<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THE SARATOGA ADVANTAGE TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO OF SARATOGA ADVANTAGE TRUST APPEARS HERE]
THE SARATOGA ADVANTAGE TRUST
TWO WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10080
Dear Shareholder:
Enclosed is a proxy statement for a special meeting of shareholders of the
Saratoga Advantage Trust (the "Trust") to be held at 10:00 a.m. on April 10,
1997.
This special meeting has been called to seek shareholder approval for a new
management agreement between the Trust, on behalf of each Portfolio, and
Saratoga Capital Management, the Manager of the Trust. It also seeks shareholder
approval for new investment advisory agreements between the Manager and each of
the Portfolios' advisors. The Board of Trustees of the Trust has, by majority,
approved the proposed agreements because it believes they are in shareholders'
best interests and in the best interests of the Trust. As such, the Board of
Trustees recommends that you vote in favor of each of the proposals contained in
the proxy statement. Please be assured that approval by you will not increase
any of the fees that you pay.
The enclosed Question and Answer Summary is intended to provide shareholders
with an overview of this proxy process. Please read it and the other enclosed
documents carefully. It is important that we receive your vote as soon as
possible. We have made arrangements for you to vote your proxy in two convenient
ways:
VOTING BY PHONE: Just dial 1-800-758-5378 and vote anytime between 9 a.m.
and 9 p.m. (EST).
VOTING BY MAIL: Simply return the proxy card in the enclosed postage-paid
envelope.
If you have further questions about your proxy, please contact Scott Kane,
Managing Director of Saratoga Capital Management at 1-800-807-FUND. Thank you.
Sincerely,
/s/ Bruce E. Ventimiglia
Bruce E. Ventimiglia
President
<PAGE>
QUESTION AND ANSWER SUMMARY
A SUMMARY OF THE TRANSACTION
Saratoga Capital Management, the Manager of the Saratoga Advantage Trust
(the "Trust"), is a Delaware general partnership which is owned by certain
executives of Saratoga Capital Management and by Oppenheimer Capital.
Oppenheimer Capital has agreed to transfer its interest in Saratoga Capital
Management to two new partners who will provide Saratoga Capital Management with
financial resources. Shareholders will note that Oppenheimer Capital intends to
continue in its role as Advisor to the Saratoga Large Capitalization Value
Portfolio and the Saratoga Municipal Bond Portfolio.
WHAT SHAREHOLDERS ARE BEING ASKED TO DO
Upon the transfer of Oppenheimer Capital's interest in Saratoga Capital
Management, as described above, the Trust's present management and advisory
agreements will terminate automatically as a matter of law. SHAREHOLDERS ARE
BEING ASKED TO APPROVE THE FOLLOWING:
1. A new management agreement between the Trust, on behalf of each
Portfolio, and Saratoga Capital Management, the Manager of the Trust. THE
NEW AGREEMENT WOULD BE IDENTICAL TO THE AGREEMENT CURRENTLY IN PLACE.
2. New investment advisory agreements between the Manager and each of the
Portfolios' advisors. THE TERMS OF THESE AGREEMENTS WOULD BE IDENTICAL TO
THOSE CURRENTLY IN PLACE. The advisors that currently serve each of the
Portfolios by making investment decisions will continue to serve their
respective Portfolios, with the exception of the Small Capitalization
Portfolio for which a new proposed advisor has been selected by the
Manager and approved by the Board of Trustees of the Trust.
WILL THIS CHANGE INCREASE ANY OF THE FEES THAT I PAY?
No. Fees will not change.
WHO PAYS FOR THE EXPENSE OF THIS PROXY PROCESS?
There is no charge to shareholders. Saratoga Capital Management will pay for
all expenses associated with the proxy voting process.
IF SHAREHOLDERS APPROVE THESE PROPOSALS, WHEN WILL THEY BECOME EFFECTIVE?
The new agreements will become effective the day following shareholder
approval of the new agreements.
HOW DO I VOTE MY PROXY?
It is important that we receive your vote as soon as possible. We have made
arrangements for you to vote your proxy in two convenient ways. Please select
the method you prefer and vote today!
VOTING BY PHONE: Just dial 1-800-758-5378 and vote anytime between 9 a.m.
and 9 p.m. (EST).
VOTING BY MAIL: Simply return the proxy card in the enclosed postage-paid
envelope.
WHEN AND WHERE WILL THE SPECIAL SHAREHOLDER MEETING TAKE PLACE?
The shareholder meeting will take place at 10:00 a.m. on April 10, 1997 at
Two World Financial Center, New York, New York 10080. Please phone in your vote
or return your completed proxy card by mail as soon as possible, regardless of
whether you plan to attend the meeting.
<PAGE>
THE SARATOGA ADVANTAGE TRUST
TWO WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10080
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 1997
---------------------
TO THE SHAREHOLDERS OF THE SARATOGA ADVANTAGE TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
MUNICIPAL BOND PORTFOLIO
INVESTMENT QUALITY BOND PORTFOLIO
LARGE CAPITALIZATION VALUE PORTFOLIO
LARGE CAPITALIZATION GROWTH PORTFOLIO
SMALL CAPITALIZATION PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
A special meeting (the "Meeting") of shareholders of each of the
above-referenced portfolios (each, a "Portfolio" and collectively, the
"Portfolios"), being the seven Portfolios of The Saratoga Advantage Trust (the
"Trust") will be held at Two World Financial Center, New York, New York 10080,
on April 10, 1997 at 10:00 a.m. local time. The purpose of the Meeting is to
consider the following proposals:
I.A. To approve a new management agreement between the Trust, on behalf of
each Portfolio, and Saratoga Capital Management (the "Manager").
I.B. To approve a new advisory agreement between the Manager and Sterling
Capital Management Company.
(TO BE VOTED ON BY SHAREHOLDERS OF U.S. GOVERNMENT MONEY MARKET PORTFOLIO
ONLY)
I.C. To approve a new advisory agreement between the Manager and OpCap
Advisors.
(TO BE VOTED ON BY SHAREHOLDERS OF MUNICIPAL BOND PORTFOLIO ONLY)
I.D. To approve a new advisory agreement between the Manager and Fox Asset
Management, Inc.
(TO BE VOTED ON BY SHAREHOLDERS OF INVESTMENT QUALITY BOND PORTFOLIO
ONLY)
I.E. To approve a new advisory agreement between the Manager and OpCap
Advisors.
(TO BE VOTED ON BY SHAREHOLDERS OF LARGE CAPITALIZATION VALUE PORTFOLIO
ONLY)
I.F. To approve a new advisory agreement between the Manager and Harris
Bretall Sullivan & Smith, Inc.
(TO BE VOTED ON BY SHAREHOLDERS OF LARGE CAPITALIZATION GROWTH PORTFOLIO
ONLY)
I.G. To approve a new advisory agreement between the Manager and Thorsell,
Parker Partners, Inc.
(TO BE VOTED ON BY SHAREHOLDERS OF SMALL CAPITALIZATION PORTFOLIO ONLY)
I.H. To approve a new advisory agreement between the Manager and Ivory &
Sime International, Inc. and a related investment sub-advisory agreement
between Ivory & Sime International, Inc. and Ivory & Sime plc.
(TO BE VOTED ON BY SHAREHOLDERS OF INTERNATIONAL EQUITY PORTFOLIO ONLY)
<PAGE>
II. To elect four trustees of the Trust.
III. To ratify or reject the selection of KPMG Peat Marwick LLP as
independent accountants for the Trust for the fiscal year ending August
31, 1997.
IV. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment thereof.
PROPOSALS I.A., II. AND III. APPLY TO ALL SHAREHOLDERS. Proposals I.B.,
I.C., I.D., I.E., I.F., I.G. and I.H. apply to shareholders of each Portfolio
separately, as indicated above.
The attached Proxy Statement describes the above proposals in detail and is
being sent to shareholders of record of the Trust as of the close of business on
February 27,1997, who are the shareholders entitled to notice of and to vote at
the Meeting.
By Order of the Board of Trustees,
/s/ Bruce E. Ventimiglia
Bruce E. Ventimiglia
PRESIDENT
March 20, 1997
IMPORTANT
A MAJORITY OF YOUR BOARD OF TRUSTEES URGES YOU TO VOTE IN FAVOR OF EACH PROPOSAL
THAT APPLIES TO YOU BY CALLING 1-800-758-5378 OR BY MARKING, SIGNING AND
RETURNING THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE. FOR SHAREHOLDERS WHO
CHOOSE TO VOTE BY MAIL, THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND
IS PROVIDED FOR YOUR CONVENIENCE.
<PAGE>
THE SARATOGA ADVANTAGE TRUST
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 10, 1997
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the board of trustees (the "Board" or the "Trustees") of The Saratoga
Advantage Trust (the "Trust"), a Delaware business trust, from holders (the
"Shareholders") of shares of beneficial interest of the Trust, no par value (the
"Shares") to be voted at a special meeting of Shareholders (the "Meeting") to be
held at Two World Financial Center, New York, New York 10080, on April 10, 1997
at 10:00 a.m. local time, and at any adjournments thereof, for the purposes set
forth in the accompanying Notice of Special Meeting of Shareholders. The Trust
has outstanding one class of Shares that is currently issued in the following
seven separate series: U.S. Government Money Market Portfolio, Municipal Bond
Portfolio, Investment Quality Bond Portfolio, Large Capitalization Value
Portfolio, Large Capitalization Growth Portfolio, Small Capitalization Portfolio
and International Equity Portfolio (each, a "Portfolio" and collectively, the
"Portfolios"). This proxy statement and the accompanying form of proxy will
first be sent to Shareholders on or about March 22, 1997. THE TRUST'S ANNUAL
REPORT, INCLUDING FINANCIAL STATEMENTS OF THE TRUST FOR THE FISCAL YEAR ENDED
AUGUST 31, 1996, IS AVAILABLE WITHOUT CHARGE UPON REQUEST FROM SCOTT KANE, VICE
PRESIDENT OF THE TRUST, AT TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10080
(TELEPHONE NUMBER 1-800-807-3863) (BEGINNING APRIL 10, 1997, THE ADDRESS OF THE
TRUST WILL BE 33 MAIDEN LANE, NEW YORK, NEW YORK 10038).
The primary purpose of the Meeting is to allow Shareholders to consider new
management and advisory agreements for the Portfolios. As explained in more
detail below, the existing management and advisory agreements for the Portfolios
will terminate automatically by operation of law, upon the consummation of the
proposed acquisition (the "Transaction") by Messrs. John Schiavi and Ronald J.
Goguen of Oppenheimer Capital's interest in Saratoga Capital Management (the
"Manager"). Shareholders are not being asked to approve the Transaction; rather,
they are being asked to continue the existing investment advisory relationships
for the Portfolios under new contracts which would take effect at the time of
the consummation of the Transaction (other than for Small Capitalization
Portfolio). With respect to the Small Capitalization Portfolio only,
Shareholders are being asked to approve an advisory agreement pursuant to which
the Manager would retain a new investment adviser for the Portfolio. If approved
by Shareholders of the Small Capitalization Portfolio, such new agreement also
will take effect upon the consummation of the Transaction. Consummation of the
Transaction is conditioned upon, among other things, Shareholder approval of the
new management and advisory contracts. The Transaction and the terms of the new
management and advisory agreements are discussed below.
THE PROPOSED MANAGEMENT AND ADVISORY AGREEMENTS ARE IDENTICAL IN FORM AND
TERMS TO THE PRESENT AGREEMENTS OTHER THAN THEIR COMMENCEMENT AND EXPIRATION
DATES AND IN THE CASE OF THE ADVISORY AGREEMENT APPLICABLE TO SMALL
CAPITALIZATION PORTFOLIO, THE IDENTITY OF THE INVESTMENT ADVISER.
1
<PAGE>
Therefore:
(1) All Shareholders are being asked to approve a new management agreement
(the "Proposed Management Agreement") between the Trust and the Manager to
replace the existing agreement between the Trust and the Manager (the "Existing
Management Agreement").
(2) Shareholders of each Portfolio are being asked to approve a new advisory
agreement between the Manager and the existing adviser to that Portfolio (other
than the new advisory agreement for Small Capitalization Portfolio, under which
Thorsell, Parker Partners, Inc. will become the new adviser) (each, an
"Advisor", and collectively, the "Advisors") and, with respect to the
International Equity Portfolio only, a related investment sub-advisory agreement
(the "Sub-Advisory Agreement") between one Advisor, Ivory & Sime International,
Inc. ("ISI"), and Ivory & Sime plc (the "Sub-Advisor") (collectively, the
"Proposed Advisory Agreements") to replace the existing agreement between each
Advisor and the Manager and, with respect to the International Equity Portfolio
only, the existing sub-advisory agreement between the Sub-Advisor and ISI
(collectively, the "Existing Advisory Agreements"), as follows:
a) a new agreement between the Manager and Sterling Capital Management
Company ("Sterling") (for Shareholders of U.S. Government Money Market
Portfolio only).
b) a new agreement between the Manager and Fox Asset Management, Inc.
("Fox") (for Shareholders of Investment Quality Bond Portfolio only).
c) new agreements between the Manager and OpCap Advisors ("OpCap") (for
Shareholders of each of Municipal Bond Portfolio and Large Capitalization
Value Portfolio only).
d) a new agreement between the Manager and Harris Bretall Sullivan &
Smith, Inc. ("Harris Bretall") (for Shareholders of Large Capitalization
Growth Portfolio only).
e) a new agreement between the Manager and ISI and the related
Sub-Advisory Agreement between ISI and the Sub-Advisor (for Shareholders of
International Equity Portfolio only).
f) a new agreement between the Manager and Thorsell, Parker Partners,
Inc. ("Thorsell") (for Shareholders of Small Capitalization Portfolio only).
Elsewhere in this proxy statement, the Proposed Management Agreement and the
Proposed Advisory Agreements are together referred to as the "Proposed
Agreements", and the Existing Management Agreement and the Existing Advisory
Agreements are together referred to as the "Existing Agreements".
A proxy, if properly executed, duly returned and not revoked, will be voted
in accordance with the instructions marked thereon. As to a proposal for which
no instructions are given, such proxy will be voted in favor of such proposal. A
Shareholder may revoke a proxy at any time prior to its exercise by filing with
the Secretary of the Trust a written notice revoking the proxy, by executing a
proxy dated subsequent to the date of a previously executed proxy, or by
attending and voting at the Meeting.
The Board has fixed the close of business on February 27, 1997, as the
record date (the "Record Date") for the determination of Shareholders entitled
to notice of and to vote at the Meeting and any adjournment(s) thereof.
Shareholders on that date will be entitled to one vote for each Share held and a
fractional vote with respect to fractional Shares on each matter as to which
such Shares are entitled to vote.
2
<PAGE>
The table below sets forth each proposal and those Shareholders who are
entitled to vote for each such proposal.
<TABLE>
<CAPTION>
PORTFOLIO PROPOSAL I.A. PROPOSAL I.B. PROPOSAL I.C. PROPOSAL I.D. PROPOSAL I.E. PROPOSAL I.F. PROPOSAL I.G.
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Government
Money Market
Portfolio X X
Municipal Bond
Portfolio X X
Investment Quality
Bond Portfolio X X
Large Capitalization
Value Portfolio X X
Large Capitalization
Growth Portfolio X X
Small Capitalization
Portfolio X X
International Equity
Portfolio X
<CAPTION>
PORTFOLIO PROPOSAL I.H. PROPOSAL II. PROPOSAL III.
<S> <C> <C> <C>
U.S. Government
Money Market
Portfolio X X
Municipal Bond
Portfolio X X
Investment Quality
Bond Portfolio X X
Large Capitalization
Value Portfolio X X
Large Capitalization
Growth Portfolio X X
Small Capitalization
Portfolio X X
International Equity
Portfolio X X X
</TABLE>
As of the close of business on the Record Date, the Trust had 36,706,686
Shares outstanding, allocated to the Portfolios as follows:
<TABLE>
<CAPTION>
NO. OF SHARES OUTSTANDING
PORTFOLIO ON RECORD DATE
<S> <C>
U.S. Government Money Market
Portfolio 27,267,556
Municipal Bond Portfolio 665,277
Investment Quality Bond
Portfolio 2,112,672
Large Capitalization Value
Portfolio 1,527,226
Large Capitalization Growth
Portfolio 2,498,333
Small Capitalization Portfolio 1,831,444
International Equity Portfolio 814,178
</TABLE>
3
<PAGE>
As of the Record Date, the following Shareholders held, as beneficial
owners, 5% or more of the Shares of the respective Portfolios listed below:
<TABLE>
<CAPTION>
PERCENTAGE
NAME AND ADDRESS AMOUNT AND NATURE OF
PORTFOLIO OF SHAREHOLDER OF BENEFICIAL OWNERSHIP PORTFOLIO
- -------------------------------- -------------------------------- -------------------------------- -----------
<S> <C> <C> <C>
Small Capitalization Portfolio American Medical Association 764,102.09(1) 42%
Pension Trust
515 North State Street
Chicago, IL 60610-4320
</TABLE>
- ------------------------
(1) Shareholder has sole voting and investment power with regard to listed
Shares.
To the knowledge of the Board, no other person owned beneficially on that
date as much as 5% of the outstanding Shares of any Portfolio.
As of the Record Date, the following Directors and Officers held, as
beneficial owners, Shares of the respective Portfolios listed below:
<TABLE>
<CAPTION>
PERCENT
NAME OF AMOUNT AND NATURE OF
PORTFOLIO BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PORTFOLIO
- -------------------------------- -------------------------------- -------------------------------- --------------
<S> <C> <C> <C>
U.S. Government Money Market Bruce E. Ventimiglia 344,798(1) 1.3%
Portfolio
</TABLE>
- ------------------------
(1) Shareholder has sole voting and investment power with regard to listed
Shares.
To the knowledge of the Board, no other Officer or Director owned
beneficially on that date 1% or more of the Shares of any Portfolio.
In the event that the applicable quorum (the presence in person or by proxy
of the holders of thirty percent (30%) of the Shares outstanding and entitled to
vote on a matter) has not been obtained, or in the event that insufficient
Shares for approval are represented at the Meeting in which a quorum is present,
an adjournment or adjournments of the Meeting may be sought by the persons named
as proxies. Any adjournment would require the affirmative vote of the holders of
a majority of the Shares present at the Meeting (or any adjournment thereof) in
person or by proxy and entitled to vote on the matter subject to the
adjournment. The persons named as proxies will vote all shares represented by
proxies which they are entitled to vote in favor of the proposals in favor of an
adjournment and will vote all Shares required to be voted against the proposals
against an adjournment.
Abstentions will be included for purposes of determining whether a quorum is
present at the Meeting and for purposes of calculating the vote but shall not be
deemed to have been voted in favor of such matters. Broker non-votes are shares
held in street name for which the broker indicates that instructions have not
been received from the beneficial owners or other persons entitled to vote and
for which the broker does not have discretionary voting authority. Broker
non-votes will be included for purposes of determining whether a quorum is
present at the Meeting, but will not be deemed to be represented at the Meeting
for purposes of calculating whether matters to be voted upon at the Meeting have
been approved.
It is anticipated that proxy solicitation will be made by mail and
telephone. Arrangements have been made for Shareholders to vote by either mail
or telephone. Arrangements have been made with brokers,
4
<PAGE>
custodians, nominees and fiduciaries to send proxy material to beneficial
owners. In addition, arrangements have been made with D.F. King & Co., Inc. an
independent shareholder communication firm, to assist in the solicitation of
proxies. D. F. King & Co., Inc. may call Shareholders to ask if they would like
to have their votes recorded by telephone. A telephone voting procedure has been
designed to authenticate Shareholders' identities, to allow Shareholders to
authorize the voting of their shares in accordance with their instructions and
to confirm that their instructions have been recorded properly. The Trust has
been advised by counsel that these procedures are consistent with the
requirements of applicable law. Shareholders voting by telephone would be asked
for their social security number or other identifying information and would be
given an opportunity to authorize proxies to vote their shares in accordance
with their instructions. To ensure that the Shareholders' instructions have been
recorded correctly, they will receive a confirmation of instructions in the
mail. A special toll-free number will be available in case the information
contained in the confirmation is incorrect. The expenses of the solicitation
(estimated to be $7,775) and meeting will be borne by Saratoga Capital
Management.
5
<PAGE>
PROPOSAL I.
<TABLE>
<S> <C>
I.A. APPROVAL OF A PROPOSED MANAGEMENT AGREEMENT
BETWEEN THE TRUST AND THE MANAGER
I.B., I.C., I.D., I.E., APPROVAL OF PROPOSED ADVISORY AGREEMENTS
I.F., I.G. AND I.H. BETWEEN THE MANAGER AND EACH OF THE ADVISORS
AND FOR INTERNATIONAL EQUITY PORTFOLIO,
BETWEEN THE ADVISOR AND THE SUB-ADVISOR
(THIS PROPOSAL APPLIES TO SHAREHOLDERS
OF EACH PORTFOLIO SEPARATELY AS INDICATED ABOVE)
</TABLE>
BACKGROUND
The Manager serves as manager to the Trust pursuant to the Existing
Management Agreement and, in turn, the Manager has entered into an Existing
Advisory Agreement with each Advisor selected for the Portfolios. Pursuant to
the Existing Management Agreement, the Manager, 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 each Advisor,
and makes recommendations to the Trustees with respect to the retention and
renewals of the Existing Advisory Agreements. The Manager is also responsible
for conducting all operations of the Trust except those operations contracted to
the Advisors, distributor, custodian, transfer agent and administrator. 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 Manager is a Delaware general partnership which is owned by certain
executives of the Manager (the "Individual Partners") and by Oppenheimer
Capital. Oppenheimer Capital, which is also the parent of OpCap, has been a
registered investment adviser since 1968, with total assets under management of
approximately $48.2 billion on December 31, 1996. Oppenheimer Financial Corp., a
holding company, is a general partner of the Sub-Adviser. Oppenheimer Financial
Corp. also holds a one-third 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 two-thirds interest. On February 13, 1997, PIMCO
Advisers L.P., a registered investment adviser with $110 billion in assets under
management through various subsidiaries, signed an Agreement and Plan of Merger
with Oppenheimer Group, Inc. ("OGI") and its subsidiary Oppenheimer Financial
Corp. pursuant to which PIMCO Advisers L.P. and its affiliate, Thomson Advisory
Group, Inc. ("TAG"), will acquire the one-third managing general partner
interest in Oppenheimer Capital, the general partnership interest in OpCap
Advisors, and the 1.0% general partner interest in Oppenheimer Capital L.P. (the
"Transaction") and OGI will be merged with and into TAG. The aggregate purchase
price is approximately $265 million in convertible preferred stock of TAG and
assumption of certain indebtedness. The amount of TAG preferred stock comprising
the purchase price is subject to reduction in certain circumstances. The
proposed Transaction is subject to certain conditions being satisfied prior to
closing, including consents from certain lenders, approvals from regulatory
authorities including the Internal Revenue Service and consents of clients,
which are expected to take up to six months to obtain.
The Individual Partners engaged in discussions with two individuals
otherwise unrelated to the Manager and the Trust, Mr. Ronald J. Goguen, Major
Drilling Group International Inc., 111 St. George
6
<PAGE>
Street - Suite 200, Moncton, New Brunswick, Canada EIC 177 and Mr. John Schiavi,
Schiavi Enterprises, 995 Main Street, Oxford, Maine 04270 (the "Purchasers"),
regarding a potential purchase of Oppenheimer Capital's interest in the Manager
by the Purchasers.
Mr. Goguen, a Canadian citizen, is a business entrepreneur and investor. He
is a stockholder, director and/or officer of a number of Canadian and U.S.
companies. In particular, Mr. Goguen is Director, President, Chief Executive
Officer and principal stockholder of Major Drilling Group International Inc.
("Major Drilling"), a Canadian-based contract drilling company whose shares are
traded on the Toronto Stock Exchange. As of December 31, 1996, Mr. Goguen owned
directly or indirectly 37% of the outstanding shares of Major Drilling. Major
Drilling is primarily a contract drilling company with operations in Canada, the
U.S., Central and South America. Revenues for the fiscal year ended April 30,
1996, were over 52 million Canadian dollars and net earnings were approximately
4 million Canadian dollars. As of February 13, 1997, the exchange rate for
Canadian dollars was approximately 0.74 U.S. dollars per Canadian dollar.
Mr. Schiavi is also a business entrepreneur and investor. He is President
and Chief Executive Officer of a holding company which owns commercial
construction companies, manufactured housing and health care entities. Mr.
Schiavi is also a director and directly owns 8.6% of Major Drilling.
The Purchasers were provided with information and materials prepared by the
Individual Partners, including a detailed business plan consisting of, among
other things, a description of the Manager's business, projected budgets and
other financial analyses and the Purchasers relied exclusively on information,
materials and representations by the Individual Partners in their considerations
regarding the Manager and the Trust and their decision to purchase Oppenheimer
Capital's interest in the Manager.
Oppenheimer Capital, the Individual Partners and the Purchasers have
executed a letter of intent and related documents (the "Transaction Documents")
to effect the Transaction, I.E., the purchase by the Purchasers of Oppenheimer
Capital's interest in the Manager. To date, Oppenheimer Capital has provided the
Manager with $5,889,145. The Purchasers will make initial capital contributions
to the Manager in the following manner: (a) $2.6 million in year one ($1.3
million in cash will be placed in escrow and an additional $1.3 million will be
guaranteed by an irrevocable letter of credit); (b) $2.6 million in year two and
$1 million in year three, each of which is unsecured. Pursuant to the
Transaction Documents, effective as of January 1, 1997, Oppenheimer Capital will
no longer provide additional funding to the Manager, but will continue to
provide administrative and distribution services to the Trust at no charge until
the date on which the Transaction is consummated (the "Closing Date"). The
Purchasers have agreed to provide any additional funding required by the Manager
for operations in the interim period from January 1, 1997 through the Closing
Date of the transaction.
The Transaction will be consummated only if Shareholders approve the
Proposed Agreements. If the Transaction is not consummated, the Existing
Agreements will remain in effect and the Board will consider what, if any,
alternative actions are appropriate. If the Proposed Agreements are approved and
the Transaction is thereafter consummated, the Proposed Agreements will be
executed and become effective on the day after such approval or disapproval. In
the event (i) the Proposed Management Agreement is not approved by each of the
Portfolio(s), the Proposed Management Agreement will be approved as to those
Portfolio(s) that voted in favor of the Proposed Management Agreement and the
Board will determine what action to take as to any Portfolio(s) that voted
against the Proposed Management Agreement; and (ii) any of the Proposed Advisory
Agreements is not approved, the Board will determine what action to take with
respect to any Portfolio(s) that voted against the Proposed Advisory Agreement.
In each of the
7
<PAGE>
above instances, any such action taken by the Board will be subject to the
approval of the appropriate Shareholders.
All of the parties to the Transaction have agreed that they will comply, and
use all reasonable efforts to cause compliance on behalf of their affiliates,
with the provisions of Section 15(f) of the Investment Company Act of 1940, as
amended (the "1940 Act"). Section 15(f) provides, in pertinent part, that an
investment adviser of an investment company and its affiliates may receive any
amount or benefit in connection with a sale of securities of, or a sale of any
other interest in, such investment adviser that results in an "assignment" of an
investment advisory contract as long as two conditions are met. First, no
"unfair burden" may be imposed on the investment company as a result of the
Transaction. The term "unfair burden", as defined in the 1940 Act, includes any
arrangement during the two-year period after the Transaction whereby the
investment adviser (or predecessor or successor investment adviser) or any
interested person of any such adviser receives or is entitled to receive any
compensation directly or indirectly from the investment company or its security
holders (other than fees for bona fide investment advisory or other services) or
from any person in connection with the purchase or sale of securities or other
property to, from, or on behalf of the investment company (other than fees for
bona fide principal underwriting services). No such compensation arrangements
are contemplated in connection with the Transaction.
The second condition is that, for a period of three years after the
Transaction occurs, at least 75% of the members of the board of directors of the
investment company advised by such adviser are not "interested persons" (as
defined in the 1940 Act) ("Independent Trustees") of the new or the old
investment adviser. The Board you are being asked to elect in Proposal II. meets
this 75% requirement.
The Individual Partners have advised the Trust that the Transaction does not
contemplate any changes in the individuals principally responsible for
overseeing the investment performance of each Advisor and for making
recommendations to the Trustees regarding the selection, retention, and or
termination of an Advisor.
The Individual Partners also advised the Board that the level of funding
contemplated to be provided by the Purchasers pursuant to the Transaction, will,
in their view, be sufficient to insure the Manager's continuing ability to
perform effectively its responsibilities to the Trust.
OpCap Advisors would, subsequent to the Transaction, continue its role as
Advisor to the Large Capitalization Value Portfolio and Municipal Bond
Portfolio. OCC Distributors and OpCap Advisors would discontinue their roles as
distributor and administrator, respectively, of the Trust. These services would
instead be furnished by Unified Management Corporation ("Unified Management")
and Unified Advisers, Inc. ("Unified Advisers"), respectively. Unified
Management would receive no fee from the Trust under the Distribution Agreement
for acting as distributor of the Trust. Unified Management would act as
Distributor and as Agent of the Trust for the sale and distribution of shares.
Pursuant to an Administration Agreement with the Trust, Unified Advisers (an
affiliate of Unified Management) would provide certain administrative services
(including administration and compliance services) necessary to operate the
Trust. As compensation for services provided under the Administration Agreement,
Unified Advisers would receive an annual fee, payable monthly, equal to 0.12% of
the average daily net asset value of the Trust or $234,000 ($19,500 per month),
whichever is the lesser amount.
The Individual Partners advised the Trust that the implementation of these
new arrangements will not result in any increase in the expenses of the Trust,
nor do they anticipate that their implementation will cause a reduction in the
quality of services furnished to the Trust.
8
<PAGE>
Based on the foregoing, the Individual Partners advised the Trust that, in
their view, the Transaction would not have any adverse effect on the operations
of the Trust or the Portfolios and that consummation of the Transaction was in
the best interests of the Trust and its Shareholders.
Each of the Existing Agreements, as required by Section 15 of the 1940 Act,
provides for its automatic termination in the event of its assignment. Any
change of control of the Manager and/or the Advisors is deemed to be an
assignment. Because Oppenheimer Capital's interest in the Manager will be
purchased by the Purchasers pursuant to the Transaction, there would be deemed a
change in control of the Manager. Such a change in control causes an automatic
termination of each of the Existing Agreements and necessitates affirmative
action by Shareholders of the Trust.
In order to assure continuity of investment advisory services to the
Portfolios, the Board met in person on December 18, 1996 and February 3, 1997
for the purpose of considering whether it would be in the best interests of the
Trust and its Shareholders to enter into the Proposed Agreements. At its
meetings, and for the reasons discussed below (see "The Board's Consideration"),
a majority of the Board, including a majority of the Independent Trustees,
approved each of the Proposed Agreements and recommended them for approval by
Shareholders of each Portfolio (except that one Independent Trustee voted
against the Proposed Agreements). If approved by Shareholders of a Portfolio,
each of the Proposed Agreements will become effective the day following the
Meeting.
THE BOARD'S CONSIDERATION
On December 18 and February 3, the Board of Trustees met to consider the
Transaction and its effect on the Trust and to evaluate the Proposed Agreements.
Present at the December 18 meeting to provide information regarding the
Transaction and to respond to questions from the Board of Trustees were
representatives of the Individual Partners of the Manager, representatives of
Oppenheimer Capital, John Schiavi (one of the Purchasers), and James Delamater,
a financial adviser to the Purchasers who is President and CEO of Northeast Bank
Corp. of Maine. At the February 3 meeting, only the Board of Trustees,
representatives of the Individual Partners and representatives of Oppenheimer
Capital were present.
In evaluating the Proposed Agreements, the Board reviewed various materials
that had been furnished by the Individual Partners prior to the meeting. These
materials included a proposed business plan for operating and distributing the
Trust subsequent to the Transaction and biographical and financial information
regarding the Purchasers.
John Schiavi discussed with the Trustees, among other things, his business
and financial background, the interest of the Purchasers in acquiring an
interest in the Manager, their philosophy of management, their expectations
respecting operations and their degree of commitment to the success of the
Manager.
The Trustees evaluated in particular the financial capability of the Manager
to continue to provide the necessary services to the Trust subsequent to the
Transaction. In this regard, the Trustees noted that the level of funding which
the Purchasers are contractually obligated to provide to the Manager over a
three-year period was established, based in large part, upon the Individual
Partners' revenue and expense projections and that to the extent these
projections proved inaccurate, the financial condition of the Manager would be
materially adversely affected absent increases in the level of funding or other
changes which might be necessary. The Trustees viewed as significant in this
regard John Schiavi's statements at the meeting respecting the Purchasers'
recognition of this risk and their willingness to address this situation, should
the need arise. The Trustees also took into account the fact that the
obligations of the Purchasers
9
<PAGE>
are personal obligations and that the obligations to provide financing during
the second and third year of operations of the Manager subsequent to
consummation of the Transaction are unsecured. Accordingly, the Board evaluated
carefully the background and financial condition of Messrs. Goguen and Schiavi
and all other factors it deemed relevant to evaluate the Purchasers' ability to
fulfill their obligations. In this regard the Trustees noted that the unsecured
element of the Purchasers' obligations arises only after the Purchasers already
have a significant financial stake in the financial success of the Manager.
In evaluating the Proposed Agreements with respect to each Portfolio, the
Board considered the nature, quality and extent of services provided and
expected to be provided by the Manager to the Trust and by each of the Advisors
to the Portfolio it serves, as well as the benefits derived by the Manager and
each Advisor. In addition, the Board discussed and reviewed the terms and
provisions of each of the Proposed Agreements. The Board noted that, other than
the dates of execution, effectiveness and termination and in the case of the
advisory agreement applicable to Small Capitalization Portfolio, the identity of
the Advisor (which will be Thorsell), the terms of each of the Proposed
Agreements are the same, in all material respects, as the terms of the
corresponding Existing Agreements. THE BOARD SPECIFICALLY NOTED THAT THE FEES
AND EXPENSES PAYABLE UNDER EACH OF THE PROPOSED AGREEMENTS ARE IDENTICAL TO THE
FEES AND EXPENSES PRESENTLY IN EFFECT UNDER THE CORRESPONDING EXISTING
AGREEMENTS.
With respect to the Small Capitalization Portfolio in particular, the Board
reviewed information concerning the proposed new Advisor's portfolio management
experience, investment style and investment performance. The Board specifically
noted Thorsell's stated commitment to provide the Manager and Small
Capitalization Portfolio with the same nature, quality and extent of services
currently provided to the Portfolio.
The Board also considered the proposed new arrangements for the furnishing
of distribution and administrative services to the Trust that previously have
been provided by OCC Distributors and OpCap Advisors and evaluated the
qualifications of Unified Management and Unified Advisors to provide the
services to be rendered under the proposed new Distribution Agreement and
Administration Agreement, respectively.
Based upon the Trustees' review and the evaluations of the materials they
received, and in consideration of all factors deemed relevant to them, a
majority of the Trustees determined that each of the Proposed Agreements is
fair, reasonable and in the best interests of the Trust, the Portfolios and
their Shareholders. ACCORDINGLY, A MAJORITY OF THE BOARD, INCLUDING A MAJORITY
OF THE INDEPENDENT TRUSTEES, APPROVED EACH OF THE PROPOSED AGREEMENTS AND VOTED
TO RECOMMEND THAT ALL OF THE TRUST SHAREHOLDERS VOTE TO APPROVE THE PROPOSED
MANAGEMENT AGREEMENT, AND THAT SHAREHOLDERS OF EACH PORTFOLIO VOTE TO APPROVE
THE PROPOSED ADVISORY AGREEMENT APPLICABLE TO THAT PORTFOLIO.
THE PROPOSED MANAGEMENT AND ADVISORY AGREEMENTS
If (i) Shareholders of each of the Portfolios approve the Proposed
Management Agreement and (ii) Shareholders of each Portfolio approve the
Proposed Advisory Agreement applicable to that Portfolio, the Proposed
Agreements will become effective immediately after consummation of the
Transaction.
10
<PAGE>
Each of the Proposed Agreements will remain in effect, unless earlier
terminated, for an initial term expiring two years from the Closing Date. As
previously discussed, the sole purpose of entering into the Proposed Management
Agreement and each of the Proposed Advisory Agreements is (i) to enable the
Manager to continue to serve as the manager to the Trust and (ii) to enable each
Advisor to serve as investment adviser (or sub-adviser, in the case of Ivory &
Sime plc) to the Portfolio which it serves (other than Small Capitalization
Portfolio, for which Thorsell will serve as Advisor instead of Axe-Houghton),
after termination of each of the Existing Agreements by virtue of the
"assignment" of such agreements that would result from the Transaction. OTHER
THAN THEIR RESPECTIVE EFFECTIVE AND TERMINATION DATES AND, IN THE CASE OF THE
PROPOSED ADVISORY AGREEMENT FOR SMALL CAPITALIZATION PORTFOLIO, THE IDENTITY OF
THE ADVISOR, THE MATERIAL TERMS AND PROVISIONS OF EACH OF THE PROPOSED
AGREEMENTS, ARE THE SAME, IN ALL SUBSTANTIVE RESPECTS, AS THOSE OF THE
CORRESPONDING EXISTING AGREEMENTS, EACH OF WHICH IS SUMMARIZED BELOW. FORMS OF
THE PROPOSED AGREEMENTS ARE ATTACHED AS EXHIBITS TO THIS PROXY STATEMENT.
THE EXISTING MANAGEMENT AGREEMENT
The Existing Management Agreement is dated and was unanimously approved on
July 25, 1994, by a vote cast in person by a majority of the Trust's Trustees,
including a majority of the Independent Trustees. On August 22, 1994, such
agreement was approved by the Manager, as the then sole shareholder of the
Trust, for an initial term expiring two years thereafter. The continuation of
the Existing Management Agreement until July 30, 1997, was approved by the
Trustees, including a majority of the Independent Trustees, at a meeting of the
Trustees held on July 30, 1996, called for the purpose of approving the Existing
Management Agreement.
The Existing Management Agreement may be continued from year to year as to
each Portfolio as long as each such continuance is approved at least annually by
the Board, or by a vote of the holders of a majority of the then-outstanding
voting securities (as defined below under "Vote Required") of the respective
Portfolio. Any such continuance also must be approved by a majority of the
Independent Trustees of the Trust at a meeting called for the purpose of voting
on such continuance. Upon sixty (60) days' written notice, the Existing
Management Agreement may be terminated with respect to one or more Portfolios
without penalty by the Board, or by vote of the holders of a majority of the
outstanding voting securities of the respective Portfolio, or by the Manager. As
discussed earlier, the Existing Management Agreement terminates automatically in
the event of its "assignment" under the 1940 Act.
Pursuant to the Existing Management Agreement, the Manager: (i) supervises
the Trust's investment program, including advising and consulting with the
Trustees and the Advisors regarding the overall investment strategy and makes
recommendations to the Trustees regarding the retention of the Advisors; (ii)
monitors the performance of the Trust's outside service providers, including the
Trust's administrator, transfer agent and custodian; (iii) pays salaries, fees
and expenses of such of the Trust's officers, Trustees or employees as are
directors, officers or employees of the Manager; (iv) selects advisers for each
Portfolio to: (a) make, in consultation with the Manager and the Trustees,
certain investment strategy decisions for the Portfolio, (b) manage the
investing and reinvesting of Portfolio assets, (c) place purchase and sale
orders on behalf of the Portfolio and (d) provide research and statistical data
to the Portfolio; (v) maintains a staff to furnish the services described to the
Trust and the Advisors; and (vi) retains officers and employees of the Trust,
subject to the discretion of the Board. Pursuant to the Existing Management
Agreement, the Manager shall bear all expenses arising out of its duties under
such Agreement. Except as otherwise provided in the Existing Management
Agreement, the Existing Advisory Agreements and the Trust's
11
<PAGE>
Administration Agreement with OpCap Advisors (the "Administration Agreement"),
the Trust shall be responsible for all the Trust's expenses and liabilities.
As compensation for its services, the Manager receives the fees set forth in
the table below payable by each Portfolio, expressed as a percentage of the
Portfolio's average daily net assets:
<TABLE>
<CAPTION>
PORTFOLIO FEE
- ---------------------------------------------------------------------------------------------------------- ---------
<S> <C>
U.S. Government Money Market Portfolio.................................................................... 0.475%
Municipal Bond Portfolio.................................................................................. 0.55%
Investment Quality Bond Portfolio......................................................................... 0.55%
Large Capitalization Value Portfolio...................................................................... 0.65%
Large Capitalization Growth Portfolio..................................................................... 0.65%
Small Capitalization Portfolio............................................................................ 0.65%
International Equity Portfolio............................................................................ 0.75%
</TABLE>
The fee is computed daily and payable monthly. During the fiscal year ended
August 31, 1996, the Trust accrued to the Manager management fees of $69,728,
$16,872, $59,739, $75,690, $149,335, $118,415 and $37,644, with respect to U.S.
Government Money Market Portfolio, Municipal Bond Portfolio, Investment Quality
Bond Portfolio, Large Capitalization Value Portfolio, Large Capitalization
Growth Portfolio, Small Capitalization Portfolio and International Equity
Portfolio, respectively. For the fiscal year ended August 31, 1996, the Manager
waived the management fees respecting each of the Portfolios other than Large
Capitalization Growth Portfolio and Small Capitalization Portfolio. With respect
to these two Portfolios, the Trust paid the Manager $73,649 and $11,866 of
management fees, respectively.
The Existing Management Agreement provides that the Manager shall not be
liable for any error of judgment or mistake of law or for any act or omission or
any loss suffered by the Trust in connection with the matters to which the
Agreement relates, except a loss resulting from willful misfeasance, bad faith,
gross negligence or reckless disregard of duty. In addition, under certain
circumstances, the Trust will indemnify the Manager against, and hold it
harmless from, any and all losses, liabilities or expenses.
THE EXISTING ADVISORY AGREEMENTS
Each of the Existing Advisory Agreements is dated and was approved on July
25, 1994 by the Trustees, including a majority of the Independent Trustees. On
August 22, 1994, the Manager, as the then sole shareholder of the Portfolios,
approved the Existing Advisory Agreements.
The continuation of the Existing Advisory Agreements until July 30, 1997 was
approved by the Trustees, including a majority of the Independent Trustees, at a
meeting of the Trustees held on July 30, 1996, called for the purpose of
approving the Existing Advisory Agreements. Each of the Existing Advisory
Agreements may be terminated at any time without penalty by the Manager, the
Board, a vote of a majority of the then-outstanding voting securities of the
respective Portfolio or by the applicable Advisor. Termination by the Advisor
requires at least one hundred (100) days' written notice to the Manager and to
the Trust.
Each of the Existing Advisory Agreements provides that each Advisor, with
respect to the Portfolio it advises, is obligated to manage the securities held
by the Portfolio in accordance with the Portfolio's stated
12
<PAGE>
investment objectives and policies, make investment decisions for the Portfolio
and place orders to purchase and sell securities on behalf of the Portfolio.
The Sub-Advisory Agreement provides that with respect to the International
Equity Portfolio, the Sub-Advisor is obligated to provide ISI (at ISI's
request), the Advisor for that Portfolio, with, among other things, investment
advice, statistical and research information and investment and reinvestment
management services. Under the agreement, the Sub-Advisor is required to meet
with ISI, at ISI's request (at least quarterly), to formulate investment
policies and consider acceptable securities for investment. For its services,
the Sub-Advisor receives under the Sub-Advisory Agreement seventy-eight percent
(78%) of the net income derived from the monthly fees paid by the Manager to ISI
pursuant to the Existing Advisory Agreement between the Manager and ISI. The
Sub-Advisory Agreement may be terminated upon sixty (60) days' written notice to
the Sub-Advisor by the Board, the Manager, ISI or by a vote of the majority of
the outstanding voting securities of the International Equity Portfolio.
Termination by the Sub-Advisor requires one hundred fifty (150) days' written
notice to ISI and the Manager.
As compensation for its services, each Advisor, pursuant to each Existing
Advisory Agreement, receives the fees set forth below based on the average net
assets of the Portfolio to which it serves:
<TABLE>
<CAPTION>
PORTFOLIO ADVISOR FEE RATE
- ------------------------------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
U.S. Government Money Market Portfolio............................................... Sterling .125%
Municipal Bond Portfolio............................................................. OpCap .20%
Investment Quality Bond Portfolio.................................................... Fox .20%
Large Capitalization Value Portfolio................................................. OpCap .30%
Large Capitalization Growth Portfolio................................................ Harris Bretall .30%
Small Capitalization Portfolio....................................................... Axe-Houghton .30%
International Equity Portfolio....................................................... ISI .40%
</TABLE>
The foregoing fees are computed daily and paid monthly. During the fiscal
year ended August 31, 1996, the Manager paid each Advisor advisory fees, as
follows:
<TABLE>
<CAPTION>
ADVISORY FEE
ADVISOR PAID DURING 1996
- ------------------------------------------------------------------------------------------------ ----------------
<S> <C>
Sterling........................................................................................ $ 18,350
OpCap (with respect to the Municipal Bond Portfolio)............................................ 6,135
Fox............................................................................................. 21,723
OpCap (with respect to the Large Capitalization Value Portfolio)................................ 34,934
Harris Bretall.................................................................................. 68,924
Axe-Houghton.................................................................................... 54,653
ISI............................................................................................. 20,077
</TABLE>
With respect to each of the Existing Advisory Agreements, the fees are paid
by the Manager; or in the case of the Sub-Advisory Agreement, the fees are paid
by the Advisor; and, in no case, by the Portfolios or their Shareholders.
Each of the Advisory Agreements (other than the Sub-Advisory Agreement)
provides that the Advisor shall not be liable for any investment loss suffered
by the respective Portfolio in connection with matters to
13
<PAGE>
which each agreement relates, except in the case of the Advisor's negligence,
misconduct or violation of any applicable statute. The Sub-Advisory Agreement
provides that the Sub-Advisor shall not be liable for the services provided to
ISI, except in the case of its willful misfeasance, bad faith, negligence,
reckless disregard of duty or breach of fiduciary duty involving personal
misconduct.
OTHER INFORMATION
SARATOGA CAPITAL MANAGEMENT. The Manager is a Delaware general partnership
with its offices at 33 Maiden Lane, New York, NY 10038. The Manager is owned by
certain of its executives and by Oppenheimer Capital, which is also the parent
of OpCap. SCHEDULE A to this proxy statement is a schedule of the directors and
principal executive officer of the Manager.
Information with respect to each of the Advisors is set forth below:
STERLING CAPITAL MANAGEMENT COMPANY. Sterling, a registered investment
adviser, is 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 Corporation and provides investment management services to
institutions and individuals. As of December 31, 1996, Sterling had
approximately $1.7 billion in assets under management. The address of United
Asset Management Corporation is One International Place, Boston, MA 02110.
SCHEDULE B to this proxy statement contains additional information regarding
Sterling.
FOX ASSET MANAGEMENT, INC. Fox, a registered investment adviser, is located
at 44 Sycamore Avenue, Little Silver, NJ 07739. As of December 31, 1996, Fox's
assets under management were approximately $3.2 billion. Fox is owned by its
current employees, with a controlling interest (approximately 80%) held by J.
Peter Skirkanich. The address of Mr. Skirkanich is that of Fox. SCHEDULE C to
this proxy statement contains additional information regarding Fox.
OPCAP ADVISORS. OpCap, a registered investment adviser, is located at One
World Financial Center, New York, NY 10281. OpCap is a subsidiary of Oppenheimer
Capital. Oppenheimer Capital owns a 99% interest in OpCap and Oppenheimer
Financial Corp. owns a 1% interest. Oppenheimer Financial Corp. holds a 33%
interest in Oppenheimer Capital, and Oppenheimer Capital, L.P., of which
Oppenheimer Financial Corp. is the sole general partner, owns the remaining 67%
interest. Oppenheimer Financial Corp. is owned by Oppenheimer Group, Inc.
Oppenheimer & Co., L.P. owns 100% of the common stock of Oppenheimer Group, Inc.
As of December 31, 1996, OpCap had assets under management of approximately
$48.2 billion. The address of Oppenheimer Capital, Oppenheimer Capital, L.P.,
Oppenheimer Financial Corp., Oppenheimer Group, Inc. and Oppenheimer & Co., L.P.
is One World Financial Center, New York, NY 10281. OpCap also acts as the
Trust's Administrator pursuant to the Administration Agreement with the Trust
and will continue to act as such until the Closing Date. For the fiscal year
ended August 31, 1996, each Portfolio accrued $42,000 in administrative fees.
OCC Distributors, an affiliate of OpCap, acts as the Trust's Distributor and
will continue to act as such until the Closing Date. OCC Distributors is located
at Two World Financial Center, 16th Floor, New York, NY 10281. SCHEDULE D to
this proxy statement contains additional information regarding OpCap.
HARRIS BRETALL SULLIVAN & SMITH, INC. Harris Bretall, a registered
investment adviser, is located at One Sansome Street, Suite 3300, San Francisco,
CA 94104. Harris Bretall is owned by W. Graeme Bretall, John J. Sullivan and
Henry Smith. The address of each of the foregoing persons is that of Harris
Bretall. As of December 31, 1996, the firm had approximately $2.8 billion in
assets under management. SCHEDULE E to this proxy statement contains additional
information regarding Harris Bretall.
14
<PAGE>
THORSELL, PARKER PARTNERS, INC Thorsell, a registered investment adviser,
is located at 265 Post Road West, Westport, Connecticut 06880. As of December
31, 1996, the firm had approximately $316 million of assets under management.
Thorsell is owned by its current employees with a controlling interest
(approximately 70%) held by Richard L. Thorsell. The address of each of the
foregoing persons is that of Thorsell. SCHEDULE F to this proxy statement
contains additional information regarding Thorsell.
AXE-HOUGHTON ASSOCIATES, INC. Axe-Houghton, a registered investment
adviser, is located at Royal Executive Park, 4 International Drive, Rye Brook,
NY 10573. As of December 31, 1996, the firm had approximately $4.3 billion of
assets under management. Axe-Houghton is a wholly owned subsidiary of Hoenig
Group, Inc. ("Hoenig"). The address of Hoenig is that of Axe-Houghton. SCHEDULE
G to this proxy statement contains additional information regarding
Axe-Houghton.
IVORY & SIME INTERNATIONAL, INC. ISI, a registered investment adviser, is
located at 39 Main Street, Chatham, NJ 07928. Twenty-five percent of ISI's
voting stock is owned by Jamison, Eaton & Wood, Inc. ("Jamison") and 75% is
owned by the Sub-Advisor. The address of Jamison is that of ISI. As of December
31, 1996, ISI and its affiliated companies had approximately $6.4 billion in
assets under management. SCHEDULE H to this proxy statement contains information
regarding ISI.
IVORY & SIME PLC. Ivory & Sime plc is located at 1 Charlotte Square,
Edinburgh Scotland, EH24DZ. Ivory & Sime plc is a public company, which is
approximately 29.3% owned by Caledonia Investments plc as of December 31, 1996.
The address of Caledonia Investments is Cayzer House, 1 Thomas More Street,
London E1 9AR. SCHEDULE I to this proxy statement contains additional
information regarding Ivory & Sime plc.
VOTE REQUIRED. As provided under the 1940 Act, approval of the Proposed
Management Agreement will require the affirmative vote of a majority of the
outstanding Shares of each Portfolio voting separately as a class and approval
of each of the Proposed Advisory Agreements will require the affirmative vote of
a majority of the outstanding Shares of each Portfolio, voting separately as a
class. Such a majority is defined in the 1940 Act as the lesser of: (a) 67% or
more of the shares present at such meeting, if the holders of more than 50% of
the outstanding shares of each Portfolio are present or represented by proxy, or
(b) more than 50% of the total outstanding shares of each Portfolio.
A MAJORITY OF THE TRUSTEES, INCLUDING A MAJORITY OF THE INDEPENDENT
TRUSTEES, RECOMMEND THAT ALL OF THE TRUST'S SHAREHOLDERS VOTE TO APPROVE THE
PROPOSED MANAGEMENT AGREEMENT BETWEEN THE TRUST AND THE MANAGER AND THAT
SHAREHOLDERS OF EACH PORTFOLIO VOTE TO APPROVE THE PROPOSED ADVISORY AGREEMENT
APPLICABLE TO THAT PORTFOLIO.
15
<PAGE>
ADDITIONAL INFORMATION
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 August 31, 1995 and for the year ended August
31, 1996 to Hoenig, which is an affiliated person of Axe-Houghton, and
Oppenheimer & Co., Inc. ("Opco"), which is an affiliated person of OpCap.
<TABLE>
<CAPTION>
BROKERAGE COMMISSIONS TOTAL AMOUNT OF
PAID TO HOENIG TRANSACTIONS WHERE
-------------------------------------- BROKERAGE
TOTAL COMMISSIONS
BROKERAGE PAID TO HOENIG
COMMISSIONS DOLLAR -------------------------
NAME OF PORTFOLIO PERIOD PAID AMOUNTS % DOLLAR AMOUNT %
- ------------------------------------- ---------------------- -------------- ----------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Small Capitalization Portfolio....... 9/02/94-8/31/95 $ 14,454 $ 5,860 40.5% $ 3,086,778 41.4%
Year Ended 8/31/96 17,848 40 0.2% 31,240 0.4%
Investment Quality Bond Portfolio*... 9/2/94-8/31/95 567 188 33.2% 402,109 53.5%
Year Ended 8/31/96 965 500 51.8% 1,486,691 54.1%
</TABLE>
- ------------------------
* Most transactions for the Investment Quality Bond Portfolio are on a
principal basis; however transactions with Hoenig are on an agency basis
since principal transactions between the Portfolio and an affiliated broker
are restricted by the 1940 Act.
<TABLE>
<CAPTION>
BROKERAGE COMMISSIONS TOTAL AMOUNT OF
PAID TO OPCO TRANSACTIONS WHERE
-------------------------------------- BROKERAGE COMMISSIONS
TOTAL
BROKERAGE PAID TO OPCO
COMMISSIONS DOLLAR -------------------------
NAME OF PORTFOLIO PERIOD PAID AMOUNT % DOLLAR AMOUNT %
- --------------------------------------- ---------------------- -------------- ----------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Large Capitalization Value Portfolio... 9/2/94-8/31/95 $ 8,087 $ 5,953 73.6% $ 3,923,454 77.3%
Year Ended 8/31/96 15,975 6,138 38.4% 5,356,688 42.5%
Small Capitalization Portfolio......... 9/2/94-8/31/85 14,454 578 4.0% 169,191 2.3%
Year Ended 8/31/96 17,848 180 1.0% 104,884 1.3%
</TABLE>
16
<PAGE>
PROPOSAL II: ELECTION OF TRUSTEES OF THE TRUST
All of the parties to the Transaction have agreed that they will comply and
use all reasonable efforts to cause compliance with the provisions of Section
15(f) of the 1940 Act. Section 15(f) provides, in pertinent part, that an
investment adviser and its affiliates may receive any amount or benefit in
connection with the sale of such investment adviser which results in an
assignment of an investment advisory contract if (1) for a period of three years
after the time of such event, at least 75% of the members of the board of
directors of the investment company which it advises are not "interested
persons" (as defined in the 1940 Act) of the new or old investment adviser, and
(2) during the two-year period after the date on which the transaction occurs,
there is no "unfair burden" imposed on the investment company as a result of the
transaction. For this purpose, "unfair burden" is defined to include any
arrangement during the two-year period after the transaction whereby the
investment adviser or predecessor or successor investment advisers, or any
interested person of any such adviser, receives or is entitled to receive any
compensation directly or indirectly (i) from any person in connection with the
purchase or sale of securities or other property to, from, or on behalf of the
investment company other than bona fide ordinary compensation as principal
underwriter for such company, or (ii) from the investment company or its
security holders for other than bona fide investment advisory or other services.
No compensation arrangements of the types described above are contemplated in
the proposed transaction. The composition of the Board of Trustees of the Trust
will be in compliance with the 75% requirement if all nominees named in this
Proposal II are elected.
A majority of the Board (one Independent Trustee abstained) is recommending
the election of two of the current Trustees, Mr. Patrick H. McCollough, an
Independent Trustee, and Mr. Bruce E. Ventimiglia (who would become Chairman of
the new Board). In addition, a majority of the Board is recommending the
election of Messrs. Floyd E. Seal and Udo W. Koopmann, who would be Independent
Trustees of the Trust. Messrs. Joseph M. La Motta, Lacy B. Herrmann and George
Loft are not standing for re-election and, upon the consummation of the
Transaction, will resign. Accordingly, if all four nominees are elected, three
of the four Trustees (75%) would be Independent Trustees of the Trust.
The persons named as attorneys-in-fact in the enclosed proxy have advised
the Trust that unless a proxy instructs them to withhold authority to vote for
all listed nominees or for any individual nominee, they will vote all validly
executed proxies for the election of the nominees named below. All of the
nominees have consented to being named in this proxy statement and to serve, if
elected, and no circumstances now known will prevent any of the nominees from
serving. If any nominee should be unable or unwilling to serve, the proxy will
be voted for a substitute nominee proposed by the present Trustees or, in the
case of an Independent Trustee nominee, by the Independent Trustees.
17
<PAGE>
Set forth below is information concerning the nominees for Trustee to be
elected at this Meeting:
<TABLE>
<CAPTION>
TRUSTEE NUMBER OF
OR TRUST SHARES
EXECUTIVE BENEFICIALLY
OFFICER OWNED DIRECTLY
POSITION, IF ANY, WITH THE TRUST, OF OR INDIRECTLY
PRINCIPAL OCCUPATION AND BUSINESS THE TRUST ON FEBRUARY
NAME AND AGE EXPERIENCE (DURING PAST FIVE YEARS) SINCE 27, 1997(1)
- -------------------------------------- --------------------------------------------- --------- --------------
<S> <C> <C> <C>
Bruce E. Ventimiglia* President and Trustee of the Trust. Chairman, 1994 362,754
Two World Financial Center President and Chief Executive Officer of
New York, NY 10080-6116 the Manager; Senior Vice President of
Age 41 Oppenheimer Capital and OpCap Advisors
since 1992; prior thereto, Senior Vice
President of Prudential Securities, Inc.
Patrick H. McCollough(2) Trustee of the Trust. Partner with the law 1994 22,025
One Michigan Avenue Building firm of Cawthorne, McCollough & Cavanagh
120 North Washington Square since 1987; prior thereto, Michigan State
Lansing, MI 48933 Senator.
Age 54
Floyd E. Seal Chief Executive Officer and 50% owner of 0
1650 Cox Road TARAHILL, INC., d.b.a. Pet Goods
Roswell, GA 30075 Manufacturing & Imports, Alpharetta, GA;
Age 47 partner of S&W Management, Gwinnett, GA.
Udo W. Koopmann Chief Financial and Administrative Executive 0
175 East Broadway of the North American subsidiary of
Roslyn, NY 11576 Klockner and Company AG, a multi-national
Age 55 company; member of National Committee of
Steel Service Centre Institute.
</TABLE>
- ------------------------
(1) As interpreted by the Securities and Exchange Commission, a security is
beneficially owned by a person if that person has or shares voting power or
investment power with respect to the security. The persons listed have
partial or complete voting and "investment power" with respect to their
respective Portfolio shares.
(2) Member of Audit Committee.
* Because of his affiliation with the Trust, the Manager, or the Advisors, or
with companies affiliated with such entities, this individual is deemed to
be an "interested person" of the Trust as that term is defined in the 1940
Act.
18
<PAGE>
The audit committee, consisting of all of the Independent Trustees, meets
periodically with the Trust's independent accountants and the executive officers
of the Trust. This committee reviews the accounting principles being applied by
the Trust in financial reporting, the scope and adequacy of internal controls,
the responsibilities and fees of the independent accountants and other matters.
All of the recommendations of the audit committee are reported to the full
Board. During the past fiscal year, the Board met 4 times, the audit committee
met 2 times. During the Trust's last fiscal year, each current Trustee who is
standing for reelection attended 75% or more of the aggregate of the Board
meetings and meetings of the committees of the Board on which he served. The
Trust has no nominating or compensation committee.
All officers of the Trust are officers of the Manager or Oppenheimer Capital
and receive no salary or fee from the Trust. Currently, 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 Independent Trustees 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
Independent Trustees will be paid an annual fee if $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 for the year ended August 31, 1996 and the aggregate
compensation paid to each of the Trustees by all of the Portfolios in the Fund
Complex of OpCap Advisors during each such Portfolio's 1996 fiscal year.
<TABLE>
<CAPTION>
PENSION/ TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM THE
ACCRUED AS ANNUAL TRUST AND THE
AGGREGATE PART OF BENEFITS FUND COMPLEX
COMPENSATION TRUST UPON OF OPCAP
NAME OF TRUSTEE FROM THE TRUST EXPENSES RETIREMENT ADVISORS
- -------------------------------------------------------- --------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Lacy Herrmann........................................... $ 788 0 0 $ 74,650
Joseph La Motta......................................... 0 0 0 0
George Loft............................................. 788 0 0 81,350
Patrick McCollough...................................... 788 0 0 788
Bruce Ventimiglia....................................... 0 0 0 0
</TABLE>
Mr. Herrmann earned trustees' or directors' fees with respect to 16
investment companies and Mr. Loft earned trustees' or directors' fees with
respect to 17 investment companies, 10 of which are no longer part of OpCap
Advisors' Fund Complex. In addition, Mr. Herrmann served as director or trustee
with respect to 12 investment companies in the Fund Complex of OpCap and Mr.
Loft served as director or trustee with respect to 13 investment companies in
that Fund Complex for which they received no fees. For purposes of this
paragraph, a portfolio of an investment company, organized in series form is
considered to be an investment company.
The following table sets forth, with respect to executive officers of the
Trust who are not also Trustees, their position with the Manager and its
affiliates, the year in which they first became an executive officer of the
Trust, their current age and a brief account of their business experience during
the past five years:
Maria Camacho, Assistant Secretary since 1994, Age 42
Assistant Vice President of Oppenheimer Capital since 1994 and
Registrations Department Administrator with Oppenheimer Capital since
1989; Assistant Secretary of OCC Cash Reserves, Inc., an open-end
investment company.
19
<PAGE>
Thomas E. Duggan, Assistant Secretary since 1994, Age 52
General Counsel and Secretary of Oppenheimer Capital and OpCap Advisors;
Secretary of Quest for Value Dual Purpose Fund, Inc., a closed-end
investment company; Assistant Secretary of OCC Cash Reserves, Inc., an
open-end investment company.
Deborah Kaback, Secretary since 1994, Age 45
Senior Vice President of Oppenheimer Capital; Secretary of OCC Cash
Reserves, Inc. and OCC Accumulation Trust, open-end investment companies;
and Assistant Secretary of Oppenheimer Quest Capital Value Fund, an
open-end investment company.
Scott Kane, Vice President since 1994, Age 37
Managing Director and Chief Financial Officer of the Manager since 1994;
prior thereto, Vice President of Prudential Securities, Inc.
Richard Peteka, Assistant Treasurer since 1996, Age 35
Vice President of Oppenheimer Capital; Assistant Treasurer of OCC Cash
Reserves, Inc. and OCC Accumulation Trust, open-end investment companies,
and Oppenheimer Quest Capital Value Fund, an open-end investment company.
Sheldon M. Siegel, Treasurer since 1994, Age 54
Managing Director and Treasurer of Oppenheimer Capital; Treasurer of OpCap
Advisors; Treasurer of OCC Cash Reserves, Inc. and OCC Accumulation Trust,
open-end investment companies, and Oppenheimer Quest Capital Value Fund,
an open-end investment company.
Stephen Ventimiglia, Vice President since 1994, Age 40
Vice Chairman and Chief Investment Officer of the Manager; prior thereto,
First Vice President and Senior Portfolio Manager of Prudential
Securities, Inc.
The address of each of the foregoing officers is that of the Trust.
Mr. Siegel and Mr. Duggan hold, respectively, a general partnership and a
limited partnership interest in Oppenheimer & Co., L.P.
Upon the Closing, it is anticipated that the foregoing officers, except for
Messrs. B. Ventimiglia, S. Ventimiglia and S. Kane, will resign and that a new
slate of officers will be proposed for election to the Trustees.
VOTE REQUIRED
The Trustees must be elected by a majority of the votes present at the
Meeting in person or by proxy and entitled to vote, provided a quorum is
present.
A MAJORITY OF THE TRUSTEES RECOMMEND THAT THE TRUST'S SHAREHOLDERS VOTE TO
ELECT ALL OF THE NOMINEES LISTED ABOVE.
20
<PAGE>
PROPOSAL III: RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Trustees of the Trust, including a majority of its Independent Trustees,
have selected KPMG Peat Marwick LLP ("KPMG") to continue to serve as independent
accountants of the Trust for the fiscal year ending August 31, 1997, subject to
ratification by the Shareholders. This firm has no direct financial interest or
material indirect financial interest in the Trust. Representatives of this firm
are not expected to attend the Meeting, but have been given the opportunity to
make a statement if they so desire, and will be available should any matter
arise requiring their presence.
The following summarizes KPMG's audit services for the fiscal year ended
August 31, 1996: audit of annual financial statements; preparation of the
Trust's federal and state income tax returns; preparation of the Trust's federal
excise tax return; consultation with the Trust's audit committee; and routine
consultation on financial accounting and reporting matters.
The Board authorizes all services performed by KPMG on behalf of the Trust.
In addition, the Board annually reviews the scope of services to be provided by
KPMG and considers the effect, if any, that performance of any non-audit
services might have on audit independence.
An audit committee, consisting of the Independent Trustees, meets
periodically with the Trust's independent accountants to review accounting and
reporting requirements.
VOTE REQUIRED
The ratification of the selection of the independent accountants must be
approved by a majority of the shares present at the Meeting in person or by
proxy and entitled to vote, provided a quorum is present.
THE TRUSTEES RECOMMEND THAT THE TRUST'S SHAREHOLDERS VOTE IN FAVOR OF
PROPOSAL III.
OTHER BUSINESS
The management of the Trust has no business to bring before the Meeting
other than the matters described above. Should any other business be presented
at the Meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS
The Trust does not hold annual meetings of Shareholders. Shareholders
wishing to submit proposals for inclusion in a proxy statement and form of proxy
for a subsequent Shareholders' meeting should send their written proposals to
the Secretary of the Trust, Two World Financial Center, New York, New York
10080. The Trust has not received any Shareholder proposals to be presented at
this Meeting.
By Order of the Board of Trustees,
/s/ Bruce E. Ventimiglia
Bruce E. Ventimiglia
March 20, 1997 President
21
<PAGE>
SCHEDULE A
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF SARATOGA CAPITAL MANAGEMENT:
<TABLE>
<CAPTION>
NAME POSITION WITH THE MANAGER AND PRINCIPAL OCCUPATION
- --------------------------------------------------------- ------------------------------------------------------
<S> <C>
Bruce E. Ventimiglia(1)(2)............................... Chairman, President, Chief Executive Officer and
Director
Stephen Ventimiglia(2)................................... Chief Investment Officer and Director
Scott Kane............................................... Chief Financial Officer and Director
</TABLE>
- ------------------------
(1) Mr. Ventimiglia also serves as Trustee to the Trust.
(2) These individuals are brothers.
The address of each of the above-named individuals is 33 Maiden Lane, New
York, NY 10038.
<PAGE>
SCHEDULE B
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF STERLING CAPITAL MANAGEMENT
COMPANY:
<TABLE>
<CAPTION>
NAME POSITION WITH THE ADVISOR AND PRINCIPAL OCCUPATION
- --------------------------------------------------------- ------------------------------------------------------
<S> <C>
W. Olin Nisbet, III...................................... Chairman, Chief Executive Officer and Director
Mark W. Whalen........................................... President and Director
David M. Ralston......................................... Executive Vice President, Chief Investment Officer and
Director
J. Calvin Rivers, Jr..................................... Executive Vice President/NCCMT and Director
</TABLE>
The address of each of the above named individuals is One First Union
Center, 301 S. College Street, Suite 3200, Charlotte, NC 28202-6005.
The registered investment companies listed below are managed by Sterling
Capital Management Company and have similar investment objectives to at least
one of the Portfolios:
<TABLE>
<CAPTION>
APPROXIMATE ASSETS (AS OF ADVISORY
FUND 12/31/96) FEE RATE
- --------------------------------------------------------------------- -------------------------------- -----------
<S> <C> <C>
Sterling Partners' Balanced Fund..................................... $ 60,044,165 0.75%
Sterling Partners' Equity Fund....................................... $ 37,550,543 0.75%
Sterling Partners' Short-Term Fund................................... $ 25,563,708 0.55%
</TABLE>
<PAGE>
SCHEDULE C
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF FOX ASSET MANAGEMENT, INC.:
<TABLE>
<CAPTION>
NAME POSITION WITH ADVISOR AND PRINCIPAL OCCUPATION
- --------------------------------------------------------- ------------------------------------------------------
<S> <C>
J. Peter Skirkanich...................................... President
John W. Liang............................................ Managing Director
Paul A. Stach............................................ Managing Director
Russell S. Tompkins...................................... Managing Director
</TABLE>
The address of each of the above named individuals is 44 Sycamore Avenue,
Little Silver, NJ 07739.
The registered investment company listed below is managed by Fox Asset
Management, Inc. and has similar investment objectives to at least one of the
Portfolios:
<TABLE>
<CAPTION>
APPROXIMATE NET ASSETS
FUND (AS OF 12/31/96) ADVISORY FEE RATE
- -------------------------------------------------------- ---------------------- --------------------------------
<S> <C> <C>
Prudential Bank and Trust Balanced Portfolio of $ 38,000,000 .30% for portion of portfolio
Prudential Bank and Trust Company Retirement Trust invested in equity securities
Asset Allocation Fund .25% for portion of portfolio
invested in fixed income
securities
</TABLE>
<PAGE>
SCHEDULE D
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF OPCAP ADVISORS:
<TABLE>
<CAPTION>
NAME POSITION WITH ADVISOR AND PRINCIPAL OCCUPATION
- --------------------------------------------------------- ------------------------------------------------------
<S> <C>
Bernard H. Garil......................................... President and Chief Operating Officer
Sheldon Siegel........................................... Treasurer
Thomas E. Duggan......................................... General Counsel and Secretary
</TABLE>
The address of each of the above named individuals is One World Financial
Center, New York, NY 10281.
The registered investment companies listed below are managed by OpCap
Advisors and have similar investment objectives to at least one of the
Portfolios:
<TABLE>
<CAPTION>
APPROXIMATE NET ASSETS
FUND (AS OF 1/15/97) ADVISORY FEE RATE
- ---------------------------------------- ---------------------- ------------------------------------------------
<S> <C> <C>
Oppenheimer Quest Value Fund, Inc.(1) $ 637,100,000 1.0% on the first $400 million;
.90% on the next $400 million;
.85% of net assets in excess of $800 million
Oppenheimer Quest Small Cap Value $ 160,000,000 1.0% on the first $400 million;
Fund(1) .90% on the next $400 million;
.85% of net assets in excess of $800 million
Oppenheimer Quest Opportunity Value $ 2,145,800,000 1.0% on the first $400 million;
Fund(1) .90% on the next $400 million;
.85% of net assets in excess of $800 million
Growth and Income Value Fund $ 70,500,000 .85% of net assets
Oppenheimer Quest Global Value Fund, $ 256,200,000 .75% on the first $400 million;
Inc.(1) .70% on the next $400 million;
.65% of net assets in excess of $800 million
Oppenheimer Quest Officers Value $ 11,100,000 1.0% of its daily net assets
Fund(1)(2)
Quest for Value Dual Purpose Fund $ 880,500,000 (3)
Municipal Advantage Fund $ 156,100,000 .36%
The Czech Republic Fund $ 90,900,000 .40%
Enterprise Accumulation Trust:
Equity Portfolio $ 319,700,000 .40%
Managed Portfolio $ 1,972,000,000 .40%
Enterprise Group of Funds Managed $ 221,200,000 .40%
Portfolio
Penn Series Funds, Inc.:
Value Small Cap Fund $ 16,400,000 .50%
Value Equity Fund $ 202,900,000 .50%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE NET ASSETS
FUND (AS OF 1/15/97) ADVISORY FEE RATE
- ---------------------------------------- ---------------------- ------------------------------------------------
Endeavor Series Trust:
<S> <C> <C>
Opportunity Value Equity Portfolio $ 128,700,000 .40%
Opportunity Value Small Cap Portfolio $ 797,500,000 .40%
OCC Accumulation Trust:
Equity Portfolio $ 20,000,000 .80% on the first $400 million;
.75% on the next $400 million;
.70% of net assets in excess of $800 million
Small Cap Portfolio $ 34,900,000 .80% on the first $400 million; .75% on the next
$400 million; .70% of net assets in excess of
$800 million
Global Equity Portfolio $ 17,300,000 .80% on the first $400 million;
.75% on the next $400 million;
.70% of net assets in excess of $800 million
Managed Portfolio $ 83,900,000 .80% on the first $400 million;
.75% on the next $400 million;
.70% of net assets in excess of $800 million
Bond Portfolio $ 2,400,000 .50%
U.S. Government Income Portfolio $ 3,400,000 .60%
Money Market Portfolio $ 5,300,000 .40%
</TABLE>
- ------------------------
(1) With respect to each of these funds, Oppenheimer Funds, Inc. ("OFI") is the
investment adviser and OpCap Advisors is the sub-adviser. OFI pays OpCap
Advisors monthly an annual fee based on the average daily net assets of the
fund equal to 40% of the advisory fee collected by OFI based on the total
net assets of the fund as of November 22, 1995 (the "base amount") plus 30%
of the investment advisory fee collected by OFI based on the total net
assets of the fund that exceed the base amount.
(2) OFI's advisory fee for the Oppenheimer Quest Officers Value Fund is 1.00%.
However, effective August 1, 1996, OFI is waiving the portion of its
management fee equal to what OFI would have been required to pay OpCap as
the sub-advisory fee and OpCap has agreed to waive its sub-advisory fee.
(3) OpCap currently provides investment advisory services to the fund for a fee
of .75% on assets up to $200 million and .50% on assets over $200 million.
Effective February 28, 1997, OFI will become the manager of the fund and
will be paid a fee at the rate of 1.00% of the first $400 million of assets,
.90% of the next $400 million of net assets and .85% of assets over $800
million. OFI will pay OpCap a sub-advisory fee equal to 40% of the net
advisory fee calculated by OFI for the fund based on the total net assets of
the fund as of February 28, 1997 and remaining 120 days later (the "base
amount") plus 30% of the investment advisory fee collected by OFI based on
the total net assets that exceed the base amount.
<PAGE>
SCHEDULE E
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF HARRIS BRETALL SULLIVAN & SMITH,
INC.:
<TABLE>
<CAPTION>
NAME POSITION WITH ADVISOR AND PRINCIPAL OCCUPATION
- --------------------------------------------------------- ------------------------------------------------------
<S> <C>
W. Graeme Bretall........................................ President, Director and Portfolio Manager
John J. Sullivan......................................... Treasurer, Director and Portfolio Manager
Henry B. Dunlap Smith.................................... Secretary, Director and Portfolio Manager
</TABLE>
The address of each of the above named individuals is One Sansome Street,
Suite 3320, San Francisco, CA 94104.
<TABLE>
<CAPTION>
APPROXIMATE NET ASSETS ADVISORY
FUND (AS OF 12/31/96) FEE RATE
- ----------------------------------------- ---------------------- ---------
<S> <C> <C>
Harris Bretall Sullivan & Smith, Inc. $3,000,000 .75%
Growth Equity Fund
</TABLE>
<PAGE>
SCHEDULE F
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS OF THORSELL, PARKER PARTNERS, INC.:
<TABLE>
<CAPTION>
NAME POSITION WITH THORSELL AND PRINCIPAL OCCUPATION
- --------------------------------------------------------- ------------------------------------------------------
<S> <C>
Richard L. Thorsell...................................... Managing Partner, Director and Chief Investment
Officer
Lewis W. Parker.......................................... Managing Partner, Director and Research Analyst
</TABLE>
The address of each of the above named individuals is 265 Post Road West,
Westport, CT 06880.
<PAGE>
SCHEDULE G
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF AXE-HOUGHTON ASSOCIATES, INC.:
<TABLE>
<CAPTION>
NAME POSITION WITH ADVISOR AND PRINCIPAL OCCUPATION
- --------------------------------------------------------- ------------------------------------------------------
<S> <C>
Seth Lynn................................................ President and Director
Bob Follert.............................................. Director and Director of Marketing
Lloyd Buchanan........................................... Chief Operating Officer and Director
Fredric Sapirstein....................................... Director; President of Hoenig Group Inc.
Alan Herzog.............................................. Director; Chief Operating Officer of Hoenig Group Inc.
Max Levine............................................... Director; Executive Vice President of Hoenig Group
Inc.
Kathryn Hoenig........................................... Director; Vice President and Chief Counsel of Hoenig
Group Inc.
Robert Spiegel........................................... Director; Retired
</TABLE>
The address of each of the above named individuals is Royal Executive Park,
4 International Drive, Rye Brook, NY 10573.
<PAGE>
SCHEDULE H
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF IVORY & SIME INTERNATIONAL, INC.:
<TABLE>
<CAPTION>
NAME POSITION WITH ADVISOR AND PRINCIPAL OCCUPATION
- --------------------------------------------------------- ------------------------------------------------------
<S> <C>
Keith H. Wood............................................ President, Director
Fred Thalmann............................................ Director, Secretary
Rudy Abel................................................ Director
George Walker............................................ Director
John Edwards............................................. Director
</TABLE>
The address of each of the above named individuals is 39 Main Street,
Chatham, New Jersey 07928.
<PAGE>
SCHEDULE I
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICER OF IVORY & SIME PLC:
<TABLE>
<CAPTION>
NAME POSITION WITH ADVISOR AND PRINCIPAL OCCUPATION
- --------------------------------------------------------- ------------------------------------------------------
<S> <C>
Sir David Oliphant Kinloch............................... Executive Chairman; Deputy Chief Executive of
Caledonia Investments plc
Ian Frank Rushbrook...................................... Director
Allan Munro.............................................. Director
Arnold Roger Alexander Young............................. Director; Chief Executive of Scottish Hydro Electric
plc
John Stubbs.............................................. Director and Chief Investment Officer
</TABLE>
The address of Messrs. Munro and Stubbs is Ivory & Sime plc, One Charlotte
Square, Edinburgh EH2 4D7. The address of Sir Kinloch is Caledonia Investments
plc, Cayzer House, 1 Thomas More Street, London #1 9AR. The address of Mr. Young
is Scottish Hydro Electric plc, 10 Dunkeld Road, Perth PH1 5WA. The address of
Mr. Rushbrook is 10a Colme Street, Edinburgh EH3 6AA.
<PAGE>
EXHIBIT A
MANAGEMENT AGREEMENT
Agreement dated and effective as of , 1997 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
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 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, 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, 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.
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
Unified Advisers, Inc., 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; tax and governmental fees; dues and expenses
incurred in connection with membership in investment company organizations;
printing and distributing shareholder reports, proxy materials, prospectuses,
stock certificates and distributions of
A-1
<PAGE>
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 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 (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
advisory fee percentage rate of such Portfolio as set on Schedule A hereto and
then (2) adding together the total monthly amounts computed for each Portfolio.
(b) Compensation of the Investment Advisers for services provided under the
Advisory Agreements is the sole responsibility of the Manager.
4. 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 requisite registrations, authorizations and licenses, as the case may
be, until the termination of this agreement.
5. 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.
6. 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
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
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<PAGE>
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 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. 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.
7. 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
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 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
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 in their capacity as Trustees under
the Declaration of Trust made April 4, 1994. None of
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<PAGE>
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. 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) 504-1700
Fax: (212) 504-1495
If to the Manager:
Saratoga Capital Management
33 Maiden Lane
New York, New York 10038
Attn: President
Tel: (212) 504-1700
Fax: (212) 504-1495
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 delivery, or the day of such
delivery, and, it by telex or facsimile and mail, on the date on which such
telex or facsimile and mail, on the date on which such telex or facsimile is
sent.
14. COUNTERPARTS. This agreement may be executed in 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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto caused their 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:
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<PAGE>
SCHEDULE A
TO
MANAGEMENT AGREEMENT
BETWEEN
SARATOGA ADVANTAGE TRUST
AND
SARATOGA CAPITAL MANAGEMENT
<TABLE>
<CAPTION>
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%
Municipal Bond Portfolio...................................................................... .55%
Large Capitalization Value Portfolio.......................................................... .65%
Large Capitalization Growth Portfolio......................................................... .65%
</TABLE>
A-6
<PAGE>
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SARATOGA CAPITAL MANAGEMENT
AND
------------------------
REGARDING THE
THE SARATOGA ADVANTAGE TRUST
AGREEMENT made this day of , 1994 between Saratoga Capital
Management, a Delaware general partnership (the "Manager") and , a
corporation organized under the laws of the State of (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 (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 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:
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.
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<PAGE>
3. INVESTMENT ACTIVITIES.
(a) The Advisor will direct the investment of the Portfolio's assets on
a discretionary 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 provided
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 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.
(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 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 best overall terms available. In assessing the best overall
terms available for 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.
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<PAGE>
(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.
(b) The Portfolio Advisory Fee shall accrue as of the date that the
Portfolio commences investment operations. Upon any termination of this
Agreement the 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 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 Trust'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 Trust. The
Advisor shall furnish to the Manager or the the Board, promptly upon
request, such information as may reasonably be necessary 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 Trust. 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 Trust, 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, fumish immediately to the Manager and the Trust
such information as is appropriate for this purpose.
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<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 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
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 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 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 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.
(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 Intemal Revenue Code, applicable and state securities laws
and laws of foreign countries and juridical subdivisions, 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 management of the assets or organization
and qualifications of the Trust.
B-4
<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.
(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.
(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 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 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 provisions 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.
(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, 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 the Securities and
Exchange Commission validly issued pursuant to said Act and 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 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
provisions shall be deemed to incorporate the effect of such rule,
regulation or order.
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<PAGE>
(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 "Indemnifed Party"), against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or 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.
The Advisor shall indemnify and hold harrnless 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 idemnitfy 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 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 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 theirr respective officers thereunto duly authorized and their
respective corporate seals, if any, to be hereunto affixed, as of the day and
year first written.
<TABLE>
<S> <C>
SARATOGA CAPITAL MANAGEMENT
Attest: By:
----------------------------------------------
----------------------------------------------
Attest: By:
----------------------------------------------
</TABLE>
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<PAGE>
EXHIBIT C
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , 1997 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 , 1997, 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 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
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<PAGE>
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 payable 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.
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
, 1997 between the Manager and the Trust or if the Advisory
C-2
<PAGE>
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:
--------------------------------------
C-3
<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 form the services
or benefits provided under the arrangement. A copy of the 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 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.
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.
C-4
<PAGE>
(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) The Portfolio may invest in futures, options and contracts for
differences, but only for the purposes of hedging, i.e. protecting against
possible adverse fluctuations in the value of investments or cash in the
Portfolios. Deposit or margin will be payable from the Portfolio for the
writing (or granting) of options and the purchase or sale of futures
contracts or contracts for differences and if the deposit or margin falls
below the minimum required by the exchange on which the transaction is
effected. No more than 5 per cent of the value of the Portfolio may e
committed by way of margin. Such deposit or margin may take the form of cash
or other investments in the Portfolios. Sub-Adviser will have discretion as
to the circumstances in which Sub-Adviser may, without reference to the
Adviser make contractual or other arrangements to settle or close out
outstanding obligations. The markets in futures, options, and contracts for
differences can be highly volatile and such investments carry a high risk of
loss. In the case of futures, contracts for differences and the grant of
options a relatively small adverse market movement may result not only in
the loss of the original investment, but also in unquantifiable loss
exceeding any margin deposited.
(f) Sub-Adviser may not without the Trust's consent commit Trust to an
obligation which might require Trust to supplement the funds in the
Portfolio in order to meet any required deposit or margin and may not
without Trust's consent effect margined transactions otherwise than under
the rules of a recognized or designated investment exchange and in a
contract traded thereon.
(g) 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.
(h) 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 form 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.
(i) 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.
(j) 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 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.
C-5
<PAGE>
SCHEDULE
IVORY & SIME'S POLICY ON BROKERAGE ALLOCATION
Under the United Kingdom Financial Service 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 decisions 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 and 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 to this notice a
schedule covering our current soft commission arrangements.
June 1992
C-6
<PAGE>
IVORY & SIME'S SOFT COMMISSION ARRANGEMENTS
AS AT 1 JUNE 1992
<TABLE>
<CAPTION>
PERSON PROVIDING SERVICE BROKER PAYING FOR SERVICE NAME OF SERVICE DESCRIPTION OF SERVICE
- --------------------------- --------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
Broadcourt Broadcourt Broadcourt Various services (eg
performance measurement)
First Call Warburgs Boston First Call On line UK/US database:
Institutional Services broker research
Bloomberg Warburgs Bloomberg On line database:
International Capital
Markets
Lotus Development Lynch Jones Ryan One Source/IBES On line US database:
Corporate information
Washington Service Brick Securities Associates Washington Service Political and Economic
Information
WM & Co Smith New Court Performance Measurement Performance Measurement
Combined Actuarial Boston Institutional CAPS Performance Measurement
Performance Service Services
Cecogest Panmure Gordon Cecogest Economic & Political
Analysis
Compustat Standard & Poors Compustat On line US database:
Corporate Information
Datastream S G Warburg Datastream On line database:
international economic
information and corporate
statistics
Directus S G Warburg Directus Share Dealings Information
ECRU Smith New Court ECRU European Company Research
Reuters SG Warburg Reuter Screens Share Price Information
Service
IBES SG Warburg Performance Measurement Performance Measurement
Frank Russell James Capel Frank Russell Performance Performance Measurement
Ord Minnett Measurement
Thamesway
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
PERSON PROVIDING SERVICE BROKER PAYING FOR SERVICE NAME OF SERVICE DESCRIPTION OF SERVICE
- --------------------------- --------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
Topic Smith New Court Topic Topic Screens
Quick SG Warburg Quick Terminal On line Japanese database:
Corporate information
SEI James Capel SEI Performance Measurement Performance Measurement
SG Warburg
</TABLE>
Denotes client specific performance measurement services which are paid for
exclusively by the client who receives the particular measurement service.
Commission from a client's Portfolios may only be used to pay for soft
commission services which can reasonably be expected to assist Ivory & Sime's
provision of investment Services to that particular Portfolio.
C-8
<PAGE>
US Gov't Money Market Portfolio
THE SARATOGA ADVANTAGE TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 1997
The undersigned shareholder of the Saratoga Advantage Trust (the
"Trust"), does hereby appoint BRUCE E. VENTIMIGLIA and SCOTT C. KANE, and
each of them, as attorneys-in-fact and proxies of the undersigned, each with
the full power of substitution, to attend the Special Meeting of Shareholders
of the Trust to be held on April 10, 1997, at Two World Financial Center, New
York, New York 10080 at 10:00 a.m., and at all adjournments thereof, and to
vote the shares held in the name of the undersigned on the record date for
said meeting, for the Proposals specified on the reverse side hereof. Said
attorneys-in-fact shall vote in accordance with their best judgment as to any
other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE
BOARD OF TRUSTEES, BY MAJORITY, RECOMMENDS A VOTE FOR THE PROPOSALS LISTED ON
THE REVERSE SIDE HEREOF. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE, OR FOR IF NO CHOICE IS INDICATED.
TO VOTE BY TELEPHONE PLEASE CALL TOLL FREE 1-800-758-5378 BETWEEN
9:00 A.M. AND 9:00 P.M. (EST).
TO VOTE BY MAIL, PLEASE DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Note: Please sign exactly as your name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as custodian, attorney, executor,
administrator, trustee, etc., please give your full title as such. If the
account is registered in the name of a corporation, partnership or other
entity, a duly authorized individual must sign on its behalf and give his or
her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
Please read both sides of this ballot.
<PAGE>
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
To vote by telephone please call toll free 1-800-758-5378 between 9:00 a.m.
and 9:00 p.m. (EST). To vote by mail, please date and sign below and return
promptly in the enclosed envelope.
The Proposals:
IA. To approve a new management agreement FOR AGAINST ABSTAIN
between the Trust, on behalf of the | | | | | |
Portfolio and Saratoga Capital
Management (the "Manager").
IB. To approve a new advisory agreement
between the Manager and Sterling Capital | | | | | |
Management Company.
II. To elect four Trustees of the Trust: FOR WITHHOLD FOR ALL
ALL FROM ALL EXCEPT
Udo W. Koopmann | | | | | |
Patrick H. McCollough
Floyd E. Seal
Bruce E. Ventimiglia
If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s)
name(s). Your shares will be voted for the remaining nominee(s).
III. To ratify the selection of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as independent accountants | | | | | |
for the Trust for the fiscal year ending
August 31, 1997.
IV. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment thereof.
Mark box at right if an address change or comment has been
noted on the reverse side of this card. | |
__________________________
Please be sure to sign and date this Proxy. | Date |
_______________________________________________________________________
|
____Shareholder sign here_______ ______Co-owner sign here________|
<PAGE>
Municipal Bond Portfolio
THE SARATOGA ADVANTAGE TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 1997
The undersigned shareholder of the Saratoga Advantage Trust (the
"Trust"), does hereby appoint BRUCE E. VENTIMIGLIA and SCOTT C. KANE, and
each of them, as attorneys-in-fact and proxies of the undersigned, each with
the full power of substitution, to attend the Special Meeting of Shareholders
of the Trust to be held on April 10, 1997, at Two World Financial Center, New
York, New York 10080 at 10:00 a.m., and at all adjournments thereof, and to
vote the shares held in the name of the undersigned on the record date for
said meeting, for the Proposals specified on the reverse side hereof. Said
attorneys-in-fact shall vote in accordance with their best judgment as to any
other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE
BOARD OF TRUSTEES, BY MAJORITY, RECOMMENDS A VOTE FOR THE PROPOSALS LISTED ON
THE REVERSE SIDE HEREOF. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE, OR FOR IF NO CHOICE IS INDICATED.
TO VOTE BY TELEPHONE PLEASE CALL TOLL FREE 1-800-758-5378 BETWEEN
9:00 A.M. AND 9:00 P.M. (EST).
TO VOTE BY MAIL, PLEASE DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Note: Please sign exactly as your name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as custodian, attorney, executor,
administrator, trustee, etc., please give your full title as such. If the
account is registered in the name of a corporation, partnership or other
entity, a duly authorized individual must sign on its behalf and give his or
her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
Please read both sides of this ballot.
<PAGE>
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
To vote by telephone please call toll free 1-800-758-5378 between 9:00 a.m.
and 9:00 p.m. (EST). To vote by mail, please date and sign below and return
promptly in the enclosed envelope.
The Proposals:
IA. To approve a new management agreement FOR AGAINST ABSTAIN
between the Trust, on behalf of the | | | | | |
Portfolio and Saratoga Capital
Management (the "Manager").
IC. To approve a new advisory agreement
between the Manager and OpCap Advisors. | | | | | |
II. To elect four Trustees of the Trust: FOR WITHHOLD FOR ALL
ALL FROM ALL EXCEPT
Udo W. Koopmann | | | | | |
Patrick H. McCollough
Floyd E. Seal
Bruce E. Ventimiglia
If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s)
name(s). Your shares will be voted for the remaining nominee(s).
III. To ratify the selection of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as independent accountants | | | | | |
for the Trust for the fiscal year ending
August 31, 1997.
IV. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment thereof.
Mark box at right if an address change or comment has been
noted on the reverse side of this card. | |
__________________________
Please be sure to sign and date this Proxy. | Date |
_______________________________________________________________________
|
____Shareholder sign here_______ ______Co-owner sign here________|
<PAGE>
Investment Qual. Bond Portfolio
THE SARATOGA ADVANTAGE TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 1997
The undersigned shareholder of the Saratoga Advantage Trust (the
"Trust"), does hereby appoint BRUCE E. VENTIMIGLIA and SCOTT C. KANE, and
each of them, as attorneys-in-fact and proxies of the undersigned, each with
the full power of substitution, to attend the Special Meeting of Shareholders
of the Trust to be held on April 10, 1997, at Two World Financial Center, New
York, New York 10080 at 10:00 a.m., and at all adjournments thereof, and to
vote the shares held in the name of the undersigned on the record date for
said meeting, for the Proposals specified on the reverse side hereof. Said
attorneys-in-fact shall vote in accordance with their best judgment as to any
other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE
BOARD OF TRUSTEES, BY MAJORITY, RECOMMENDS A VOTE FOR THE PROPOSALS LISTED ON
THE REVERSE SIDE HEREOF. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE, OR FOR IF NO CHOICE IS INDICATED.
TO VOTE BY TELEPHONE PLEASE CALL TOLL FREE 1-800-758-5378 BETWEEN
9:00 A.M. AND 9:00 P.M. (EST).
TO VOTE BY MAIL, PLEASE DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Note: Please sign exactly as your name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as custodian, attorney, executor,
administrator, trustee, etc., please give your full title as such. If the
account is registered in the name of a corporation, partnership or other
entity, a duly authorized individual must sign on its behalf and give his or
her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
Please read both sides of this ballot.
<PAGE>
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
To vote by telephone please call toll free 1-800-758-5378 between 9:00 a.m.
and 9:00 p.m. (EST). To vote by mail, please date and sign below and return
promptly in the enclosed envelope.
The Proposals:
IA. To approve a new management agreement FOR AGAINST ABSTAIN
between the Trust, on behalf of the | | | | | |
Portfolio and Saratoga Capital
Management (the "Manager").
ID. To approve a new advisory agreement
between the Manager and Fox Asset | | | | | |
Management Company, Inc.
II. To elect four Trustees of the Trust: FOR WITHHOLD FOR ALL
ALL FROM ALL EXCEPT
Udo W. Koopmann | | | | | |
Patrick H. McCollough
Floyd E. Seal
Bruce E. Ventimiglia
If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s)
name(s). Your shares will be voted for the remaining nominee(s).
III. To ratify the selection of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as independent accountants | | | | | |
for the Trust for the fiscal year ending
August 31, 1997.
IV. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment thereof.
Mark box at right if an address change or comment has been
noted on the reverse side of this card. | |
__________________________
Please be sure to sign and date this Proxy. | Date |
_______________________________________________________________________
|
____Shareholder sign here_______ ______Co-owner sign here________|
<PAGE>
Large Cap. Value Portfolio
THE SARATOGA ADVANTAGE TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 1997
The undersigned shareholder of the Saratoga Advantage Trust (the
"Trust"), does hereby appoint BRUCE E. VENTIMIGLIA and SCOTT C. KANE, and
each of them, as attorneys-in-fact and proxies of the undersigned, each with
the full power of substitution, to attend the Special Meeting of Shareholders
of the Trust to be held on April 10, 1997, at Two World Financial Center, New
York, New York 10080 at 10:00 a.m., and at all adjournments thereof, and to
vote the shares held in the name of the undersigned on the record date for
said meeting, for the Proposals specified on the reverse side hereof. Said
attorneys-in-fact shall vote in accordance with their best judgment as to any
other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE
BOARD OF TRUSTEES, BY MAJORITY, RECOMMENDS A VOTE FOR THE PROPOSALS LISTED ON
THE REVERSE SIDE HEREOF. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE, OR FOR IF NO CHOICE IS INDICATED.
TO VOTE BY TELEPHONE PLEASE CALL TOLL FREE 1-800-758-5378 BETWEEN
9:00 A.M. AND 9:00 P.M. (EST).
TO VOTE BY MAIL, PLEASE DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Note: Please sign exactly as your name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as custodian, attorney, executor,
administrator, trustee, etc., please give your full title as such. If the
account is registered in the name of a corporation, partnership or other
entity, a duly authorized individual must sign on its behalf and give his or
her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
Please read both sides of this ballot.
<PAGE>
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
To vote by telephone please call toll free 1-800-758-5378 between 9:00 a.m.
and 9:00 p.m. (EST). To vote by mail, please date and sign below and return
promptly in the enclosed envelope.
The Proposals:
IA. To approve a new management agreement FOR AGAINST ABSTAIN
between the Trust, on behalf of the | | | | | |
Portfolio and Saratoga Capital
Management (the "Manager").
IE. To approve a new advisory agreement
between the Manager and OpCap Advisors. | | | | | |
II. To elect four Trustees of the Trust: FOR WITHHOLD FOR ALL
ALL FROM ALL EXCEPT
Udo W. Koopmann | | | | | |
Patrick H. McCollough
Floyd E. Seal
Bruce E. Ventimiglia
If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s)
name(s). Your shares will be voted for the remaining nominee(s).
III. To ratify the selection of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as independent accountants | | | | | |
for the Trust for the fiscal year ending
August 31, 1997.
IV. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment thereof.
Mark box at right if an address change or comment has been
noted on the reverse side of this card. | |
__________________________
Please be sure to sign and date this Proxy. | Date |
_______________________________________________________________________
|
____Shareholder sign here_______ ______Co-owner sign here________|
<PAGE>
Large Cap. Growth Portfolio
THE SARATOGA ADVANTAGE TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 1997
The undersigned shareholder of the Saratoga Advantage Trust (the
"Trust"), does hereby appoint BRUCE E. VENTIMIGLIA and SCOTT C. KANE, and
each of them, as attorneys-in-fact and proxies of the undersigned, each with
the full power of substitution, to attend the Special Meeting of Shareholders
of the Trust to be held on April 10, 1997, at Two World Financial Center, New
York, New York 10080 at 10:00 a.m., and at all adjournments thereof, and to
vote the shares held in the name of the undersigned on the record date for
said meeting, for the Proposals specified on the reverse side hereof. Said
attorneys-in-fact shall vote in accordance with their best judgment as to any
other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE
BOARD OF TRUSTEES, BY MAJORITY, RECOMMENDS A VOTE FOR THE PROPOSALS LISTED ON
THE REVERSE SIDE HEREOF. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE, OR FOR IF NO CHOICE IS INDICATED.
TO VOTE BY TELEPHONE PLEASE CALL TOLL FREE 1-800-758-5378 BETWEEN
9:00 A.M. AND 9:00 P.M. (EST).
TO VOTE BY MAIL, PLEASE DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Note: Please sign exactly as your name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as custodian, attorney, executor,
administrator, trustee, etc., please give your full title as such. If the
account is registered in the name of a corporation, partnership or other
entity, a duly authorized individual must sign on its behalf and give his or
her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
Please read both sides of this ballot.
<PAGE>
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
To vote by telephone please call toll free 1-800-758-5378 between 9:00 a.m.
and 9:00 p.m. (EST). To vote by mail, please date and sign below and return
promptly in the enclosed envelope.
The Proposals:
IA. To approve a new management agreement FOR AGAINST ABSTAIN
between the Trust, on behalf of the | | | | | |
Portfolio and Saratoga Capital
Management (the "Manager").
IF. To approve a new advisory agreement
between the Manager and Harris Bretall | | | | | |
Sullivan & Smith, Inc.
II. To elect four Trustees of the Trust: FOR WITHHOLD FOR ALL
ALL FROM ALL EXCEPT
Udo W. Koopmann | | | | | |
Patrick H. McCollough
Floyd E. Seal
Bruce E. Ventimiglia
If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s)
name(s). Your shares will be voted for the remaining nominee(s).
III. To ratify the selection of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as independent accountants | | | | | |
for the Trust for the fiscal year ending
August 31, 1997.
IV. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment thereof.
Mark box at right if an address change or comment has been
noted on the reverse side of this card. | |
__________________________
Please be sure to sign and date this Proxy. | Date |
_______________________________________________________________________
|
____Shareholder sign here_______ ______Co-owner sign here________|
<PAGE>
Small Capitalization Portfolio
THE SARATOGA ADVANTAGE TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 1997
The undersigned shareholder of the Saratoga Advantage Trust (the
"Trust"), does hereby appoint BRUCE E. VENTIMIGLIA and SCOTT C. KANE, and
each of them, as attorneys-in-fact and proxies of the undersigned, each with
the full power of substitution, to attend the Special Meeting of Shareholders
of the Trust to be held on April 10, 1997, at Two World Financial Center, New
York, New York 10080 at 10:00 a.m., and at all adjournments thereof, and to
vote the shares held in the name of the undersigned on the record date for
said meeting, for the Proposals specified on the reverse side hereof. Said
attorneys-in-fact shall vote in accordance with their best judgment as to any
other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE
BOARD OF TRUSTEES, BY MAJORITY, RECOMMENDS A VOTE FOR THE PROPOSALS LISTED ON
THE REVERSE SIDE HEREOF. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE, OR FOR IF NO CHOICE IS INDICATED.
TO VOTE BY TELEPHONE PLEASE CALL TOLL FREE 1-800-758-5378 BETWEEN
9:00 A.M. AND 9:00 P.M. (EST).
TO VOTE BY MAIL, PLEASE DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Note: Please sign exactly as your name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as custodian, attorney, executor,
administrator, trustee, etc., please give your full title as such. If the
account is registered in the name of a corporation, partnership or other
entity, a duly authorized individual must sign on its behalf and give his or
her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
Please read both sides of this ballot.
<PAGE>
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
To vote by telephone please call toll free 1-800-758-5378 between 9:00 a.m.
and 9:00 p.m. (EST). To vote by mail, please date and sign below and return
promptly in the enclosed envelope.
The Proposals:
IA. To approve a new management agreement FOR AGAINST ABSTAIN
between the Trust, on behalf of the | | | | | |
Portfolio and Saratoga Capital
Management (the "Manager").
IG. To approve a new advisory agreement
between the Manager and Thorsell, Parker | | | | | |
Partners, Inc.
II. To elect four Trustees of the Trust: FOR WITHHOLD FOR ALL
ALL FROM ALL EXCEPT
Udo W. Koopmann | | | | | |
Patrick H. McCollough
Floyd E. Seal
Bruce E. Ventimiglia
If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s)
name(s). Your shares will be voted for the remaining nominee(s).
III. To ratify the selection of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as independent accountants | | | | | |
for the Trust for the fiscal year ending
August 31, 1997.
IV. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment thereof.
Mark box at right if an address change or comment has been
noted on the reverse side of this card. | |
__________________________
Please be sure to sign and date this Proxy. | Date |
_______________________________________________________________________
|
____Shareholder sign here_______ ______Co-owner sign here________|
<PAGE>
International Equity Portfolio
THE SARATOGA ADVANTAGE TRUST
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 1997
The undersigned shareholder of the Saratoga Advantage Trust (the
"Trust"), does hereby appoint BRUCE E. VENTIMIGLIA and SCOTT C. KANE, and
each of them, as attorneys-in-fact and proxies of the undersigned, each with
the full power of substitution, to attend the Special Meeting of Shareholders
of the Trust to be held on April 10, 1997, at Two World Financial Center, New
York, New York 10080 at 10:00 a.m., and at all adjournments thereof, and to
vote the shares held in the name of the undersigned on the record date for
said meeting, for the Proposals specified on the reverse side hereof. Said
attorneys-in-fact shall vote in accordance with their best judgment as to any
other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE
BOARD OF TRUSTEES, BY MAJORITY, RECOMMENDS A VOTE FOR THE PROPOSALS LISTED ON
THE REVERSE SIDE HEREOF. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE, OR FOR IF NO CHOICE IS INDICATED.
TO VOTE BY TELEPHONE PLEASE CALL TOLL FREE 1-800-758-5378 BETWEEN
9:00 A.M. AND 9:00 P.M. (EST).
TO VOTE BY MAIL, PLEASE DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Note: Please sign exactly as your name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as custodian, attorney, executor,
administrator, trustee, etc., please give your full title as such. If the
account is registered in the name of a corporation, partnership or other
entity, a duly authorized individual must sign on its behalf and give his or
her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
Please read both sides of this ballot.
<PAGE>
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
To vote by telephone please call toll free 1-800-758-5378 between 9:00 a.m.
and 9:00 p.m. (EST). To vote by mail, please date and sign below and return
promptly in the enclosed envelope.
The Proposals:
IA. To approve a new management agreement FOR AGAINST ABSTAIN
between the Trust, on behalf of the | | | | | |
Portfolio and Saratoga Capital
Management (the "Manager").
IH. To approve a new advisory agreement
between the Manager and Ivory & Sime | | | | | |
International, Inc. and a related
investment sub-advisory agreement
between Ivory & Sime International,
Inc. and Ivory & Sime plc.
II. To elect four Trustees of the Trust: FOR WITHHOLD FOR ALL
ALL FROM ALL EXCEPT
Udo W. Koopmann | | | | | |
Patrick H. McCollough
Floyd E. Seal
Bruce E. Ventimiglia
If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the nominee's(s)
name(s). Your shares will be voted for the remaining nominee(s).
III. To ratify the selection of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as independent accountants | | | | | |
for the Trust for the fiscal year ending
August 31, 1997.
IV. To consider and act upon such other matters as may properly come before
the Meeting or any adjournment thereof.
Mark box at right if an address change or comment has been
noted on the reverse side of this card. | |
__________________________
Please be sure to sign and date this Proxy. | Date |
_______________________________________________________________________
|
____Shareholder sign here_______ ______Co-owner sign here________|
<PAGE>
AN IMPORTANT MESSAGE FROM SARATOGA CAPITAL MANAGEMENT
REGARDING THE PROXY FOR THE SARATOGA ADVANTAGE TRUST
We are pleased to announce that the proxy for the Saratoga Advantage Trust will
be mailed to shareholders of record as of February 27, 1997. The approximate
mailing date will be March 17, 1997. As you may already know from the most
recent Saratoga Advantage Trust prospectus, Saratoga Capital Management (SCM)
will, upon shareholder approval, be joined by new partners who will replace
Oppenheimer Capital. The new partners will be providing SCM with significant
funding to support our efforts. In addition, OpCap Advisors will be replaced by
Unified Advisers, Inc. as Trust administrator, and OCC Distributors will be
replaced by Unified Management Corporation as Trust distributor. Oppenheimer
Capital, however, will continue to be the Advisor for the Saratoga Large
Capitalization Value Portfolio and the Saratoga Municipal Bond Portfolio. All of
SCM's senior management team will remain the same.
WE ARE EXTREMELY PLEASED TO REPORT THAT THE NEW FUNDING WILL ENABLE SCM TO
EXPAND THE CURRENT MARKETING EFFORTS FOR THE SARATOGA ADVANTAGE TRUST. We
expect that additional field personnel will be joining SCM, as well as
additional internal support staff. We look forward to significantly
increasing our support to your firm through more frequent visits with your
sales staff, and more extensive contact between visits.
In addition, you will note that UPON SHAREHOLDER APPROVAL, THE SARATOGA SMALL
CAPITALIZATION PORTFOLIO WILL BE MANAGED BY THORSELL, PARKER PARTNERS, INC.
instead of Axe-Houghton Associates, Inc. Thorsell, Parker is a well-respected
firm, and I am pleased to enclose information regarding their investment
methodology. RICHARD THORSELL, the Chief Investment Officer of Thorsell, Parker,
WILL MANAGE THE PORTFOLIO. Mr. Thorsell has had extensive portfolio management
experience, EARLIER HE WAS WITH FIDELITY MANAGEMENT AS THE FOUNDER AND FIRST
LEADER OF THE FUND GROUP WHICH SPECIALIZED IN SMALL TO MID-SIZE STOCKS; THESE
FUNDS INCLUDED CONTRA FUND, MAGELLAN FUND, AND DESTINY FUND, AMONG OTHERS. HE
WAS ALSO THE CHAIRMAN OF THE INVESTMENT COMMITTEE AT PAINEWEBBER. In addition,
HE RECEIVED AN MBA FROM THE HARVARD BUSINESS SCHOOL AND IS THE AUTHOR OF
INVESTING ON YOUR OWN, a book on small capitalization stocks. All of the other
Advisors to the Saratoga Advantage Trust Portfolios will remain the same.
For more information regarding the proxy process, please call me or Scott Kane
with any questions, comments or suggestions you may have. For your reference, I
have also enclosed the President's letter, the Question and Answer Summary, and
a copy of the proxy card that will be mailed to shareholders along with the
proxy. To request a copy of the proxy, please call (800) 255-6228.
Thank you for all of your support of the Saratoga Advantage Trust. We look
forward to reaching new heights in service and support for you in 1997!
Best wishes,
/s/ Bruce E. Ventimiglia
Bruce E. Ventimiglia
<PAGE>
SMALL CAPITALIZATION PORTFOLIO
The Portfolio seeks maximum capital appreciation by investing in a diversified
portfolio of the common stocks of small capitalization companies.
THORSELL, PARKER PARTNERS, INC.
The Small Capitalization Portfolio is managed by Thorsell, Parker Partners, Inc.
The firm is owned 100% by its partners and associates, all of whom devote their
full time to the practice of investment management. Thorsell, Parker's Portfolio
Management Team consists of seven professionals with an average of 21 years of
experience. Thorsell, Parker manages total assets in excess of $300 million and
normally prefers a minimum account size of $1 million for this investment style.
INVESTMENT STRATEGY
Thorsell, Parker Partners invests in the U.S. stocks which it feels represent
the "active institutional core" of the market: the capitalization range between
$100 million and $5 billion. Through a constant monitoring of these stocks,
Thorsell, Parker uses quantitative and qualitative analysis to create a focus
list of approximately 200 stocks from which it seeks "double plays": firms with
both growing earnings and the realistic opportunity for higher valuations. These
stocks are further researched using in-house analysts supplemented by "Street"
research and consultants. Each stock eligible for the Portfolio must have a
clearly defined set of assumptions and an explicit price target. All stocks are
monitored daily to determine their potential return to that target.
REPRESENTATIVE CLIENTS
American Academy of Physical State of Iowa Municipal Fire & Police
Medicine and Rehabilitation Retirement System
Levitz Furniture Corporation The Kresge Foundation
Vermont American Corporation Sheet Metal Workers' National
(a subsidiary of Emerson Electric Co.) Pension Fund
THE INCLUSION OF REPRESENTATIVE CLIENT NAMES IN THIS BROCHURE, ALTHOUGH APPROVED
BY THE CLIENTS, DOES NOT CONSTITUTE A RECOMMENDATION OF THE MANAGERS' SERVICES.
SARATOGA CAPITAL MANAGEMENT HAS SELECTED SPECIFIC REPRESENTATIVE CLIENTS FROM
THE MANAGERS' CLIENT LISTS FOR THIS BROCHURE BASED ON THEIR UNIVERSAL NAME
RECOGNITION AND NOT ALL ACCOUNTS ARE MANAGED ACCORDING TO THE INVESTMENT STYLE
OF THE PORTFOLIOS.
FOR INTERNAL DEALER USE ONLY.
