THE SARATOGA ADVANTAGE TRUST
SEMI ANNUAL REPORT
AS OF FEBRUARY 28,1998
TABLE OF CONTENTS
President's Letter......................................................Page 1
Investment Review ......................................................Page 3
Schedules of Investments ...............................................Page 10
Statements of Assets and Liabilities ...................................Page 29
Statements of Operations ...............................................Page 30
Statements of Changes in Net Assets ....................................Page 31
Notes to Financial Statements ..........................................Page 33
Financial Highlights ...................................................Page 36
Saratoga Shareholders' Meetings/Votes ..................................Page 39
This report is authorized for distribution only to shareholders and
to others who have received a copy of the prospectus.
<PAGE>
TRUSTEES AND OFFICERS
Bruce E. Ventimiglia Trustee, Chairman, President & CEO
Patrick H. McCollough Trustee
Udo W. Koopmann Trustee
Floyd E. Seal Trustee
Scott C. Kane Vice President & Secretary
Stephen Ventimiglia Vice President
William Marra Treasurer & Chief Financial Officer
Michael Durham Assistant Treasurer
Carol Highsmith Assistant Secretary
Investment Manager Distributor
Saratoga Capital Management Unified Management Corporation
1501 Franklin Avenue 431 North Pennsylvania Street
Mineola, NY 11501-4803 Indianapolis, IN 46204
Transfer and Shareholder Servicing Agent Custodian
State Street Bank and Trust Company State Street Bank and Trust Company
P.O. Box 8514 P.O. Box 351
Boston, MA 02266 Boston, MA 02101
<PAGE>
THE SARATOGA ADVANTAGE TRUST
Semi-Annual Report to Shareholders
April 17, 1998
Dear Shareholder:
We are pleased to provide you with this semi-annual report on the investment
strategies and performance of the portfolios in the Saratoga Advantage Trust
(the "Trust").
This report covers the six months from September 1, 1997 through February 28,
1998, a period of positive domestic stock and bond investment returns. During
this period of time, the portfolios in the Trust all reported positive
returns. In addition, I am pleased to report that through February 28, 1998,
the Trust's Large Capitalization Growth and Large Capitalization Value
portfolios and the Small Capitalization portfolio all outperformed their
respective Lipper Averages for the six and twelve month periods, and since
their inception.
Combining the strength of the Trust's performance with a well designed asset
allocation plan can help you to achieve your long-term investment goals. We
are proud to be able to offer you the ability to access multiple investment
asset classes through the Trust's portfolios. These portfolios are managed by
some of the world's leading institutional investment advisory firms. Each of
the advisors has been selected on the basis of their: investment philosophy,
research capabilities, long-term investment performance, organizational
stability and other key factors. This diversity of portfolio structure is
designed to give you the opportunity to efficiently implement your asset
allocation strategy to create a balanced portfolio in accordance with your
investment goals and objectives.
As the financial markets go through their cycles over time, the multiple
investment asset class structure of the Saratoga Advantage Trust provides
investors with the ability to react to economic, market and personal changes by
reallocating their assets within the Trust to structure a portfolio that makes
sense for current conditions. This gives our investors the opportunity to
establish as conservative or aggressive a posture as they prefer through
consultations with their financial advisors.
Finally, pursuant to the recent proxy statement regarding the Saratoga
Advantage Trust, the shareholders have approved the following:
1. The investment advisory agreements between Saratoga Capital Management (the
"Manager") and OpCap Advisors with respect to the Municipal Bond Portfolio
and the Large Capitalization Value Portfolio; and
2. The investment advisory agreement between the Manager and Harris Bretall
Sullivan & Smith L.L.C. with respect to the Large Capitalization Growth
Portfolio.
<PAGE>
In addition, the shareholders approved a proposal to permit the Manager to
select and contract with investment advisors for each portfolio of the Trust
after obtaining the approval of the Board of Trustees of the Trust, but without
obtaining shareholder approval. Finally, the shareholders approved all of the
proposals in the proxy related to the elimination of, or reclassification as
nonfundamental, various policies and restrictions of the portfolios.
Following you will find specific information on the investment strategy and
performance of each of the portfolios. Please speak with your financial advisor
if you have any questions about your investment in the Saratoga Advantage Trust
or your allocation of assets among the portfolios.
We remain dedicated to serving your investment needs. Thank you for investing
with us.
Sincerely,
Bruce E. Ventimiglia
Chairman, President and
Chief Executive Officer
<PAGE>
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
Advised by:
Sterling Capital Management
Charlotte, North Carolina
Objective: Seeks maximum current income, consistent with the maintenance of
liquidity and the preservation of capital. The portfolio invests exclusively in
short-term securities and related repurchase agreements issued by the United
States Government, its agencies and instrumentalities.
U.S. Government 90 Day T-Bills
7-Day Money Market Average Discount
Compound Yield Portfolio Yield
- -------------- --------- -----
2/28/98 4.6% 5.1%
Total Aggregate U.S. Government Lipper U.S.
Return for the Period Money Market Treasury Money
Ended February 28, 1998 Portfolio Market Average(1)
- ----------------------- --------- --------------
Since Inception (9/l/94)* 4.7% 4.8%
3/1/97 - 2/28/98 4.6% 4.5%
9/1/97 - 2/28/98 2.3% 2.3%
*Annualized performance for periods greater than one year
By taking advantage of changes in short-term interest rates and utilizing a
variety of sectors within the short-term government market, Sterling Capital
Management seeks to maximize the Portfolio's yield while maintaining a constant
net asset value of $1.00 per share.
The Portfolio was invested primarily in U.S. Government Agency Notes as of
February 28, 1998 due to the higher yields versus Treasury Bills. The average
dollar weighted portfolio maturity was 60 days compared with a maximum
allowable average maturity of 90 days. Since March of 1997 the Federal Reserve
has held the Fed Funds rate steady at 5.5%. The average maturity of the
Portfolio has remained in a range from 52 to 72 days since last fall in an
environment of stable inflation and moderate economic growth.
Shares of the U.S. Government Money Market Portfolio are not guaranteed or
insured by the U.S. Government. There can be no assurance that the U.S.
Government Money Market Portfolio will be able to maintain a constant net
asset value of $ 1.00 per share.
(1) The Lipper U.S. Treasury Money Market Fund Index consists of the 30
largest mutual funds that invest principally in U.S. Treasury obligations
with dollar-weighted average maturities of less than 90 days. These funds
intend to keep a constant net asset value.
Past performance is not indicative of future results.
<PAGE>
INVESTMENT QUALITY BOND PORTFOLIO
Advised by:
Fox Asset Management, Inc.
Little Silver, New Jersey
Objective: Seeks current income and reasonable stability of principal through
investment in a diversified portfolio of investment quality, actively managed
fixed income securities.
Lipper Short-
Intermediate
Investment
Total Aggregate Investment Grade Debt
Return Quality Bond Funds
Ended February 28, 1998 Portfolio Average(1)
----------------------- --------- --------
Since Inception (9/1/94)* 6.1% 6.8%
3/1/97 - 2/28/98 7.1% 6.9%
9/1/97 - 2/28/98 3.8% 3.7%
*Annualized performance for periods greater than one year
The Portfolio seeks to provide high income by investing primarily in investment
grade bonds with maturities between 2 and 10 years. In the 12 months ended
February 28, 1998, the Portfolio distributed dividends of $.51 per share.
Investments are normally divided approximately evenly between U.S. Government
and corporate securities. Due to the current phenomenon of tight supply and
only a slight yield advantage available in corporate securities, there will be
greater emphasis on U.S. Government holdings at this time.
Fox will continue to focus on those instruments that offer improving credit
quality, liquidity, and the highest possible total return. Due to the challenge
of trying to preserve principal in the current volatile market environment, Fox
is maintaining a conservative investment posture with an average maturity of
4.0 years, and an average duration of 3.3 years in the Portfolio.
Other portfolio statistics as of February 28, 1998 are as follows: Average
weighted yield-to-maturity was 6.0%, average weighted coupon was 6.5% and the
average Moody's Rating was AA3 with 22 fixed income issues held.
(1) The Lipper Short-Intermediate Investment Grade Debt Funds Average
consists of the 30 largest mutual funds that invest at least 65% of their
assets in investment grade debt issues (rated in the top four grades) with
dollar-weighted average maturities of 1 to 5 years.
Past performance is not predictive of future performance.
<PAGE>
MUNICIPAL BOND PORTFOLIO
Advised by:
OpCap Advisors
New York, New York
Objective: Seeks a high level of interest income exempt from federal income
taxation, consistent with prudent investment management and the preservation of
capital.
Lipper General
Total Aggregate Municipal
Return for the Period Municipal Debt Funds
Ended February 28, 1998 Bond Portfolio Average(1)
----------------------- -------------- ----------
Since Inception (9/1/94)* 6.3% 7.6%
3/1/97-2/28/98 8.5% 9.2%
9/1/97-2/28/98 4.9% 5.0%
*Annualized performance for periods greater than one year
During the past six months, the economy remained strong enough for the Federal
Reserve, under most circumstances, to raise short term rates to slow the
economy and preempt inflation. Normally, this would have caused rates to rise
and bond prices to decline. Yet the Asian economic crisis has introduced new
risk in our domestic economy which has put Federal Reserve policy on hold.
Subsequently, the bond market has rallied and the 30 year treasury bond's yield
is now below 6%. Though not to the same extent as taxables, municipals also
participated in the bond rally as 30 year AAA general obligation yields moved
below the 5% level for the first time since 1993. The municipal market relative
performance to taxables was negatively impacted by supply imbalances due to
massive refundings as well as tepid retail demand due to "sticker shock"
yields.
We continued to overweight the general obligation and insured sectors of the
municipal market as they present outstanding value. We also focused on the
health and housing sectors to add incremental yield to the portfolio. We
maintained an average maturity of 17.7 years which captures 97% of the longest
30 year yield on the yield curve. New York was one of our largest state
holdings which was indicative of our comfort with the credit. During the past
quarter, New York City was upgraded by Moody's from Baal to A3. We hold a 4%
position in New York City general obligations.
We are still constructive on the bond market. Yet, the Asian contagion as well
as the fundamentals which have kept inflation at bay are still evident. This
should serve to support bond prices for quite a while longer. Of course, we
will remain vigilant on the factors (perceived Asian turnaround, higher
commodity prices) which could push yields higher.
(1) The Lipper General Municipal Debt Funds Index consists of the 30 largest
mutual funds that invest at least 65% of their assets in municipal debt
issues in the top four credit rating
Past performance is not predictive of future performance.
<PAGE>
LARGE CAPITALIZATION VALUE PORTFOLIO
Advised by:
OpCap Advisors
New York, New York
Objective: Seeks total return consisting of capital appreciation and dividend
income by investing in a diversified portfolio of common stocks that are
believed to be undervalued in the market and offer above-average price
appreciation potential .
Large Lipper Capital
Total Aggregate Capitalization Appreciation
Return Value Funds
------ Portfolio Average(1)
--------- ----------
Since Inception (9/1/94)* 25.1% 20.3%
3/1/97 - 2/28/98 28.7% 28.0%
9/1/97 - 2/28/98 12.6% 11.4%
*Annualized performance for periods greater than one year
The Saratoga Large Capitalization Value Portfolio is designed for the long-term
investor who seeks to preserve capital and make it grow. As disciplined value
investors, we seek to invest in superior companies at reasonable prices. Our
philosophy is based on the concept that the single most important determinant
of whether a stock will increase in value is the rate of return on invested
capital within the company. We believe companies with high returns can increase
their value for extended periods. Therefore, we look for companies with
above-average returns where those returns are protected by strong competitive
positions, and we want to buy those companies at what we consider to be
reasonable prices. The strong contributors to the portfolio performance
included EXEL Ltd., Freddie Mac, Tenet Healthcare, ACE Ltd., and Countrywide
Credit Industries.
The Portfolio owned the common stocks of 40 companies as of February 28, 1998.
The five largest holdings were; EXEL Ltd., a strong capitalized specialty
insurance company; ACE Ltd., one of the leading providers of excess liability
insurance in the world; Lockheed Martin Corporation, a major aeronautics and
technology company; May Department Stores, one of the largest U.S. department
store companies; and Tenet Healthcare Corp., the second largest publicly traded
hospital management company.
(1) The Lipper Capital Appreciation Funds Average consists of the 30 largest
mutual funds that aim at maximum capital appreciation, frequently by means
of 100% or more portfolio turnover, leveraging, purchasing unregistered
securities, purchasing options, etc. (the funds may take large cash
positions).
Past performance is not predictive of future performance.
<PAGE>
LARGE CAPITALIZATION GROWTH PORTFOLIO
Advised by:
Harris Bretall Sullivan & Smith, L.L.C.
San Francisco, California
Objective: Seeks capital appreciation by investing in a diversified portfolio
of common stocks that, in the advisor's opinion, have faster earnings growth
potential than the Standard & Poor's 500.
Total Aggregate Large
Return for the Period Capitalization Lipper Growth
Ended February 28, 1998 Growth Funds
----------------------- Portfolio Average(1)
--------- --------
Since Inception (9/1/94)* 23.9% 23.3%
3/1/97 - 2/28/98 34.5% 32.2%
9/1/97 - 2/28/98 17.9% 14.7%
*Annualized performance for periods greater than one year
Harris Bretall Sullivan & Smith, L.L.C. analyzes a universe of approximately
300 established, high quality, US based companies and ranks them relative to
each other and the S&P 500. This relative ranking is based on present value,
trends in current earnings and price performance. The Portfolio is invested in
stocks that rank in the top one third of this universe. All investment
decisions are made through a team approach. This team, called the strategy
team, meets four times a week to set the firm's economic framework and reviews
specific holdings, recent news announcements and company data.
At the end of February, the Portfolio was invested in 44 stocks. Technology
continues to be a major investment theme of the Portfolio. The advisor believes
that technology is creating exceptional opportunities for astute management. The
Portfolio is invested not only in companies that are developing new
technologies, but also those that are using technology to gain market share and
increase productivity.
Additionally the Portfolio is invested in companies with "global franchises".
The advisor believes that as the global marketplace continues to evolve, US
based companies with worldwide brand recognition will be the major benefactor.
As of the end of February 1998, one third of the Portfolio was invested in
companies that the advisor feels have established "global franchises". Included
in this group are: American International Group Inc., Cisco Systems Inc.,
Citicorp, Colgate-Palmolive Co., The Walt Disney Co., General Electric Co.,
Gillette Co., Intel Corp., Johnson & Johnson, Merck & Co. Inc., Microsoft
Corp., and Pfizer, Inc.
(1) The Lipper Growth Funds Average consists of the 30 largest mutual funds
that normally invest in companies whose long-term earnings are expected to
grow significantly faster than the earnings of the stocks represented in
the major unmanaged stock indices.
Past performance is not predictive of future performance.
<PAGE>
SMALL CAPITALIZATION PORTFOLIO
Advised by:
Thorsell, Parker Partners, Inc.
Westport, Connecticut
Objective: Seeks maximum capital appreciation by investing in a diversified
portfolio of common stocks of small capitalization growth companies.
Total Aggregate Small Lipper Small
Return for the Period Capitalization Cap Funds
Ended February 28, 1998 Portfolio Average(1)
----------------------- --------- ----------
Since Inception (9/1/94)* 20.0% 19.1%
3/1/97-2/28/98 48.6% 26.5%
9/1/97-2/28/98 14.2% 7.5%
*Annualized performance for periods greater than one year
During the six month period ending February 28, 1998 stock prices continued to
rise in an environment of an expanding economy, declining unemployment,
improving productivity and continued fresh flows of capital into equity mutual
funds. We also continued to witness an asset allocation shift away from the
high valuation large capitalization multinational companies to smaller
capitalization U.S. stocks, in anticipation of their superior long term
returns.
The portfolio holdings in consumer staples, producer durables, technology,
regional banks and financial sectors were particularly strong. Within consumer
staples, Canadaigua Brands Inc., formerly known as Canandaigua Wine Inc., is
the second largest wine producer and fourth largest imported beer marketer in
the United States. In the producer durables sector, Oakwood Homes is one of the
premier companies in the manufactured housing industry. The company continues
to expand its retail distribution network that now includes over 300 company
owned stores and is the largest manufactured housing retailer in the U.S. In
the technology sector, EG&G, Inc. produces a variety of scientific and high
technology products for the industrial, government and consumer markets in the
medical, automotive and aerospace industries. The company has recently
undergone corporate restructuring from a decentralized group of business units
to a more centrally structured organization with anticipation of significant
cost reductions. Looking to the future, we are particularly optimistic for the
smaller stock asset class which has historically outperformed large cap stocks
and in the current environment enjoys stronger earnings and lower valuations
compared to the large cap issues.
(1) The Lipper Small Cap Funds Average consists of the 30 largest mutual
funds that by prospectus or portfolio practice invest primarily in
companies with market capitalizations less than $1 billion at the time of
purchase.
Past performance is not predictive of future performance.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
Advised by:
Friends Ivory & Sime plc
Edinburgh, Scotland
Objective: Seeks capital appreciation by investing primarily in a diversified
portfolio of securities of companies headquartered outside the United States.
Morgan
Total Aggregate International Stanley EAFE
Return Equity Index
------ Portfolio (U.S. Dollars)(1)
--------- -----------------
Since Inception (9/1/94)* 5.2% 8.0%
3/1/97 - 2/28/98 15.7% 15.5%
9/1/97 - 2/28/98 7.9% 8.3%
*Annualized performance for periods greater than one year
Over the last six months we have witnessed continued market volatility,
especially in Asia. The Asian Crisis has led to many of the ASEAN nations
turning to the International Monetary Fund for assistance. As their governments
begin to adopt the strict policies included within the IMF bail out packages we
have begun to see some moderate signs of stability returning to many of these
economies, indicated by positive improvements in both currency and
stockmarkets.
The Japanese economy shows little sign of recovery, despite the government's
efforts to boost the Nikkei above the 18,000 level by their fiscal year end of
March 31 st. It continues to be a two tier market, with many internationally
biased companies showing considerable outperformance.
Friends Ivory & Sime continues to favour European stockmarkets, with their
single largest country allocation to the UK. On the Continent, many markets
achieved new highs as signs of a self sustaining economic recovery became
apparent, and fears of a potential interest rate rise in Germany proved
unfounded.
As of February 28, 1998, major weightings in the Portfolio were as follows:
16.3% in Japan, 54.2% in Continental Europe, 23.4% in the UK, 0.8% in Australia
and 2.4% in Latin America.
Some of the portfolio's recent acquisitions include: Portugal Telecom the
principal telecommunications operator in Portugal, and BBV, the largest Spanish
banking group (in terms of capital and deposits) with substantial operations in
Latin America.
(1)The Europe, Australia, Far East Index (EAFE) is a widely recognized index
prepared by Morgan Stanley Capital International. This unmanaged index
consists of non-U.S. companies which are listed on one of twenty foreign
markets and assumes the reinvestment of dividends. The Gross Domestic
Product (GDP) version of the index is used above.
Past performance is not predictive of future performance.
<PAGE>
<TABLE>
February 28, 1998 (Unaudited)
------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
Principal
Amount Value
------------ ---------------
Federal Farm Credit Bank Discount Notes - 1.61%
$455,000 5.33%, 04/23/98 .......................................... $451,430
---------------
Total Federal Farm Credit Bank Discount Notes
(cost--$451,430) ......................................... $451,430
---------------
Federal Home Loan Bank - 19.48%
$975,000 5.59%, 03/02/98 .......................................... $974,849
1,500,000 5.25%, 03/13/98 .......................................... 1,497,375
430,000 5.38%, 03/27/98 .......................................... 428,329
1,000,000 5.43%, 06/08/98 .......................................... 985,067
1,560,000 5.715%, 07/21/98 ......................................... 1,559,818
---------------
Total Federal Home Loan Bank
(cost--$5,445,438) ....................................... $5,445,438
---------------
Federal Home Loan Mortgage Discount Notes - 37.66%
$35,000 5.60%, 03/06/98 .......................................... $34,973
1,500,000 5.38%, 03/12/98 .......................................... 1,497,534
365,000 5.36%, 03/23/98 .......................................... 363,804
1,020,000 5.32%, 03/25/98 .......................................... 1,016,382
70,000 5.38%, 04/03/98 .......................................... 69,655
1,190,000 5.37%, 04/15/98 .......................................... 1,182,012
235,000 5.37%, 04/15/98 .......................................... 233,423
1,800,000 5.33%, 04/17/98 .......................................... 1,787,475
1,750,000 5.33%, 04/22/98 .......................................... 1,736,527
80,000 5.35%, 04/22/98 .......................................... 79,382
1,500,000 5.33%, 05/06/98 .......................................... 1,485,343
820,000 5.36%, 05/14/98 .......................................... 810,965
165,000 5.38%, 05/14/98 .......................................... 163,175
65,000 5.38%, 05/29/98 .......................................... 64,135
---------------
Total Federal Home Loan Mortgage Discount Notes
(cost--$10,524,785) ...................................... $10,524,785
---------------
Federal National Mortgage Association - 38.53%
$10,000 5.38%, 03/04/98 .......................................... $9,995
30,000 5.38%, 03/10/98 .......................................... 29,960
530,000 5.38%, 03/20/98 .......................................... 528,495
720,000 5.38%, 03/20/98 .......................................... 717,956
820,000 5.38%, 03/23/98 .......................................... 817,304
615,000 5.33%, 03/30/98 .......................................... 612,359
10,000 5.34%, 04/10/98 .......................................... 9,941
350,000 5.37%, 04/17/98 .......................................... 347,546
55,000 5.35%, 04/24/98 .......................................... 54,559
490,000 5.38%, 04/24/98 .......................................... 486,046
2,000,000 5.50%, 04/27/98 .......................................... 1,982,583
1,460,000 5.36%, 05/05/98 .......................................... 1,445,870
1,000,000 5.89%, 05/21/98 .......................................... 999,861
2,000,000 5.42%, 07/06/98 .......................................... 1,961,759
780,000 5.33%, 07/08/98 .......................................... 765,103
---------------
Total Federal National Mortgage Association
(cost--$10,769,337) ...................................... $10,769,337
---------------
Total Investments
(cost--$27,190,990) ............................................ 97.28% $27,190,990
Other Assets in Excess of
Other Liabilities .............................................. 2.72% 758,890
---------------
Total Net Assets .................................................. 100.0% $27,949,880
======== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
February 28, 1998 (Unaudited)
-------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
-------------------------------------------------------------------------------------------------------
INVESTMENT QUALITY BOND PORTFOLIO
<S> <C> <C>
Principal
Amount Value
---------------- ---------------------
U.S. TREASURY NOTES -48.46%
$4,075,000 6.125%, 09/30/00 .................................. $4,128,464
3,500,000 5.625%, 11/30/00 .................................. 3,504,935
5,500,000 6.500%, 08/31/01 .................................. 5,654,660
---------------------
Total U.S. Treasury Notes
(cost--$13,083,245) ............................... $13,288,059
---------------------
CORPORATE NOTES & BONDS - 50.79%
Aerospace/Defense - 5.51%
$1,500,000 Raytheon Co.
6.50%, 07/15/05 ................................... $1,509,450
---------------------
Automotive - 2.32%
225,000 Ford Motor Credit Corp.
7.75%, 10/01/99 ................................... 230,789
400,000 General Motors Acceptance Corp.
7.75%, 01/15/99 ................................... 405,772
---------------------
636,561
---------------------
Banking - 5.92%
1,000,000 ICI Wilmington Inc.
6.95%, 09/15/04 ................................... 1,032,160
600,000 Nationsbank Corp.
5.375%, 04/15/00 .................................. 591,780
---------------------
1,623,940
---------------------
Chemicals - 2.13%
550,000 Du Pont (E.I.) de Nemours & Co.
8.500%, 02/15/03 .................................. 583,138
---------------------
Health & Hospitals - 4.63%
1,200,000 Tenet Healthcare Corp.
8.625%, 12/01/03................................... 1,269,000
---------------------
Miscellaneous Financial Services - 13.51%
Associates Corp. of North America
350,000 6.250%, 09/15/00 .................................. 352,313
1,000,000 6.250%, 06/15/05 .................................. 1,019,220
Bear Stearns & Co.
1,750,000 5.750%, 02/15/01 .................................. 1,727,950
350,000 7.625%, 09/15/99 .................................. 357,571
250,000 Morgan Stanley Group
5.750%,02/15/01 .................................. 247,433
---------------------
3,704,487
---------------------
Oil/Gas - 1.05%
275,000 Amoco Canada Petroleum Co. Ltd.
7.250%, 12/01/02 .................................. 288,571
---------------------
Pharmaceuticals - 3.98%
1,000,000 American Home Product Corp.
7.900%, 02/15/05................................... 1,092,730
---------------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
-------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
-------------------------------------------------------------------------------------------------------
INVESTMENT QUALITY BOND PORTFOLI0 (cont'd)
Principal
Amount Value
---------------- ---------------------
Power/Utility - 2.55% $700,000 Southern
California Edison Co.
5.875%, 01/15/01 .................................. $699,069
Resource Recovery - 4.60%
WMX Technologies, Inc.
500,000 6.700%, 05/01/01 .................................. 500,285
750,000 7.125%, 06/15/01 .................................. 760,455
---------------------
1,260,740
---------------------
Transportation - 4.59%
1,300,000 Union Pacific RR Company
6.120%, 02/01/04 .................................. 1,258,621
---------------------
Total Corporate Notes & Bonds
(cost--$13,869,286) ............................... $13,926,307
---------------------
Total Investments
(cost--$26,952,531) ....................................... 99.25% $27,214,366
Other Assets in Excess of
Other Liabilities ......................................... .75% 204,651
----------- ---------------------
Total Net Assets ............................................. 100.0% $27,419,017
=========== =====================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BOND PORTFOLIO
Principal
Amount Value
-------------- ---------------
MUNICIPAL NOTES & BONDS (SHORT-TERM ) - 6.07%
CALIFORNIA - 1.21%
Airport -
$100,000 Los Angeles California Regional Airport Leasing
3.40%, 12/01/24 ............................................ $100,000
--------------
TEXAS - 4.86%
Airport - 1.21%
100,000 Grapevine Texas Industrial Development Corp.
DDT 12/01/84
3.60%, 12/01/24 ............................................ 100,000
--------------
Health Facility - 3.65%
300,000 Harris County Texas Health Facility
St. Lukes Episcopal Hospital (Series A)
3.40%, 2/15/27 (MBIA insured) .............................. 300,000
--------------
400,000
--------------
Total Short Term Investments
(cost--$500,000)............................................ $500,000
--------------
MUNICIPAL NOTES & BONDS - 92.97%
ALABAMA - 4.14%
Health Care -
$350,000 Huntsville Alabama Health Care
(Series A)
5.00%, 6/01/17 ............................................. $341,520
--------------
CALIFORNIA - 4.74%
Education - 3.77%
50,000 California State Public Works Board Lease Revenue
California State University Projects
6.00%, 9/01/15 ............................................. 53,583
250,000 California State Public Works Board Lease Revenue
California State University Projects
5.375%, 10/01/17 ........................................... 257,418
--------------
311,001
--------------
Water/Sewer - .97%
75,000 San Francisco, California City & County Public Utilities
Community Water Revenue (Series A)
6.00%, 11/01/15 ............................................ 79,563
--------------
390,564
--------------
COLORADO - 1.95%
Health/Hospital -
150,000 Denver, Colorado City & County Revenue
Children's Hospital Association Project
6.00%, 10/01/15 ............................................ 160,727
---------------
CONNECTICUT - .26%
Housing -
20,000 Connecticut State Housing Finance Authority
Housing Mortgage Financing Program (Series B)
6.50%, 5/15/18 ............................................. 21,333
---------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------------------
MUNICIPAL BOND PORTFOLIO (cont'd)
Principal
Amount Value
-------------- ---------------
FLORIDA - 2.00%
Education - .45%
$35,000 Dade County, Florida School Board
Certificates of Participation (Series A)
5.75%, 5/01/12 (MBIA insured) .............................. $37,249
---------------
General Obligation - .91%
75,000 Florida State Board of Education Capital Outlay
5.25%, 6/01/23 (Series D) .................................. 74,682
---------------
Sales Tax - .64%
50,000 St. Petersburg, Florida Professional Sports Facilities
Sales Tax Revenue
5.60%, 10/01/15 (MBIA insured) ............................. 52,629
---------------
164,560
---------------
GEORGIA - 13.66%
Airport - 3.89%
305,000 Atlanta, Georgia Airport Facilities
6.25%, 1/01/21 ............................................ 320,433
---------------
Education - 2.85%
215,000 Jackson County, Georgia School District
6.00%, 7/01/14 (MBIA insured) .............................. 235,229
---------------
General Obligation - 2.78%
200,000 Georgia State General Obligation Bonds (Series B)
6.25%, 4/01/07 ............................................. 229,252
---------------
Power/Utility - 4.14%
350,000 Municipal Electric Authority Georgia
General Resolution (Series A)
5.00%, 1/01/20 ............................................ 340,900
---------------
1,125,814
---------------
IOWA - .67%
Water/Sewer
50,000 West Des Moines, Iowa Water Revenue
6.80%, 12/01/13 (AMBAC insured) ............................ 55,326
---------------
KENTUCKY - 1.28%
Turnpike/Toll
100,000 Kentucky State Turnpike Authority
Economic Development Road Revenue
5.625%, 7/01/15 (AMBAC insured) ............................ 105,684
---------------
LOUISIANA - 1.99%
General Obligation
150,000 New Orleans, Louisiana General Obligation Bonds
6.125%, 10/01/16 ........................................... 163,623
---------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------------------
MUNICIPAL BOND PORTFOLIO (cont'd)
Principal
Amount Value
-------------- ---------------
MARYLAND - 3.98%
Resource Recovery
$300,000 Maryland State Energy Financing Administration
Solid Waste Disposal Revenue Wheelabrator Water Projects
6.30%, 12/01/10 ............................................ $327,228
---------------
MASSACHUSETTS - 1.33%
General Obligation - .66%
50,000 Lowell, Massachusetts General Obligation Bonds
6.05%, 4/01/11 ............................................. 54,596
---------------
Transportation - .67%
50,000 Massachusetts Bay Transportation Authority
General Transportation System (Series B)
5.90%, 3/01/24 ............................................. 55,057
---------------
109,653
---------------
MICHIGAN - 5.01%
General Obligation - 3.46%
250,000 Michigan Municipal Bond Authority
General Obligation Bonds
6.50%, 10/01/09 ............................................ 285,520
---------------
Pollution Control - 1.55%
125,000 Michigan State Environmental Protection Program
5.40%, 11/01/19 ............................................ 127,330
---------------
412,850
---------------
MISSOURI - .58%
Housing -
45,000 Missouri State Housing Development Community
Single Family Mortgage Revenue
6.90%, 7/01/18 ............................................. 47,883
---------------
NEBRASKA - 0.52%
Power/Utility
40,000 Omaha Public Power District (Series C)
5.50%, 2/01/14 ............................................. 42,952
---------------
NEVADA - 3.50%
General Obligation - 1.58%
50,000 Clark County, Nevada General Obligation Bonds (Series B)
6.00%, 6/01/16 (AMBAC insured) ............................. 53,696
75,000 Nevada State General Obligation Bonds
Municipal Bond Bank (Series A)
5.50%, 11/01/20 ............................................ 76,865
---------------
130,561
---------------
Housing - 1.92%
150,000 Nevada Housing Division
Single Family Program (Series A1)
6.15%, 4/01/17 ............................................. 157,823
---------------
288,384
---------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------------------
MUNICIPAL BOND PORTFOLIO (cont'd)
Principal
Amount Value
-------------- ---------------
NEW YORK - 12.16%
Education - 1.68%
New York State Dormitory Authority
$125,000 Consolidated City University System
5.75%, 7/01/09 ............................................. $138,638
---------------
General Obligation - 6.85%
300,000 New York City General Obligation Bonds (Series H)
6.50%, 3/15/05 ............................................. 334,170
200,000 New York State General Obligation Bonds (Series A)
6.50%, 7/15/06 ............................................. 229,774
---------------
563,944
---------------
Housing - .97%
New York State Mortgage Agency Revenue
75,000 Homeowner Mortgage (Series 54)
6.10%, 10/01/15 ............................................ 80,063
---------------
Pollution Control - .52%
40,000 New York State Environmental Facilities Corp.
Pollution Control Revenue
5.875%, 6/15/14 ............................................ 42,949
---------------
Transportation - 1.32%
100,000 Metropolitan Transportation Authority
5.50%, 7/01/08 (FGIC insured) .............................. 108,623
---------------
Water/Sewer - .82%
65,000 New York City Municipal Water Finance Authority
Water and Sewer Systems Revenue (Series F)
5.50%, 6/15/15 (MBIA insured) .............................. 67,673
---------------
1,001,890
---------------
NORTH DAKOTA - 6.01%
Housing -
500,000 North Dakota State Housing Finance Agency
Housing Financial PG. Home Mortgage Fin (Series A)
5.25%, 7/01/18 ............................................. 495,645
---------------
OHIO - .73%
Health/Hospital
50,000 Lorain County, Ohio Hospital Revenue
7.75%, 11/01/13 (AMBAC insured) ............................ 60,177
---------------
PENNSYLVANIA - 7.21%
Education - 1.92%
150,000 Pennsylvania State Higher Educational Facilities Authority
Health Services Revenue University of Pennsylvania (Series B)
5.75%, 1/01/17 ............................................. 157,934
---------------
General Obligation - 3.68%
300,000 Pennsylvania State
General Obligation Bonds (Second Series)
5.00%, 11/15/12 ............................................ 303,452
---------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------------------
MUNICIPAL BOND PORTFOLIO (cont'd)
Principal
Amount Value
-------------- ---------------
PENNSYLVANIA (Cont'd)
Tax Allocation - .95%
$75,000 Philadelphia, Pennsylvania Municipal Authority Revenue
5.625%, 11/15/14 (FGIC insured) ............................ $78,773
---------------
Water/Sewer - .66%
50,000 Pittsburgh, Pennsylvania Water & Sewer Authority
Water & Sewer Systems Revenue (Series B)
5.60%, 9/01/15 ............................................. 54,241
---------------
594,400
---------------
PUERTO RICO - .85%
Power/Utility -
65,000 Puerto Rico Electric Power Authority
Power Revenue (Series X)
6.00%, 7/01/15 ............................................. 70,002
---------------
SOUTH CAROLINA - 3.02%
Health & Hospitals
250,000 Spartanburg County, South Carolina
Health Services (Series B)
5.125%, 4/15/17 ............................................ 248,628
---------------
TEXAS - 8.74%
General Obligation - 3.38%
75,000 Houston, Texas General Obligation Bonds (Series C)
5.25%, 4/01/14 ............................................. 76,329
175,000 Mesquite, Texas Independent School District
General Obligation Bonds
5.00%, 8/15/15 ............................................. 174,391
25,000 San Antonio, Texas General Obligation Bonds
6.625%, 8/01/14 ............................................ 28,278
---------------
278,998
---------------
Power/Utility - .63%
50,000 Brazos River Authority Texas Revenue
Houston Light & Power Company
5.80%, 8/01/15 (MBIA insured) .............................. 51,842
---------------
Turnpike/Toll - 4.73%
400,000 Harris County, Texas
Toll Road Sub Lien
5.00%, 8/15/21 ............................................. 389,748
---------------
720,588
---------------
UTAH - 3.92%
Power/Utility
300,000 Intermountain Power Agency (Series C)
6.00%, 7/01/02 ............................................ 322,578
---------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------------------
MUNICIPAL BOND PORTFOLIO (cont'd)
Principal
Amount Value
-------------- ---------------
WASHINGTON - .58%
Power/Utility
$35,000 Seattle, Washington Municipal Light & Power Revenue
5.75%, 8/01/11 (Series A) .................................. $37,017
10,000 Washington State Public Power Supply Systems
Nuclear Project Revenue (Series B)
7.25%, 7/01/12 (FGIC insured) .............................. 10,916
---------------
47,933
---------------
WISCONSIN - 3.82%
Housing
$300,000 Wisconsin Housing & Economic Development
6.20%, 3/01/27 ............................................. $314,883
---------------
WYOMING - .32%
Housing
25,000 Wyoming Community Development
Authority Housing Revenue (Series 1)
6.65%, 12/01/06 ............................................ 26,585
---------------
Total Long Term Investments
(cost--$7,308,229).......................................... 7,661,408
---------------
Total Investments
(cost--$7,808,229)........................................... 99.04% 8,161,408
Other Assets in Excess of
Other Liabilities............................................ 0.96% 79,074
------------------ ---------------
Total Net Assets................................................ 100.0% $8,240,482
================== ===============
</TABLE>
MBIA - Municipal Bond Investors Assurance
FGIC - Financial Guaranty Insurance Company
AMBAC - American Municipal Bond Assurance Company
See accompanying notes to financial statements.
<PAGE>
<TABLE>
February 28, 1998 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LARGE CAPITALIZATION VALUE PORTFOLIO
Principal
Amount Value
-------------- ---------------
SHORT-TERM CORPORATE/GOVERNMENT NOTES - 19.75%
Miscellaneous Financial Services - 11.31%
Ford Motor Credit Co.
$1,453,000 5.46%, 03/02/98 .............................................. $1,452,780
Ford Motor Credit Co.
120,000 5.48%, 03/02/98 ............................................... 119,982
General Motors Acceptance Corporation
1,130,000 5.50%, 03/30/98 ............................................... 1,124,993
American Express Corp.
1,000,000 5.47%, 03/04/98 ................................................ 999,544
American Express Corp.
513,000 5.47%, 03/11/98 ................................................ 512,221
---------------
4,209,520
---------------
Machinery/Engineering - 4.21%
John Deere Cap Corporation
1,565,000 5.47%, 03/04/98 ................................................ 1,564,286
---------------
Federal Farm Credit Bank - .30%
110,000 5.37%, 03/04/98 ................................................ 109,951
---------------
Federal Home Loan Bank - 3.93 %
410,000 5.59%, 03/02/98 ................................................ 409,936
65,000 5.35%, 03/04/98 ................................................ 64,971
990,000 5.35%, 03/24/98 ................................................ 986,616
---------------
1,461,523
---------------
Total Short-Term Corporate/Government Notes
(cost--$7,345,280)........................................... $7,345,280
---------------
Shares
--------------
COMMON STOCKS - 81.20%
Advertising - 1.87%
13,000 WPP Group PLC .................................................. $697,125
---------------
Aerospace - 5.40%
5,000 Textron Inc. .................................................. 374,688
14,000 Lockheed Martin Corp. ......................................... 1,633,625
---------------
2,008,313
---------------
Airlines - 1.70%
5,000 AMR Corp.*...................................................... 632,813
---------------
Automotive - 2.38%
23,526 Lucasvarity PLC................................................. 885,166
---------------
Banking - 6.86%
7,000 Bank of Boston Corp. ........................................... 697,813
6,300 Citicorp ....................................................... 834,750
3,166 Wells Fargo & Co. ............................................. 1,019,452
---------------
2,552,015
---------------
Building & Construction - 2.74%
13,000 Armstrong World Industries Inc.................................. 1,020,500.
---------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
- ---------------------------------------------------------------------------------------------------------------
LARGE CAPITALIZATION VALUE PORTFOLIO (cont'd)
Shares Value
-------------- ---------------
Chemicals - 3.12%
9,400 Du Pont (E.I.) de Nemours & Co. ............................... $576,338
6,000 Hercules, Inc. ................................................ 289,875
5,250 Monsanto Co. .................................................. 267,093
1,050 Solutia Inc. .................................................. 28,678
---------------
1,161,984
---------------
Computers - 1.87%
25,000 Wang Labs Inc.* ............................................... 696,875
---------------
Conglomerates - 1.68%
3,800 General Electric Co. .......................................... 295,450
8,000 Tenneco, Inc. ................................................. 329,000
---------------
624,450
---------------
Cosmetics & Jewelry - 1.33%
7,000 Avon Products Inc. ............................................ 493,062
---------------
Drugs & Medical Products - 1.83%
10,680 Becton, Dickinson & Co. ....................................... 679,515
---------------
Electronics - 3.87%
10,000 Adaptec, Inc.*.................................................. 264,376
16,160 Arrow Electronics, Inc.*........................................ 538,330
10,000 Avnet Inc. .................................................... 637,500
---------------
1,440,206
---------------
Food Services - 2.65%
18,000 McDonalds Corp. ................................................ 985,500
---------------
Healthcare Services - 3.14%
31,250 Tenet Healthcare Corp.*......................................... 1,166,016
---------------
Insurance - 19.60%
18,700 Ace Ltd. ...................................................... 1,848,962
16,950 AFLAC, Inc. ................................................... 1,041,365
3,225 American International Group, Inc. ............................ 387,605
15,000 Everest Re Holdings, Inc. .................................... 553,125
28,620 EXEL Ltd. ..................................................... 1,894,286
4,700 General Re Corp. .............................................. 1,001,100
13,000 Renaissance Re Holdings Ltd. .................................. 563,875
---------------
7,290,318
---------------
Leisure - 3.57%
13,000 Carnival Corp. ................................................ 765,375
17,000 Sabre Group Holdings Inc. CL A* .............................. 561,000
---------------
1,326,375
---------------
Machinery/Engineering - 2.29%
15,600 Caterpillar, Inc. ............................................. 852,150
---------------
Miscellaneous Financial Services - 5.03%
17,200 Countrywide Credit Industries, Inc. ........................... 764,325
23,400 Federal Home Loan Mortgage Corp. .............................. 1,105,650
---------------
1,869,975
---------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
- ---------------------------------------------------------------------------------------------------------------
LARGE CAPITALIZATION VALUE PORTFOLIO (cont'd)
Shares Value
-------------- ---------------
Printing/Publishing - .91%
8,500 Donnelley R R & Sons Co. ..................................... $336,813
---------------
Retail - 3.21%
19,650 May Department Stores Co. ..................................... 1,193,737
---------------
Telecommunications - 1.42%
8,000 Sprint Corp. .................................................. 528,000
---------------
Textiles - 2.96%
30,000 Unifi, Inc. .................................................. 1,102,500
---------------
Transportation - 1.77%
23,000 Canadian Pacific Ltd .......................................... 656,937
---------------
Total Common Stocks
(cost--$20,133,841) ......................................... $30,200,345
---------------
Total Investments
(cost--$27,479,121) .............................................. 100.95% $37,545,625
Other Liabilities in Excess of
Other Assets ..................................................... (.95%) (353,908)
---------------
Total Net Assets .................................................... 100.0% $37,191,717
============ ===============
-------------------------------------------------------------------------
* Non-income producing security.
</TABLE>
<PAGE>
<TABLE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------------
<S> <C> <C>
LARGE CAPITALIZATION GROWTH PORTFOLIO
Shares Value
------------- ------------------
COMMON STOCKS - 98.91%
Advertising - 2.50%
27,750 Interpublic Group of Companies, Inc. ............... $1,512,375
------------------
Banking - 6.77%
17,000 BankAmerica Corp. .................................. 1,317,500
9,000 Citicorp ........................................... 1,192,500
38,600 Norwest Corp. ...................................... 1,580,188
------------------
4,090,188
------------------
Building Material/Home Improvement -1.99%
18,800 Home Depot Inc. .................................... 1,199,675
------------------
Computers - 2.79%
52,500 Compaq Computer Corp. .............................. 1,683,281
------------------
Computer Services - 4.46%
20,300 Automatic Data Processing, Inc. .................... 1,239,569
22,050 Cisco Systems, Inc.*................................. 1,452,544
------------------
2,692,113
------------------
Computer Software - 4.20%
18,000 Microsoft Corp.*..................................... 1,525,500
41,000 Oracle Systems Corp.*................................ 1,009,625
------------------
2,535,125
------------------
Conglomerate - 2.26%
17,600 General Electric Co. ............................... 1,368,400
------------------
Cosmetics/Toiletries - 2.13%
11,900 Gillette Co. ....................................... 1,283,713
------------------
Drugs & Medical Products - 18.23%
18,000 Abbott Laboratories ................................. 1,346,625
12,000 Bristol Myers Squibb Co.............................. 1,202,250
18,000 Johnson & Johnson ................................... 1,359,000
38,600 Rite Aid Corp. ..................................... 1,249,675
23,000 Medtronic Inc. ...................................... 1,221,875
10,600 Merck & Co., Inc. .................................. 1,352,162
20,400 Pfizer Inc. ........................................ 1,805,400
19,400 Schering Plough Corp. .............................. 1,475,613
------------------
11,012,600
------------------
Electronics - 3.76%
30,000 Applied Materials, Inc.*............................. 1,104,375
13,000 Intel Corp. ........................................ 1,165,938
------------------
2,270,313
------------------
Entertainment - 2.41%
13,000 The Walt Disney Co. ................................ 1,455,188
------------------
Finance - 2.33%
22,100 Federal National Mortgage Corporation ............... 1,410,256
------------------
Food Service - 4.42%
32,800 Kroger Company* ..................................... 1,385,800
32,500 Starbucks Corp.* .................................... 1,285,781
------------------
2,671,581
------------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------------
LARGE CAPITALIZATION GROWTH PORTFOLIO (cont'd)
Shares Value
------------- ------------------
Household Products - 4.87%
19,000 Colgate-Palmolive Co. .............................. $1,542,562
16,500 Proctor & Gamble Co. ............................... 1,401,469
------------------
2,944,031
------------------
Insurance - 2.34%
11,775 American International Group, Inc. ................. 1,415,208
------------------
Manufacturing - 9.49%
34,000 Dover Corp. ....................................... 1,313,250
22,400 Illinois Tool Works, Inc. .......................... 1,342,600
31,100 Solectron Corp.* .................................. 1,504,462
31,000 Tyco International Ltd. ............................ 1,573,250
------------------
5,733,562
------------------
Miscellaneous Other - 2.39
38,449 Cendant Corp.* ...................................... 1,441,838
------------------
Miscellaneous Financial Services - 4.20%
35,000 Charles Schwab & Co. ................................ 1,321,250
17,000 Merrill Lynch & Co. Inc. ........................... 1,216,563
------------------
2,537,813
------------------
Retail - 6.84%
16,600 Dayton Hudson Corp. ............................... 1,283,387
37,800 Safeway Inc.* ..................................... 1,318,275
33,000 Wal-Mart Stores, Inc. .............................. 1,528,312
------------------
4,129,974
------------------
Telecommunications - 2.00%
20,000 Tellabs, Inc.*....................................... 1,207,500
------------------
Tobacco/Beverages/Food Products - 6.35%
18,000 Coca Cola Co. ..................................... 1,236,375
41,500 ConAgra Inc. ...................................... 1,245,000
37,000 PepsiCo, Inc. ...................................... 1,352,812
------------------
3,834,187
------------------
Toys/Games/Hobby - 2.18%
31,100 Mattel, Inc. ....................................... 1,315,918
------------------
Total Common Stocks
(cost--$39,878,181)............................... $59,744,839
------------------
Total Investments
(cost--$39,878,181) .................................... 98.91% $59,744,839
Other Assets in Excess of
Other Liabilities ...................................... 1.09% 661,285
---------- ------------------
Total Net Assets .......................................... 100.0% $60,406,124
========== ==================
----------------------------------------------------------------
*Non - income producing security.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
February 28, 1998 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SMALL CAPITALIZATION PORTFOLIO
Shares Value
------ -----
COMMON STOCKS - 98.71%
Banking - 3.43%
15,000 Commercial Federal Corp. ..................................... $530,625
20,550 Queens County Bancorp ........................................ 816,863
------------
1,347,488
------------
Building & Construction - 5.14%
51,000 Oakwood Homes Corp. ........................................... 2,020,875
------------
Computers - 4.50%
83,500 Sequent Computer Systems Inc.* ............................... 1,769,156
------------
Computer Software - 3.00%
22,400 Sterling Software Inc.* ....................................... 1,180,200
------------
Electronics - 15.64%
31,000 ETEC System Inc.* ............................................. 1,625,563
41,500 Harman International Industries Inc. .......................... 1,929,750
13,000 Varian Associates Inc. ........................................ 754,000
90,100 Vishay Intertechnology Inc.* .................................. 1,835,788
------------
6,145,101
------------
Food Services - 1.29%
12,000 Hannaford Bros. Co. ........................................... 506,250
------------
Machinery/Engineering - 4.20%
69,300 Albany International Corp. ................................... 1,650,206
------------
Manufacturing - 15.13%
261,200 BEC Group Inc.* .............................................. 1,681,475
62,000 Silicon Valley Group Inc.* ................................... 1,689,500
20,000 Teleflex Inc. ................................................ 811,250
44,000 Toro Co. ..................................................... 1,765,500
------------
5,947,725
------------
Measuring Instruments - 2.23%
32,500 E.G. & G Inc. ................................................. 875,468
------------
Media/Broadcasting - 2.15%
18,000 Media General Inc. ............................................ 846,000
------------
Metals/Mining - 4.92%
96,000 Oregon Steel Mills Inc. ....................................... 1,932,000
------------
Miscellaneous Financial Services - 4.93%
17,000 Astoria Financial Corp. ...................................... 949,875
30,000 T R Financial Corp. .......................................... 989,063
------------
1,938,938
------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
- ---------------------------------------------------------------------------------------------------------------------
SMALL CAPITALIZATION PORTFOLIO (cont'd)
Shares Value
------ -----
Oil/Gas - 12.80%
74,000 EEX Corp.* .................................................... 633,625
116,600 Oceaneering International Inc.* ............................... 1,931,188
22,500 Pride International Inc.* .................................... 513,281
37,000 Tritron Energy Ltd.* ......................................... 1,170,125
22,000 Valero Energy Corporation .................................... 781,000
------------
5,029,219
------------
Pipelines - 5.07%
83,000 Shaw Group Inc.* .............................................. $1,992,000
------------
Retail - 10.17%
111,750 American Homestar Corp.* ...................................... 2,311,827
45,500 Foodmaker Inc.* ............................................... 827,531
24,000 Outback Steakhouse Inc.* ..................................... 858,000
------------
3,997,358
------------
Tobacco, Beverage/Food Products - 4.11%
29,000 Canandaigua Wine Inc.* ........................................ 1,616,750
------------
1,595,400 Total Common Stocks
(cost--$32,666,653) ........................................ $40,420,297
------------
Repurchase Agreement - .76%
$300,000 Repurchase Agreement dated 02/27/98, maturing 03/02/98 with
State Street Bank & Trust Company, collateralized by $305,000
U.S. Treasury Bonds, 5.50% due 11/15/98; proceeds $300,071
(cost--$300,000) ........................................... $300,000
------------
Total Investments
(cost--$32,966,653) ........................................... 99.47% $40,720,297
Other Assets in Excess of
Other Liabilities ............................................. .53% 206,365
Total Net Assets ................................................. 100.0% $40,926,662
========== ============
* Non-income producing security.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------
<S> <C> <C>
INTERNATIONAL EQUITY PORTFOLIO
Shares Value
------------ -----------------
COMMON STOCKS - 97.14%
AUSTRALIA - .79%
Conglomerates -
7,500 CSR Ltd. Sponsored ADR .......................... $99,530
-----------------
FINLAND - 3.19%
Conglomerates
4,000 Nokia Corp. Sponsored ADR * ..................... 403,000
-----------------
FRANCE - 7.47%
Banking - 2.98%
12,500 Societe Generale France Sponsored ADR * ......... 376,891
-----------------
Chemicals - 2.23%
6,100 Rhone-Poulenc S.A. Sponsored ADR* ............... 281,744
-----------------
Oil/Gas - 2.26%
5,000 Elf Aquitane S.A. Sponsored ADR ................. 285,938
-----------------
944,573
-----------------
GERMANY - 10.69%
Automotive - 2.93%
2,700 Sap Aktiengesellschaft Sponsored ADR * .......... 370,587
-----------------
Banking - 2.45%
4,500 Deutsche Bank AG Sponsored ADR .................. 309,091
-----------------
Machinery/Engineering - 2.85%
600 Mannesmann AG Sponsored ADR ..................... 360,379
-----------------
Utilities - 2.46%
4,600 Veba AG Sponsored ADR*........................... 311,075
-----------------
1,351,132
-----------------
IRELAND - 2.36%
Drugs & Medical Products -
4,800 Elan PLC Sponsored ADR*......................... 297,900
-----------------
ITALY - 5.14%
Oil/Gas - 2.42%
5,200 ENI spa Sponsored ADR ........................... 305,500
-----------------
Telecommunications - 2.72%
5,000 Telecom Italia S.P.A. ........................... 344,375
-----------------
649,875
-----------------
JAPAN - 16.52%
Banking - .79%
7,000 Bank of Tokyo-Mitsubishi ADR .................... 99,750
-----------------
Electronics -5.38%
4,202 Fujitsu Ltd,. ADR ............................... 236,160
2,984 Sony Corp. Sponsored ADR ........................ 269,866
1,200 Sumitomo Electric Industries Ltd. ADR ........... 174,780
-----------------
680,806
-----------------
Manufacturing - 2.05%
1,123 Bridgestone Corp. ADR ........................... 258,682
-----------------
Merchandising -2.28%
8,799 Marui Co. Ltd. ADR ............................. 288,355
-----------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO (cont'd)
Shares Value
------------ -----------------
JAPAN (cont'd)
Photography - 1.18%
1,300 Canon, Inc. Sponsored ADR ....................... $148,688
-----------------
Printing/Publishing - 1.34%
1,000 Dai Nippon Printing Ltd. ADR ................... 170,189
-----------------
Telecommunication - 1.50%
4,300 Nippon Telegraph & Telephone Corp. Sponsored ADR 189,200
-----------------
Video Games - 2.00%
22,000 Nintendo L td*................................... 252,511
-----------------
2,088,181
-----------------
MEXICO - 2.43%
Automotive - 1.31%
5,700 Desc S A De C V Repstg Ser C SH ADR * .......... 166,013
-----------------
Banking - 1.12%
11,800 Empresas Ica Sociedad Control Sponsored ADR .... 140,862
-----------------
306,875
-----------------
NETHERLANDS - 8.09%
Chemicals - 2.33%
2,900 Akzo Nobel Sponsored ADR ........................ 294,350
-----------------
Printing/Publishing - 2.91%
11,700 N V Verenigd Bezit VNU Sponsored ADR ............ 368,110
-----------------
Software - 2.85%
8,000 BAAN Co NVF* .................................... 360,000
-----------------
1,022,460
-----------------
PORTUGAL - 2.08%
Telecommunications -
5,000 Portugal Telecommunication S A Sponsored ADR ..... 263,125
-----------------
SPAIN -5.23%
Banking - 2.61%
7,100 Banco Bilbao Vizcaya S A Sponsored ADR* .......... 329,263
-----------------
Telecommunications - 2.62%
3,200 Telefonica De Espana S A Sponsored ADR ........... 331,200
-----------------
660,463
-----------------
SWEDEN - 2.80%
Drugs & Medical Products -
17,500 Astra AB A SH Sponsored ADR* ................... 353,281
-----------------
SWITZERLAND - 7.15%
Drugs & Medical Products
2,600 Roche Holdings Ltd. ADR ........................ 304,361
3,400 Nestle S A SH Sponsored ADR *.................... 297,697
3,300 Novartis AG Sponsored ADR*....................... 300,972
-----------------
903,030
-----------------
See accompanying notes to financial statements.
<PAGE>
February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (continued)
--------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO (cont'd)
Shares Value
------------ -----------------
UNITED KINGDOM - 23.20%
Airports - .75%
10,000 BAA Plc. Sponsored ADR .......................... $95,003
-----------------
Automotive - 1.87%
9,800 GKN Pub Ltd Sponsored ADR *...................... 236,226
-----------------
Banking - 2.45%
2,600 Barclays Plc. Sponsored ADR ..................... 309,400
-----------------
Conglomerate - 1.27%
8,000 BAT Industries Plc. Sponsored ADR ............... 160,500
-----------------
Drugs & Medical Products - 3.42%
3,000 BOC Group Plc. Sponsored ADR .................... 95,812
6,200 Glaxo Wellcome Plc. Sponsored ADR ............... 336,738
-----------------
432,550
-----------------
Entertainment - .16%
1,820 Rank Group Plc. Sponsored ADR ................... 20,703
-----------------
Food Service - 1.11%
3,369 Diageo Plc Sponsored ADR *....................... 140,024
-----------------
Insurance - 2.83%
4,800 Prudential PLC Sponsored ADR*.................... 358,015
-----------------
Leisure - 1.01%
25,000 Ladbroke Group Ltd. Sponsored ADR .............. 127,190
-----------------
Manufacturing - 1.20%
6,500 Tomkins Plc. Sponsored ADR ...................... 151,125
-----------------
Media/Broadcasting - .86%
3,000 Carlton Communications Plc. Sponsored ADR ....... 108,375
-----------------
Merchandising - 2.00%
8,400 Boots Plc. ADR ................................. 252,407
-----------------
Oil/Gas - 2.32%
6,900 Shell Transport & Trading Co. ADR ............... 293,680
-----------------
Power/Utility - 1.07%
20,500 General Electric Ltd. ADR ...................... 134,927
-----------------
Tobacco/Beverages/Food Products - .88%
6,607 Bass Plc. Sponsored ADR ......................... 111,080
-----------------
2,931,205
-----------------
Total Common Stocks
(cost--$10,299,552) .......................... $12,274,630
-----------------
Total Investments
(cost--$10,299,552) .....................................97.14% $12,274,630
Other Assets in Excess of
Other Liabilities ........................................2.86% 361,414.
---------- -----------------
Total Net Assets ..........................................100.0% $12,636,044
========== =================
----------------------------------------------------------
* Non-income producing security.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
February 28, 1998 (Unaudited)
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
------------ ------------- ---------- ----------- -------------- ----------- ------------
U.S. Large Large
Government Investment Municipal Capitalization Capitalization Small International
Money Market Quality Bond Bond Value Growth Capitalization Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------- ----------- ------------ -------------- ------------- ------------ -----------
Assets
Investments, at value
(cost--$27,190,990;$26,952,531;
$7,808,229; $27,479,121;
$39,878,181; $32,666,653
and $10,299,552, respectively)...$27,190,990 $27,214,366 $8,161,408 $37,545,625 $59,744,839 $39,094,734 $12,274,630
Cash........................... 5,263 1,787,780 -- 4,556 861,079 247 359,798
Receivable for shares of
beneficial interest sold 859,049 158,569 3,250 321,691 284,318 113,948 19,646
Deferred organization expenses... 19,174 19,174 19,174 19,174 19,174 19,174 19,174
Interest receivable.............. 26,267 513,715 114,904 -- -- 71 --
Receivable from manager.......... -- -- 2,161 -- -- -- --
Dividends receivable............. -- -- -- 31,452 38,313 14,780 11,962
Receivable for investments sold.. -- 56,064 -- -- -- 830,012 --
Foreign taxes receivable ........ -- -- -- -- -- -- 6,976
Prepaid expenses and other assets 1,466 4,172 260 2,295 6,616 2,695 377
--------- ------------ ----------- ----------- ---------- ----------- -------------
Total Assets...................28,102,209 29,753,840 8,301,157 37,924,793 60,954,339 40,075,661 12,692,563
---------- ------------ ------------ ----------- ---------- ----------- -------------
Liabilities
Payable to manager............. 9,586 11,013 -- 16,566 20,181 18,572 7,623
Administration fee payable .... 2,177 2,149 722 2,869 4,648 3,062 987
Payable for overdrafts......... -- -- 14,209 -- -- -- --
Payable for shares of beneficial
interest redeemed............ 94,702 23,918 18,763 49,918 90,122 6,949 11,930
Dividends payable.............. 769 1,792 119 -- -- -- --
Payable for investments purchased -- 2,260,521 -- 636,421 387,055 705,910 --
Other payables and accrued
expenses.................. 45,095 35,430 26,862 27,302 46,209 40,069 35,979
----------- ------------ --------- ---------- ----------- ---------- ------------
Total Liabilities............ 152,329 2,334,823 60,675 733,076 548,215 774,562 56,519
----------- ------------ --------- ---------- ----------- ---------- ------------
Net Assets
Shares of beneficial interest
at par value........ 279,518 26,873 7,786 18,364 29,860 24,285 10,940
Paid-in-surplus 27,672,189 27,064,949 7,868,678 25,962,613 39,817,051 29,168,563 10,888,870
Accumulated undistributed net
investment income (loss) -- (3,131) (11,632) (453,548) (137,255) (1,124,292) (18,494)
Accumulated net realized gain
(loss) on investments and
foreign currency transaction (1,827) 68,490 22,470 1,597,785 829,809 4,804,462 (220,350)
Net unrealized appreciation
(depreciation) on investments -- 261,835 353,180 10,066,504 19,866,659 6,428,081 1,975,078
------------ ------------ ----------- ----------- ------------- ----------- -----------
Total Net Assets........... $27,949,880 $27,419,017 $8,240,482 $37,191,717 $60,406,124 $39,301,099 $12,636,044
============ ============= =========== =========== ============= =========== ============
Shares of beneficial interest.....27,951,707 2,687,235 778,623 1,836,408 2,985,909 2,428,493 1,093,858
outstanding
------------ ------------- ------------ ----------- ------------- ----------- ------------
Net asset value and offering
price per share $1.00 $10.20 $10.58 $20.25 $20.23 $16.18 $11.55
============= ============= ============ =========== ============= ========== ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Six Months Ended February 28, 1998 (Unaudited)
--------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
-------------- ------------ ------------ ------------- ------------- ------------- -----------
U.S. Large Large
Government Investment Municipal Capitalization Capitalization Small International
Money Market Quality Bond Bond Value Growth Capitalization Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
-------------- ------------ ------------ ------------- ------------- ------------- -----------
Investment Income
Dividends ................... -- -- -- $173,458(1) $214,358 $94,130 $65,699
Interest .................... $756,163 $736,527 $194,552 124,080 29,994 18,683 --
-------------- ------------ ------------ ------------- ------------- ------------- -----------
Total investment income ... 756,163 736,527 194,552 297,538 244,352 112,813 65,699
-------------- ------------ ------------ ------------- ------------- ------------- -----------
Operating Expenses
Management fees (note 2a) ... 64,617 65,461 20,090 103,877 168,324 107,136 42,314
Administration fees
(note 2c)................. 16,324 14,282 4,383 19,177 31,075 19,779 6,770
Transfer and dividend
disbursing agent fees..... 34,933 24,435 9,050 31,132 48,870 30,770 14,480
Custodian fees (note 2a) .... 24,543 31,849 28,484 25,951 24,039 33,813 34,419
Registration fees ........... 9,846 11,111 8,004 11,123 12,566 11,717. 8,765
Amortization of deferred
organization expenses
(note 1c) ................ 6,322 6,322 6,322 6,322 6,322 6,322 6,322
Auditing fees ............... 5,108 5,108 5,553 5,108 5,108 (1,934) 7,240
Reports and notices to
shareholders.............. 4,503 3,752 1,271 4,693 8,214 4,357 1,723
Legal fees .................. 2,326 1,901 570 2,367 4,062 2,210 780
Trustees' fees .............. 3,663 447 447 447 4,835 447 447
Miscellaneous ............... 3,657 2,993 1,544 3,423 4,958 3,356 1,879
-------------- ------------ ------------ ------------- ------------- ------------- -----------
Total operating expenses .. 175,842 167,661 85,718 213,620 318,373 217,973 125,139
Less: Management fees
waived and/or expenses
assumed (note 2a)...... (22,694) (13,804) (41,457) (5,988) (76) (4,648) (29,835)
Expense offset
arrangement
(note 2a)......... (108) (11,034) (429) (611) (15,894) (328) (16,319)
-------------- ------------ ------------ ------------- ------------- ------------- -----------
Net operating expenses .. 153,040 142,823 43,832 207,021 302,403 212,997 78,985
-------------- ------------ ------------ ------------- ------------- ------------- -----------
Net investment income (loss) 603,123 593,704 150,720 90,517 (58,051) (100,184) (13,286)
-------------- ------------ ------------ ------------- ------------- ------------- -----------
Realized and Unrealized
Gain(Loss) on Investments-Net
Net realized gain (loss)
on securities............. (1,693) 130,432 20,095 1,256,208 1,166,199 3,980,513 (164,973)
Net realized gain on
foreign currency
transactions .............. -- -- -- -- -- -- --
-------------- ------------ ------------ ------------- ------------- ------------- -----------
Net realized gain (loss)
on investments............. (1,693) 130,432 20,095 1,256,208 1,166,199 3,980,513 (164,973)
Net change in unrealized
appreciation(depreciation)
on investments............ -- 142,949 171,464 2,678,377 7,804,510 881,923 1,088,593
-------------- ------------ ------------ ------------- ------------- ------------- -----------
Net realized gain (loss) and
change in unrealized
appreciation (depreciation)
on investments............ (1,693) 273,381 191,559 3,934,585 8,970,709 4,862,436 923,620
-------------- ------------ ------------ ------------- ------------- ------------- -----------
Net increase in net assets
resulting from
operations .............. $601,430 $867,085 $342,279 $4,025,102 $8,912,658 $4,762,252 $910,334
============== ============ ============ ============= ============= ============= ===========
(1) Net of foreign withholding taxes of $2,099 and $5,030 for Large
Capitalization Value and International Equity, respectively.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------- ------------------------------ --------------------------------
U.S. Government Money Market Investment Quality Bond Municipal Bond
Portfolio Portfolio Portfolio
------------------------------- ------------------------------ --------------------------------
6 Months Ended Year Ended 6 Months Ended Year Ended 6 Months Ended Year Ended
February 28,1998 August 31,1997 February 28,1998 August 31,1997 February 28,1998 August 31,1997
---------------- -------------- ---------------- -------------- ---------------- --------------
Operations
Net investment income (loss) ...... $603,123 $1,128,847 $593,704 $1,025,416 $150,720 $261,692
Net realized gain (loss)
on investments .................. (1,693) (101) 130,432 (24,955) 20,095 24,803
Net change in unrealized
appreciation (depreciation)
on investments .................. -- -- 142,949 385,534 171,464 179,068
------------- -------------- -------------- -------------- -------------- -------------
Net increase (decrease) in
net assets resulting from
operations .................... 601,430 1,128,746 867,085 1,385,995 342,279 465,563
------------- -------------- -------------- -------------- -------------- -------------
Dividends and Distributions to
Shareholders
Net investment income ............. (603,123) (1,128,847) (593,670) (1,046,193) (162,352) (260,619)
Net realized gain ................. -- -- (33,855) -- (10,602) (1,073)
------------- -------------- -------------- -------------- -------------- -------------
Total dividends and distributions
to shareholders ............... (603,123) (1,128,847) (627,525) (1,046,193) (172,954) (261,692)
------------- -------------- -------------- -------------- -------------- -------------
Share Transactions of
Beneficial Interest
Net proceeds from sales ........... 14,496,997 29,208,442 7,166,541 11,370,735 1,631,360 3,823,165
Reinvestment of dividends and
distributions ................... 583,399 1,098,942 667,667 1,022,378 171,766 259,144
Cost of shares redeemed ........... (15,700,593) (24,641,813) (3,162,166) (7,089,550) (955,143) (1,770,754)
------------- -------------- -------------- -------------- -------------- -------------
Net increase (decrease) in net
assets from share transactions
of beneficial interest ........ (620,197) 5,665,571 4,672,043 5,303,563 847,983 2,311,555
------------- -------------- -------------- -------------- -------------- -------------
Total increase in net assets 621,890) 5,665,470 4,911,603 5,643,365 1,017,308 2,515,426
Net Assets
Beginning of period ............... 28,571,770 22,906,300 22,507,414 16,864,049 7,223,174 4,707,748
------------- -------------- -------------- -------------- -------------- -------------
End of period (including
undistributed (overdistributed)
net investment income of $0, $0;
($3,131), $1,533; ($11,632),
$1,073; ($453,548), $100,767;
($137,255), 1,896; $1,124,292),
$1,896; ($18,494) and ($6,422),
respectively) ................... $27,949,880 $28,571,770 $27,419,017 $22,507,414 $8,240,482 $7,223,174
============= ============== ============== ============== ============== =============
Shares of Beneficial Interest
Issued and Redeemed
Issued ............................ 14,496,998 29,208,442 701,779 1,132,061 154,382 376,537
Issued from reinvestment of
dividends and distributions ..... 583,399 1,098,942 65,475 101,660 16,331 25,376
Redeemed .......................... (15,700,593) (24,641,813) (310,177) (705,446) (91,230) (173,590)
------------- -------------- -------------- -------------- -------------- -------------
Net increase (decrease).......... (620,196) 5,665,571 457,077 528,275 79,483 228,323
============= ============== ============== ============== ============== =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------- -------------------------------- -------------------------------- ---------------------------------
Large Capitalization Value Large Capitalization Growth Small Capitalization International Equity
Portfolio Portfolio Portfolio Portfolio
- -------------------------------- -------------------------------- -------------------------------- ---------------------------------
6 Months Ended Year Ended 6 Months Ended Year Ended 6 Months Ended Year Ended 6 Months Ended Year Ended
February 28,1998 August 31, 1997 February 28,1998 August 31, 1997 February 28,1998 August 31, 1997 February 28, 1998 August 31, 1997
- ---------------- --------------- ---------------- --------------- ---------------- --------------- ----------------- ---------------
$90,517 $146,306 ($58,051) ($48,190) ($100,184) ($161,829) ($13,286) $30,456
1,256,208 818,090 1,166,199 2,749,355 3,980,513 3,054,526 (164,973) 53,835
2,678,377 5,463,243 7,804,510 9,619,691 881,923 1,552,671 1,088,593 933,958
- ---------------- --------------- --------------- --------------- --------------- --------------- --------------- ------------
4,025,102 6,427,639 8,912,658 12,320,856 4,762,252 4,445,368 910,334 1,018,249
- ---------------- --------------- --------------- --------------- --------------- --------------- --------------- ------------
(125,990) (127,527) -- -- -- -- (45,288) (162,685)
(922,236) (390,714) (2,127,182) -- (1,999,133) (1,384,063) -- (164)
- ---------------- --------------- --------------- --------------- --------------- --------------- --------------- ------------
(1,048,226) (518,241) (2,127,182) -- (1,999,133) (1,384,063) (45,288) (162,849)
- ---------------- --------------- --------------- --------------- --------------- --------------- --------------- ------------
6,320,988 13,038,032 9,654,311 18,266,314 11,290,319 8,766,703 2,242,643 4,769,883
1,033,466 512,658 2,098,284 -- 1,976,468 1,374,155 44,587 159,504
(2,815,430) (8,058,730) (5,330,440) (17,350,873) (5,510,211) (6,492,135) (905,139) (2,252,818)
- ---------------- --------------- --------------- --------------- --------------- --------------- --------------- ------------
4,539,024 5,491,960 6,422,155 915,441 7,756,576 3,648,723 1,382,091 2,676,569
- ---------------- --------------- --------------- --------------- --------------- --------------- --------------- ------------
7,515,900 11,401,358 13,207,631 13,236,297 10,519,695 6,710,028 2,247,137 3,531,969
29,675,817 18,274,459 47,198,493 33,962,196 28,781,404 22,071,376 10,388,907 6,856,938
- ---------------- --------------- --------------- --------------- --------------- --------------- --------------- ------------
$37,191,717 $29,675,817 $60,406,124 $47,198,493 $39,301,099 $28,781,404 $12,636,044 $10,388,907
================ =============== =============== =============== =============== =============== =============== ============
354,450 797,161 515,613 1,172,529 732,258 671,535 205,288 456,093
53,874 32,655 110,902 -- 131,586 107,862 4,136 15,919
(170,150) (496,095) (282,336) (1,112,030) (348,136) (492,311) (82,631) (219,913)
- ---------------- --------------- --------------- --------------- --------------- --------------- --------------- ------------
238,174 333,721 344,179 60,499 515,708 287,086 126,793 252,099
================ =============== =============== =============== =============== =============== =============== ============
</TABLE>
<PAGE>
February 28,1998 (Unaudited)
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Saratoga Advantage Trust (the "Trust") was organized on April 8, 1994 as a
Delaware Business Trust and is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment company. The
Trust commenced investment operations on September 2, 1994. The Trust consists
of seven portfolios: the U.S. Government Money Market Portfolio; the Investment
Quality Bond Portfolio; the Municipal Bond Portfolio; the Large Capitalization
Value Portfolio; the Large Capitalization Growth Portfolio; the Small
Capitalization Portfolio and the International Equity Portfolio. Saratoga
Capital Management (the "Manager") serves as the Trusts' manager. Each of the
Portfolios are provided with discretionary advisory services of an Adviser
identified, retained, supervised and compensated by the Manager. The following
serve as Advisers (the "Advisers") to their respective portfolio(s): OpCap
Advisors (formerly Quest for Value Advisors): Municipal Bond and Large
Capitalization Value; Fox Asset Management Inc.: Investment Quality Bond; Harris
Bretall Sullivan and Smith, Inc.: Large Capitalization Growth; Thorsell, Parker
Partners, Inc.: Small Capitalization; Sterling Capital Management Co.: U.S.
Government Money Market and Ivory & Sime International, Inc.: International
Equity. Unified Fund Services, Inc. (the "Administrator") provides the Trust
with administrative services. Unified Management Corporation serves as the
Trust's distributor. On August 19, 1994, U.S. Government Money Market issued
100,000 shares to the Manager for $100,000 to provide initial Capital for the
Trust. The following is a summary of significant accounting policies
consistently followed by each Portfolio:
(a) Valuation of Investments
Investment securities listed on a national securities exchange and securities
traded in the over-the-counter National Market System are valued at the last
reported sale price on the valuation date; if there are no such reported sales,
the securities are valued at the last quoted bid price. Other securities traded
over-the-counter and not part of the National Market System are valued at the
last quoted bid price. Investment debt securities (other than short - term
obligations) are valued each day by an independent pricing service approved by
the Board of Trustees using methods which include current market quotations from
a major market maker in the securities and trader-reviewed "matrix" prices.
Short-term debt securities having a remaining maturity of sixty days or less are
valued at amortized cost or amortized value, which approximates market value.
Any securities or other assets for which market quotations are not readily
available are valued at their fair value as determined in good faith under
procedures established by the Board of Trustees. The ability of issuers of debt
securities held by the portfolios to meet their obligations may be affected by
economic or political developments in a specific state, industry or region. U.S.
Government Money Market values all of its securities on the basis of amortized
cost which approximates market value. Investments in countries in which
International Equity may invest may involve certain considerations and risks not
typically associated with domestic investments as a result of, among others, the
possibility of future political and economic developments and the level of
governmental supervision and regulation of foreign securities markets.
(b) Federal Income Tax
It is each Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantally all of its taxable and tax-exempt income to shareholders;
accordingly, no Federal income tax provision is required.
(c) Deferred Organization Expenses
In connection with the Trust's organization, each Portfolio incurred
approximately $66,000 in costs. These costs have been deferred and are being
amortized to expense on a straight-line basis over sixty months from
commencement of operations.
(d) Security Transactions and Other Income
Security transactions are recorded on the trade date. In determining the
gain or loss from the sale of securities, the cost of securities sold is
determined on the basis of identified cost. Dividend income is recorded on the
ex-dividend date and interest income is recorded on accrual basis. Discounts or
premiums on debt securities purchased are accreted or amortized to interest
income over the lives of the respective securities.
<PAGE>
(e) Dividends and Distributions
The following table summarizes each Portfolio's dividend and capital gain
declaration policy:
Income
Dividends Capital Gains
------------------------------
U.S. Government Money Markey daily * annually
Investment Quality Bond daily * annually
Municipal Bond daily * annually
Large Capitalization Value annually annually
Large Capitalization Growth annually annually
Small Capitalization annually annually
International Equity annually annually
* paid monthly
Each Portfolio records dividends and distributions to its shareholders on
the ex-dividend date. The amount of dividends and distributions from net
investment income and net realized gains are determined in accordance with
federal income tax regulations, which may differ from generally accepted
accounting principles. These "book-tax" differences are either permanent or
temporary in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the net asset accounts based on their
federal tax-basis treatment; temporary differences do not require
reclassification. To the extent distributions exceed current and accumulated
earnings and profits for federal income tax purposes, they are reported as
distributions of paid-in-surplus or tax return of capital.
February 28,1998 (Unaudited)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
(f) Purchased Put Option Accounting Policy
When a Portfolio purchases a put option, it pays a premium and an amount
equal to the premium is recorded as an investment. The option is subsequently
marked-to-market to reflect its current market value. The Portfolio, as
purchaser of an option, has control over whether the option is exercised. If an
option expires, the Portfolio realizes a loss in the amount of the premium paid.
If an option is exercised, the premium paid is an adjustment to the proceeds
from the sale in determining whether the Portfolio has realized a gain or loss.
If a Portfolio enters into a closing sale transaction, the difference between
the premium paid and the amount received from the sale is the realized gain or
loss. The Portfolio, as a purchaser of an option, bears the risk of the
potential inability of the counter parties to meet the terms of their contracts.
No options were outstanding as of February 28,1998.
(g) Allocation of Expenses
Expenses specifically identifiable to a particular Portfolio are borne by
that Portfolio. Other expenses are allocated to each Portfolio based on its net
assets in relation to the total net assets of all the applicable Portfolios or
another reasonable basis. Actual results could differ from those estimates.
(h) Other
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts and disclosures in the financial
statements.
2. MANAGEMENT FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS WITH AFFILIATES
(a) The management fees are payable monthly by the Portfolio to the
Manager and are computed daily at the following annual rates of each
Portfolio's average daily net assets: .475% for U.S. Government Money
Market; .55% for Investment Quality Bond and Municipal Bond; .65% for Large
Capitalization Value, Large Capitalization Growth and Small Capitalization
and .75% for International Equity.
<PAGE>
For the six months ended February 28,1998, the Manager voluntarily
waived all of its management fees and assumed $21,367 in other operating
expenses for Municipal Bond . The Manager also voluntary waived $22,694;
$13,804; $5,988; $76; $4,648 and $29,835 in management fees for U.S.
Governament Money Market, Investment Quality Bond, Large Capitalization
Value, Large Capitalization Growth, Small Capitalization and International
Equity, respectively, for the six months ended February 28,1998.
The Portfolios also benefit from an expense offset arrangement with
their custodian bank where uninvested cash balances earn credits that
reduce monthly fees. Had these cash balances been invested in income
producing assets, they would have generated income for their respective
Portfolios.
(b) The Manager, not the Portfolios, pays a portion of its management
fees to the Advisers at the following annual rates of each Portfolios'
average daily net assets: .125% for U.S. Government Money Market; .20% for
Investment Quality Bond and Municipal Bond; .30% for Large Capitalization
Value, Large Capitalization Growth and Small Capitalization and .40% for
International Equity.
(c) The administration fee is accrued daily and payable monthly to the
Administrator. The administration fee for the six months ended February
28,1998 was accrued at an annual rate of the lesser of .12% of each
Portfolio's average daily net assets or $234,000 for the Trust.
3. PURCHASES AND SALES OF SECURITIES
For the six months ended February 28,1998 purchases and sales of
investment securities, other than short-term securities were as follows:
Purchases Sales
------------------------------
Investment Quality Bond $17,717,683 $9,145,586
Municipal Bond 1,084,284 692,142
Large Capitalization Value 5,886,071 4,671,182
Large Capitalization Growth 16,247,010 10,991,234
Small Capitalization 17,597,470 8,163,682
International Equity 5,440,132 3,851,309
4. UNREALIZED APPRECIATION (DEPRECIATION) FOR FEDERAL INCOME TAX PURPOSES
At February 28,1998, the composition of unrealized appreciation
(depreciation) of investment securities were as follows:
Appreciation (Depreciation) Net
-------------------------------------------
Investment Quality Bond $310,658 (48,823) $261,835
Municipal Bond 357,535 (4,355) 353,180
Large Capitalization Value 10,124,905 (58,401) 10,066,504
Large Capitalization Growth 19,952,167 (85,508) 19,866,659
Small Capitalization 6,946,740 (518,659) 6,428,081
International Equity 2,247,627 (272,549) 1,975,078
For U.S. federal income tax, the cost of securities owned at February
28,1998 was substantially the same as the cost of securities for financial
statement purposes.
<PAGE>
February 28,1998 (Unaudited)
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
5. AUTHORIZED SHARES OF BENEFICIAL INTEREST AND PAR VALUE PER SHARE
Each Portfolio has unlimited shares of beneficial interest authorized with
$.001 par value per share.
6. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
When a Portfolio purchases a put option, it is generally to hedge against
adverse movements in the value of Portfolio holdings. The risk of buying an
option is that the Portfolio will pay a premium whether or not the option is
exercised. The Portfolio also has the additional risk of not being able to enter
into a closing securities transaction if an illiquid market exists.
7. CAPITAL LOSS CARRYFORWARDS
At August 31,1997, the following portfolios had, for Federal income tax
purposes, unused capital loss carryforwards available to offset future capital
gains through the following fiscal years ended August 31:
<TABLE>
<S> <C> <C> <C> <C>
Name of Portfolio Total 2003 2004 2005
U.S. Government Money Market Portfolio $ 32 -- -- $32
Investment Quality Bond Portfolio $6,147 -- -- $6,147
International Equity Portfolio $8,875 -- -- $8,875
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a share outstanding throughout each period)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INCOME FROM DIVIDENDS AND
INVESTMENT OPERATIONS DISTRIBUTIONS RATIOS
--------------------------------------- ----------------------- ------------------------------------
Distributions
Net to
Realized Dividends Shareholders Ratio of Ratio of Net
Net and to from Net Net Net Net
Asset Unrealized Total Shareholders Net Asset Assets Operating Investment
Value, Net Gain from from Realized Value, End Expenses Income Portfolio
Beginning Investment(Loss) Invest- Net Gains End of to (Loss) Turn- Average
of Income on ment Investment on of Total Period Average to Average over Commission
Period (Loss) Investments Operations Income Investments Period Return*(000's) Net Assets Net Assets Rate Rate
U.S.
Government
Money Market
Portfolio
Six Months
Ended February
28,1998
$1.000 $0.022 $0.000 0.022 ($0.022) -- $1.000 2.28% $27,950 1.12%(1,4) 4.40%(1,4) -- --
Year Ended
August 31,
1997
1.000 0.043 0.000 0.043 (0.043) -- 1.000 4.41% 28,572 1.12%(1) 4.31%(1) -- --
Year Ended
August 31,
1996
1.000 0.044 0.000 0.044 (0.044) -- 1.000 4.47% 22,906 1.13%(1) 4.30%(1) -- --
September 2,
1994 (2)to
August 31,
1995
1.000(3) 0.052 0.000 0.052 (0.052) -- 1.000 5.36% 5,072 0.40%(1,4) 5.38%(1,4) -- --
</TABLE>
(1) During the six months ended February 28,1998 and the fiscal year ended
August 31,1997, Saratoga Capital Management waived a portion of its
management fees. During all other time periods presented above, Saratoga
Capital Management waived all of its fees and assumed a portion of the
operating expenses. Additionally, for the periods presented above, the
Portfolio benefited from an expense offset arrangement with its custodian
bank. If such waivers, assumptions and expense offsets had not been in
effect for the respective periods, the ratios of net operating expenses to
average daily net assets and of net investment income (loss) to average
daily net assets would have been 1.28% and 4.22%, annualized, respectively,
for the six months ended February 28,1998, 1.35% and 4.08%, respectively,
for the year ended August 31,1997, 1.79% and 3.64%, respectively, for the
year ended August 31,1996 and 6.69% and (0.91%), annualized, respectively,
for the period September 2, 1994 (commencement of operations) to August
31,1995.
Investment Quality Bond Portfolio
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Six Months
Ended
February
28,1998
$10.09 $0.25 $0.12 $0.37 ($0.25) ($0.01) $10.20 3.77% $27,419 1.18%(1,4) 4.89%(1,4) 39% --
Year Ended
August 31,
1997
9.91 0.51 0.18 0.69 (0.51) 0.00 10.09 7.16% 22,507 1.28%(1) 5.03%(1) 30% --
Year Ended
August 31,
1996
10.08 0.48 (0.16) 0.32 (0.48) (0.01) 9.91 3.23% 16,864 1.31%(1) 4.84%(1) 55% --
September 2,
1994 (2)
to August 31, 1995
10.00(3) 0.60 0.08 0.68 (0.60) -- 10.08 7.12% 4,503 0.45%(1,4) 5.77%(1,4) 18% --
</TABLE>
<PAGE>
(1) During the six months ended February 28,1998 and the fiscal year ended
August 31,1997, Saratoga Capital Management waived a portion of its
management fees. During all other time periods presented above, Saratoga
Capital Management waived all of its fees and assumed a portion of the
operating expenses. Additionally, for the periods presented above, the
Portfolio benefited from an expense offset arrangement with its custodian
bank. If such waivers, assumptions and expense offsets had not been in
effect for the respective periods, the ratios of net operating expenses to
average daily net assets and of net investment income (loss) to average
daily net assets would have been 1.38% and 4.69%, annualized, respectively,
for the six months ended February 28,1998, 1.52% and 4.71%, respectively,
for the year ended August 31,1997, 2.12% and 3.90%, respectively, for the
year ended August 31,1996 and 7.93% and (1.71%), annualized, respectively,
for the period September 2, 1994 (commencement of operations) to August
31,1995.
Municipal Bond Portfolio
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Six Months Ended
February 28,1998
$10.33 $0.21 $0.27 $0.48 ($0.22) ($0.01) $10.58 4.87% $8,240 1.18%(1,4) 4.05%(1,4)10% --
Year Ended
August 31,
1997 10.00 0.43 0.33 0.76 (0.43) -- 10.33 7.67% 7,223 1.21% (1) 4.19% (1) 20% --
Year Ended
August 31,
1996 9.93 0.41 0.07 0.48 (0.41) -- 10.00 4.88% 4,708 1.23% (1) 4.03% (1) 12% --
September 2,
1994 (2) to
August 31,
1995 10.00(3) 0.51 (0.07) 0.44 (0.51) -- 9.93 4.65% 1,477 0.37%(1,4) 4.79% (1,4) 27% --
</TABLE>
(1) During the six months ended February 28,1998 and the fiscal year ended
August 31,1997, Saratoga Capital Management waived a portion of its
management fees. During all other time periods presented above, Saratoga
Capital Management waived all of its fees and assumed a portion of the
operating expenses. Additionally, for the periods presented above, the
Portfolio benefited from an expense offset arrangement with its custodian
bank. If such waivers, assumptions and expense offsets had not been in
effect for the respective periods, the ratios of net operating expenses to
average daily net assets and of net investment income (loss) to average
daily net assets would have been 2.30% and 2.92%, annualized, respectively,
for the six months ended February 28,1998, 2.96% and 2.43%, respectively,
for the year ended August 31,1997, 5.32% and (0.12%), respectively, for the
year ended August 31,1996 and 20.15% and (14.99%), annualized,
respectively, for the period September 2, 1994 (commencement of operations)
to August 31,1995.
<PAGE>
---------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a share outstanding throughout each period)
---------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INCOME FROM DIVIDENDS AND
INVESTMENT OPERATIONS DISTRIBUTIONS RATIOS
-------------------------- ---------------------------- -------------------------------------
Ratio Ratio
Distributions of of
Realized Dividends to Net Net
and to Shareholders Net Net Operating Investmet
Net Asset Net Unrealized Shareholders from Net Asset Assets Expenses Income
Value, Invest- Gain Total from Realized Value, End to (Loss)to
Beginning ment (Loss) from Net Gains End of Average Average Portfolio Average
of Income on Investment Investment on of Total Period Net Net Turnover Commission
Period (Loss) Investments Operations Income Investments Period Return*(000's) Assets Assets Rate Rate
Large Capitalization
Value Portfolio
Six Months Ended
February 28,1998
$18.57 $0.05 $2.25 $2.30 ($0.38) ($0.24) $20.25 12.64% $37,191 1.26%(1,4) 0.55%(1,4) 21% $0.06
Year Ended
August 31,1997
14.45 0.09 4.37 4.46 (0.08) (0.26) 18.57 31.37% 29,676 1.31%(1) 0.60%(1) 25% 0.06
Year Ended
August 31, 1996
12.30 0.07 2.33 2.40 (0.11) (0.14) 14.45 19.73% 18,274 1.28%(1) 0.97%(1) 26% 0.06
September 2, 1994(2)
to August 31, 1995
10.00(3) 0.15 2.20 2.35 (0.05) -- 12.30 23.60% 5,515 0.40%(1,4)2.29%(1,4) 33% --
</TABLE>
(1) During the six months ended February 28,1998 and the fiscal year ended
August 31,1997, Saratoga Capital Management waived a portion of its
management fees. During all other time periods presented above, Saratoga
Capital Management waived all of its fees and assumed a portion of the
operating expenses. Additionally, for the periods presented above, the
Portfolio benefited from an expense offset arrangement with its custodian
bank. If such waivers, assumptions and expense offsets had not been in
effect for the respective periods, the ratios of net operating expenses to
average daily net assets and of net investment income (loss) to average
daily net assets would have been 1.30% and 0.51%, annualized, respectively,
for the six months ended February 28,1998, 1.56% and 0.35%, respectively,
for the year ended August 31,1997, 2.19% and 0.04%, respectively, for the
year ended August 31,1996 and 6.54% and (3.85%), annualized, respectively,
for the period September 2, 1994 (commencement of operations) to August
31,1995.
Large Capitalization Growth Portfolio
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Six Months Ended
February 28,1998
$17.87 ($0.02) $3.14 $3.12 -- ($0.76) $20.23 6.06% $60,406 1.14%(1,4)(0.22%)(1,4) 24% $0.05
Year Ended
August 31,1997
13.16 (0.02) 4.73 4.71 -- -- 17.87 35.79% 47,197 1.36%(1) (0.12%)(1) 53% 0.07
Year Ended
August 31,1996
12.86 (0.02) 0.35 0.33 (0.01) (0.02) 13.16 2.56% 33,962 1.34%(1) (0.13%)(1) 50% 0.07
September 2, 1994 (2)
to August 31, 1995
10.00(3) 0.02 2.85 2.87 (0.01) -- 12.86 28.77% 11,107 0.51%(1,4) 0.32%(1,4) 23% --
</TABLE>
(1) During the six months ended February 28,1998 and the fiscal year ended
August 31,1997, Saratoga Capital Management waived a portion of its
management fees. During all other time periods presented above, Saratoga
Capital Management waived all of its fees and assumed a portion of the
operating expenses. Additionally, for the periods presented above, the
Portfolio benefited from an expense offset arrangement with its custodian
bank. If such waivers, assumptions and expense offsets had not been in
effect for the respective periods, the ratios of net operating expenses to
average daily net assets and of net investment income (loss) to average
daily net assets would have been 1.19% and (0.28%), annualized,
respectively, for the six months ended February 28,1998, 1.36% and (0.20%),
respectively, for the year ended August 31,1997, 1.67% and (0.60%),
respectively, for the year ended August 31,1996 and 5.00% and (4.17%),
annualized, respectively, for the period September 2, 1994 (commencement of
operations) to August 31,1995.
<PAGE>
Small Capitalization Portfolio
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Six Months Ended
February 28,1998
$15.05 ($0.05) $2.11 $2.06 ($0.33) ($0.60) $16.18 14.21% $39,301 1.25%(1,4)(0.59%)(1,4) 37% $0.04
Year Ended
August 31, 1997
13.58 (0.07) 2.37 2.30 -- (0.83) 15.05 18.07% 28,781 1.30% (1) (0.70%) (1) 162% 0.06
Year Ended
August 31, 1996
12.62 (0.09) 1.44 1.35 ($0.00) (0.39) 13.58 11.03% 22,071 1.25% (1) (0.83%)(1) 95% 0.06
September 2, 1994 (2)
to August 31, 1995
10.00(3) 0.02 2.61 2.63 (0.01) -- 12.62 26.38% 15,103 0.42%(1,4) 0.07%(1,4) 111% --
</TABLE>
(1) During the six months ended February 28,1998 and the fiscal year ended
August 31,1997, Saratoga Capital Management waived a portion of its
management fees. During all other time periods presented above, Saratoga
Capital Management waived all of its fees and assumed a portion of the
operating expenses. Additionally, for the periods presented above, the
Portfolio benefited from an expense offset arrangement with its custodian
bank. If such waivers, assumptions and expense offsets had not been in
effect for the respective periods, the ratios of net operating expenses to
average daily net assets and of net investment income (loss) to average
daily net assets would have been 1.28% and (0.62%), annualized,
respectively, for the six months ended February 28,1998, 1.64% and (1.04%),
respectively, for the year ended August 31,1997, 1.84% and (1.42%),
respectively, for the year ended August 31,1996 and 3.57% and (3.08%),
annualized, respectively, for the period September 2, 1994 (commencement of
operations) to August 31,1995.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a share outstanding throughout each period)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INCOME FROM DIVIDENDS
INVESTMENT AND
OPERATIONS DISTRTIBUTIONS RATIOS
------------------------------- ------------------------- --------------------------------------
Ratio of
Net Distributions Ratio of Net
Realized Dividends to Net Investment
and to Shareholders Net Net Operating Income
Net Asset Net Unrealized Shareholders from Net Asset Assets Expenses(Loss)
Value, Invest- Gain Total from Net Realized Value, End to to
. Beginning ment (Loss)from from Gains End End of Average Average Portfolio Average
of Income on Investment Investment on of Total Period Net Net Turnover Commission
Period (Loss) Investments Operations Income Investments Period Return*(000's)Assets Assets Rate Rate
International Equity Portfolio
Six Months Ended
February 28,1998
$10.74 ($0.02) $0.88 $0.86 ($0.05) -- $11.55 7.87% $12,636 1.37%(1,4)(0.23%)(1,4) 34% $0.05
Year Ended
August 31,1997
9.59 0.23 1.12 1.35 (0.20) -- 10.74 14.39% 10,389 1.64%(1) 0.32%(1) 58% 0.06
Year Ended
August 31, 1996
9.33 0.00 0.34 0.34 (0.03) (0.05) 9.59 3.68% 6,857 1.65%(1) 0.23%(1) 58% 0.09
September 2, 1994 (2)
to August 31, 1995
10.00(3) 0.05 (0.71) (0.66) (0.01) -- 9.33 (6.61%) 2,907 0.38%(1,4)1.03%(1,4) 36% --
</TABLE>
(1) During the six months ended February 28,1998 and the fiscal year ended
August 31,1997, Saratoga Capital Management waived a portion of its management
fees. During all other time periods presented above, Saratoga Capital Management
waived all of its fees and assumed a portion of the operating expenses.
Additionally, for the periods presented above, the Portfolio benefited from an
expense offset arrangement with its custodian bank. If such waivers, assumptions
and expense offsets had not been in effect for the respective periods, the
ratios of net operating expenses to average daily net assets and of net
investment income (loss) to average daily net assets would have been 2.17% and
(1.03%), annualized, respectively, for the six months ended February 28,1998,
2.76% and (1.00%), respectively, for the year ended August 31,1997, 3.91% and
(2.33%), respectively, for the year ended August 31,1996 and 8.96% and (7.55%),
annualized, respectively, for the period September 2, 1994 (commencement of
operations) to August 31,1995.
- --------------------------------------------------------------------------------
(2) Commencement of operations.
(3) Initial offering price.
(4) Annualized.
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.
<PAGE>
Shareholder Votes
A special meeting of the shareholders of the trust was held on October 31, 1997.
The information below gives a brief description of each matter voted upon at the
meeting and the number of votes for, against or withheld, as well as the number
of abstentions as to each matter.
I.A. Proposal: To approve the investment advisory agreement between Saratoga
Capital Management (the "Manager" or "SCM") and OpCap Advisors with respect
to the Municipal Bond Portfolio (to be voted on by shareholders of the
Municipal Bond Portfolio only);
Portfolio For Against Abstain
- --------- --- ------- -------
Municipal Bond 347,964.1670 72.5560 27,609.1170
I.B. Proposal: To approve the investment advisory agreement between the Manager
and OpCap Advisors with respect to the Large Capitalization Value
Portfolio, (to be voted on by the shareholders of the Large Capitalization
Value Portfolio only);
Portfolio For Against Abstain
- --------- --- ------- -------
Large Capitalization 591,571.6010 3,071.5180 62,523.4370
Value
II. Proposal: To approve the investment advisory agreement between the Manager
and Harris Bretall Sullivan & Smith L.L.C. with respect to the Large
Capitalization Growth Portfolio (to be voted on by the shareholders of the
Large Capitalization Growth Portfolio only);
Portfolio For Against Abstain
- --------- --- ------- -------
Large Capitalization 1,247,290.3320 2,834.0590 86,933.7660
Growth
III. Proposal: To approve a proposal to permit the Manager, in the future, to
select and contract with investment advisers for each portfolio of the
Trust (the "Portfolios") after obtaining the approval of the Board of
Trustees of the Trust (the "Board"), but without obtaining shareholder
approval;
Portfolio For Against Abstain
- --------- --- ------- -------
U.S. Government 12,454,583.2040 81,353.6500 1,201,570.7090
Money Market
Investment 1,010,326.4750 6,884.1370 130,572.3310
Quality Bond
Municipal Bond 355,354.5540 1,390.1690 27,609.1170
Large Capitalization 612,481.5560 6,293.1400 65,177.8600
Value
Large Capitalization 1,041,815.8070 8,720.4200 88,847.9300
Growth
Small 1,160,383.5060 2,883.6730 44,574.4820
Capitalization
International 470,292.1170 2,058.7440 34,934.8790
Equity
IV.A.Proposal: To approve the elimination of the fundamental investment policy
restricting the Portfolios from investing in unseasoned issuers (companies
with a record of less than three years continuous operation, including
predecessors).
Portfolio For Against Abstain
- --------- --- ------- -------
U.S. Government 13,353,295.9530 160,113.2300 366,668.3800
Money Market
Investment 1,067,786.2090 17,634.7540 74,855.9800
Quality Bond
Municipal Bond 371,880.9880 2,910.0900 9,562.7620
Large Capitalization 651,792.0490 9,803.6350 22,357.8720
Value
Large Capitalization 1,110,276.8260 15,835.4420 13,255.8890
Growth
Small 1,183,571.5340 6,178.2840 18,091.8430
Capitalization
International 482,347.1240 12,942.8800 11,995.7360
Equity
IV.B.Proposal: To approve the elimination of the fundamental investment
restriction prohibiting the Portfolios from investing in oil, gas or other
mineral exploration or development companies.
Portfolio For Against Abstain
- --------- --- ------- -------
U.S. Government 13,360,470.0530 152,939.1300 366,668.3800
Money Market
Investment 1,070,950.6310 14,470.3320 74,855.9800
Quality Bond
Municipal Bond 373,565.5500 1,225.5280 9,562.7620
Large Capitalization 653,000.2210 8,595.4630 22,357.8720
Value
Large Capitalization 1,111,635.8430 14,476.4250 13,255.8890
Growth
Small 1,184,692.8940 5,056.9240 18,091.8430
Capitalization
International 492,055.1340 4,021.1390 11,209.4670
Equity
IV.C.Proposal: To approve the reclassification as non-fundamental the
fundamental investment restriction on investments by the Portfolios in
companies for the purpose of exercising control or management.
Portfolio For Against Abstain
- --------- --- ------- -------
U.S. Government 13,360,470.0530 152,939.1300 366,668.3800
Money Market
Investment 1,070,950.6310 14,470.3320 74,855.9800
Quality Bond
Municipal Bond 373,565.5500 1,225.5280 9,562.7620
Large Capitalization 653,000.2210 8,595.4630 22,357.8720
Value
Large Capitalization 1,111,635.8430 14,476.4250 13,255.8890
Growth
Small 1,184,692.8940 5,056.9240 18,091.8430
Capitalization
International 492,055.1340 4,021.1390 11,209.4670
Equity
IV.D.Proposal: To approve the elimination of the fundamental investment
restriction imposed on the Portfolios regarding investments in issuers
whose securities are owned by the Trustees or officers of the Trust, or
directors or officers of the investment advisers or Manager.
Portfolio For Against Abstain
- --------- --- ------- -------
U.S. Government 13,322,758.4130 190,650.7700 366,668.3800
Money Market
Investment 1,067,340.6360 18,080.3270 74,855.9800
Quality Bond
Municipal Bond 373,565.5500 1,225.5280 9,562.7620
Large Capitalization 652,088.7860 9,506.8980 22,357.8720
Value
Large Capitalization 1,109,931.1750 16,181.0930 13,255.8890
Growth
Small 1,184,467.1920 5,282.6260 18,091.8430
Capitalization
International 492,055.1340 4,021.1390 11,209.4670
Equity
IV.E.Proposal: To approve the elimination of fundamental restrictions imposed
by state securities commissions on the Portfolios concerning aggregate
investments in restricted securities and unseasoned issuers.
Portfolio For Against Abstain
- --------- --- ------- -------
U.S. Government 13,353,295.9530 160,113.2300 366,668.3800
Money Market
Investment 1,067,786.2090 17,634.7540 74,855.9800
Quality Bond
Municipal Bond 371,880.9880 2,910.0900 9,562.7620
Large Capitalization 651,792.0490 9,803.6350 22,357.8720
Value
Large Capitalization 1,110,276.8260 15,835.4420 13,255.8890
Growth
Small 1,183,571.5340 6,178.2840 18,091.8430
Capitalization
International 482,347.1240 12,942.8800 11,995.7360
Equity
IV.F.Proposal: To approve the reclassification as non-fundamental the
fundamental investment policy of the Portfolios restricting investments in
illiquid securities.
Portfolio For Against Abstain
- --------- --- ------- -------
U.S. Government 13,360,470.0530 152,939.1300 366,668.3800
Money Market
Investment 1,070,950.6310 14,470.3320 74,855.9800
Quality Bond
Municipal Bond 373,565.5500 1,225.5280 9,562.7620
Large Capitalization 653,000.2210 8,595.4630 22,357.8720
Value
Large Capitalization 1,111,635.8430 14,476.4250 13,255.8890
Growth
Small 1,184,692.8940 5,056.9240 18,091.8430
Capitalization
International 492,055.1340 4,021.1390 11,209.4670
Equity
IV.G.Proposal: To approve the elimination of the fundamental investment
limitations imposed on the Portfolios concerning investing in other
investment companies.
Portfolio For Against Abstain
- --------- --- ------- -------
U.S. Government 13,360,470.0530 152,939.1300 366,668.3800
Money Market
Investment 1,070,950.6310 14,470.3320 74,855.9800
Quality Bond
Municipal Bond 373,565.5500 1,225.5280 9,562.7620
Large Capitalization 653,000.2210 8,595.4630 22,357.8720
Value
Large Capitalization 1,111,635.8430 14,476.4250 13,255.8890
Growth
Small 1,184,692.8940 5,056.9240 18,091.8430
Capitalization
International 492,055.1340 4,021.1390 11,209.4670
Equity
IV.H.Proposal: To approve the reclassification as non-fundamental the
fundamental investment limitations imposed on the Portfolios concerning
short sales.
Portfolio For Against Abstain
- --------- --- ------- -------
U.S. Government 13,353,295.9530 160,113.2300 366,668.3800
Money Market
Investment 1,067,786.2090 17,634.7540 74,855.9800
Quality Bond
Municipal Bond 371,880.9880 2,910.0900 9,562.7620
Large Capitalization 651,792.0490 9,803.6350 22,357.8720
Value
Large Capitalization 1,110,276.8260 15,835.4420 13,255.8890
Growth
Small 1,183,571.5340 6,178.2840 18,091.8430
Capitalization
International 490,089.6580 5,200.3460 11,995.7360
Equity
