that may be required by the Investment Advisors Act of 1940,
the Internal Revenue Code, applicable federal and state securities laws and laws
of foreign countries and juridical subdivisions thereof, in the manner provided
by such laws or regulations and such additional records as required by the
Manager. The Advisor acknowledges that such records are the property of the
Trust and will be surrendered to the Trust promptly upon request. The Manager
agrees to furnish to the Advisor at its principal office all prospectuses, proxy
statements, reports to stockholders, sales reports and any other information
relative to the management of the assets or organization and qualifications of
the Trust.

8. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

(b) The Advisor agrees that, during the term of this Agreement, neither it nor
any of its affiliated persons (as defined in the Investment Company Act of 1940)
shall accept retention as an investment advisor, investment subadvisor,
investment manager, or similar service provider to any investment company
registered under the Investment Company Act of 1940 nor any investment firm that
seeks to market an asset allocation program similar in nature to the Trust.

(d) In the event that the Advisor is terminated by the Manager, the Advisor
agrees that neither it nor any of its affiliated persons (as defined in the
Investment Company Act of 1940) shall accept or solicit any assets, accounts, or
clients of the Trust for any purpose whatsoever for a period of one (1) year
from the termination of this Agreement.

(e) The provisos set forth in Subparagraphs 8(a), 8(b), 8(c), and 8(d) above
shall not apply to the continuation of any contractual relationship to which the
Advisor is a party that is in effect on the date of this Agreement and that is
disclosed in writing to the Manager prior to the execution of this Agreement.

Page 6

<PAGE>

(f) When the Advisor recommends the purchase or sale of a security for other
investment companies and other clients, and at the same time the Advisor
recommends the purchase or sale of the same security for the Trust, it is
understood that in light of its fiduciary duty to the Trust, such transactions
will be executed on a basis that is fair and equitable to the Trust.

9. MISCELLANEOUS.

(a) The Advisor shall not be liable for any investment loss suffered by the
Portfolio in connection with matters to which this Agreement relates, except in
the case of the Advisor's negligence, actual misconduct or violation of any
applicable statute; provided, however, that this limitation shall not act to
relieve the Advisor from any responsibility, obligation or duty which the
Advisor may have under any federal or state securities acts or other applicable
statutes.

(b) Any questions of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act shall be resolved by reference to such term or provision of the 1940
Act, to rules, regulations or orders of the Securities and Exchange Commission
validly issued pursuant to said Act and to interpretations thereof, if any, by
the United States courts. Specifically, the terms "vote of a majority of the
outstanding voting securities", "interested persons", "assignment", and
"affiliated person", as used herein, shall have the meanings assigned to them by
Section 2(a) of the 1940 Act. In addition, where the effect of a requirement of
the 1940 Act reflected in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.

(c) The Manager shall indemnify and hold harmless the Advisor, its officers and
directors and each person, if any, who controls the Advisor within the meaning
of Section 15 of the Securities Act of 1933 (any and all such persons shall be
referred to as "Indemnified Party"), against any loss, liability, claim, damage
or expense (including the reasonable cost of investigating or defending any
alleged loss, liability, claim, damage or expense and reasonable counsel fees
incurred in connection therewith), arising by reason of any matter to which this
Agreement relates. However, in no case (i) is this indemnity to be deemed to
protect any particular Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of misfeasance, bad faith
or negligence in the performance of its duties or by reason of disregard of its
obligations and duties under this Agreement; nor (ii) is the Manager to be
liable under this indemnity with respect to any claim made against any
particular Indemnified Party unless such Indemnified Party shall have notified
the Manager in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Advisor or such controlling persons.

Page 7

<PAGE>

The Advisor shall indemnify and hold harmless the Manager and the Trust and each
of their directors and officers and each person, if any, who controls the
Manager and the Trust against any loss, liability, claim, damage or expense
described in the foregoing indemnity but only with respect to the Advisor's
misfeasance, bad faith or negligence in the performance of its duties under this
Agreement. In case any action shall be brought against the Manager or any
person so indemnified, in respect of which indemnity may be sought against the
Advisor, the Advisor shall have the rights and duties given to the Manager, and
the Manager and each person so indemnified shall have the rights and duties
given to the Advisor by the provisions of Subsections (i) and (ii) of this
Subparagraph.

(d) Except as otherwise provided in Subparagraph 9(b) hereof, and as may be
required under applied federal law, this Agreement shall be governed by the laws
of the State of New York.

(e) The Advisor acknowledges that the name of the Trust may be changed at any
time at the sole discretion of the Trustees and that such change will in no way
effect the obligations of the Advisor under this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals, if any, to be hereunto affixed, as of the day and year first
written.

SARATOGA CAPITAL MANAGEMENT

Attest: By:

STERLING CAPITAL MANAGEMENT COMPANY

Attest: By:

Page 8

<PAGE>

INVESTMENT ADVISORY AGREEMENT

BETWEEN

SARATOGA CAPITAL MANAGEMENT

AND

FOX ASSET MANAGEMENT INC.

REGARDING THE

THE SARATOGA ADVANTAGE TRUST

AGREEMENT made this 1st day of September, 1994 between Saratoga Capital
Management, a Delaware general partnership (the "Manager") and Fox Asset
Management Inc., a corporation organized under the laws of the State of New
Jersey (the "Advisor").

WHEREAS, the Manager has entered into a Management Agreement (the "Manager's
Agreement") with The Saratoga Advantage Trust (the "Trust"), an open-end
investment company organized in series form with at least seven (7) separate
portfolios, one of which is the Investment Quality Bond Portfolio (the
"Portfolio"), a diversified portfolio, pursuant to which the Manager furnishes
continuous investment advice and direction; and

WHEREAS, the Advisor is registered under the Investment Advisers Act of 1940;
and

WHEREAS, the Manager desires to retain the Advisor to provide continuous
investment management and direction concerning the Portfolio and the Advisor is
willing to provide such management;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the Manager and the Advisor as follows:

<PAGE>

3. INVESTMENT ACTIVITIES.

(b) The Advisor hereby specifically acknowledges and represents:

(i) The Advisor has provided the Manager with full information regarding the
Advisor's historical track record of investment performance.

Saratoga Advantage Trust Agreement Page 2

<PAGE>

(c) The Advisor will place orders to purchase and sell securities (and where
appropriate commodity futures contracts and other investments) for the
Portfolio.

4. BROKERAGE.

5. COMPENSATION.

(a) As compensation for services performed and costs assumed hereunder, the
Manager agrees to pay the Advisor a fee that is computed daily and paid monthly
at the annual rate of 20 basis points per annum on net assets (the "Portfolio
Advisory Fee"), which fee may be reduced by the Manager in the same percentage
as the Manager's fee when the Manager reduces its fee to the Portfolio.

Page 3

<PAGE>

6. DURATION AND TERMINATION.

(b) This Agreement may not be amended, transferred, sold or in any manner
hypothecated or pledged by the Advisor without the affirmative vote of a
majority of the outstanding voting securities of the Portfolio. The Manager may
immediately terminate this Agreement without notice to any party in the event of
its assignment by the Advisor.

7. INFORMATION TO BE PROVIDED TO THE MANAGER AND THE TRUST.

Page 4

<PAGE>

Page 5

<PAGE>

8. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

(a) It is understood that the services of the Advisor are not exclusive, and
nothing in this Agreement shall prevent the Advisor from providing investment
management or similar services or from engaging in other activities, except as
provided in Subparagraphs 8(b), 8(c), and 8(d) below. It is also understood
that the Advisor is not responsible for the actions of persons who are no longer
in the employ of, or no longer affiliated with, the Advisor.

(b) The Advisor agrees that ,during the term of this Agreement, neither it nor
any of its affiliated persons (as defined in the Investment Company Act of 1940)
shall accept retention as an investment advisor, investment subadvisor,
investment manager, or similar service provider to any investment company
registered under the Investment Company Act of 1940 nor any investment firm that
seeks to market an asset allocation program similar in nature to the Trust.

(d) In the event that the Advisor is terminated by the Manager, the Advisor
agrees that neither it nor any of its affiliated persons (as defined in the
Investment Company Act of 1940) shall knowingly accept or solicit any assets,
accounts, or clients of the Trust for any purpose whatsoever for a period of one
(1) year from the termination of this Agreement, except for such assets,
accounts, or clients placed into the Trust by the Advisor.

Page 6

<PAGE>

9. MISCELLANEOUS.

Page 7

<PAGE>

this indemnity with respect to any claim made against any particular
Indemnified Party unless such Indemnified Party shall have notified the
Manager in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Advisor or such controlling persons.

(d) Except as otherwise provided in Subparagraph 9(b) hereof, and as may be
required under applied federal law, this Agreement shall be governed by the laws
of the State of New York.

SARATOGA CAPITAL MANAGEMENT

Attest: By:

FOX ASSET MANAGEMENT INC.

Attest: By:

Page 8

<PAGE>

INVESTMENT ADVISORY AGREEMENT

BETWEEN

SARATOGA CAPITAL MANAGEMENT

AND

QUEST FOR VALUE ADVISORS

REGARDING THE

THE SARATOGA ADVANTAGE TRUST

AGREEMENT made this 1st day of September, 1994 between Saratoga Capital
Management, a Delaware general partnership (the "Manager") and Quest for Value
Advisors, a Delaware general partnership (the "Advisor").

WHEREAS, the Manager has entered into a Management Agreement (the "Manager's
Agreement") with The Saratoga Advantage Trust (the "Trust"), an open-end
investment company organized in series form with at least seven (7) separate
portfolios, one of which is the Municipal Bond Portfolio (the "Portfolio"), a
diversified portfolio, pursuant to which the Manager furnishes continuous
investment advice and direction; and

WHEREAS, the Advisor is registered under the Investment Advisers Act of 1940;
and

WHEREAS, the Manager desires to retain the Advisor to provide continuous
investment management and direction concerning the Portfolio and the Advisor is
willing to provide such management;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the Manager and the Advisor as follows:

<PAGE>

3. INVESTMENT ACTIVITIES.

(b) The Advisor hereby specifically acknowledges and represents:

(i) The Advisor has provided the Manager with full information regarding the
Advisor's historical track record of investment performance.

Page 2

<PAGE>

(c) The Advisor will place orders to purchase and sell securities (and where
appropriate commodity futures contracts and other investments) for the
Portfolio.

4. BROKERAGE.

5. COMPENSATION.

(a) As compensation for services performed and costs assumed hereunder, the
Manager agrees to pay the Advisor a fee that is computed daily and paid monthly
at the annual rate of 20 basis points per annum on net assets (the "Portfolio
Advisory Fee"), reduced in the same percentage as the Manager when the Manager
reduces its fee to the Portfolio.

Page 3

<PAGE>

6. DURATION AND TERMINATION.

7. INFORMATION TO BE PROVIDED TO THE MANAGER AND THE TRUST.

Page 4

<PAGE>

Page 5

<PAGE>

8. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

(b) In the event that the Advisor voluntarily terminates this Agreement, the
Advisor agrees that neither it nor any of its affiliated persons (as defined in
the Investment Company Act of 1940) except the Manager, shall for a period of
one (1) year after the termination of this Agreement, knowingly accept or
solicit any assets, accounts, or clients of the Trust for any purpose
whatsoever.

(c) In the event that the Advisor is terminated by the Manager, the Advisor
agrees that neither it nor any of its affiliated persons (as defined in the
Investment Company Act of 1940, except the Manager) shall knowingly accept or
solicit any assets, accounts, or clients of the Trust for any purpose whatsoever
for a period of one (1) year from the termination of this Agreement.

(d) The provisos set forth in Subparagraphs 8(a), 8(b), and 8(c) above shall
not apply to the continuation of any contractual relationship to which the
Advisor is a party that is in effect on the date of this Agreement and that is
disclosed in writing to the Manager prior to the execution of this Agreement.

(e) When the Advisor recommends the purchase or sale of a security for other
investment companies and other clients, and at the same time the Advisor
recommends the purchase or sale of the same security for the Trust, it is
understood that in light of its fiduciary duty to the Trust, such transactions
will be executed on a basis that is fair and equitable to the Trust.

Page 6

<PAGE>

9. MISCELLANEOUS.

Page 7

<PAGE>

Manager, and the Manager and each person so indemnified shall have the rights
and duties given to the Advisor by the provisions of Subsections (i) and (ii) of
this Subparagraph.

(d) Except as otherwise provided in Subparagraph 9(b) hereof, and as may be
required under applied federal law, this Agreement shall be governed by the laws
of the State of New York.

(e) The Advisor acknowledges that there is a substantial likelihood that a
violation of the provisions of this Agreement will cause irreparable harm to the
business of the Manager and the Trust, and therefore agrees that the Manager and
the Trust will be entitled to equitable relief, including a temporary
restraining order issued ex parte and a preliminary and/or permanent injunction,
in addition to any financial remedies available under law, resulting from any
breech of these paragraphs, upon demonstration of the required facts upon which
such relief may be granted.

(f) The Advisor acknowledges that the name of the Trust may be changed at any
time at the sole discretion of the Trustees and that such change will in no way
effect the obligations of the Advisor under this Agreement.

SARATOGA CAPITAL MANAGEMENT

Attest: By:

QUEST FOR VALUE ADVISORS

Attest: By:

Page 8

<PAGE>

INVESTMENT ADVISORY AGREEMENT

BETWEEN

SARATOGA CAPITAL MANAGEMENT

AND

QUEST FOR VALUE ADVISORS

REGARDING THE

THE SARATOGA ADVANTAGE TRUST

WHEREAS, the Manager has entered into a Management Agreement (the "Manager's
Agreement") with The Saratoga Advantage Trust (the "Trust"), an open-end
investment company organized in series form with at least seven (7) separate
portfolios, one of which is the Large Capitalization Value Portfolio (the
"Portfolio"), a diversified portfolio, pursuant to which the Manager furnishes
continuous investment advice and direction; and

WHEREAS, the Advisor is registered under the Investment Advisers Act of 1940;
and

WHEREAS, the Manager desires to retain the Advisor to provide continuous
investment management and direction concerning the Portfolio and the Advisor is
willing to provide such management;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the Manager and the Advisor as follows:

<PAGE>

3. INVESTMENT ACTIVITIES.

(b) The Advisor hereby specifically acknowledges and represents:

(i) The Advisor has provided the Manager with full information regarding the
Advisor's historical track record of investment performance.

Page 2

<PAGE>

(c) The Advisor will place orders to purchase and sell securities (and where
appropriate commodity futures contracts and other investments) for the
Portfolio.

4. BROKERAGE.

5. COMPENSATION.

(a) As compensation for services performed and costs assumed hereunder, the
Manager agrees to pay the Advisor a fee that is computed daily and paid monthly
at the annual rate of 30 basis points per annum on net assets (the "Portfolio
Advisory Fee"), reduced in the same percentage as the Manager when the Manager
reduces its fee to the Portfolio.

Page 3

<PAGE>

6. DURATION AND TERMINATION.

7. INFORMATION TO BE PROVIDED TO THE MANAGER AND THE TRUST.

Page 4

<PAGE>

Page 5

<PAGE>

8. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

(c) In the event that the Advisor is terminated by the Manager, the Advisor
agrees that neither it nor any of its affiliated persons (as defined in the
Investment Company Act of 1940) except the Manager, shall knowingly accept or
solicit any assets, accounts, or clients of the Trust for any purpose whatsoever
for a period of one (1) year from the termination of this Agreement.

Page 6

<PAGE>

9. MISCELLANEOUS.

Page 7

<PAGE>

Manager, and the Manager and each person so indemnified shall have the rights
and duties given to the Advisor by the provisions of Subsections (i) and (ii) of
this Subparagraph.

(d) Except as otherwise provided in Subparagraph 9(b) hereof, and as may be
required under applied federal law, this Agreement shall be governed by the laws
of the State of New York.

SARATOGA CAPITAL MANAGEMENT

Attest: By:

QUEST FOR VALUE ADVISORS

Attest: By:

Page 8

<PAGE>

INVESTMENT ADVISORY AGREEMENT

BETWEEN

SARATOGA CAPITAL MANAGEMENT

AND

HARRIS BRETALL SULLIVAN & SMITH, INC.

REGARDING THE

THE SARATOGA ADVANTAGE TRUST

AGREEMENT made this ____ day of __________, 1994 between Saratoga Capital
Management, a Delaware general partnership (the "Manager") and Harris Bretall
Sullivan & Smith, Inc., a corporation organized under the laws of the State of
California (the "Advisor").

WHEREAS, the Manager has entered into a Management Agreement (the "Manager's
Agreement") with The Saratoga Advantage Trust (the "Trust"), an open-end
investment company organized in series form with at least seven (7) separate
portfolios, one of which is the Large Capitalization Growth Portfolio (the
"Portfolio"), a diversified portfolio, pursuant to which the Manager furnishes
continuous investment advice and direction; and

WHEREAS, the Advisor is registered under the Investment Advisers Act of 1940;
and

WHEREAS, the Manager desires to retain the Advisor to provide continuous
investment management and direction concerning the Portfolio and the Advisor is
willing to provide such management;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the Manager and the Advisor as follows:

<PAGE>

3. INVESTMENT ACTIVITIES.

(b) The Advisor hereby specifically acknowledges and represents:

(i) The Advisor has provided the Manager with full information regarding the
Advisor's historical track record of investment performance.

Page 2

<PAGE>

(c) The Advisor will place orders to purchase and sell securities (and where
appropriate commodity futures contracts and other investments) for the
Portfolio.

4. BROKERAGE.

5. COMPENSATION.

Page 3

<PAGE>

6. DURATION AND TERMINATION.

7. INFORMATION TO BE PROVIDED TO THE MANAGER AND THE TRUST.

Page 4

<PAGE>

Page 5

<PAGE>

8. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

(b) The Advisor agrees that, during the term of this Agreement, neither it nor
any of its affiliated persons (as defined in the Investment Company Act of 1940)
shall accept retention as an investment advisor, investment subadvisor,
investment manager, or similar service provider to any mutual fund sold or to be
sold without a sales charge by any investment company registered under the
Investment Company Act of 1940 (for example, a "no-load fund"), except that the
Advisor may accept retention, as prohibited above, by a fund created by the
Advisor acting in the capacity of both the Registered Investment Company and the
fund manager.

(c) In the event that the Advisor voluntarily terminates this Agreement, the
Advisor agrees that neither it nor any of its affiliated persons (as defined in
the Investment Company Act of 1940) shall for a period of one (1) year after the
termination of this Agreement: (i)accept retention as an investment advisor,
investment subadvisor, investment manager, or similar service provider to any
investment company registered under the Investment Company Act of 1940 nor any
investment firm that seeks to market an asset allocation program similar in
nature to the Trust and (ii)accept or solicit any assets, accounts, or clients
of the Trust for any purpose whatsoever.

Page 6

<PAGE>

9. MISCELLANEOUS.

Page 7

<PAGE>

(d) Except as otherwise provided in Subparagraph 9(b) hereof, and as may be
required under applied federal law, this Agreement shall be governed by the laws
of the State of New York.

Page 8

<PAGE>

SARATOGA CAPITAL MANAGEMENT

Attest: By:

HARRIS BRETALL SULLIVAN & SMITH, INC.

Attest: By:

Page 9

<PAGE>

INVESTMENT ADVISORY AGREEMENT

BETWEEN

SARATOGA CAPITAL MANAGEMENT

AND

AXE-HOUGHTON ASSOCIATES, INC.

REGARDING THE

THE SARATOGA ADVANTAGE TRUST

AGREEMENT made this ___ day of __________, 1994 between Saratoga Capital
Management, a Delaware general partnership (the "Manager") and Axe-Houghton
Associates, Inc., a corporation organized under the laws of the State of
Delaware (the "Advisor").

WHEREAS, the Manager has entered into a Management Agreement (the "Manager's
Agreement") with The Saratoga Advantage Trust (the "Trust"), an open-end
investment company organized in series form with at least seven (7) separate
portfolios, one of which is the Small Capitalization Portfolio (the
"Portfolio"), a diversified portfolio, pursuant to which the Manager furnishes
continuous investment advice and direction; and

WHEREAS, the Advisor is registered under the Investment Advisers Act of 1940;
and

WHEREAS, the Manager desires to retain the Advisor to provide continuous
investment management and direction concerning the Portfolio and the Advisor is
willing to provide such management;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the Manager and the Advisor as follows:

<PAGE>

1. APPOINTMENT. The Manager hereby retains the Advisor to manage the
Portfolio, subject to the provisions of the Trust registration statement and the
Portfolio's prospectus and overall supervision by the Manager and the Trust's
Board of Trustees. Notwithstanding the foregoing, the Manager will continue to
have general responsibility for all services to be provided to the Trust
pursuant to the Manager's Agreement and will oversee and review the Advisor's
performance of its duties under this Agreement. The day-to-day management of
the Portfolio's assets will be the responsibility of the Advisor.

2. EXPENSES. The Advisor assumes as its own expense, or agrees to pay the
cost of, all services provided by it pursuant to Paragraph 1, above, provided
that it will not be responsible for any expenses specifically assumed by the
Trust pursuant to the Manager's Agreement, or for the payment of brokerage
commissions, taxes or other transaction-related expenses. The Advisor will, for
all purposes herein, be deemed to be an independent contractor and will, except
as expressly provided or authorized (herein or otherwise) have no authority to
act for or on behalf of the Trust in any way or otherwise be deemed to be an
agent of the Trust.

3. INVESTMENT ACTIVITIES.

(a) The Advisor will direct the investment of the Portfolio's assets on a
discretionary basis in accordance with applicable law and the investment
objectives, policies and restrictions set forth in the then-current Prospectus
and Statement of Additional Information relating to the Portfolio contained in
its Registration Statement under the Investment Company Act of 1940 and the
Securities Act of 1933, as amended, copies of which the Manager shall have
provided to the Advisor; the investment objectives, policies and restrictions
from time to time prescribed by the Board of Trustees of the Trust (the
"Board"), and communicated in writing by the Manager to the Advisor and such
further reasonable limitations as the Manager may from time to time impose by
written notice to the Advisor. The Advisor hereby acknowledges that it has
carefully reviewed the Prospectus, Statement of Additional Information,
Declaration of Trust and By-laws, if any, of the Trust and it agrees that it
will make investments solely for the purpose of achieving the stated investment
objectives of the Portfolio.

(b) The Advisor hereby specifically acknowledges and represents:

(i) The Advisor has provided the Manager with all material information
regarding the Advisor's historical record of investment performance for the
period 1984 through 1993, a copy of which is attached as Exhibit A.
(ii) The Advisor's historical record of investment performance as set forth in
Exhibit A is accurate and true in all material aspects and there are no material
omissions. In addition, the information the Advisor provided to the Manager
regarding the Advisor's investment methodology, attached hereto as Exhibit B, is
accurate and true in all material respects and there are no material omissions.

Page 2

<PAGE>

(iii) The information provided by the Advisor in Exhibits A and B may be
included in the Prospectus and Statement of Additional Information regarding the
Trust.

(iv) Subject to the requirements of this Agreement, the instructions of the
Board of Trustees and the Manager, and the nature of the Trust, the Advisor will
direct the investment of the Portfolio's assets in a manner substantially
similar to that which the Advisor has employed in managing the accounts included
in the historical record of investment performance stated in Exhibit A hereto.
The Advisor represents that, to its knowledge as of the date hereof, nothing
contained in Paragraph 3(a) or elsewhere in this Agreement, the Prospectus, or
the Statement of Additional Information is inconsistent with the Advisor
directing the investment of the Portfolio's assets in said manner.

(c) The Advisor will place orders to purchase and sell securities (and where
appropriate commodity futures contracts and other investments) for the
Portfolio.

4. BROKERAGE.

5. COMPENSATION.

Page 3

<PAGE>

Advisory Fee"), reduced in the same percentage as the Manager when the Manager
reduces its fee to the Portfolio.

(b) The Portfolio Advisory Fee shall accrue as of the date that the Portfolio
commences investment operations. Upon any termination of this Agreement the
Portfolio Advisory Fee will cease to accrue as of the date the Advisor ceases
to provide investment advisory services to the Portfolio. Accrued Portfolio
Advisory Fees will be paid to the Advisor upon receipt by the Manager of its
fees for the same accrual period from the Portfolio.

6. DURATION AND TERMINATION.

(b) This Agreement may not be amended, transferred, sold or in any manner
hypothecated or pledged by the Advisor without the affirmative vote of a
majority of the outstanding voting securities of the Portfolio. The Manager may
immediately terminate this Agreement without notice to any party in the event of
its assignment by the Advisor.

(d)(i) The Advisor may initiate termination of this Agreement by providing
written notice of termination to the Manager. Once such notice has been
received by the Manager, the Advisor will continue to provide its full services
under this Agreement and be bound by the terms of this Agreement, except as
indicated in Paragraph 6 (d)(ii) below, until the earlier of 180 days or such
time as the Manager notifies the Advisor in writing that a suitable replacement
Advisor has been retained. This Agreement will terminate upon the receipt by
the Advisor of the Manager's written notice.

Page 4

<PAGE>

(ii) Upon the expiration of ninety (90) days from the Manager's receipt of the
Advisor's written notice of termination, the Advisor will no longer be subject
to the terms contained in Paragraph 8 (b) of this Agreement.

7. INFORMATION TO BE PROVIDED TO THE MANAGER AND THE TRUST.

(a) The Advisor shall provide the Manager and the Board of Trustees with a
complete valuation of the Portfolio not less frequently than quarterly and not
later than forty-five (45) days following the date through which such valuation
is given. The Advisor also promptly shall provide the Manager with copies of
any amendments to the Advisor's Form ADV and any other federal or state
registrations or applications. Upon written request, the Advisor shall provide
the Manager and/or the Board of Trustees with any other information necessary to
comply with reporting requirements and any other applicable law.

(b) The Advisor will keep the Manager and the Trust immediately informed of all
developments materially affecting the Portfolio and the Advisor's ability to
direct the investment of the Portfolio and shall, on the Advisor's own
initiative, furnish immediately to the Manager and the Trust such information as
is appropriate for this purpose.

(c) The Advisor agrees that it will immediately notify the Manager and the
Trust in the event that the Advisor or any of its affiliates: (i) becomes
subject to a statutory disqualification that prevents the Advisor from serving
as investment advisor pursuant to this Agreement; or (ii) becomes the subject of
an administrative proceeding or enforcement action by the SEC or other
regulatory authority. The Advisor has provided the information about itself set
forth in the Trust's Registration Statement and has reviewed the entire
description of its operations, duties and responsibilities as stated therein and
acknowledges that they are true and correct in all material respects and contain
no material misstatement or omission. The Advisor further agrees to notify the
Manager and the Trust's Administrator immediately of any material fact known to
the Advisor respecting or relating to the Advisor that is not contained in the
Prospectus or Statement of Additional Information of the Trust, or any amendment
or supplement thereto, or any statement contained therein that becomes untrue in
any material respect.

(d) The Advisor represents that it is an investment adviser registered under
the Investment Advisers Act of 1940 and that the statements contained in the
Advisor's registration under the Investment Advisers Act of 1940 on Form ADV, as
of the date hereof, are true and correct in all material respects and do not
omit any material facts required to be stated therein or necessary in order to
make the statements therein not misleading. The Advisor agrees to maintain the
completeness and accuracy of its registration on Form ADV in accordance with all
legal requirements relating to that Form and to timely provide the Manager with
an amended or changed copy whenever such copy is required to be filed. The
Advisor acknowledges that it is an "investment advisor"

Page 5

<PAGE>

to the Portfolio within the meaning of the Investment Company Act of 1940 and
the Investment Advisers Act of 1940.
(e) The Advisor will make available promptly upon the Manager's written request
such reports as the Manager may reasonably request in discharging its duties
under the Manager's Agreement, which reports may be distributed by the Manager
to the Board. A representative of the Advisor will attend, at the request of
the Manager, regular quarterly meetings of the Board, meetings of the Trust's
shareholders and special meetings upon reasonable notice.

(f) The Advisor will maintain and keep current and preserve on behalf of the
Trust all records required by the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
as well as those that may be required by the Investment Advisors Act of 1940,
the Internal Revenue Code and applicable federal and state securities laws and
juridical subdivisions thereof, in the manner provided by such laws or
regulations and such additional records as required by the Manager. The Advisor
acknowledges that such records are the property of the Trust and will be
surrendered to the Trust promptly upon request. The Manager agrees to furnish
to the Advisor at its principal office all prospectuses, proxy statements,
reports to stockholders, sales reports and any other information relative to the
management of the assets or organization and qualifications of the Trust.

8. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

(a) It is understood that the services of the Advisor are not exclusive, and
nothing in this Agreement or elsewhere shall prevent the Advisor from providing
investment management or similar services or from engaging in other activities,
except as provided in Subparagraphs 8(b), 8(c) and 8(d) below.

(b) The Advisor agrees that, during the term of this Agreement, it shall not
accept retention as an investment advisor or investment subadvisor, or similar
service provider to (i)any mutual fund or series thereof registered under the
Investment Company Act of 1940, whose shares are offered to the public at net
asset value without a sales load; nor (ii)Smith Barney Shearson's Trak program
or Prudential Securities' Target program or any other substantially similar
asset allocation program that utilizes mutual fund shares as underlying
investment vehicles.

(c) In the event that the Advisor voluntarily terminates this Agreement, the
Advisor agrees that it shall not for a period of one (1) year after the
termination of this Agreement, knowingly accept or solicit any assets, accounts,
or clients of the Trust for any purpose whatsoever.

(d) In the event that the Advisor is terminated by the Manager, the Advisor
agrees that it shall not knowingly solicit any assets, accounts, or clients of
the Trust for any purpose whatsoever for a period of one (1) year from the
termination of this Agreement. The Advisor will not knowingly accept any
assets, accounts, or clients of the Trust for a

Page 6

<PAGE>

period of one (1) year from the termination of this Agreement, unless the
Advisor provides a written assurance to the Manager that the assets, accounts,
or clients have not been solicited by the Advisor.

(e) The provisos set forth in Subparagraphs 8(a), 8(b), 8(c), and 8(d) above
shall not apply to the continuation of any contractual relationship to which the
Advisor or any affiliated person is a party that are in effect on the date of
this Agreement and that are disclosed in writing to the Manager prior to the
execution of this Agreement.

(g) The Advisor hereby agrees to provide the Manager with prior written notice
in the event that any affiliated person of the Advisor ( as defined in the
Investment Company Act of 1940) accepts retention as an investment advisor or
investment subadvisor or similar service provider to (i)any mutual fund or
series thereof registered under the Investment Company Act of 1940, whose shares
are offered to the public at net asset value without a sales load; nor (ii)Smith
Barney Shearson's Trak program or Prudential Securities' Target program or any
other substantially similar asset allocation program that utilizes mutual fund
shares as underlying investment vehicles.

9. MISCELLANEOUS.

(a) The Advisor shall not be liable for any error of judgment or mistake of law
or for any investment loss suffered by the Portfolio, the Manager, or the Trust
in connection with the performance of this Agreement, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from the Advisor's negligence, actual misconduct or
bad faith; provided, however, that this limitation shall not act to relieve the
Advisor from any responsibility, obligation or duty which the Advisor may have
under any federal or state securities acts or other applicable statutes.

Page 7

<PAGE>

the 1940 Act reflected in any provision of this Agreement is relaxed by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.

(d) Except as otherwise provided in Subparagraph 9(b) hereof, and as may be
required under applied federal law, this Agreement shall be governed by the laws
of the State of New York.

(f) The Manager hereby represents and warrants that (i)it has received and
reviewed a current copy of the Advisor's Form ADV; and (ii)it has the capacity
and the authority to enter into this Agreement on behalf of itself and the Trust
and to provide the services required of it and to perform its obligations
hereunder.

Page 8

<PAGE>

SARATOGA CAPITAL MANAGEMENT

Attest: By:

AXE-HOUGHTON ASSOCIATES, INC.

Attest: By:

Page 9

<PAGE>

INVESTMENT ADVISORY AGREEMENT

BETWEEN

SARATOGA CAPITAL MANAGEMENT

AND

IVORY & SIME INTERNATIONAL, INC.

REGARDING THE

THE SARATOGA ADVANTAGE TRUST

AGREEMENT made this ____ day of __________, 1994 between Saratoga Capital
Management, a Delaware general partnership (the "Manager") and Ivory & Sime
International, Inc., a corporation organized under the laws of the State of
Delaware (the "Advisor").

WHEREAS, the Manager has entered into a Management Agreement (the "Manager's
Agreement") with The Saratoga Advantage Trust (the "Trust"), an open-end
investment company organized in series form with at least seven (7) separate
portfolios, one of which is the International Equity Portfolio (the
"Portfolio"), a diversified portfolio, pursuant to which the Manager furnishes
continuous investment advice and direction; and

WHEREAS, the Advisor is registered under the Investment Advisers Act of 1940;
and

WHEREAS, the Manager desires to retain the Advisor to provide continuous
investment management and direction concerning the Portfolio and the Advisor is
willing to provide such management;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the Manager and the Advisor as follows:

<PAGE>

3. INVESTMENT ACTIVITIES.

(b) The Advisor hereby specifically acknowledges and represents:

(i) The Advisor has provided the Manager with full information regarding the
Advisor's historical track record of investment performance.

Page 2

<PAGE>

(c) The Advisor will place orders to purchase and sell securities (and where
appropriate commodity futures contracts and other investments) for the
Portfolio.

4. BROKERAGE.

5. COMPENSATION.

(a) As compensation for services performed and costs assumed hereunder, the
Manager agrees to pay the Advisor a fee that is computed daily and paid monthly
at the annual rate of 40 basis points per annum on net assets (the "Portfolio
Advisory Fee"), reduced in the same percentage as the Manager when the Manager
reduces its fee to the Portfolio.

Page 3

<PAGE>

6. DURATION AND TERMINATION.

7. INFORMATION TO BE PROVIDED TO THE MANAGER AND THE TRUST.

Page 4

<PAGE>

Page 5

<PAGE>

8. SERVICES TO OTHER COMPANIES OR ACCOUNTS.

(b) The Advisor agrees that, during the term of this Agreement, neither it nor
any of its affiliated persons (as defined in the Investment Company Act of 1940)
shall accept retention as an investment advisor, investment subadvisor,
investment manager, or similar service provider to (i)any mutual fund sold or to
be sold without a sales charge by any investment company registered under the
Investment Company Act of 1940 (for example, "no-load funds"), nor (ii)any
investment firm that seeks to market an asset allocation program similar in
nature to the Trust.

Page 6

<PAGE>

9. MISCELLANEOUS.

Page 7

<PAGE>

(d) Except as otherwise provided in Subparagraph 9(b) hereof, and as may be
required under applied federal law, this Agreement shall be governed by the laws
of the State of New York.

Page 8

<PAGE>

SARATOGA CAPITAL MANAGEMENT

Attest: By:

IVORY & SIME INTERNATIONAL, INC.

Attest: By:

Page 9

<PAGE>

SUB-INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this ____ day of _______ 1994 by and between Ivory & Sime
International, Inc., a New Jersey corporation (hereinafter called "Adviser"),
and Ivory & Sime plc, a Scottish corporation (hereinafter called "Sub-Adviser"),

WHEREAS, Saratoga Capital Management (the "Manager") has been organized to
serve as investment manager of The Saratoga Advantage Trust ("Trust"), a
Delaware business trust which has filed a registration statement under the
Investment Company Act of 1940 as amended (the "1940 Act") and the Securities
Act of 1933; and

WHEREAS, the Trust is comprised of several separate investment portfolios,
one of which is the International Equity Portfolio (the "Portfolio"); and

WHEREAS, Adviser proposes to provide investment management and advisory
services for the Manager in respect of the Portfolio; and

WHEREAS, Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
analytical and investment research and advisory services; and

WHEREAS, Adviser desires to retain Sub-Adviser to provide analytical and
investment research services and investment and reinvestment management services
to Adviser in connection with Adviser's investment management and advisory
services with respect to the Portfolio, on the terms and conditions hereinafter
set forth; and

WHEREAS, Sub-Adviser desires to provide such services in the manner and on
the terms and conditions hereinafter set forth; and

WHEREAS, Sub-Adviser is familiar with the investment objectives, policies
and restrictions of the Portfolio and has reviewed the Investment Advisory
Agreement dated as of ______,1994, between the Manager and Adviser;

NOW, THEREFORE, THIS AGREEMENT

W I T N E S S E T H:

That in consideration of the foregoing and the covenants hereinafter
contained Adviser and Sub-Adviser agree as follows:

1. Sub-Adviser agrees to provide Adviser at its request with investment
advisory, statistical and research information and investment and reinvestment
management services which
<PAGE>

may be used by the Adviser in satisfaction of its obligations under the
Investment Advisory Agreement, including but not limited to advisory, research,
statistical and other factual information relating to the economy of particular
countries or regions, national and international credit conditions, and the
investment and reinvestment of assets of the Portfolio. Sub-Adviser shall also
furnish other information which may relate to issuers of securities owned by the
Portfolio or which it might purchase, or to the businesses in which such issuers
may be engaged, as well as information and recommendations with respect to the
acquisition, holding or disposal by the Portfolio of securities in which it is
permitted to invest. Sub-Adviser shall meet with Adviser at Adviser's request,
but at least quarterly, to formulate investment policies and consider acceptable
securities for investment.

2. For the services rendered by the Sub-Adviser hereunder, Adviser shall
pay to Sub-Adviser seventy-eight (78%) percent of the net income derived from
the monthly fees paid by the Manager to Adviser pursuant to the Investment
Advisory Agreement. Sub-Adviser shall not be entitled to any other compensation
or payment for services hereunder, either from Adviser, Manager or the Trust and
in no event shall the fee paid or payable by the Adviser to Sub-Adviser
hereunder, or otherwise, be an obligation of the Manager or the Trust. The fee
payable to Sub-Adviser hereunder shall be paid promptly after receipt by the
Adviser of a fee payment under Investment, Advisory Agreement.

3. Nothing herein contained shall be deemed to prohibit Adviser from
obtaining information or services of the type to be provided by Sub-Adviser
hereunder from any other source, or Sub-Adviser from providing services similar
to that provided hereunder to any other person, firm or corporation provided
that Adviser, Manager, and Portfolio are given equitable and no less favorable
treatment in receipt of information, recommendations and other services to be
provided hereunder. It is understood that the action taken by the Sub-Adviser
under this Agreement may differ from the advice given or the timing or nature of
action taken with respect to other clients of the Sub-Adviser, and that a
transaction in specific security may not be accomplished for all clients of the
Sub-Adviser at the same time or at the same price.

4. Sub-Adviser, in rendering its services hereunder, agrees to use its
best judgement and efforts, and Adviser agrees that Sub-Adviser shall not be
liable hereunder for any mistake in judgment or any event whatsoever except for
lack of good faith on the part of Sub-Adviser. Notwithstanding the foregoing,
nothing herein shall be deemed to protect or purport to protect Sub-Adviser
against any liability to Adviser, Manager, the Trust, or the holders of
securities of the Trust to which Sub-Adviser would otherwise be subject by
reason of an act or practice constituting willful misfeasance, bad faith,
negligence, reckless disregard of duty or a breach of fiduciary duty involving
personal misconduct, (all within the meaning of 1940 Act) in respect of Adviser,
Manager or the Trust in the performance of duties hereunder.

5. The Sub-Adviser is obliged under the rules of the Investment
Management Regulatory Organization, Limited ("IMRO") to include certain
statements in any agreement relating to investment services in which it enters.
These statements are contained in the attached Schedule I which shall form part
of this Agreement.

<PAGE>

6. This Agreement shall continue in effect, unless sooner terminated as
hereinafter provided, for a period of two years from the date hereof and shall
continue in full force and effect for successive periods of one year thereafter,
but only so long as each such continuance as to the Portfolio is specifically
approved at least annually by vote of the holders of a majority of the
outstanding voting securities of the Portfolio or by vote of a majority of the
Trust's Board of Trustees; and further provided that such continuance is also
approved annually by the vote of a majority of the Trustees who are not
interested persons of the Adviser or Sub-Adviser, cast in person at a meeting
called for the purpose of voting on such approval. This Agreement may be
terminated as to the Portfolio at any time, without payment of any penalty, by
the Trust's Board of Trustees, by the Manager, by Adviser, or by a vote of the
majority of the outstanding voting securities of such Portfolio upon 60 days'
prior written notice to the Sub-Adviser, or by the Sub-Adviser upon 150 days'
prior written notice to the Adviser and to the Manager, or upon such shorter
notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Management Agreement dated
________,1994 between the Manager and the Trust or if the Advisory Agreement
between the Manager and the Adviser terminates. This agreement shall terminate
automatically and immediately in the event of its assignment. Sub-Adviser shall
notify Adviser and Manager in writing of any change in the officers of Sub-
Adviser within a reasonable time after such a change, but such notification
shall not preclude or prevent this Agreement from terminating in the event of
its assignment. The terms "interested persons", "vote of a majority of the
outstanding voting securities" and "assignment" shall have the meanings set
forth for such terms in the 1940 Act. This Agreement may be amended at any time
by the Adviser and the Sub-Adviser, subject to approval by the Trust's Board of
Trustees, the Manager and, if required by applicable SEC rules and regulations,
a vote of a majority of the outstanding voting securities of the Portfolio.

7. This Agreement shall become effective at the time and on the date when
the last of the following shall have occurred: (i) the execution of this
Agreement by the Adviser and the Sub-Adviser; (ii) the approval by a majority
of outstanding voting securities of the Portfolio; (iii) the approval by a vote
of a majority of Trustees of the Trust who are not interested persons of
Manager, Adviser or Sub-Adviser, cast in person at a meeting called for the
purpose of voting on such approval.

8. This agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the 1940 Act. To the extent
applicable law of the State of New York, or any of the provisions herein,
conflict with applicable provisions of the 1940 Act, the latter shall control.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Chatham, New Jersey.

IVORY & SIME INTERNATIONAL, INC.

BY:
---------------------------------

IVORY & SIME PLC

BY:
---------------------------------
<PAGE>
SCHEDULE 1

1. The Sub-Adviser is a member of and regulated in the conduct of its
investment business by IMRO.

2. For the purposes of this Agreement and the services provided by the Sub-
Adviser hereunder, the Adviser shall be treated as a "non-private customer" as
defined by the IMRO rules.

3. The Adviser does not wish to receive portfolio statements provided for
under the IMRO rules.

4. Termination of this Agreement shall be without prejudice to transactions
already initiated, which transactions shall be completed.

5. Any complaints which the Adviser may have regarding the services provided
by the Sub-Adviser will be investigated promptly and thoroughly by a director or
other senior employee of the Sub-Adviser who was not involved in the matter
complained of. The Adviser will also have the right to complain directly to
IMRO. Details of the compensation available should the Sub-Adviser be unable to
meet any liabilities to the Adviser are available on request from the Sub-
Adviser.

6. The Sub-Adviser may have arrangements with third parties whereby the third
party will provide services such as research, valuations or analysis to the Sub-
Adviser, the Sub-Adviser making no direct payment for those services but instead
undertaking to place business with or to the order to that third party. The
Sub-Adviser may only effect transactions under such arrangements if the
transaction achieves "Best Execution", - i.e. if it is effected on the best
terms available on the relevant market at the time for transactions of the same
size and nature with a reliable counterparty disregarding any benefits which
might enure directly or indirectly to the Adviser or Manager from the services
or benefits provided under the arrangement. A copy of Sub-Adviser's policy
statement in relation to soft commission agreements, together with details of
all soft commission agreements or arrangements in force as of the date hereof is
attached as Schedule II.

7. Sub-Adviser is not responsible for the appointment of any Custodian.
Custodians shall be appointed by and be responsible to Trust for the safekeeping
of all documents of title.

8. All transactions recommended or effected by the Sub-Adviser under this
Agreement shall comply with the investment objective, policies and restrictions
as set down in the Prospectus of the Trust filed with the Securities and
Exchange Commission on June 2, 1994 together with the restrictions contained
in sub-paragraphs (a) - (j) below as such may from time to time be amended and
notified in writing to Sub-Adviser which objectives, policies and restrictions
form part of this Agreement.
<PAGE>

For the avoidance of doubt and to comply with the Rules of IMRO, it is
acknowledged that:

(a) Sub-Adviser may not acquire units in any Collective Investment Scheme
(whether regulated or unregulated) as defined in the Financial Services Act
1986.

(b) Sub-Adviser may not acquire securities of which an issue or offer for
sale was underwritten or otherwise arranged by Sub-Adviser or any
associated company.

(c) Sub-Adviser may not without Trust's written consent commit Trust to an
obligation to supplement the funds in the Portfolio whether by borrowing on
the Portfolios' behalf or otherwise.

(d) The Sub-Adviser may not commit the Portfolio to any obligations to
underwrite securities issued by other persons except to the extent that in
connection with the disposition of its Portfolio investments, the Portfolio
may be deemed to be an underwriter under U.S. Federal Securities law.

(e) Subject to the restrictions contained in the Prospectus, the Fund may
invest in futures and options, including contingent liability transactions,
effected otherwise than under the rules of an investment exchange
recognized or designated under the Financial Services Act 1986 or in a
contract traded thereon. Sub Advisor is permitted to effect such
transactions under IMRO rule 3.13(1).

(f) Sub-Adviser may match a liability in one currency with an asset in a
different currency and may invest in investments denominated in a currency
other than U.S. dollar. In such cases, a movement of exchange rates may
have a separate effect unfavorable as well as favorable on the gain or loss
which might otherwise be experience on the investment.

(g) Except where otherwise permitted under this Agreement, the Sub-Adviser
may not, without prior notice to Manager, effect transactions in which the
Sub-Adviser has directly or indirectly a material interest (other than an
interest arising solely from the Sub-Adviser's participation in the
transaction) or any relationship which may involve a conflict with the Sub-
Adviser's duty to Manager and the Portfolios.

(h) Except to the extent necessary or desirable to effect transactions in
futures, options, or contracts for differences, Sub-Adviser may not without
Trust's consent (which consent will constitute an amendment tomarginied
this Agreement) lend any of the Portfolio's assets to third parties or
create a charge over any of the Portfolio's assets.

(i) The Portfolio may acquire "non-readily realizable investments" as
defined in the IMRO rules and it is appreciated that these investments may
be difficult to value and dispose of.

9. The value of cash and securities contained in the Portfolio shall be
expressed by the Sub-Adviser in its reports to the Trustees in U.S. Dollars and
shall be calculated by reference to the mid-market prices and exchange rates
indicated by Extel Financial Services unless these are unavailable, in which
case prices and exchange rates published by other reputable sources may be

<PAGE>

used. Income shall be accounted for when received. The Sub-Adviser
acknowledges that the value of cash and securities contained in the Portfolio
shall be calculated by the Portfolio according to the procedures specified in
the Trust's Registration Statement.
<PAGE>

SCHEDULE II

IVORY & SIME'S POLICY ON BROKER ALLOCATION

Under the United Kingdom Financial Services Act 1986 those who provide services
covered under the Act are required to supply relevant information to clients.
Under the development of the disclosure policy, Ivory & Sime is now required to
furnish you with details of its operational methods in respect of stock market
commissions.

Ivory & Sime deals both with agency brokers and directly with market makers.
Our decision as to which to use is governed by a number of factors including
market information, research and services. We have a number of arrangements to
receive disclosable soft commission services from agency brokers. It is our
policy to use soft commission arrangements since the services supplied under
them assist us in our investment management decision-making process. In
determining through which broker or market maker a particular transaction is
placed, best execution is, at all times, the prime consideration. It must be
emphasized that except as noted below all clients are treated equally and no
commitment is given by way of a guarantee on the level of business that a broker
will receive for such services.

Where commission is paid the amount an use are strictly monitored. Some
commission, not exceeding 20% of our total commission payable per annum, is used
to pay for services such as Reuters and Datastream, which are easily
identifiable as being of benefit to all clients. Certain commission is used to
buy specific services because they pertain to a particular client or group of
clients. These specific services are paid for only by commission generated by
those specific clients' accounts.

As part of the full disclosure you will find attached a schedule covering our
current soft commission arrangements.

July 1994
<PAGE>

IVORY & SIME'S SOFT COMMISSION ARRANGEMENTS

AS AT 31 JANUARY 1994

PERSON PROVIDING SERVICE BROKER PAYING FOR SERVICE NAME OF SERVICE DESCRIPTION OF SERVICE
------------------------ ------------------------- --------------- ----------------------
<S> <C> <C> <C>

* Consulting Services Group S G Warburg Consulting Services Consulting Services
(HCA)
Brian Marber S G Warburg Brian Marber Service Investment Publications
First Call S G Warburg First Call On line UK/US database:
broker research
Bloomberg S G Warburg Bloomberg On line database:
International Capital Markets
Lotus Development Lynch Jones Ryan IBES On line US database:
Corporate information
Washington Service Brick Securities Associates Washington Service Political and Economic Information
* W M & Co Smith New Court W M Performance Performance measurement
Measurement Report
* Combined Actuarial Boston Institutional Services CAPS Performance measurement
Performance Service
Cecogest Panmure Gordon Cecogest Economic & Political Analysis
Compustat Standard & Poors Compustat On line US database:
Corporate information
European Company Research Smith New Court ECRU Research European company research
Unit (cancelled May 1993) materials

* Morgan Stanley S G Warburg Morgan Stanley Capital Various indices
International
Directus S G Warburg Directus Share Dealings information
Reuters S G Warburg Reuters Screens Share Price information
service

* Frank Russell James Capel Frank Russell Performance Performance measurement
Ord Minnett Measurement
Thamesway

</TABLE>
<PAGE>

PERSON PROVIDING SERVICE BROKER PAYING FOR SERVICE NAME OF SERVICE DESCRIPTION OF SERVICE
------------------------ ------------------------- --------------- ----------------------
<S> <C> <C> <C>

[Topic] Stock Exchange Smith New Court Topic Topic screens
* SEI James Capel SEI Performance Performance measurement
Measurement
S G Warburg

<FN>
* Denote client specific performance measurement services which are paid for
exclusively by the client who receives the particular measurement service.

Commission from a client's Portfolio may only be used to pay for soft
commission services which can reasonable be expected to assist Ivory & Sime's
provision of Investment Services to that particular Portfolio.

</TABLE>

<PAGE>

GENERAL DISTRIBUTOR'S AGREEMENT

AGREEMENT made as of September 1, 1994 by and between THE SARATOGA
ADVANTAGE TRUST, a Delaware trust (the "Trust") and QUEST FOR VALUE
DISTRIBUTORS, a Delaware general partnership (the "Distributor").

WHEREAS, the Trust is an open-end, diversified, management investment
company registered with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "1940
Act") and the Distributor is a broker/dealer registered with the Securities
and Exchange Commission and the National Association of Securities Dealers,
Inc.;

WHEREAS, the Trust's shares are issued in separately capitalized series
(the "Portfolios") pursuant to the Trust's registration statement and are
offered for sale to the public in a continuous public offering in accordance
with the terms and conditions set forth in the Prospectus included in the
registration statement as it may be amended from time to time;

WHEREAS, the Trust desires that your firm act as General Distributor and
as Agent of the Trust for the sale and distribution of shares which have been
registered as described above and of any additional shares which may become
registered during the term of this Agreement. You have advised the Trust
that you are willing to act as such General Distributor and Agent;

NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the Trust and Distributor agree as follows:

1. The Trust hereby appoints you as General Distributor and as
exclusive Agent for sale of the shares, pursuant to the aforesaid continuous
public offering of its shares, and the Trust further agrees from and after
the date of this Agreement, that it will not, without your consent, sell or
agree to sell any shares otherwise than through you, except the Trust may
issue shares in connection with a merger, consolidation or acquisition of
assets on such basis as may be authorized or permitted under the 1940 Act.

2. You hereby accept such appointment and agree to use your best
efforts to sell such shares, provided, however, that when requested by the
Trust at any time because of market or other economic considerations or
abnormal circumstances of any kind, you will suspend such efforts. The Trust
may also withdraw the offering of the shares at any time when required by the
provisions of any statute, order rule or regulation of any governmental body
having jurisdiction. It is understood that you do not undertake to sell all
or any specific portion of the shares of the Trust.

<PAGE>

3. As General Distributor, you shall have the right to accept or reject
orders for the purchase of shares of the Trust. Any consideration which you
may receive in connection with a rejected purchase order will be returned
promptly. You agree promptly to issue confirmations of all accepted purchase
orders and to transmit a copy of such confirmations to the Trust, or, if so
directed, to any duly appointed transfer or shareholder servicing agent of
the Trust. The net asset value of all shares which are the subject of such
confirmations, computed in accordance with the applicable rules under the
1940 Act, shall be a liability of your company to the Trust to be paid
promptly after receipt of payment from the originating dealer and not later
than eleven business days after such confirmation even if you have not
actually received payment from the originating dealer. If the originating
dealer shall fail to make timely settlement of its purchase order in
accordance with the rules of the National Association of Securities Dealers,
Inc., you shall have the right to cancel such purchase order and, at your
account and risk, to hold responsible the originating dealer. You agree
promptly to reimburse the Trust for any amount by which the Trust's losses
attributable to any such cancellation or to errors on your part in relation
to the effective date of accepted purchase order, exceed contemporaneous
gains realized by the Trust for either of such reasons in respect to other
purchase orders. The Trust shall register or cause to be registered all
shares sold by you pursuant to the provisions hereof in such name or names
and amounts as you may request from time to time and the Trust shall issue or
cause to be issued certificates evidencing such shares for delivery to you or
pursuant to your direction if and to the extent that the shareholder account
in question contemplates the issuance of such share certificates. All shares
of the Trust, when so issued and paid for, shall be fully paid and
non-assessable.

4. The Trust has delivered to you a copy of its current prospectus.
The Trust agrees that it will use its best efforts to continue the
effectiveness of the its Registration Statement under the 1933 Act. The
Trust further agrees to prepare and file any amendments to its Registration
Statement as may be necessary and any supplemental data in order to comply
with the 1933 Act. The Trust will furnish you at your expense with a
reasonable number of copies of the Prospectus and any amended Prospectus for
use in connection with the sale of shares.

5. The Trust has registered under the 1940 Act as an investment
company, and it will use its best efforts to maintain such registration and
to comply with the requirements of the 1940 Act.

6. At your request, the Trust will take such steps as may be necessary
and feasible to qualify shares for sale in states, territories of
dependencies of the United States of America, in the District of Columbia and
in foreign countries, in accordance with the laws thereof, and to renew or
extend any such qualification; provided however, that the Trust shall not be
required to qualify shares or to maintain the qualification of shares in any
state, territory, dependency, district or country where it shall deem such
qualification disadvantageous to the Trust.

7. You agree that:

<PAGE>

(a) Neither you nor any of your officers will take any long or
short position in the shares of the Trust, but this provision shall not
prevent you or your officers from acquiring shares of the Trust for
investment purposes only;

(b) You shall furnish to the Trust any pertinent information
required to be inserted with respect to you as General Distributor within the
purview of the 1933 Act in any reports or registration required to be filed
with any governmental authority; and

(c) You will not make any representations inconsistent with the
information contained in the Registration Statement or Prospectus of the
Trust filed under the 1933 Act, as in effect from time to time.

8. The Trust will pay the cost of composition and printing of
sufficient copies of its Prospectus and financial statements as shall be
required for quarterly and annual distribution to its shareholders and the
expense of registering shares for sale under federal and state securities
laws. You shall pay the cost of printing the copies of the Trust's
Prospectus and any sales literature used by you in the public sale of the
Trust's shares.

9. Unless earlier terminated pursuant to paragraph 10 hereof, this
Agreement shall remain in effect until two years from the date hereof. This
Agreement shall continue in effect from year to year thereafter provided that
such continuance shall be specifically approved at least annually (a) by the
Trust's Board of Trustees, including a vote of a majority of the Trustees who
are not parties to this Agreement or "interested persons" (as defined in
the 1940 Act) of any such persons, cast in person at a meeting called for the
purpose of voting on such approval or (b) by the vote of the holders of a
majority of the outstanding voting securities of the respective Portfolios of
the Trust and by such a vote of the Trustees.

10. This Agreement may be terminated (a) by the General Distributor at
any time without penalty by giving sixty days' written notice (which notice
may be waived by the Trust); or (b) by the Trust at any time without penalty
upon sixty days' written notice to the General Distributor (which notice may
be waived by the General Distributor), provided that such termination by the
Trust shall be directed or approved by the Trustees or by the vote of the
holders of a majority of the outstanding voting securities of the Portfolio
with respect to which notice of termination has been given to the Trust.

11. This Agreement may not be amended or changed except in writing and
shall be binding upon and shall enure to the benefits of the parties hereto
and their respective successors, but this Agreement shall not be assigned by
either party and shall automatically terminate upon assignment.

<PAGE>

If the foregoing is in accordance with your understanding, kindly so
indicate by signing in the space provided below.

THE SARATOGA ADVANTAGE TRUST

By------------------------------

Accepted:

QUEST FOR VALUE DISTRIBUTORS

By-------------------------------

<PAGE>

DEALER AGREEMENT

THE SARATOGA ADVANTAGE TRUST

FROM:

TO:

Quest For Value Distributors
Two World Financial Center
225 Liberty Street - 16th Floor
New York, NY 10080-6116

Gentlemen:

We desire to enter into an agreement with you for the sale and
distribution of the shares of The Saratoga Advantage Trust, an open-end
investment company in series form of which you are Distributor (hereinafter
referred to as the "Trust" and each series thereof as a "Portfolio") and
whose shares are offered to the public at an offering price which will not
include a sales charge (hereinafter referred to as "Shares"). Upon
acceptance of this Agreement by you, we understand that we may offer and sell
Shares subject, however, to all of the terms and conditions hereof and to
your right, without notice, to suspend or terminate the sale of the Shares of
any one or more of the Portfolios.

1. We understand that the Shares will be offered and sold at the public
offering price in effect at the time the order for such Shares is confirmed
and accepted by you. All purchase requests and applications submitted by us
are subject to acceptance or rejection in your sole discretion, and, if
accepted, each purchase will be deemed to have been consummated at the office
of your shareholder servicing agent, State Street Bank & Trust Company.

2. We certify (a) that we are a member of the National Association of
Securities Dealers, Inc. ("NASD") and agree to maintain membership in the
NASD or in the alternative (b) that we are a foreign dealer not eligible for
membership in the NASD. In either case, we agree to abide by all the rules
and regulations of the Securities and Exchange Commission and the NASD which
are binding upon underwriters and dealers in

<PAGE>

the distribution of the securities of open-end investment companies,
including without limitation, Section 26 of Article III of the NASD Rules of
Fair Practice, all of which are incorporated herein as if set forth in full.
We agree that we will not sell or offer for sale Shares in any state or
jurisdiction where they have not been qualified for sale.

3. We will offer and sell Shares of any Portfolio only in accordance
with the terms and conditions of its then current Prospectus and we will make
no representations not included in said Prospectus or in any authorized
supplemental material supplied by you. We will use our best efforts in the
development and promotion of sales of Shares and agree to be responsible for
the proper instruction and training of all sales personnel employed by us, in
order that the Shares will be offered in accordance with the terms and
conditions of this Agreement and all applicable laws, rules and regulations.
We agree to hold you harmless and indemnify you in the event that we, or any
of our sales representatives, should violate any law, rule or regulation, or
any provisions of the Agreement, which violation may result in liability to
you or any Portfolio. All expenses which we incur in connection with our
activities under this Agreement shall be borne by us.

4. Payments for purchases of Shares made by wire order from us shall be
made to you and received by you together with all necessary applications and
other documents required to establish an account within five business days
after the acceptance of our order or such shorter time as may be required by
law. If such timely payment is not received by you, we understand that you
reserve the right, without notice, forthwith to cancel the sale, or, at your
option, to sell the Shares ordered by us back to the Portfolio, in which
latter case we will be held responsible for any loss, including loss of
profit, suffered by you resulting from our failure to make the aforesaid
payment. Where sales of Portfolio Shares are contingent upon the Portfolio's
receipt of funds in payment therefor, we will forward promptly to you any
purchase orders and/or payments received by us from investors.

5. We agree to purchase Shares only from you or from our customers. If
we purchase Shares from you, we agree that all such purchases shall be made
only to cover orders received by us from our customers, or for our own bona
fide investment. If we purchase Shares from our customers, we agree to pay
such customers not less than the applicable repurchase price as established
by the then current applicable Prospectus.

6. Your obligations to us under this Agreement are subject to all the
provisions of any distributorship agreement entered into between you and the
Trust. We understand and agree that in performing our services covered by
this Agreement we are acting as principal, and you are in no way responsible
for the manner of our performance or for any of our acts, employees or
representatives as your agent, partner or employee, or the agent or employee
of the Trust.

7. We may terminate this Agreement by notice in writing to you, which
termination shall become effective thirty days after the date of mailing to
you. We agree that you have and reserve the right, in your sole discretion
without notice, to suspend sales of Shares of

<PAGE>

any of the Portfolios, or to withdraw entirely the offering of Shares of any
of the Portfolios, or, in your sole discretion, to modify, amend or cancel
this Agreement upon written notice to us of such modification, amendment or
cancellation, which shall be effective on the date stated in such notice.
Without limiting the foregoing, you may terminate this Agreement for cause on
violation by us of any of the provisions of this Agreement, said termination
to become effective on the date of mailing notice to us of such termination.
Without limiting the foregoing, any provision hereof to the contrary
notwithstanding, our expulsion from the NASD will automatically terminate
this Agreement without notice; our suspension from the NASD, the appointment
of a trustee for all or substantially all of our business assets, or
violation of applicable State or Federal laws or rules and regulations of
authorized regulatory agencies will terminate this Agreement effective upon
the date of your mailing notice to us of such termination. Your failure to
terminate for any cause shall not constitute a waiver of your right to
terminate at a later date for any such cause. All notices hereunder shall be
to the respective parties at the addresses listed hereon, unless changed by
written notice. Any dispute that may arise in connection with this Agreement
shall be submitted to arbitration by the National Association of Securities
Dealers, Inc., with the panel to be located in New York, N.Y.

8. This Agreement shall become effective as of the later of (I) the date
when it is executed and dated by you below or (ii) the date that the initial
Registration Statement on Form N-1A of the Trust is declared effective by the
Securities and Exchange Commission. This Agreement and all the rights and
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of New York. This Agreement is not assignable or
transferable, except that your firm may assign or transfer this Agreement to
any successor firm or corporation which becomes the Distributor or
Sub-distributor of the Trust.

"Accepted"

Name QUEST FOR VALUE DISTRIBUTORS

By: -------------------------- By: ----------------------------
(Authorized Signature) Peter F. Muratore
President

--------------------------
(Please Print Name)

Date:-------------------------- Date:-----------------------------

<PAGE>

CUSTODIAN CONTRACT
Between
SARATOGA ADVANTAGE TRUST
and
STATE STREET BANK AND TRUST COMPANY

<PAGE>

TABLE OF CONTENTS

Page

1. Employment of Custodian and Property to be Held By It......1

2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States.....3
2.1 Holding Securities.........................................3
2.2 Delivery of Securities.....................................3
2.3 Registration of Securities.................................8
2.4 Bank Accounts..............................................9
2.5 Availability of Federal Funds.............................10
2.6 Collection of Income......................................10
2.7 Payment of Fund Monies....................................11
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased......................14
2.9 Appointment of Agents................................15
2.10 Deposit of Fund Assets in Securities System..........15
2.10A Fund Assets Held in the Custodian's Direct
Paper System.........................................18
2.11 Segregated Account...................................20
2.12 Ownership Certificates for Tax Purposes..............21
2.13 Proxies..............................................22
2.14 Communications Relating to Portfolio
Securities...........................................22

3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States................23

3.1 Appointment of Foreign Sub-Custodians................23
3.2 Assets to be Held....................................23
3.3 Foreign Securities Depositories......................24
3.4 Agreements with Foreign Banking Institutions.........24
3.5 Access of Independent Accountants of the Fund........25
3.6 Reports by Custodian.................................25
3.7 Transactions in Foreign Custody Account..............26
3.8 Liability of Foreign Sub-Custodians..................27
3.9 Liability of Custodian...............................27
3.10 Reimbursement for Advances...........................28
3.11 Monitoring Responsibilities..........................29
3.12 Branches of U.S. Banks...............................29
3.13 Tax Law..............................................30

4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund.....................................31

5. Proper Instructions.......................................32

<PAGE>

6. Actions Permitted Without Express Authority...............33

7. Evidence of Authority.....................................33

8. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net
Income.........................................................34

9. Records...................................................34

10. Opinion of Fund's Independent Accountants.................35

11. Reports to Fund by Independent Public Accountants.........35

12. Compensation of Custodian.................................36

13. Responsibility of Custodian...............................36

14. Effective Period, Termination and Amendment...............38

15. Successor Custodian.......................................40

16. Interpretive and Additional Provisions....................41

17. Additional Funds..........................................42

18. Massachusetts Law to Apply................................42

19. Prior Contracts...........................................42

20. Shareholder Communications Election.......................42

<PAGE>

CUSTODIAN CONTRACT

This Contract between Saratoga Advantage Trust, a business trust organized and
existing under the laws of Delaware, having its principal place of business at
Two World Financial Center, 225 Liberty Street, 16th Floor, New York, New York,
10080-6116, hereinafter called the "Fund", and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",

WITNESSETH:

WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and

WHEREAS, the Fund intends to initially offer shares in seven series, Large
Capitalization Value, Large Capitalization Growth, Small Capitalization,
International Equity, Investment Quality Bond, Municipal Bond and U.S.
Government Money Market (such series together with all other series subsequently
established by the Fund and made subject to this Contract in accordance with
paragraph 17, being herein referred to as the "Portfolio(s)");

NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:

1. Employment of Custodian and Property to be Held by It

The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Master of Trust
Agreement. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios, ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.

<PAGE>

Upon receipt of "Proper Instructions" (within the meaning of Article 5), the
Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.

2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States

2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in the
United States, including all domestic securities owned by such Portfolio, other
than (a) securities which are maintained pursuant to Section 2.10 in a clearing
agency which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury, collectively referred to
herein as "Securities System" and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper System of the
Custodian pursuant to Section 2.10A.

2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a Securities System
account of the Custodian or in the Custodian's Direct Paper book entry system
account ("Direct Paper System Account") only upon receipt of Proper Instructions
from the Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:

1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;

2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;

3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;

<PAGE>

4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;

5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any such case,
the cash or other consideration is to be delivered to the Custodian;

6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of the Custodian or
into the name or nominee name of any agent appointed pursuant to Section 2.9 or
into the name or nominee name of any sub-custodian appointed pursuant to Article
1; or for exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be delivered to the
Custodian;

7) Upon the sale of such securities for the account of the Portfolio,
to the broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for such securities
except as may arise from the Custodian's own negligence or willful misconduct;

8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash, if any, are to be
delivered to the Custodian;

9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;

10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Fund on behalf of the Portfolio, which may
be in the form of cash or obligations issued by the United States government,
its agencies or instrumentalities, except that in connection with any loans for
which collateral is to be credited to the Custodian's account in the book-entry
system authorized by the

<PAGE>

U.S. Department of the Treasury, the Custodian will not be held liable or
responsible for the delivery of securities owned by the Portfolio prior to the
receipt of such collateral;

11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the Fund on
behalf of the Portfolio, but only against receipt of amounts borrowed;

12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by any Portfolio of the Fund;

13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of any Portfolio, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations, regarding account
deposits in connection with transactions by any Portfolio of the Fund;

14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the holders of
shares in connection with distributions in kind, as may be described from time
to time in the currently effective prospectus and statement of additional
information of the Fund, related to the Portfolios ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase or redemption; and

15) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, specifying the securities of the Portfolio
to be delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such securities shall be made.

<PAGE>

2.3 Registration of Securities. Domestic securities held by the Custodian (other
than bearer securities) shall be registered in the name of the Portfolio or in
the name of any nominee of the Fund on behalf of the Portfolio or of any nominee
of the Custodian which nominee shall be assigned exclusively to the Portfolio,
unless the Fund has authorized in writing the appointment of a nominee to be
used in common with other registered investment companies having the same
investment adviser as the Portfolio, or in the name or nominee name of any agent
appointed pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of the Portfolio under the terms of this Contract shall be
in "street name" or other good delivery form. If, however, the Fund directs the
Custodian to maintain securities in "street name", the Custodian shall utilize
its best efforts only to timely collect income due the Fund on such securities
and to notify the Fund on a best efforts basis only of relevant corporate
actions including, without limitation, pendency of calls, maturities, tender or
exchange offers.

2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for a Portfolio may
be deposited by it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may in its discretion
deem necessary or desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Portfolio be approved by vote of a majority of the Board of Trustees
of the Fund. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.

2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian shall, upon
the receipt of Proper Instructions from the Fund on behalf of a Portfolio, make
federal funds available to such Portfolio as of specified times agreed upon from
time to time by the Fund and the Custodian in the amount of checks received in
payment for Shares of such Portfolio which are deposited into the Portfolio's
account.

<PAGE>

2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments with
respect to registered domestic securities held hereunder to which each Portfolio
shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments with
respect to bearer domestic securities if, on the date of payment by the issuer,
such securities are held by the Custodian or its agent thereof and shall credit
such income, as collected, to such Portfolio's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach and present
for payment all coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith, other
than to provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of the
income to which the Portfolio is properly entitled.

2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out monies of a
Portfolio in the following cases only:

1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of title to such
options, futures contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the United States or
abroad which is qualified under the Investment Company Act of 1940, as amended,
to act as a custodian and has been designated by the Custodian as its agent for
this purpose) registered in the name of the Portfolio or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Section 2.10 hereof; (c) in the case
of a purchase involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.10A; (d) in the case of repurchase agreements
entered into between the Fund on behalf of the Portfolio and the Custodian, or
another bank, or a broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Portfolio of
securities owned by the Custodian along with written evidence of the agreement
by the Custodian to

<PAGE>

repurchase such securities from the Portfolio or (e) for transfer to a
time deposit account of the Fund in any bank, whether domestic or foreign;
such transfer may be effected prior to receipt of a confirmation from a
broker and/or the applicable bank pursuant to Proper Instructions from the Fund
as defined in Article 5;

2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;

3) For the redemption or repurchase of Shares issued by the Portfolio
as set forth in Article 4 hereof;

4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for the account
of the Portfolio: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund whether or not such expenses are
to be in whole or part capitalized or treated as deferred expenses;

5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;

6) For payment of the amount of dividends received in respect of
securities sold short;

7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Trustees or of the Executive
Committee of the Fund signed by an officer of the Fund and certified by its
Secretary or an Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or persons to whom such
payment is to be made.

2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case where
payment for purchase of domestic securities for the account of a Portfolio is
made by the Custodian in advance of receipt of the securities purchased in the
absence of specific written instructions from the Fund on behalf of such
Portfolio to so pay in advance, the Custodian shall be absolutely liable to the
Fund for such securities to the same extent as if the securities had been
received by the Custodian.

2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion with the approval of the Trust appoint (and may at any time remove)
any other bank or trust company which is itself

<PAGE>

qualified under the Investment Company Act of 1940, as amended, to act as a
custodian, as its agent to carry out such of the provisions of this Article 2 as
the Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder.

2.10 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by a Portfolio in a clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury and certain
federal agencies, collectively referred to herein as "Securities System" in
accordance with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:

1) The Custodian may keep securities of the Portfolio in a
Securities System provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall not include
any assets of the Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;

2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Portfolio;

3) The Custodian shall pay for domestic securities purchased for the
account of the Portfolio upon (i) receipt of advice from the Securities System
that such securities have been transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to reflect such payment and transfer
for the account of the Portfolio. The Custodian shall transfer domestic
securities sold for the account of the Portfolio upon (i) receipt of advice from
the Securities System that payment for such securities has been transferred to
the Account, and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Portfolio. Copies of
all advices from the Securities System of transfers of domestic securities for
the account of the Portfolio shall identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio in the
form of a written advice or notice and shall furnish to the Fund on behalf of
the Portfolio copies of daily transaction sheets

<PAGE>

reflecting each day's transactions in the Securities System for the account of
the Portfolio;

4) The Custodian shall provide the Fund for the Portfolio with any
report obtained by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Securities System;

5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be, required by
Article 14 hereof;

6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the Portfolio for any
loss or damage to the Portfolio resulting from use of the Securities System by
reason of any negligence, misfeasance or misconduct of the Custodian or any of
its agents or of any of its or their employees or from failure of the Custodian
or any such agent to enforce effectively such rights as it may have against the
Securities System; at the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent that the Portfolio
has not been made whole for any such loss or damage.

2.10A Fund Assets Held in the Custodian's Direct Paper System The Custodian may
deposit and/or maintain securities owned by a Portfolio in the Direct Paper
System of the Custodian subject to the following provisions:

1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions from the Fund on
behalf of the Portfolio;

2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall not include
any assets of the Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;

3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to the Portfolio;

<PAGE>

4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the account of
the Portfolio. The Custodian shall transfer securities sold for the account of
the Portfolio upon the making of an entry on the records of the Custodian to
reflect such transfer and receipt of payment for the account of the Portfolio;

5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio, in the
form of a written advice or notice, of Direct Paper on the next business day
following such transfer and shall furnish to the Fund on behalf of the Portfolio
copies of daily transaction sheets reflecting each day's transaction in the
Securities System for the account of the Portfolio;

6) The Custodian shall provide the Fund on behalf of the Portfolio
with any report on its system of internal accounting control as the Fund may
reasonably request from time to time.

2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio establish and
maintain a segregated account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.10 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or written by
the Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio
with the procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in the case of
clause (iv), upon receipt of, in addition to Proper Instructions from the Fund
on behalf of the applicable Portfolio, a certified copy of a resolution of the
Board of Trustees or of the Executive Committee signed by an officer of the Fund
and certified by the Secretary or an Assistant Secretary, setting forth the
purpose or purposes of

<PAGE>

such segregated account and declaring such purposes to be proper corporate
purposes.

2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect to
domestic securities of each Portfolio held by it and in connection with
transfers of securities.

2.13 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of the
Portfolio or a nominee of the Portfolio, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to the
Portfolio such proxies, all proxy soliciting materials and all notices relating
to such securities.

2.14 Communications Relating to Portfolio Securities Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency of
calls and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options written by
the Fund on behalf of the Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the Custodian from issuers of
the securities being held for the Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Portfolio all written
information received by the Custodian from issuers of the securities whose
tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Portfolio desires to take action with respect
to any tender offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian at least three business days prior to the
date on which the Custodian is to take such action.

3. Duties of the Custodian with Respect to Property of the Fund
Held Outside of the United States

3.1 Appointment of Foreign Sub-Custodians

The Fund hereby authorizes and instructs the Custodian to employ as
sub-custodians for the Portfolio's securities and other assets maintained
outside the United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined in Section 5
of this Contract, together with a certified resolution of the Fund's Board of

<PAGE>

Trustees, the Custodian and the Fund may agree to amend Schedule A hereto from
time to time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the employment of any
one or more such sub-custodians for maintaining custody of the Portfolio's
assets.

3.2 Assets to be Held. The Custodian shall limit the securities and other assets
maintained in the custody of the foreign sub-custodians to: (a) "foreign
securities", as defined in paragraph (c)(1) of Rule 17f-5 under the Investment
Company Act of 1940, and (b) cash and cash equivalents in such amounts as the
Custodian or the Fund may determine to be reasonably necessary to effect the
Portfolio's foreign securities transactions. The Custodian shall identify on its
books as belonging to the Fund, the foreign securities of the Fund held by each
foreign sub-custodian.

3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as sub-custodians
pursuant to the terms hereof. Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.4 hereof.

3.4 Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution shall be substantially in the form set forth in Exhibit 1
hereto and shall provide that: (a) the assets of each Portfolio will not be
subject to any right, charge, security interest, lien or claim of any kind in
favor of the foreign banking institution or its creditors or agent, except a
claim of payment for their safe custody or administration; (b) beneficial
ownership for the assets of each Portfolio will be freely transferable without
the payment of money or value other than for custody or administration; (c)
adequate records will be maintained identifying the assets as belonging to each
applicable Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be given
access to the books and records of the foreign banking institution relating to
its actions under its agreement with the Custodian; and (e) assets of the
Portfolios held by the foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.

3.5 Access of Independent Accountants of the Fund. Upon request of the Fund, the
Custodian will use its best efforts to arrange for the independent accountants
of the Fund to be afforded access to

<PAGE>

the books and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the performance of
such foreign banking institution under its agreement with the Custodian.

3.6 Reports by Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and other
assets of the Portfolio(s) held by foreign sub-custodians, including but not
limited to an identification of entities having possession of the Portfolio(s)
securities and other assets and advices or notifications of any transfers of
securities to or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio indicating,
as to securities acquired for a Portfolio, the identity of the entity having
physical possession of such securities.

3.7 Transactions in Foreign Custody Account

(a) Except as otherwise provided in paragraph (b) of this Section 3.7, the
provision of Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis
to the foreign securities of the Fund held outside the United States by foreign
sub-custodians.

(b) Notwithstanding any provision of this Contract to the contrary, settlement
and payment for securities received for the account of each applicable Portfolio
and delivery of securities maintained for the account of each applicable
Portfolio may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such purchaser
or dealer.

(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set forth
in Section 2.3 of this Contract, and the Fund agrees to hold any such nominee
harmless from any liability as a holder of record of such securities.

3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian shall
require the institution to exercise reasonable care in the performance of its
duties and to indemnify, and hold harmless, the Custodian and the Fund from and
against any loss, damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations. At the
election of the Fund, it shall be entitled to

<PAGE>

be subrogated to the rights of the Custodian with respect to any claims
against a foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that the Fund
has not been made whole for any such loss, damage, cost, expense, liability
or claim.

3.9 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth with
respect to sub-custodians generally in this Contract and, regardless of whether
assets are maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated by paragraph
3.12 hereof, the Custodian shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where the
sub-custodian has otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.9, in delegating custody duties to
State Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except such loss
as may result from (a) political risk (including, but not limited to, exchange
control restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses (excluding
a bankruptcy or insolvency of State Street London Ltd. not caused by political
risk) due to Acts of God, nuclear incident or other losses under circumstances
where the Custodian and State Street London Ltd. have exercised reasonable care.

3.10 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose for the benefit of a Portfolio including the
purchase or sale of foreign exchange or of contracts for foreign exchange, or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolios assets to the extent necessary to obtain reimbursement.

3.11 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be similar in
kind and scope to that furnished to the Fund in connection with the initial
approval of this Contract. In addition, the Custodian will promptly inform the
Fund in the event that the Custodian learns of a material adverse

<PAGE>

change in the financial condition of a foreign sub-custodian or any material
loss of the assets of the Fund or in the case of any foreign sub-custodian not
the subject of an exemptive order from the Securities and Exchange Commission is
notified by such foreign sub-custodian that there appears to be a substantial
likelihood that its shareholders' equity will decline below $200 million (U.S.
dollars or the equivalent thereof) or that its shareholders' equity has declined
below $200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).

3.12 Branches of U.S. Banks

(a) Except as otherwise set forth in this Contract, the provisions hereof shall
not apply where the custody of the Portfolios assets are maintained in a foreign
branch of a banking institution which is a "bank" as defined by Section 2(a)(5)
of the Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a sub-custodian
shall be governed by paragraph 1 of this Contract.

(b) Cash held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the direction of
the Custodian, State Street London Ltd. or both.

3.13 Tax Law

The Custodian shall have no responsibility or liability for any obligations now
or hereafter imposed on the Fund or the Custodian as custodian of the Fund by
the tax law of the United States of America or any state or political
subdivision thereof. It shall be the responsibility of the Fund to notify the
Custodian of the obligations imposed on the Fund or the Custodian as custodian
of the Fund by the tax law of jurisdictions other than those mentioned in the
above sentence, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Fund with respect to any claim
for exemption or refund under the tax law of jurisdictions for which the Fund
has provided such information.

4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund

The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by

<PAGE>

the Fund. The Custodian will provide timely notification to the Fund on behalf
of each such Portfolio and the Transfer Agent of any receipt by it of payments
for Shares of such Portfolio.

From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.

5. Proper Instructions

Proper Instructions as used throughout this Contract means a writing signed
or initialled by one or more person or persons as the Board of Trustees shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three - party agreement which requires a segregated asset account in
accordance with Section 2.11.

6. Actions Permitted without Express Authority

<PAGE>

The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:

1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Contract,
provided that all such payments shall be accounted for to the Fund on behalf of
the Portfolio;

2) surrender securities in temporary form for securities in definitive
form;

3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and

4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of the Portfolio except as otherwise directed by the
Board of Trustees of the Fund.

7. Evidence of Authority

The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.

8. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income

The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of each Portfolio or, if directed in writing to do so
by the Fund on behalf of the Portfolio, shall itself keep such books of account
and/or compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of the Portfolio as described in the
Fund's currently effective prospectus related to such Portfolio and shall advise
the Fund and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to do so, shall advise
the Transfer Agent periodically of the division of

<PAGE>

such net income among its various components. The calculations of the net asset
value per share and the daily income of each Portfolio shall be made at the time
or times described from time to time in the Fund's currently effective
prospectus related to such Portfolio.

9. Records

The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.

10. Opinion of Fund's Independent Accountant

The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.

11. Reports to Fund by Independent Public Accountants

The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.

<PAGE>

12. Compensation of Custodian

The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.

13. Responsibility of Custodian

So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.

The Custodian shall be liable for the acts or omissions of a foreign banking
institution appointed pursuant to the provisions of Article 3 to the same extent
as set forth in Article 1 hereof with respect to sub-custodians located in the
United States (except as specifically provided in Article 3.9) and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for any
loss, damage, cost, expense, liability or claim resulting from, or caused by,
the direction of or authorization by the Fund to maintain custody or any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism.

If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take

<PAGE>

such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.

If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) for
the benefit of a Portfolio including the purchase or sale of foreign exchange or
of contracts for foreign exchange or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time held
for the account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's assets to
the extent necessary to obtain reimbursement.

14. Effective Period, Termination and Amendment

This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees of the Fund has approved the
initial use of a particular Securities System by such Portfolio and the receipt
of an annual certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has reviewed the use by such Portfolio of such Securities
System, as required in each case by Rule 17f-4 under the Investment Company Act
of 1940, as amended and that the Custodian shall not with respect to a Portfolio
act under Section 2.10A hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has approved the initial use of the Direct Paper System by such
Portfolio and the receipt of an annual certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has reviewed the use by such
Portfolio of the Direct Paper System; provided further, however, that the Fund
shall not amend or terminate this Contract in contravention of any applicable
federal or state regulations, or any provision of the Declaration of Trust, and
further provided, that the Fund on behalf of one or more of the Portfolios may
at any time by action of its Board of Trustees (i) substitute another bank or
trust company for

<PAGE>

the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.

Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.

15. Successor Custodian

If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.

If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.

In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.

In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the

<PAGE>

certified copy of the vote referred to or of the Board of Trustees to appoint a
successor custodian, the Custodian shall be entitled to fair compensation for
its services during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this Contract
relating to the duties and obligations of the Custodian shall remain in full
force and effect.

16. Interpretive and Additional Provisions

In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.

17. Additional Funds

In the event that the Fund establishes one or more series of Shares in
addition to Large Capital Value, Large Capital Growth, Small Cap, International
Equities, Total Return Bond, Municipal Bond and U.S. Government Bond with
respect to which it desires to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such series of Shares
shall become a Portfolio hereunder.

18. Massachusetts Law to Apply

This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.

19. Prior Contracts

This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.

20. Shareholder Communications Election

<PAGE>

Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives below.

YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.

NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.

<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the day of , 1994.

ATTEST SARATOGA INVESTMENT TRUST

By
- ---------------------- ----------------------------------

ATTEST STATE STREET BANK AND TRUST COMPANY

By
- ---------------------- ----------------------------------
Executive Vice President

<PAGE>

Schedule A

The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Saratoga Investment
Trust for use as sub-custodians for the Fund's securities and other assets:

(Insert banks and securities depositories)

Certified:

- -------------------------
Fund's Authorized Officer

<PAGE>

Date:

<PAGE>

ADMINISTRATION AGREEMENT

AGREEMENT made as of September 1, 1994, by and between THE SARATOGA
ADVANTAGE TRUST, a Delaware trust (the "trust") and QUEST FOR VALUE ADVISORS,
a Delaware general partnership (the "Administrator").

WHEREAS, the Trust is an open-end, diversified, management investment
company registered with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "1940 Act")
and the Administrator is engaged in the business of providing investment
management and advisory services;

WHEREAS, the Trust is organized in series form and each of the U.S.
Government Money Market Portfolio, the Investment Quality Bond Portfolio, the
Total Return Bond Portfolio, the Municipal Bond Portfolio, the Large
Capitalization Value Portfolio, the Large Capitalization Growth Portfolio, the
Small Capitalization Portfolio, and the International Equity Portfolio is a
separately capitalized series ("Portfolio") of shares of beneficial interest to
be issued by the Trust pursuant to the Trust's Registration Statement;

NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the Trust and the Administrator agree as follows:

<PAGE>

1. GENERAL PROVISIONS.

The Trust hereby employs the Administrator and the Administrator hereby
undertakes to act as the corporate administrator of the Trust and to perform for
the Trust such other duties and functions for the period and on such terms as
are set forth in this Agreement. In performing its duties hereunder, the
Administrator shall at all times conform to, and use its best efforts to enable
the Trust to conform to:

(a) the provisions of the 1940 Act and any rules or regulations
thereunder;

(b) any other applicable provisions of state or federal law;

(d) the policies and determinations of the Trust's board of trustees;

(e) the investment objectives and policies and investment restrictions of
the Trust as reflected in its registration statement under the 1940 Act or as
such objectives, policies and restrictions may from time to time be amended; and

(f) the prospectus, if any, of the Trust in effect from time to time.

The appropriate officers and employees of the Administrator shall be available
upon reasonable notice for consultation with any of the Trust's trustees or
officers with respect to any matters

<PAGE>

relating to the Administrator's duties and functions under this Agreement.

2. ADMINISTRATION.

(a) the Administrator shall, subject to the direction and control of the
Trust's board of trustees: (i) provide the Trust with adequate office space,
facilities, equipment and personnel; (ii) supervise the determination of the
Trust's net asset value in accordance with such policies as may be adopted from
time to time by the Trust's board of trustees; (iii) prepare the Trust's proxy
materials for annual and special meetings of the Trust's shareholders, as well
as annual and semi-annual reports to shareholders; (iv) prepare materials for
regular and special meetings of the Trust's Board of Trustees; (v) prepare such
financial or other information required for the Trust's reports to the
Commission; and (vi) respond to or refer to the Trust's officers or transfer
agents, shareholders' inquiries relating to the Trust.

(b) so long as the Administrator shall have acted with due care and in
good faith, the Administrator shall not be liable to the Trust or its
shareholders for losses resulting from any error in judgment, mistake of law or
any other act or omission in the course of or connected with, rendering services
hereunder. Nothing herein contained shall, however, be construed to protect the

<PAGE>

Administrator against any liability to the Trust or its shareholders arising out
of the Administrator's willful misfeasance, bad faith or gross negligence in the
performance of its duties or reckless disregard of its obligations and duties
under this Agreement.

(c) nothing in this Agreement shall prevent the Administrator or any
officer thereof from acting as an investment adviser for any other person, firm
or corporation and shall not in any way limit or restrict the activities of the
Administrator or any of its trustees, officers, stockholders or employees if
such activities will not adversely affect or otherwise impair the performance by
the Administrator of its duties and obligations under this Agreement.

3. ALLOCATION OF EXPENSES.

The Administrator will bear all costs and expenses of its employees and
overhead incurred by it in connection with its duties hereunder. All other
expenses (other than those to be paid by the Trust's manager under a Management
Agreement, investment advisers under the investment advisory agreements, by any
underwriter under an underwriting agreement concerning the Trust's shares or by
the Company's distributor under a distribution agreement), shall be paid by the
Trust, including, but not limited to:

(a) interest expense, taxes and governmental fees;

<PAGE>

(b) brokerage commissions and other expenses incurred in acquiring or
disposing of the Trust's portfolio securities;

(d) fees of the Trust's trustees other than those who are interested
persons of the Administrator and out-of-pocket travel expenses for all trustees
and other expenses incurred by the Trust in connection with trustees' meetings;

(e) outside legal and audit expenses;

(f) custodian, dividend disbursing and transfer agent fees and expenses;

(g) fees for the calculation of the daily net asset value of the Trust's
Portfolios and fees for pricing services;

(h) expenses in connection with the issuance, offering, distribution, sale
or underwriting of securities issued by the Trust, including preparation of
stock certificates;

(i) fees and expenses, other than as hereinabove provided, incident to the
registration or qualification of the Trust's shares for sale with the Commission
and in various states and foreign jurisdictions;

(j) expenses of printing and mailing reports and notices, prospectuses,
stock certificates, distributions of dividends and proxy material to the Trust's
shareholders;

<PAGE>

(k) all other expenses incidental to holding regular annual meetings of
the Trust's shareholders;

(l) dues and expenses incurred in connection with membership in investment
company organizations;

(m) such extraordinary non-recurring expenses as may arise, including
litigation affecting the Trust and the legal obligation which the Trust may have
indemnify its officers and trustees with respect thereto.

Notwithstanding the foregoing, the Administrator shall pay all salaries and
fees of each of the Trust's officers and trustees who are interested persons of
the Administrator.

4. COMPENSATION OF THE ADMINISTRATOR.

The Trust agrees to pay the Administrator and the Administrator agrees to
accept as full compensation for the performance of all its functions and duties
to be performed hereunder, an annual fee of $42,000 with respect to each
Portfolio provided that the Portfolio's average daily net assets do not exceed
$80 million. In the event that a Portfolio's average daily net assets exceed
$80 million, an additional fee of .05% of average daily net assets in excess of
$80 million shall be payable by the Portfolio. Determination of net asset value
will be made in accordance with the policies disclosed in the Trust's
registration statement under the 1940 Act. The fee is payable at the end of
each calendar month.

<PAGE>

5. DURATION.

This Agreement will become effective as of the date hereof. This Agreement
will continue in effect for two years from the date hereof and thereafter
(unless sooner terminated in accordance with this Agreement) for successive
periods of twelve months so long as each continuance shall be specifically
approved at least annually with respect to each Portfolio by (1) the vote of a
majority of those trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such person at a meeting called for the purpose of voting on such
approval and (2) a majority of the board of trustees of the Trust or by a vote
of a majority of the outstanding voting securities of the respective Portfolio.

6. TERMINATION.

This Agreement may be terminated with respect to one or more Portfolios (i)
by the Administrator at any time, without payment of any penalty upon giving the
Trust one hundred twenty (120) days' written notice (which notice may be waived
by the Trust) or (ii) by the Trust at any time, without payment of any penalty
upon sixty (60) days' written notice to the Administrator (which notice may be
waived by the Administrator), provided that such termination by the Trust shall
be directed or approved by the vote of the majority of all of the trustees of
the Trust or by the vote of a majority of the outstanding voting securities of
the respective Portfolio.

<PAGE>

7. ASSIGNMENT OR AMENDMENT.

This Agreement may be amended with respect to a Portfolio only if such
amendment is specifically approved by a majority of the board of trustees of the
Trust, including a majority of those trustees who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. This Agreement shall
automatically and immediately terminate in the event of its assignment as
defined in the 1940 Act and the rules thereunder.

8. GOVERNING LAW.

This Agreement shall be interpreted in accordance with the laws of the
State of New York and the applicable provisions of the 1940 act and rules
thereunder. To the extent that the applicable laws of the State of New York, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.

9. SEVERABILITY.

If any provisions of this Agreement shall be held or made unenforceable by
a court decision, statue, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.

10. As used in this Agreement, the terms "interested person" and "vote of
a majority of the outstanding voting securities of the Trust" shall have the
respective meanings set forth in Sections 2(a)(19) and 2(a)(42) of the 1940 Act.

<PAGE>

11. NO LIABILITY OF SHAREHOLDERS.

This Agreement is executed by the Trustees of the Trust not individually,
but rather in their capacity as Trustees under the Declaration of Trust made
April 4, 1994. None of the shareholders, Trustees, officers, employees or
agents of the Trust shall be personally bound or liable under this Agreement,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim hereunder but only to the property of the Trust and, if the
obligation or claim relates to the property held by the Trust for the benefit of
one or more but fewer than all Portfolios, then only to the property held for
the benefit of the affected Portfolio.

12. NOTIFICATION OF CHANGE IN MEMBERSHIP OF PARTNERSHIP.

The Administrator agrees to notify the Trust of any change in
membership of the Administrator within a reasonable period of time after such
change.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

SARATOGA ADVANTAGE TRUST
Attest:
By:_______________________

______________________ Title:____________________

<PAGE>

QUEST FOR VALUE ADVISORS
Attest:

By:________________________

______________________ Title:_____________________

<PAGE>

EXHIBIT 10

GORDON ALTMAN BUTOWSKY WEITZEN SHALOV & WEIN
114 West 47th Street New York, NY 10036
Telephone: (212) 626-0800 Telecopier (212) 626-0799

August 22, 1994

The Saratoga Advantage Trust
Two World Financial Center
New York, New York 10080

Dear Sir/Madam:

This opinion is being furnished in connection with the registration by
The Saratoga Advantage Trust, a Delaware business trust (the "Trust"), of an
indefinite number of shares of beneficial interest, $.001 par value (the
"Shares"), pursuant to the Trust's registration statement on Form N-1A (File No.
33-79708), as amended (the "Registration Statement"), under the Securities Act
of 1933, as amended (the "1933 Act") and the Investment Company Act of 1940, as
amended.

As counsel for the Trust, we have examined such Trust records,
certificates and other documents and reviewed such questions of law as we have
considered necessary or appropriate for purposes of this opinion.

As to matters of Delaware law contained in this opinion, we have
relied upon the opinion of Richards, Layton & Finger dated August 22, 1994.

Based upon the foregoing, we are of the opinion that the Shares, upon
issuance and sale in the manner referred to in the Registration Statement, will
be duly and validly issued, fully paid and non-assessable by the Trust.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the 1933 Act or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.

Very truly yours,

Gordon Altman Butowsky Weitzen Shalov & Wein

<PAGE>

RICHARDS, LAYTON & FINGER
One Rodney Square
P.O. Box 551
Wilmington, Delaware, 19899
Telephone (302) 658-6541
Telecopier (302) 658-6548

August 22, 1994

Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036

Re: The Saratoga Advantage Trust
----------------------------

Gentlemen:

We have acted as special Delaware counsel for The Saratoga Advantage
Trust, a Delaware business trust (the "Trust"), in connection with the
matters set forth herein. At your request, this opinion is being furnished
to you.

For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of executed or
conformed counterparts, or copies otherwise proved to our satisfaction, of
the following:

(a) The Certificate of Trust of the Trust, dated April 4, 1994 (the
"Certificate"), as filed in the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on April 8, 1994;

(b) The Agreement and Declaration of Trust of the Trust, dated as of
April 4, 1994 (the "Original Agreement");

<PAGE>

(c) Amendment No. 1 to the Original Agreement, dated as of July 25, 1994
(the "Trust Amendment") (the Original Agreement as amended by the Trust
Amendment being hereinafter referred to as the "Agreement");

(d) The By-Laws of the Trust (the "By-Laws");

(e) A registration statement (the "Initial Registration Statement") on
Form N-1A (Registration No. 33-79708), filed by the Trust with the Securities
and Exchange Commission (the "SEC") on June 2, 1994, as amended by
Pre-Effective Amendment No. 1 to the Initial Registration Statement, filed by
the Trust with the SEC on August 11, 1994 ("Amendment No. 1"), and by
Pre-Effective Amendment No. 2 to the Initial Registration Statement, including
a related preliminary prospectus (the "Prospectus"), filed by the Trust with the
SEC on or about August 23, 1994 ("Amendment No. 2") (the Initial Registration
Statement as amended by Amendment No. 1 and Amendment No. 2 being
hereinafter referred to as the "Registration Statement"); and

(f) A Certificate of Good Standing for the Trust, dated August 22, 1994,
obtained from the Secretary of State.

Initially capitalized terms used herein and not otherwise defined are
used as defined in the Agreement.

For purposes of this opinion, we have not reviewed any documents other than
the documents listed above, and we have assumed that there exists no provision
in any document not listed above that bears upon or is inconsistent with the
opinions stated herein. We have conducted no independent factual investigation
of our own, but rather have relied solely upon the foregoing documents, the
statements and information set forth

<PAGE>

therein and the additional matters recited or assumed herein, all of which
we have assumed to be true, complete and accurate in all material respects.

With respect to all documents examined by us, we have assumed that (i)
all signatures on documents examined by us are genuine, (ii) all documents
submitted to us as originals are authentic, and (iii) all documents
submitted to us as copies conform with the original copies of those
documents.

For purposes of this opinion, we have assumed (i) the due
authorization, execution and delivery by all parties thereto of all
documents examined by us, (ii) that the Agreement and the By-Laws
constitute the entire agreement among the parties thereto with respect to
the subject matter thereof, including with respect to the admission of
beneficial owners to, and the creation, operation and termination of, the
Trust, and that the Agreement, the By-Laws and the Certificate are in full
force and effect, have not been amended and no amendment of the Agreement,
the By-Laws or the Certificate is pending or has been proposed, and (iii)
except for the valid existence in good standing of the Trust as a business
trust under the Delaware Business Trust Act (12 DEL. C. Section 3801, ET
SEQ.) ("the Act"), the valid existence in good standing of each party to
the documents examined by us under the laws of the jurisdiction governing its
organization or formation, and the capacity of persons and entities who are
parties to the documents examined by us. We have not participated in the
preparation of the Registration Statement and assume no responsibility for its
contents.

This opinion is limited to the laws of the State of Delaware (excluding the
securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and

<PAGE>

regulations relating thereto. Our opinions are rendered only with respect to
Delaware laws and rules, regulations and orders thereunder which are currently
in effect.

Based upon the foregoing, and upon our examination of such questions of law
and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:

1. The Trust has been duly created and is validly existing in good standing
as a business trust under the Act.

2. Assuming (i) the due acceptance by the Trustees of an appropriate
instrument subscribing for beneficial interests in the Trust (the "Shares")
from each of the persons and entities who subscribe for Shares in the offering
described in the Prospectus (the "Shareholders") and the due acceptance by the
Trustees of the Shareholders as beneficial owners of the Trust, (ii) the
payment by each of the Shareholders to the Trust of the full consideration due
from it for the Shares acquired by it, (iii) that the books and records of the
Trust set forth all information required by the Agreement and the Act, including
all information with respect to all persons and entities who are to be
Shareholders and their contributions to the Trust, and (iv) that the Shares
are offered and sold as described in the Registration Statement and the
Agreement, the Shares to be issued to the Shareholders will be validly issued
and will represent fully paid and nonassessable beneficial interests in the
Trust, the Shareholders being entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit (subject
to the obligation of a Shareholder to make contributions required to be made by
it to the Trust,

<PAGE>

to make other payments provided for in the Agreement and to repay any funds
wrongfully distributed to it from the Trust).

We understand that you will rely as to matters of Delaware law upon
this opinion in connection with an opinion to be submitted by you to the
Trust and filed by it with the SEC as an exhibit to the Registration
Statement in connection with the filing by the Trust of the Registration
Statement under the Securities Act of 1933, as amended, and under the
Investment Company Act of 1940, as amended. In connection with such
opinion, we hereby consent to your relying as to matters of Delaware Law
upon this opinion and to the filing of a copy of this opinion with the SEC.
Except as stated above, without our prior consent, this opinion may not be
furnished or quoted to, or relied upon by, any other person or entity for
any purpose.

Very truly yours,

Richards, Layton & Finger

<PAGE>

STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THAT "THE SARATOGA ADVANTAGE TRUST" IS DULY FORMED UNDER THE
LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL
EXISTENCE NOT HAVING BEEN CANCELLED OR REVOKED SO FAR AS THE RECORDS OF THIS
OFFICE SHOW AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.

THE FOLLOWING DOCUMENTS HAVE BEEN FILED:

CERTIFICATE OF BUSINESS TRUST REGISTRATION, FILED THE EIGHTH DAY OF
APRIL, A.D. 1994, AT 2 O'CLOCK P.M.

AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THE
ONLY CERTIFICATES ON RECORD OF THE AFORESAID BUSINESS TRUST.

AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL TAXES HAVE NOT BEEN
ASSESSED TO DATE.

-----------------------------------
Edward J. Freel, Secretary of State

AUTHENTICATION: 7217825

DATE: 08-22-94

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Saratoga Advantage Trust:

We consent to the use of our report dated August 22, 1994, included in the
Post Effective Amendment No. 1 to the Registration Statement on Form N-1A and
to the reference to our firm under the heading "Independent Auditors" in
the Statement of Additional Information.

/s/ KPMG PEAT MARWICK LLP

New York, New York
May 1, 1995

<PAGE>

THE SARATOGA ADVANTAGE TRUST
Two World Financial Center
New York, NY 10080

August 19, 1994

Saratoga Capital Management
Two World Financial Center
New York, NY 10080

Ladies and Gentlemen:

In connection with your purchase today of an aggregate of 100,000 shares of
common stock of the U.S. Government Money Market Portfolio, a portfolio of The
Saratoga Advantage Trust, for $100,000 (the "Shares"), you hereby represent and
confirm that you have acquired such securities for investment for your own
account, with no present intention of redeeming, reselling, or otherwise
distributing the same.

It is mutually agreed that the Shares purchased by you cannot be sold,
assigned, or transferred, except upon redemption by Saratoga Capital Management.

Furthermore, you hereby confirm that you are party to no arrangement,
agreement or understanding regarding The Saratoga Advantage Trust (the "Trust")
or its securities, with the Trust, or any other person, made in consideration of
your purchase of the Shares.

If the foregoing correctly expresses your understanding and our agreement,
please so indicate by signing and returning the enclosed copy of this letter.

This Agreement is executed on behalf of the Trustees of the Trust as
Trustees and not individually, and the obligations thereunder are not binding
upon any of the Trustees or shareholders of the Trust individually but are
binding only upon the assets and the property of the Trust.

Very truly yours,

THE SARATOGA ADVANTAGE TRUST

By:_________________________
Sheldon Siegel
Treasurer

Confirmed and Agreed:

SARATOGA CAPITAL MANAGEMENT

By:________________________
Bruce E. Ventimiglia
President

<PAGE>

SARATOGA ADVANTAGE TRUST
INTERNATIONAL PORTFOLIO

TOTAL RETURN FROM INCEPTION (9/1/94) THROUGH 2/28/95

DIVIDENDS &
DISTRIBUTIONS REINVESTMENT SHARES INVESTMENT
DATE PER SHARE N.A.V. PER SHARE ------- ----------
- -------- ------------- ---------------- 100 $1,000.00
12/30/94 $0.0093 $9.39 100.099

VALUE = N.A.V. ON 2/28/95 ($8.62) * SHARES (100.099) $862.85
-------
-------

RETURN -13.72%
-------
-------

AVERAGE ANNUAL RETURN N/A
-------
-------

<PAGE>

SARATOGA ADVANTAGE TRUST
SMALL CAPITALIZATION PORTFOLIO

TOTAL RETURN FROM INCEPTION (9/1/94) THROUGH 2/28/95

DIVIDENDS &
DISTRIBUTIONS REINVESTMENT SHARES INVESTMENT
DATE PER SHARE N.A.V. PER SHARE ------- ----------
- -------- ------------- ---------------- 100 $1,000.00
12/30/94 $0.0136 $9.70 100.140

VALUE = N.A.V. ON 2/28/95 ($10.10) * SHARES (100.140) $1,011.41
---------
---------

RETURN 1.14%
---------
---------

AVERAGE ANNUAL RETURN N/A
---------
---------

<PAGE>

SARATOGA ADVANTAGE TRUST
LARGE CAPITALIZATION VALUE PORTFOLIO

TOTAL RETURN FROM INCEPTION (9/1/94) THROUGH 2/28/95

DIVIDENDS &
DISTRIBUTIONS REINVESTMENT SHARES INVESTMENT
DATE PER SHARE N.A.V. PER SHARE ------- ----------
- -------- ------------- ---------------- 100 $1,000.00
12/30/94 $0.0467 $9.65 100.484

VALUE = N.A.V. ON 2/28/95 ($10.50) * SHARES (100.484) $1,055.08
---------
---------

RETURN 5.51%
---------
---------

AVERAGE ANNUAL RETURN N/A
---------
---------

<PAGE>

SARATOGA ADVANTAGE TRUST
LARGE CAPITALIZATION GROWTH PORTFOLIO

TOTAL RETURN FROM INCEPTION (9/1/94) THROUGH 2/28/95

DIVIDENDS &
DISTRIBUTIONS REINVESTMENT SHARES INVESTMENT
DATE PER SHARE N.A.V. PER SHARE ------- ----------
- -------- ------------- ---------------- 100 $1,000.00
12/30/94 $0.0132 $9.98 100.132

VALUE = N.A.V. ON 2/28/95 ($10.57) * SHARES (100.132) $1,058.40
---------
---------

RETURN 5.84%
---------
---------

AVERAGE ANNUAL RETURN N/A
---------
---------

<PAGE>

SARATOGA ADVANTAGE TRUST
INVESTMENT QUALITY BOND PORTFOLIO

TOTAL RETURN FROM INCEPTION (9/1/94) THROUGH 2/28/95

DIVIDENDS &
DISTRIBUTIONS REINVESTMENT SHARES INVESTMENT
DATE PER SHARE N.A.V. PER SHARE ------- ----------
- -------- ------------- ---------------- 100 $1,000.00
09/30/94 $0.0418395 $9.86 100.424
10/31/94 0.0448831 9.79 100.884
11/30/94 0.0478031 9.69 101.382
12/30/94 0.0537566 9.67 101.946
01/31/95 0.0564551 9.75 102.536
02/28/95 0.0533815 9.87 103.091

VALUE = N.A.V. ON 2/28/95 ($9.87) * SHARES (103.091) $1,017.51
---------
---------

RETURN 1.75%
---------
---------

AVERAGE ANNUAL RETURN N/A
---------
---------

<PAGE>

SARATOGA ADVANTAGE TRUST
INVESTMENT QUALITY BOND PORTFOLIO
YIELDS AS OF 2/28/95

01/30/95 0.0016170
01/31/95 0.0017029
02/01/95 0.0017090
02/02/95 0.0016365
02/03/95 0.0019401
02/04/95 0.0019403
02/05/95 0.0019403
02/06/95 0.0019403
02/07/95 0.0019406
02/08/95 0.0019401
02/09/95 0.0019162
02/10/95 0.0019155
02/11/95 0.0019150
02/12/95 0.0019150
02/13/95 0.0019150
02/14/95 0.0019153
02/15/95 0.0018987
02/16/95 0.0018869
02/17/95 0.0018871
02/18/95 0.0018615
02/19/95 0.0018615
02/20/95 0.0018615
02/21/95 0.0018615
02/22/95 0.0018274
02/23/95 0.0018105
02/24/95 0.0018078
02/25/95 0.0020843
02/26/95 0.0020843
02/27/95 0.0020843
02/28/95 0.0020851
---------
0.0567015

YIELDS
---------------
30 DAY DIVIDEND 30 DAY DIVIDEND
RATE ENDING YIELD
2/28/95 * 12 / 2/28/95 N.A.V. = ANNUALIZED
--------------- ------ -------------- ---------------
0.0567015 12 $9.87 6.89%

MONTH END MONTHLY DIVIDEND
DIVIDEND RATE YIELD
2/28/95 * 12 / 2/28/95 N.A.V. = ANNUALIZED
--------------- ------ -------------- ---------------
0.0533815 12 $9.87 6.49%

NET INCOME FOR AVG. SHARES OUT. RAISED TO THE S.E.C. 30 DAY
THE 30 DAYS MULTIPLIED BY SIXTH POWER DIVIDEND
2 * (ENDED 2/28/95 / N.A.V. ON 2/28/95 +1) AND MINUS 1 = YIELD
- --- --------------- ---------------------- ------------- -------------
2 ( $6,782.34 119,562.282*$9.87+1) (6) - 1 7.00%

<PAGE>

SARATOGA ADVANTAGE TRUST
MUNICIPAL BOND PORTFOLIO

TOTAL RETURN FROM INCEPTION (9/1/94) THROUGH 2/28/95

DIVIDENDS &
DISTRIBUTIONS REINVESTMENT SHARES INVESTMENT
DATE PER SHARE N.A.V. PER SHARE ------- ----------
- -------- ------------- ---------------- 100 $1,000.00
09/30/94 $0.0385365 $9.79 100.394
10/31/94 0.0507183 9.50 100.930
11/30/94 0.0493773 9.22 101.471
12/30/94 0.0388425 9.40 101.890
01/31/95 0.0468287 9.58 102.388
02/28/95 0.0463097 9.78 102.873

VALUE = N.A.V. ON 2/28/95 ($9.78) * SHARES (102.873) $1,006.10
---------
---------

RETURN 0.61%
---------
---------

AVERAGE ANNUAL RETURN N/A
---------
---------

<PAGE>

SARATOGA ADVANTAGE TRUST
MUNICIPAL BOND PORTFOLIO
YIELDS AS OF 2/28/95

01/30/95 0.0015018
01/31/95 0.0013321
02/01/95 0.0016288
02/02/95 0.001553
02/03/95 0.0015048
02/04/95 0.0015053
02/05/95 0.0015053
02/06/95 0.0015053
02/07/95 0.0015667
02/08/95 0.001656
02/09/95 0.0016332
02/10/95 0.0016339
02/11/95 0.0016325
02/12/95 0.0016325
02/13/95 0.0016325
02/14/95 0.001633
02/15/95 0.001633
02/16/95 0.0017067
02/17/95 0.0017078
02/18/95 0.0016858
02/19/95 0.0016858
02/20/95 0.0016858
02/21/95 0.0016858
02/22/95 0.0017557
02/23/95 0.0017269
02/24/95 0.0017184
02/25/95 0.0017156
02/26/95 0.0017156
02/27/95 0.0017156
02/28/95 0.0019485
---------
0.0491437

YIELDS
---------------
30 DAY DIVIDEND 30 DAY DIVIDEND TAX
RATE ENDING YIELD EQUIVALENT
2/28/95 * 12 / 2/28/95 N.A.V. = ANNUALIZED 39.6% FED.
--------------- ---- -------------- ---------------- ----------
0.0491437 12 $9.78 6.03% 9.98%

MONTH END MONTHLY DIVIDEND
DIVIDEND RATE YIELD
2/28/95 12 / 2/28/95 N.A.V. = ANNUALIZED
--------------- ---- -------------- ----------------
0.0463097 12 $9.78 5.68% 9.41%

NET INCOME FOR AVG. SHARES OUT. RAISED TO THE S.E.C. 30 DAY
THE 30 DAYS MULTIPLIED BY SIXTH POWER DIVIDEND
2 * (ENDED 2/28/95 / N.A.V. ON 2/28/95 +1) AND MINUS 1 = YIELD
- -- -------------- --------------------- ------------- -------------
2 * ($2,022.78 43,327.996*$9.78 +1) (6) - 1 5.80% 9.60%

<PAGE>

SARATOGA ADVANTAGE TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO

YIELDS AS OF 2/28/95

DAILY
DIVIDEND RATES
DATE PER SHARE
-------- --------------

02/22/95 0.000162966
02/23/95 0.000163254
02/24/95 0.000162976
02/25/95 0.000162977
02/26/95 0.000162977
02/27/95 0.000163442
02/28/95 0.000162262
-----------
0.001140854
-----------
-----------

SEVEN DAY
BASE PERIOD
RETURN ENDING SEVEN DAY
2/28/95 * 365/7 = CURRENT YIELD
------------- ------------- -------------
0.001140854 5.95%

SEVEN DAY
COMPOUNDED
SEVEN DAY YIELD
BASE PERIOD (RAISED TO A
RETURN ENDING POWER OF 365/7
1 + 2/28/95 = = AND MINUS 1)
- ------ ------------- ----------- --------------
1 + 0.001140854 = 1.001140854 6.13%

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE SEMI ANNUAL REPORT (UNAUDITED) FOR THE PERIOD SEPTEMBER 2, 1994
TO FEBRUARY 28, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000924628
<NAME> THE SARATOGA ADVANTAGE TRUST
<SERIES>
<NUMBER> 1
<NAME> SARATOGA U.S. GOVERNMENT MONEY MARKET PORTFOLIO

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-02-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 1,800,891
<INVESTMENTS-AT-VALUE> 1,800,891
<RECEIVABLES> 102,935
<ASSETS-OTHER> 79,845
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,983,671
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 116,183
<TOTAL-LIABILITIES> 116,183
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,865,621
<SHARES-COMMON-STOCK> 1,867
<SHARES-COMMON-PRIOR> 100<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,867,488
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 22,042
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 22,042
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 22,042
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 22,042
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,792,893
<NUMBER-OF-SHARES-REDEEMED> 47,328
<SHARES-REINVESTED> 21,923
<NET-CHANGE-IN-ASSETS> 1,767,488
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,875
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 58,645
<AVERAGE-NET-ASSETS> 800,530
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .024
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.024)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0<F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>SEED CAPITAL
<F2>THE MANAGER HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED THE
PORTFOLIO FOR ALL ITS OPERATING EXPENSES
</FN>

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE SEMI ANNUAL REPORT (UNAUDITED) FOR THE PERIOD SEPTEMBER 2, 1994
TO FEBRUARY 28, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000924628
<NAME> THE SARATOGA ADVANTAGE TRUST
<SERIES>
<NUMBER> 2
<NAME> SARATOGA INVESTMENT QUALITY BOND PORTFOLIO

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-02-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 1,060,434
<INVESTMENTS-AT-VALUE> 1,072,157
<RECEIVABLES> 219,957
<ASSETS-OTHER> 60,314
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,352,428
<PAYABLE-FOR-SECURITIES> 43,919
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 204,496
<TOTAL-LIABILITIES> 248,415
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,095,302
<SHARES-COMMON-STOCK> 112
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,124)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,723
<NET-ASSETS> 1,104,013
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 22,259
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 22,259
<REALIZED-GAINS-CURRENT> (3,124)
<APPREC-INCREASE-CURRENT> 11,723
<NET-CHANGE-FROM-OPS> 30,858
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 22,259
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 145,663
<NUMBER-OF-SHARES-REDEEMED> 35,901
<SHARES-REINVESTED> 2,132
<NET-CHANGE-IN-ASSETS> 1,104,013
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,976
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 58,205
<AVERAGE-NET-ASSETS> 728,607
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> (.13)
<PER-SHARE-DIVIDEND> (.30)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.87
<EXPENSE-RATIO> 0<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE MANAGER HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED THE
PORTFOLIO FOR ALL ITS OPERATING EXPENSES.
</FN>

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEMI ANNUAL REPORT (UNAUDITED) FOR THE PERIOD SEPTEMBER 2, 1994 TO
FEBRUARY 28, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000924628
<NAME> THE SARATOGA ADVANTAGE TRUST
<SERIES>
<NUMBER> 3
<NAME> SARATOGA MUNICIPAL BOND PORTFOLIO

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-02-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 387,160
<INVESTMENTS-AT-VALUE> 398,032
<RECEIVABLES> 77,296
<ASSETS-OTHER> 85,200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 560,528
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 118,565
<TOTAL-LIABILITIES> 118,565
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 435,681
<SHARES-COMMON-STOCK> 45
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,635)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,872
<NET-ASSETS> 441,963
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,580
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 7,580
<REALIZED-GAINS-CURRENT> (4,635)
<APPREC-INCREASE-CURRENT> 10,872
<NET-CHANGE-FROM-OPS> 13,817
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,580
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 59,744
<NUMBER-OF-SHARES-REDEEMED> 15,360
<SHARES-REINVESTED> 786
<NET-CHANGE-IN-ASSETS> 441,963
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 759
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 59,909
<AVERAGE-NET-ASSETS> 279,695
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .27
<PER-SHARE-GAIN-APPREC> (.22)
<PER-SHARE-DIVIDEND> (.27)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.78
<EXPENSE-RATIO> 0<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE MANAGER HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED THE
PORTFOLIO FOR ALL ITS OPERATING EXPENSES.
</FN>

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE SEMI ANNUAL REPORT (UNAUDITED) FOR THE PERIOD SEPTEMBER 2, 1994
TO FEBRUARY 28, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000924628
<NAME> THE SARATOGA ADVANTAGE TRUST
<SERIES>
<NUMBER> 4
<NAME> SARATOGA LARGE CAPITALIZATION VALUE PORTFOLIO

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-02-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 1,848,563
<INVESTMENTS-AT-VALUE> 1,988,659
<RECEIVABLES> 138,358
<ASSETS-OTHER> 159,083
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,286,100
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 148,922
<TOTAL-LIABILITIES> 148,922
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,989,369
<SHARES-COMMON-STOCK> 203
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 9,262
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,752)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 140,096
<NET-ASSETS> 2,137,178
<DIVIDEND-INCOME> 8,947
<INTEREST-INCOME> 6,857
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 15,804
<REALIZED-GAINS-CURRENT> (1,752)
<APPREC-INCREASE-CURRENT> 140,096
<NET-CHANGE-FROM-OPS> 154,148
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,542
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 234,648
<NUMBER-OF-SHARES-REDEEMED> 31,853
<SHARES-REINVESTED> 669
<NET-CHANGE-IN-ASSETS> 2,137,178
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,481
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 63,842
<AVERAGE-NET-ASSETS> 1,086,072
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .14
<PER-SHARE-GAIN-APPREC> .41
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.50
<EXPENSE-RATIO> 0<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE MANAGER HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED
THE PORTFOLIO FOR ALL ITS OPERATING EXPENSES.
</FN>

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE SEMI ANNUAL REPORT (UNAUDITED) FOR THE PERIOD SEPTEMBER 2, 1994
TO FEBRUARY 28, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000924628
<NAME> THE SARATOGA ADVANTAGE TRUST
<SERIES>
<NUMBER> 5
<NAME> SARATOGA LARGE CAPITALIZATION GROWTH PORTFOLIO

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-02-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 1,686,043
<INVESTMENTS-AT-VALUE> 1,792,296
<RECEIVABLES> 155,787
<ASSETS-OTHER> 219,320
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,167,403
<PAYABLE-FOR-SECURITIES> 58,779
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132,149
<TOTAL-LIABILITIES> 190,928
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,869,663
<SHARES-COMMON-STOCK> 187
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,793
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,421)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 106,253
<NET-ASSETS> 1,976,475
<DIVIDEND-INCOME> 4,588
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 4,588
<REALIZED-GAINS-CURRENT> (2,421)
<APPREC-INCREASE-CURRENT> 106,253
<NET-CHANGE-FROM-OPS> 108,420
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,795
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 244,543
<NUMBER-OF-SHARES-REDEEMED> 57,643
<SHARES-REINVESTED> 176
<NET-CHANGE-IN-ASSETS> 1,976,475
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,336
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 66,792
<AVERAGE-NET-ASSETS> 1,040,838
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> .54
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.57
<EXPENSE-RATIO> 0<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE MANAGER HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED
THE PORTFOLIO FOR ALL ITS OPERATING EXPENSES.
</FN>

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE SEMI ANNUAL REPORT (UNAUDITED) FOR THE PERIOD SEPTEMBER 2, 1994
TO FEBRUARY 28, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000924628
<NAME> THE SARATOGA ADVANTAGE TRUST
<SERIES>
<NUMBER> 6
<NAME> SARATOGA SMALL CAPITALIZATION PORTFOLIO

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-02-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 2,689,178
<INVESTMENTS-AT-VALUE> 2,782,691
<RECEIVABLES> 435,748
<ASSETS-OTHER> 392,639
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,611,078
<PAYABLE-FOR-SECURITIES> 352,627
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 141,731
<TOTAL-LIABILITIES> 494,358
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,001,457
<SHARES-COMMON-STOCK> 309
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 976
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20,465
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 93,513
<NET-ASSETS> 3,116,720
<DIVIDEND-INCOME> 4,094
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 4,094
<REALIZED-GAINS-CURRENT> 20,465
<APPREC-INCREASE-CURRENT> 93,513
<NET-CHANGE-FROM-OPS> 118,072
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,118
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 330,073
<NUMBER-OF-SHARES-REDEEMED> 21,691
<SHARES-REINVESTED> 304
<NET-CHANGE-IN-ASSETS> 3,116,720
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,986
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 69,954
<AVERAGE-NET-ASSETS> 1,555,429
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> .08
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.10
<EXPENSE-RATIO> 0<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE MANAGER HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED
THE PORTFOLIO FOR ALL ITS OPERATING EXPENSES.
</FN>

</TABLE>

<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE SEMI ANNUAL REPORT (UNAUDITED) FOR THE PERIOD SEPTEMBER 2, 1994
TO FEBRUARY 28, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000924628
<NAME> THE SARATOGA ADVANTAGE TRUST
<SERIES>
<NUMBER> 7
<NAME> SARATOGA INTERNATIONAL EQUITY PORTFOLIO

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-02-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 1,169,847
<INVESTMENTS-AT-VALUE> 1,062,082
<RECEIVABLES> 184,639
<ASSETS-OTHER> 274,951
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,521,672
<PAYABLE-FOR-SECURITIES> 39,600
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 118,661
<TOTAL-LIABILITIES> 158,261
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,497,276
<SHARES-COMMON-STOCK> 158
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,038
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (27,296)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (107,765)
<NET-ASSETS> 1,363,411
<DIVIDEND-INCOME> 2,153
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 2,153
<REALIZED-GAINS-CURRENT> (27,296)
<APPREC-INCREASE-CURRENT> (107,765)
<NET-CHANGE-FROM-OPS> 135,908
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,115
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 180,775
<NUMBER-OF-SHARES-REDEEMED> 22,778
<SHARES-REINVESTED> 118
<NET-CHANGE-IN-ASSETS> 1,363,411
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,101
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 62,199
<AVERAGE-NET-ASSETS> 838,426
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> (1.39)
<PER-SHARE-DIVIDEND> (.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.62
<EXPENSE-RATIO> 0<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>THE MANAGER HAS VOLUNTARILY WAIVED ALL OF ITS FEES AND REIMBURSED
THE PORTFOLIO FOR ALL OF ITS OPERATING EXPENSES.
</FN>

</TABLE>