SARATOGA ADVANTAGE TRUST, 485APOS, 2000-12-22

SARATOGA ADVANTAGE TRUST
485APOS, 2000-12-22

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As filed with the Securities and Exchange Commission on December 22, 2000
Securities Act File No. 033-79708
Investment Company Act File No. 811-08542

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 9 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 11 [X]
______________

THE SARATOGA ADVANTAGE TRUST
(a Delaware business trust)
(Exact Name of Registrant as Specified in Charter)

1501 Franklin Avenue, Mineola, New York 11501-4803
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code
(516) 873-7010

Stuart M. Strauss, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
(Name and Address of Agent for Service)
______________

It is proposed that this filing will become effective (check the
appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)

[ X ] 60 days after filing pursuant to paragraph (a) (1)

[ ] 75 days after filing pursuant to paragraph (a) (2)

[ ] On (date) pursuant to paragraph (b)

[ ] On (date) pursuant to paragraph (a) (1)

[ ] On (date) pursuant to paragraph (a) (2) of Rule 485

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post- effective amendment.

THE SARATOGA
ADVANTAGE TRUST

CLASS I SHARES
PROSPECTUS - January 1, 2001

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

The Saratoga Advantage Trust is a mutual fund company comprised of 7
separate mutual fund portfolios, each with its own distinctive investment
objectives and policies. The Portfolios are:

U.S. Government Money Market Large Capitalization Value Portfolio
Portfolio
Large Capitalization Growth Portfolio

Investment Quality Bond Portfolio Small Capitalization Portfolio

Municipal Bond Portfolio International Equity Portfolio

The Portfolios are managed by Saratoga Capital Management (the "Manager").
Each Portfolio is advised by an investment adviser selected and supervised by
the Manager.

Shares of the Portfolios are offered to participants in investment advisory
programs that provide asset allocation recommendations to investors based on an
evaluation of each investor's objectives and risk tolerance. An asset allocation
methodology developed by the Manager, the Saratoga Strategic Horizon Asset
Reallocation Program(Trademark) (the "Saratoga SHARP(Trademark) Program"), may
be utilized in this regard by investment advisers that have entered into
agreements with the Manager. The Manager receives a fee from the investment
advisers that have entered into such agreements with the Manager. Shares of the
Portfolios are also available to other investors and advisory services.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

------------------------------------------------------------------- ---------
Page
THE PORTFOLIOS
U.S. Government Money Market Portfolio 3
Investment Quality Bond Portfolio 5
Municipal Bond Portfolio 8
Large Capitalization Value Portfolio 11
Large Capitalization Growth Portfolio 13
Small Capitalization Portfolio 15
International Equity Portfolio 17
Summary of Trust Expenses 20
Additional Investment Strategy Information 22
Additional Risk Information 22
Investment Manager 23
Advisers 24
Administration 25

SHAREHOLDER INFORMATION
Pricing of Portfolio Shares 25
Purchase of Shares 25
Redemption of Shares 27
Dividends and Distributions 28
Tax Consequences 29
Financial Highlights 30
--------------------------------------------------------------------------------

THE PORTFOLIOS

U.S. GOVERNMENT MONEY MARKET PORTFOLIO

Investment Objective

The U.S. Government Money Market Portfolio seeks to provide maximum current
income to the extent consistent with the maintenance of liquidity and the
preservation of capital.

The Adviser

The Portfolio is advised by Sterling Capital Management Company. All
investment decisions for the Portfolio are made by Sterling Capital's investment
committee.

Principal Investment Strategies

The Portfolio will invest in high quality, short-term U.S. Government
securities. The Adviser seeks to maintain the Portfolio's share price at $1.00.
The share price remaining stable at $1.00 means that the Portfolio would
preserve the principal value of your investment.

The U.S. Government securities that the Portfolio may purchase include:

o U.S. Treasury bills, notes and bonds, all of which are direct obligations
of the U.S. Government.

o Securities issued by agencies and instrumentalities of the U.S.
Government which are backed by the full faith and credit of the United States.
Among the agencies and instrumentalities issuing these obligations are the
Government National Mortgage Association and the Federal Housing Administration.

o Securities issued by agencies and instrumentalities which are not backed
by the full faith and credit of the United States, but whose issuing agency or
instrumentality has the right to borrow from the U.S. Treasury to meet its
obligations. Among these agencies and instrumentalities are the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation and the Federal
Home Loan Bank.

o Securities issued by agencies and instrumentalities which are backed
solely by the credit of the issuing agency or instrumentality. Among these
agencies and instrumentalities is the Federal Farm Credit System.

In addition, the Portfolio may invest in repurchase agreements with respect
to securities issued by the U.S. Government, its agencies and instrumentalities.

Principal Risks

There is no assurance that the Portfolio will achieve its investment objectives.

Credit and Interest Rate Risks. A principal risk of investing in the
Portfolio is associated with its U.S. Government securities investments, which
are subject to two types of risks: credit risk and interest rate risk. Credit
risk refers to the possibility that the issuer of a security will be unable to
make interest payments and repay the principal on its debt. Interest rate risk,
another risk of debt securities, refers to fluctuations in the value of a
fixed-income security resulting from changes in the general level of interest
rates.

Credit risk is minimal with respect to the Portfolio's U.S. Government
securities investments. Repurchase agreements involve a greater degree of credit
risk. The Adviser, however, actively manages the Portfolio's assets to reduce
the risk of losing any principal investment as a result of credit or interest
rate risks. In addition, federal regulations require money market funds, such as
the Portfolio, to invest only in high quality debt obligations and short
maturities.

An investment in the Portfolio is not a bank deposit and is not insured or
guaranteed by the FDIC or any other government agency. Although the Portfolio
seeks to preserve the value of your investment at $1.00 per share, if it is
unable to do so, it is possible to lose money by investing in this Portfolio.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years
This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's Class I shares has
varied from year to year over the
life of the Portfolio.
---------------------------------------
Calendar Years Average Annual Returns
-------------- ----------------------
1995 5.40%
1996 4.32%
1997 4.47%
1998 4.44%
1999 4.22%

During the periods shown in the bar chart, the highest return for a
calendar quarter was 1.50% (quarter ended June 30, 1995) and the lowest return
for a calendar quarter was 0.95% (quarter ended June 30, 1999). Year-to-date
total return as of September 30, 2000 was 3.85%.

AVERAGE ANNUAL TOTAL RETURNS

--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
U.S. Government Money Market
Portfolio 4.22% 4.57% 4.57%

90 Day T-Bills 4.60% 5.02% 5.26%

Lipper U.S. Treasury Money
Market Index(1) 4.30% 4.81% 4.79%
--------------------------------------------------------------------------------

(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. Investors may not invest directly in the
Index.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

INVESTMENT QUALITY BOND PORTFOLIO

Investment Objective

The Investment Quality Bond Portfolio seeks current income and reasonable
stability of principal.

The Adviser

The Investment Quality Bond Portfolio is advised by Fox Asset Management,
Inc. The Portfolio is managed by a team that includes J. Peter Skirkanich, John
Sampson, James O'Mealia and Doug Edler. Mr. Skirkanich is the President and
Chief Investment Officer of Fox and founded the firm in 1985. Mr. Sampson is a
Managing Director and joined the firm in 1998 from Pharos Management LLC, a
consulting firm specializing in fixed income investments. Mr. O'Mealia is a
Managing Director of Fox and joined the firm in 1998 from Sunnymeath Asset
Management Inc., where he was President. Mr. Edler is a Senior Vice President of
Fox; he joined Fox in 1999 from J. P. Morgan & Co., Inc., where he managed that
firm's proprietary fixed income investments. Principal Investment Strategies

The Portfolio will normally invest at least 65% of its assets in investment
grade fixed-income securities or in non-rated securities considered by the
Adviser to be of comparable quality. The Portfolio may also invest in
non-convertible fixed income preferred stock and mortgage pass-through
securities. In deciding which securities to buy, hold or sell, the Adviser
considers economic developments, interest rate trends and other factors such as
the issuer's creditworthiness. The average maturity of the securities held by
the Portfolio may range from three to ten years.

Mortgage pass-through securities are mortgage-backed securities that
represent a participation interest in a pool of residential mortgage loans
originated by the U.S. government or private lenders such as banks. They differ
from conventional debt securities, which provide for periodic payment of
interest in fixed amounts and principal payments at maturity or on specified
call dates. Mortgage pass-through securities provide for monthly payments that
are a 'pass-through' of the monthly interest principal payments made by the
individual borrowers on the pooled mortgage loans.

The Portfolio may invest in mortgage pass-through securities that are
issued or guaranteed by the Government National Mortgage Association, the
Federal National Mortgage Association and the Federal Home Loan Mortgage
Corporation. These securities are either direct obligations of the U.S.
Government, or the issuing agency/instrumentality has the right to borrow from
the U.S. Treasury to meet its obligations, although the Treasury is not legally
required to extend credit to the agency/instrumentality.

Private mortgage pass-through securities also can be Portfolio investments.
They are issued by private originators of and investors in mortgage loans,
including savings and loan associations and mortgage banks. Since private
mortgage pass-through securities typically are not guaranteed by an entity
having the credit status of a U.S. Government agency, the securities generally
are structured with one or more type of credit enhancement.

In addition, the Portfolio may invest up to 5% of its net assets in
fixed-income securities rated lower than investment grade, commonly known as
'junk bonds.'

Principal Risks

There is no assurance that the Portfolio will achieve its investment
objective. The Portfolio share price will fluctuate with changes in the market
value of its portfolio securities. When you sell your Portfolio shares, they may
be worth less than what you paid for them and, accordingly, you can lose money
investing in this Portfolio.

Fixed-Income Securities. Principal risks of investing in the Portfolio are
associated with its fixed-income investments. All fixed-income securities, such
as corporate bonds, are subject to two types of risk: credit risk and interest
rate risk. Credit risk refers to the possibility that the issuer of a security
will be unable to make interest payments and/or repay the principal on its debt.

Interest rate risk refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest rates. When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. (Zero coupon securities are
typically subject to greater price fluctuations than comparable securities that
pay current interest.) Long-term fixed income securities will rise and fall in
response to interest rate changes to a greater extent than short-term
securities.

Mortgage-Backed Securities. The Portfolio may invest in mortgage-backed
securities, such as mortgage pass-through securities, which have different risk
characteristics than traditional debt securities. Although the value of
fixed-income securities generally increases during periods of falling interest
rates and decreases during periods of rising interest rates, this is not always
the case with mortgage-backed securities. This is due to the fact that the
principal on underlying mortgages may be prepaid at any time as well as other
factors. Generally, prepayments will increase during a period of falling
interest rates and decrease during a period of rising interest rates. The rate
of prepayments also may be influenced by economic and other factors. Prepayment
risk includes the possibility that, as interest rates fall, securities with
stated interest rates may have the principal prepaid earlier than expected,
requiring the Portfolio to invest the proceeds at generally lower interest
rates.

Investments in mortgage-backed securities are made based upon, among other
things, expectations regarding the rate of prepayments on underlying mortgage
pools. Rates of prepayment, faster or slower than expected by the Manager and/or
Adviser, could reduce the Portfolio's yield, increase the volatility of the
Portfolio and/or cause a decline in net asset value. Certain mortgage-backed
securities may be more volatile and less liquid than other traditional types of
debt securities.

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments including the risks associated with junk bonds. For more information
about these risks, see the "Additional Risk Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

During the periods shown in the bar chart, the highest return for a
calendar quarter was 3.99% (quarter ended June 30, 1995) and the lowest return
for a calendar quarter was -0.73% (quarter ended March 31, 1996). Year-to-date
total return as of September 30, 2000 was 6.03%.

AVERAGE ANNUAL TOTAL RETURNS

This table compares the Portfolio's average annual returns with those of a
broad measure of market performance over time, as well as with an index of funds
with similar investment objectives. The Portfolio's returns assume you sold your
shares at the end of each period.
--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
Investment Quality Bond
Portfolio -0.01% 5.64% 5.00%

Lehman Intermediate
Government/Corporate Bond
Index(1) 0.39% 7.09% 6.43%

Lipper Short-Intermediate
Investment Grade Debt Funds
Index(2) 1.19% 6.41% 5.89%
--------------------------------------------------------------------------------
(1) The Lehman Intermediate Government/Corporate Bond Index is composed of
the bonds in the Lehman Government/Corporate Bond Index that have maturities
between 1 and 9.99 years. The Lehman Government/Corporate Bond Index consists of
approximately 5,400 issues. The securities must be investment grade (BAA or
higher) with amounts outstanding in excess of $1 million and have at least one
year to maturity. The Lehman Index is an unmanaged index which does not include
fees and expenses. Investors may not invest directly in the Index.

(2) The Lipper Short-Intermediate Investment Grade Debt Funds Index
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. Investors may not invest
directly in the Index.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

MUNICIPAL BOND PORTFOLIO

Investment Objective

The Municipal Bond Portfolio seeks a high level of interest income that is
excluded from federal income taxation to the extent consistent with prudent
investment management and the preservation of capital.

The Adviser

The Portfolio is advised by OpCap Advisors. It is managed by a management
team lead by Matthew Greenwald, Senior Vice President of Oppenheimer Capital,
the parent of OpCap Advisors. Mr. Greenwald has been a fixed income portfolio
manager and financial analyst for Oppenheimer Capital since 1989. From 1984-1989
he was a fixed income portfolio manager with PaineWebber's Mitchell Hutchins
Asset Management.

Principal Investment Strategies

The Portfolio will normally invest at least 80% of its assets in securities
that pay interest exempt from federal income taxes. The Portfolio's Adviser
generally invests the Portfolio's assets in municipal obligations. There are no
maturity limitations on the Portfolio's securities. Municipal obligations are
bonds, notes or short-term commercial paper issued by state governments, local
governments, and their respective agencies. In pursuing the Portfolio's
investment objective, the Adviser has considerable leeway in deciding which
investments it buys, holds or sells on a day-to-day basis. The Portfolio will
invest primarily in municipal bonds rated within the four highest grades by
Moody's Investors Service Inc. ("Moody's"), Standard & Poor's Corporation
("S&P"), or Fitch IBCA, Inc. ("Fitch") or, if not rated, of comparable quality
in the opinion of the Adviser. The Portfolio may invest without limit in
municipal obligations that pay interest income subject to the 'alternative
income tax' although it does not currently expect to invest more than 20% of its
total assets in such instruments. Some shareholders may have to pay tax on
distributions of this income.

Municipal bonds, notes and commercial paper are commonly classified as
either 'general obligation' or 'revenue.' General obligation bonds, notes, and
commercial paper are secured by the issuer's faith and credit, as well as its
taxing power, for payment of principal and interest. Revenue bonds, notes and
commercial paper, however, are generally payable from a specific source of
income. They are issued to fund a wide variety of public and private projects in
sectors such as transportation, education and industrial development. Included
within the revenue category are participations in lease obligations. The
Portfolio's municipal obligation investments may include zero coupon securities,
which are purchased at a discount and make no interest payments until maturity.

Principal Risks

Credit and Interest Rate Risks. Municipal obligations, like other debt
securities, are subject to two types of risks: credit risk and interest rate
risk.

Credit risk refers to the possibility that the issuer of a security will be
unable to make interest payments and/or repay the principal on its debt. In the
case of revenue bonds, notes or commercial paper, for example, the credit risk
is the possibility that the user fees from a project or other specified revenue
sources are insufficient to meet interest and/or principal payment obligations.
The issuers of private activity bonds, used to finance projects in sectors such
as industrial development and pollution control, also may be negatively impacted
by the general credit of the user of the project. Lease obligations may have
risks not normally associated with general obligation or other revenue bonds.
Certain lease obligations contain 'non-appropriation' clauses that provide that
the governmental issuer has no obligation to make future payments under the
lease or contract unless money is appropriated for such purposes by the
appropriate legislative body on an annual or other periodic basis. Consequently,
continued lease payments on those lease obligations containing
'non-appropriation' clauses are dependent on future legislative actions. If such
legislative actions do not occur, the holders of the lease obligation may
experience difficulty in exercising their rights, including disposition of the
property.

Interest rate risk refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest rates. When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. Zero coupon securities are
typically subject to greater price fluctuations than comparable securities that
pay current interest.

The Portfolio is not limited as to the maturities of the municipal
obligations in which it may invest. Thus, a rise in the general level of
interest rates may cause the price of its portfolio securities to fall
substantially.

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the 'Additional Risk
Information' section. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years
This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's Class I shares has
varied from year to year over the
life of the Portfolio.
--------------------------------------------------------------------------------
Calendar Years Average Annual Returns
-------------- ----------------------
1995 15.21%
1996 3.05%
1997 8.27%
1998 5.38%
1999 (6.00%)

During the periods shown in the bar chart, the highest return for a
calendar quarter was 5.85% (quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -2.52% (quarter ended June 30, 1999). Year-to-date
total return as of September 30, 2000 was 7.59%.

AVERAGE ANNUAL TOTAL RETURNS

Municipal Bond Portfolio -6.00% 4.95% 3.79%

Lehman Municipal Bond Index(1) -2.06% 6.90% 5.88%

Lipper General Municipal Debt
Funds Index(2) -4.07% 6.14% 5.12%
--------------------------------------------------------------------------------

(1) The Lehman Brothers Municipal Bond Index consists of approximately
25,000 municipal bonds which are selected to be representative of the long-term,
investment grade tax-exempt bond market. The bonds selected for the index have
the following characteristics: a minimum credit rating of at least Baa; an
original issue of at least $50 million; at least $3 million of the issue
outstanding; issued within the last five years; and a maturity of at least one
year. The Lehman Index is an unmanaged index which does not include fees and
expenses. Investors may not invest directly in the Index.

(2) 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 ratings. Investors may not invest directly in the
Index.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

LARGE CAPITALIZATION VALUE PORTFOLIO

Investment Objective

The Large Capitalization Value Portfolio seeks total return consisting of
capital appreciation and dividend income.

The Adviser

The Portfolio is advised by OpCap Advisors. It is managed by a portfolio
team comprised of senior professionals of OpCap Advisors. One member of the
team, Frank LeCates, has primary supervisory authority over implementation of
the management team's purchase and sale recommendations. Mr. LeCates is the
Director of Research at Oppenheimer Capital, the parent of OpCap Advisors. Mr.
LeCates brings 32 years of investment experience to his current position.
Formerly with Donaldson, Lufkin & Jenrette for 18 years, he has served as head
of institutional equity sales, Director of Research and as a securities analyst.
Mr. LeCates, a Chartered Financial Analyst, is a graduate from Princeton
University and earned his MBA in finance from Harvard Business School.

Principal
Investment Strategies

The Portfolio will normally invest at least 80% of its assets in a
diversified portfolio of common stocks and securities convertible into common
stocks. At least 65% of the Portfolio assets will be invested in common stocks
of issuers with total market capitalizations of $1 billion or greater at the
time of purchase. In determining which securities to buy, hold or sell, the
Adviser focuses its investment selection on highly liquid equity securities
that, in the Adviser's opinion, have above average price appreciation potential
at the time of purchase. In general, securities are characterized as having
above average dividend yields and below average price earnings ratios relative
to the stock market in general, as measured by the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500"). Other factors, such as earnings,
the issuer's ability to generate cash flow in excess of business needs and
sustain above average profitability, as well as industry outlook and market
share, are also considered by the Adviser.

In addition, the Portfolio may invest in stock index futures contracts and
options.

Principal Risks

Common Stocks. A principal risk of investing in the Portfolio is associated
with common stock investments. In general, stock values fluctuate in response to
activities specific to the company as well as general market, economic and
political conditions. Stock prices can fluctuate widely in response to these
factors.

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments including the risks associated with stock index futures contracts
and options. For information about these risks, see the "Additional Risk
Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

During the periods shown in the bar chart, the highest return for a
calendar quarter was 14.90% (quarter ended December 31, 1998) and the lowest
return for a calendar quarter was -13.09% (quarter ended September 30, 1998).
Year-to-date total return as of September 30, 2000 was 0.38%.

AVERAGE ANNUAL TOTAL RETURNS

Large Capitalization Value
Portfolio 1.11% 19.21% 17.24%

S&P/Barra Value Index(1) 12.73% 22.94% 20.37%

Morningstar Large Value
Average(2) 6.62% 19.59% 17.60%
--------------------------------------------------------------------------------
(1) The S&P/Barra Value Index is constructed by dividing the stocks in the
S&P 500 Index according to price-to-book ratios. This unmanaged Index contains
stocks with lower price-to-book ratios and is market capitalization weighted.
The S&P/Barra Value Index does not include fees and expenses, and investors may
not invest directly in the Index.

(2) The Morningstar Large Value Average, as of August 31, 2000, consisted
of 669 mutual funds comprised of large market capitalization stocks with the
lowest combinations of price-to-earnings and price-to-book scores. Investors may
not invest in the Average directly.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

LARGE CAPITALIZATION GROWTH PORTFOLIO

Investment Objective

The Large Capitalization Growth Portfolio seeks capital appreciation.

The Adviser

The Portfolio is advised by Harris Bretall Sullivan & Smith, L.L.C. Stock
selection for the Portfolio is made by the Strategy and Investment Committees of
Harris Bretall. The Portfolio is managed by a management team lead by Jack
Sullivan and Gordon Ceresino. Mr. Sullivan is a partner of Harris Bretall and
has been associated with the firm since 1981. Mr. Ceresino is a Partner of
Harris Bretall and has been associated with the firm since 1991.

Principal Investment Strategies

The Portfolio will normally invest at least 80% of its assets in a
diversified portfolio of common stocks that, in the Adviser's opinion, are
characterized by earnings growth in excess of that of the S&P 500. The Portfolio
will also normally invest at least 65% of its assets in common stocks of issuers
with total market capitalizations of $3 billion or more. In deciding which
securities to buy, hold or sell, the Adviser evaluates factors believed to be
favorable to long-term capital appreciation, including specific financial
characteristics of the issuer such as historical earnings growth, sales growth,
profitability and return on equity. The Adviser also analyzes the issuer's
position within its industry as well as the quality and experience of the
issuer's management.

Principal Risks

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the "Additional Risk
Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

During the periods shown in the bar chart, the highest return for a
calendar quarter was 34.27% (quarter ended December 31, 1998) and the lowest
return for a calendar quarter was -13.18% (quarter ended September 30, 1998).
Year-to-date total return as of September 30, 2000 was -3.13%.

AVERAGE ANNUAL TOTAL RETURNS

--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
--------------------------------------------------------------------------------
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
Large Capitalization Growth
Portfolio 34.18% 28.82% 26.79%

S&P/Barra Growth Index(1) 28.25% 33.64% 31.05%

Morningstar Large Growth
Average(2) 38.48% 29.46% 26.78%
--------------------------------------------------------------------------------
(1) The S&P/Barra Growth Index is constructed by dividing the stocks in the
S&P 500 Index according to price-to-book ratios. This unmanaged Index contains
stocks with higher price-to-book ratios and is market capitalization weighted.
The S&P/Barra Growth Index does not include fees and expenses, and investors may
not invest directly in the Index.

(2) The Morningstar Large Growth Average, as of August 31, 2000, consisted
of 698 mutual funds comprised of large market capitalization stocks with the
highest combinations of price-to-earnings and price-to-book scores. Investors
may not invest in the Average directly.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the '"Summary of Trust Expenses"' section.

SMALL CAPITALIZATION PORTFOLIO

Investment Objective

The Small Capitalization Portfolio seeks maximum capital appreciation.

The Adviser

The Portfolio is advised by Fox Asset Management, Inc. The Portfolio is
co-managed by J. Peter Skirkanich and George C. Pierides, who are the key
small-cap personnel on the firm's Investment Committee. Mr. Skirkanich is the
President and Chief Investment Officer of Fox and founded the firm in 1985. Mr.
Pierides is a Managing Director, spearheads the firm's small-cap efforts and
joined the firm in 1995 from Windward Asset Management, an all-cap investment
management firm.

Principal Investment Strategies

The Portfolio will normally invest at least 80% of its assets in common
stocks. Normally 80% of the Portfolio will be invested in companies whose stock
market capitalizations fall within the range of capitalizations in the Russell
2000 Index. The Portfolio will also occasionally invest a portion of its assets
in mid-cap stocks with compelling valuations and fundamentals that are small
relative to their industries, and it will not immediately sell a security that
was bought as a small-cap stock but through appreciation has become a mid-cap
stock. In selecting securities for the Portfolio, the Adviser begins with a
screening process that seeks to identify growing companies whose stocks sell at
discounted price-to-earnings and price-to-cash flow multiples. The Adviser also
attempts to discern situations where intrinsic asset values are not widely
recognized. The Adviser favors such higher-quality companies that generate
strong cash flow, provide above-average free cash flow yields and maintain sound
balance sheets. Rigorous fundamental analysis, from both a quantitative and
qualitative standpoint, is applied to all investment candidates. While the
Adviser employs a disciplined "bottom-up" approach that attempts to identify
undervalued stocks, it nonetheless is sensitive to emerging secular trends. The
Adviser does not, however, rely on macroeconomic forecasts in its stock
selection efforts and prefers to remain fully invested.

Principal Risks

Small and Medium Capitalization Companies. The Portfolio's investments in
smaller and medium-sized companies carry more risk than investments in larger
companies. While some of the Portfolio's holdings in these companies may be
listed on a national securities exchange, such securities are more likely to be
traded in the over-the-counter market. The low market liquidity of these
securities may have an adverse impact on the Portfolio's ability to sell certain
securities at favorable prices and may also make it difficult for the Portfolio
to obtain market quotations based on actual trades, for purposes of valuing its
securities. Investing in lesser-known, smaller and medium capitalization
companies involves greater risk of volatility of the Portfolio's net asset value
than is customarily associated with larger, more established companies. Often
smaller and medium capitalization companies and the industries in which they are
focused are still evolving and, while this may offer better growth potential
than larger, more established companies, it also may make them more sensitive to
changing market conditions.

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the "Additional Risk
Information" section. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years

This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's Class I shares has
varied from year to year over the
life of the Portfolio.
-------------- ----------------------
Calendar Years Average Annual Returns
-------------- ----------------------
1995 27.31%
1996 15.89%
1997 23.20%
1998 (18.61%)
1999 13.01%

During the periods shown in the bar chart, the highest return for a
calendar quarter was 22.62% (quarter ended June 30, 1999) and the lowest return
for a calendar quarter was -28.41% (quarter ended September 30, 1998).
Year-to-date total return as of September 30, 2000 was 14.37%.
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS

Small Capitalization Portfolio 13.01% 10.82% 9.52%

Russell 2000 Index(1) 21.26% 16.69% 15.09%

Morningstar Small Value
Average(2) 4.33% 14.62% 13.09%
--------------------------------------------------------------------------------
(1) The Russell 2000 Index is comprised of the 2,000 smallest U.S.
domiciled publicly traded common stocks which are included in the Russell 3000
index. The common stocks included in the Russell 2000 Index represent
approximately 10% of the U.S. equity market as measured by market
capitalization. The Russell 3000 Index is an unmanaged index of the 3,000
largest U.S. domiciled publicly traded common stocks by market capitalization
representing approximately 98% of the U.S. publicly traded equity market. The
Russell 2000 Index is an unmanaged index which does not include fees and
expenses, and whose performance reflects reinvested dividends. Investors may not
invest in the Index directly.

(2) The Morningstar Small Value Average, as of August 31, 2000, consisted
of 211 mutual funds comprised of small market capitalization stocks with the
lowest combinations of price-to-earnings and price-to-book scores. Investors may
not invest in the Average directly.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

INTERNATIONAL EQUITY PORTFOLIO

Investment Objective

The Portfolio seeks long-term capital appreciation.

The Adviser

The Portfolio is advised by Friends Ivory & Sime, Inc. The Portfolio is
managed by a management team lead by Julie Dent, Director of Global Funds at
Friends Ivory & Sime plc who has been overseeing the management of the Portfolio
since January 31, 1997. Ms. Dent joined Friends Ivory & Sime in 1986 and, as a
member of the Asset Allocation Committee, is responsible for asset allocation
and overseeing the management of global and international accounts for U.S. and
Japanese clients. Individual stocks are selected by the regional Equity Teams
which operate on a sectoral basis. Ian Peart is the European team leader; Rowan
Chaplin is the Japan team leader; and Mearns Nimmo is the Pacific Rim team
leader.

Principal Investment Strategy

The Portfolio will normally invest at least 80% of its assets in the equity
securities of companies located outside of the United States. Equity securities
consist of common and preferred stock and other securities such as depositary
receipts, bonds, rights and warrants that are convertible into common stock.
Under normal market conditions, at least 65% of the Portfolio's assets will be
invested in securities of issuers located in at least three foreign countries,
including countries with developing and emerging economies. The Portfolio
expects that its investments in foreign issuers will generally take the form of
depositary receipts. These are dollar denominated receipts which represent and
may be converted into the underlying foreign security. Depositary receipts are
publicly traded on exchanges or over-the-counter in the United States. In
deciding which securities to buy, hold or sell, the Adviser considers economic
developments, industry prospects and other factors such as an issuer's
competitive position or potential earnings.

Principal Risks

Foreign Securities. A principal risk of investing in the Portfolio is
associated with foreign stock investments. In general, stock values fluctuate in
response to activities specific to the company as well as general market,
economic and political conditions. Stock prices can fluctuate widely in response
to these factors.

The Portfolio's investments in foreign securities (including depositary
receipts) involve risks in addition to the risks associated with domestic
securities. One additional risk is currency risk. While the price of Portfolio
shares is quoted in U.S. dollars, the Portfolio generally converts U.S. dollars
to a foreign market's local currency to purchase a security in that market. If
the value of that local currency falls relative to the U.S. dollar, the U.S.
dollar value of the foreign security will decrease. This is true even if the
foreign security's local price remains unchanged.

Foreign securities also have risks related to economic and political
developments abroad, including expropriations, confiscatory taxation, exchange
control regulation, limitations on the use or transfer of Portfolio assets and
any effects of foreign social, economic or political instability. In particular,
adverse political or economic developments in a geographic region or a
particular country in which the Portfolio invests could cause a substantial
decline in the value of its portfolio securities. Foreign companies, in general,
are not subject to the regulatory requirements of U.S. companies and, as such,
there may be less publicly available information about these companies.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. Finally, in the
event of a default of any foreign debt obligations, it may be more difficult for
the Portfolio to obtain or enforce a judgment against the issuers of the
securities.

Securities of foreign issuers may be less liquid than comparable securities
of U.S. issuers and, as such, their price changes may be more volatile.
Furthermore, foreign exchanges and broker-dealers are generally subject to less
government and exchange scrutiny and regulation than their U.S. counterparts. In
addition, differences in clearance and settlement procedures in foreign markets
may cause delays in settlements of the Portfolio's trades effected in those
markets. Delays in purchasing securities may result in the Portfolio losing
investment opportunities. The inability to dispose of foreign securities due to
settlement delays could result in losses to the Portfolio due to subsequent
declines in the value of the securities. Issuers of the foreign security
represented by a depositary receipt may not be obligated to disclose material
information in the United States.

The Portfolio may invest in foreign securities issued by companies located
in developing or emerging countries. Compared to the United States and other
developed countries, developing or emerging countries may have relatively
unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities. Prices of these securities tend
to be especially volatile and, in the past, securities in these countries have
been characterized by greater potential loss (as well as gain) than securities
of companies located in developed countries.

The Portfolio may invest in foreign small capitalization securities.
Investing in lesser-known, smaller capitalized companies may involve greater
risk of volatility of the Portfolio's share price than is customarily associated
with investing in larger, more established companies. There is typically less
publicly available information concerning smaller companies than for larger,
more established companies. Some small companies have limited product lines,
distribution channels and financial and managerial resources and tend to
concentrate on fewer geographical markets than do larger companies. Also,
because smaller companies normally have fewer shares outstanding than larger
companies and trade less frequently, it may be more difficult for the Portfolio
to buy and sell significant amounts of shares without an unfavorable impact on
prevailing market prices.

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the "Additional Risk
Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years

This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's Class I shares has
varied from year to year over the
life of the Portfolio.
-------------- ----------------------
Calendar Years Average Annual Returns
-------------- ----------------------
1995 3.08%
1996 6.56%
1997 6.91%
1998 13.22%
1999 40.03%

During the periods shown in the bar chart, the highest return for a
calendar quarter was 27.38% (quarter ended December 31, 1999) and the lowest
return for a calendar quarter was -16.13% (quarter ended March 31, 1999).
Year-to-date total return as of September 30, 2000 was -12.97%.
--------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURNS

This table compares the Portfolio's average annual returns with those of a
broad measure of market performance over time. The Portfolio's returns assume
you sold your shares at the end of each period.

International Equity Portfolio 40.03% 13.23% 11.06%

Morgan Stanley EAFE Index
(U.S. Dollars)(1) 26.97% 12.83% 11.10%
--------------------------------------------------------------------------------

(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. This Index does not include fees and
expenses, and investors may not invest in the Index directly. The Gross Domestic
Product (GDP) version of the Index is used above.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

SUMMARY OF TRUST EXPENSES

Annual Portfolio Operating Expenses. The following table lists the costs
and expenses that an investor will incur as a shareholder of each of the
Portfolios based on operating expenses incurred during the fiscal year ended
August 31, 2000. There are no shareholder transaction expenses, sales loads or
distribution fees.

U.S.
Government Investment Large Large
Money Market Quality Municipal Capitalization Capitalization Small International
Portfolio Bond Bond Value Growth Capitalization Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------- ----------- ------------- ---------------- ---------- ----------- -----------
Shareholder Fees None None None None None None None
Annual Portfolio Operating Expenses
(expenses that are deducted form
Portfolio assets as a percentage of
average net assets)
Management Fees* .475% 0.55% 0.55% 0.65% 0.65% 0.65% 0.75%
Distribution (Rule 12b-1 Expenses) None None None None None None None
Other Expenses* .565% 0.61% 1.24% 0.37% 0.29% 0.61% 0.70%
Total Annual Portfolio Operating Expenses 1.04% 1.16% 1.79% 1.02% 0.94% 1.26% 1.45%
Fee Waiver (and/or Expense
Reimbursement)* -------- (0.05%) (0.59%) -------- (0.05%) (0.01%) (0.17%)

Net Expenses* 1.04% 1.11% 1.20% 1.02% 0.89% 1.25% 1.28%
========================================= ======== ======= ======= ======== ======= ======= ======

</TABLE>

* Management Fees, Other Expenses, Fee Waiver and/or Reimbursement, and Net
Expenses: Each Portfolio pays the Manager a fee for its services that is
computed daily and paid monthly at an annual rate ranging from .475% to .75% of
the value of the average daily net assets of the Portfolio. The fees of each
Adviser are paid by the Manager. The nature of the services provided to, and the
aggregate management fees paid by each Portfolio are described under 'Investment
Manager.' The Portfolios benefit from expense offset arrangements with the
Trust's custodian bank where uninvested cash balances earn credits that reduce
monthly fees. The amount of the expense offset for each respective portfolio was
as follows: U.S. Government Money Market, 0%; Investment Quality Bond, 0.04%;
Municipal Bond, 0.01%; Large Capitalization Value, 0%; Large Capitalization
Growth, 0.04%; Small Capitalization, 0%; and International Equity, 0.16%. Under
applicable SEC regulations, the amount by which Portfolio expenses are reduced
by an expense offset arrangement is required to be added to 'Other Expenses.'
'Other Expenses' also include fees for shareholder services, administration,
custodial fees, legal and accounting fees, printing costs, registration fees,
the costs of regulatory compliance, a Portfolio's allocated portion of the costs
associated with maintaining the Trust's legal existence and the costs involved
in the Trust's communications with shareholders. The Trust and the Manager have
entered into an Excess Expense Agreement (the "Expense Agreement") effective
January 1, 1999. In connection with the Expense Agreement, the Manager is
currently waiving its management fees and/or assuming certain other operating
expenses of the Portfolios in order to maintain the expense ratios of each class
of the Portfolios at or below predetermined levels (each an "Expense Cap").
Under the terms of the Expense Agreement, expenses borne by the Manager are
subject to reimbursement by the Portfolios up to five years from the date the
fee or expense was incurred, but no reimbursement payment will be made by a
Portfolio if it would result in the Portfolio exceeding its Expense Cap. The
following are the Expense Caps for each of the Portfolios: U.S. Government Money
Market, 1.125%; Investment Quality Bond, 1.20%; Municipal Bond, 1.20%; Large
Capitalization Value, 1.30%; Large Capitalization Growth, 1.30%; Small
Capitalization, 1.30%; and International Equity, 1.40%. The Expense Agreement
can be terminated by either party, without penalty, upon 60 days prior notice.
For the year ended August 31, 2000, reimbursement payments were made by the
following Portfolios to the Manager under the terms of the Expense Agreement:
$5,648, $1,276, $4,904, $936 and $9,358 for the Large Capitalization Value,
Large Capitalization Growth, International Equity, Investment Quality Bond and
Money Market Portfolios, respectively.

Example. This example is intended to help you compare the cost of investing
in the Portfolios with the cost of investing in other mutual funds. This example
shows what expenses you could pay over time. The example assumes that you invest
$10,000 in the Portfolio, your investment has a 5% return each year, and the
Portfolio's operating expenses remain the same. Although your actual costs may
be higher or lower, the table below shows your costs at the end of each period
based on these assumptions.

- If You HELD or SOLD Your Shares:

</TABLE>

ADDITIONAL INVESTMENT STRATEGY INFORMATION

This section provides additional information relating to each Portfolio's
principal strategies.

Defensive Investing. The Portfolios are intended primarily as vehicles for
the implementation of a long term investment program utilizing asset allocation
strategies rendered through investment advisory programs that are based on an
evaluation of an investor's investment objectives and risk tolerance. Because
these asset allocation strategies are designed to spread investment risk across
the various segments of the securities markets through investment in a number of
Portfolios, each individual Portfolio generally intends to be substantially
fully invested in accordance with its investment objectives and policies during
most market conditions. Although the Adviser of a Portfolio may, upon the
concurrence of the Manager, take a temporary defensive position during adverse
market conditions, it can be expected that a defensive posture will be adopted
less frequently than would be by other mutual funds. This policy may impede an
Adviser's ability to protect a Portfolio's capital during declines in the
particular segment of the market to which the Portfolio's assets are committed.

Forward Currency Contracts. A Portfolio's investments also may include
forward currency contracts, which involve the purchase or sale of a specific
amount of foreign currency at the current price with delivery at a specified
future date. A Portfolio may use these contracts to hedge against adverse price
movements in its portfolio securities or securities it may purchase and the
currencies in which they are determined or to gain exposure to currencies
underlying various securities or financial instruments.

Investment Policies. The percentage limitations relating to the composition
of a Portfolio referenced in the discussion of a Portfolio apply at the time a
Portfolio acquires an investment and refer to the Portfolio's net assets, unless
otherwise noted. Subsequent percentage changes that result from market
fluctuations will not require a Portfolio to sell any Portfolio security. A
Portfolio may change its principal investment strategies without shareholder
approval; however you would be notified of any change.

ADDITIONAL RISK INFORMATION

This section provides additional information relating to principal risks of
investing in the Portfolios.

The risks set forth below are applicable to a Portfolio only to the extent
the Portfolio invests in the investment described.

Junk Bonds. A Portfolio's investments in securities rated lower than
investment grade or if unrated of comparable quality as determined by the
Adviser (commonly known as "junk bonds") pose significant risks. The prices of
junk bonds are likely to be more sensitive to adverse economic changes or
individual corporate developments than higher rated securities. During an
economic downturn or substantial period of rising interest rates, junk bond
issuers and, in particular, highly leveraged issuers may experience financial
stress that would adversely affect their ability to service their principal and
interest payment obligations, to meet their projected business goals or to
obtain additional financing. In the event of a default, the Portfolio may incur
additional expenses to seek recovery. The secondary market for junk bonds may be
less liquid than the markets for higher quality securities and, as such, may
have an adverse effect on the market prices of certain securities. The
illiquidity of the market may also adversely affect the ability of the Trust's
Trustees to arrive at a fair value for certain junk bonds at certain times and
could make it difficult for the Portfolios to sell certain securities. In
addition, periods of economic uncertainty and change probably would result in
increased volatility of market prices of high yield securities and a
corresponding volatility in a Portfolio's net asset value.

Securities Rated in the Lowest Investment Grade Category. Investments in
the fixed-income securities rated in the lowest investment grade category by
Moody's or S&P may have speculative characteristics and therefore changes in
economic or other circumstances are more likely to weaken their capacity to make
principal and interest payments than would be the case with investments in
securities with higher credit ratings.

Options and Futures. If a Portfolio invests in options and/or futures, its
participation in these markets would subject the Portfolio to certain risks. The
Adviser's predictions of movements in the direction of the stock, bond, stock
index, currency or interest rate markets may be inaccurate, and the adverse
consequences to the Portfolio (e.g., a reduction in the Portfolio's net asset
value or a reduction in the amount of income available for distribution) may
leave the Portfolio in a worse position than if these strategies were not used.
Other risks inherent in the use of options and futures include, for example, the
possible imperfect correlation between the price of options and futures
contracts and movements in the prices of the securities being hedged, and the
possible absence of a liquid secondary market for any particular instrument.
Certain options may be over-the-counter options, which are options negotiated
with dealers; there is no secondary market for these investments.

Forward Currency Contracts. A Portfolio's participation in forward currency
contracts also involves risks. If the Adviser employs a strategy that does not
correlate well with the Portfolio's investments or the currencies in which the
investments are denominated, currency contracts could result in a loss. The
contracts also may increase the Portfolio's volatility and may involve a
significant risk.

INVESTMENT MANAGER

Saratoga Capital Management serves as the Trust's Manager. The Manager,
subject to the review and approval of the Board of Trustees of the Trust,
selects Advisers for each Portfolio and supervises and monitors the performance
of each Adviser.

The Manager may, subject to the approval of the Trustees, replace
investment advisers or amend investment advisory agreements without shareholder
approval whenever the Manager and the Trustees believe such action will benefit
a Portfolio and its shareholders. The Manager compensates each Adviser out of
its management fee.

The total amount of investment management fees payable by each Portfolio to
the Manager may not be changed without shareholder approval.

Manager's Fee
Portfolio -------------

U.S. Government Money Market Portfolio .475%
Investment Quality Bond Portfolio .55%
Municipal Bond Portfolio .55%
Large Capitalization Value Portfolio .65%
Large Capitalization Growth Portfolio .65%
Small Capitalization Portfolio .65%
International Equity Portfolio .75%

The Manager is located at 1501 Franklin Avenue, Mineola, New York
11501-4803. Saratoga Capital Management is a Delaware general partnership which
is owned by certain executives of Saratoga Capital Management and by Mr. Ronald
J. Goguen, whose address is Major Drilling Group International Inc., 111 St.
George Street, Suite 200, Moncton, New Brunswick, Canada E1C177, Mr. John
Schiavi, whose address is Schiavi Enterprises, 985 Main Street, Oxford, Maine
04270, and Mr. Thomas Browne, whose address is Pontil PTY Limited, 14 Jannali
Road, Dubbo, NSW Australia 2830.

ADVISERS

The following set forth certain information about each of the Advisers:

OpCap Advisors ("OpCap"), a registered investment adviser, located at 1345
Avenue of the Americas, New York, NY 10105, serves as Adviser to the Municipal
Bond Portfolio and the Large Capitalization Value Portfolio. OpCap is a majority
owned subsidiary of Oppenheimer Capital, a registered investment adviser,
founded in 1968. Oppenheimer Capital is an indirect wholly owned subsidiary of
PIMCO Advisors, L.P. ("PIMCO"), a registered investment adviser. On May 5, 2000,
Allianz AG acquired majority ownership of PIMCO Advisors, in part by acquiring
all of the publicly traded units of PIMCO Advisors Holding LP, which owns about
44% of PIMCO Advisors, including Oppenheimer Capital, as independent operating
units. Allianz is a holding company that owns several insurance and financial
service companies and is a subsidiary of Allianz AG, the world's second largest
insurance company as measured by premium income. As of August 31, 2000,
Oppenheimer Capital and its subsidiary OpCap had assets under management of
approximately $38.3 billion.

Fox Asset Management, Inc. ("Fox"), a registered investment adviser, serves
as Adviser to the Investment Quality Bond and Small Capitalization Portfolios.
Fox was formed in 1985. Fox is wholly-owned by its current employees, with a
controlling interest held by J. Peter Skirkanich, President and Chairman of
Fox's Investment Committee. Fox is located at 44 Sycamore Avenue, Little Silver,
NJ 07739. As of August 31, 2000, assets under management by Fox were
approximately $1.8 billion.

Harris Brettal Sullivan & Smith, L.L.C. ("Harris Bretall"), a registered
investment adviser, serves as Adviser to the Large Capitalization Growth
Portfolio. The firm's predecessor, Harris Bretall Sullivan & Smith, Inc., was
founded in 1971. Value Asset Management, Inc., a holding company owned by
BancBoston Ventures, Inc., is the majority owner. Located at One Sansome Street,
Suite 3300, San Francisco, CA 94104, the firm managed assets of approximately $7
billion as of August 31, 2000.

Sterling Capital Management Company ("Sterling"), a registered investment
adviser, is the Adviser to the U.S. Government Money Market Portfolio. Sterling
is a North Carolina corporation formed in 1970 and located at One First Union
Center, 301 S. College Street, Suite 3200, Charlotte, NC 28202. Sterling is a
wholly-owned subsidiary of Old Mutual plc and provides investment management
services to corporations, pension and profit-sharing plans, trusts, estates and
other institutions and individuals. As of August 31, 2000, Sterling had
approximately $3 billion in assets under management. It is anticipated that a
buyout of Sterling by its employees will occur on or around January 1, 2001,
after which Sterling will be a North Carolina limited liability company that is
100% owned by its employees.

Friends Ivory & Sime, Inc. ("FIS"), a registered investment adviser, is the
Adviser to the International Equity Portfolio and, in connection therewith, has
entered into a sub-investment advisory agreement with Friends Ivory & Sime plc
of London, England. Pursuant to such sub-investment advisory agreement, Friends
Ivory & Sime plc performs investment advisory and portfolio transaction services
for the Portfolio. While Friends Ivory & Sime plc is responsible for the
day-to-day management of the Portfolio's assets, FIS reviews investment
performance, policies and guidelines, facilitates communication between Friends
Ivory & Sime plc and the Manager and maintains certain books and records.

FIS (formerly Ivory & Sime International, Inc.) was organized in 1978, and
as of February, 1998 is a wholly-owned subsidiary of Friends Ivory & Sime plc.
FIS offers clients in the United States the services of Friends Ivory & Sime plc
in global securities markets. Friends Ivory & Sime plc is a subsidiary of
Friends Provident Group. Friends Provident was founded in 1832, and is a mutual
life assurance company registered in England. As of August 31, 2000, the firm
and its affiliates managed approximately $55 billion of global equity
investments. FIS is located at One World Trade Center, Suite 2101, New York, NY
10048, and Friends Ivory & Sime plc is located at 100 Wood Street, London,
England EC2V 7AN.

ADMINISTRATION

State Street Bank and Trust Company, located at One Heritage Drive, North
Quincy, Massachusetts 02171, is the custodian of the assets of the Trust, and
calculates the net asset value of the shares of each Portfolio and creates and
maintains the Trust's required financial records.

Funds Distributor, Inc. provides administrative services and manages the
administrative affairs of the Trust.

SHAREHOLDER INFORMATION

PRICING OF PORTFOLIO SHARES

The price of shares of each Portfolio called "net asset value," is based on
the value of the Portfolio's investments.

The net asset value per share of each Portfolio is determined once daily at
the close of trading on the New York Stock Exchange ("NYSE") (currently 4:00
p.m. Eastern Standard Time) on each day that the NYSE is open. Shares will not
be priced on days that the NYSE is closed.

The value of each Portfolio's portfolio securities is based on the
securities' market price when available. When a market price is not readily
available, including circumstances under which an Adviser determines that a
security's market price is not accurate, a portfolio security is valued at its
fair value, as determined under procedures established by the Trust's Board of
Trustees. In these cases, the Portfolio's net asset value will reflect certain
portfolio securities' fair value rather than their market price.

All securities held by the U.S. Government Money Market Portfolio and debt
securities with remaining maturities of sixty days or less at the time of
purchase are valued at amortized cost. The amortized cost valuation method
involves valuing a debt obligation in reference to its cost rather than market
forces.

PURCHASE OF SHARES

Purchase of shares of a Portfolio must be made through a dealer having a
sales agreement with Funds Distributor, Inc., the Trust's general distributor
(the "Distributor"), or directly through the Distributor. Shares of a Portfolio
are available to participants in Consulting Programs and to other investors and
investment advisory services. The purchase price is the net asset value per
share next determined after receipt of an order by the Distributor.

Investment Advisory Programs. The Trust is designed to allow Consulting
Programs and other investment advisory programs to relieve investors of the
burden of devising an asset allocation strategy to meet their individual needs
as well as selecting individual investments within each asset category among the
myriad choices available. Generally, the Consulting Programs provide advisory
services in connection with investments among the Portfolios by identifying the
investor's risk tolerance and investment objectives through evaluation of an
investor questionnaire; identifying and recommending an appropriate allocation
of assets among the Portfolios that is intended to conform to such risk
tolerance and objectives in a recommendation; and providing, on a periodic
basis, an analysis and evaluation of the investor's account and recommending any
appropriate changes in the allocation of assets among the Portfolios. The
investment advisers for the Consulting Programs are also responsible for
reviewing the asset allocation recommendations and performance reports with the
investor, providing any interpretations, monitoring identified changes in the
investor's financial characteristics and the implementation of investment
decisions.

The investment advisers in the Consulting Programs may use the Manager's
Saratoga SHARP(Trademark) Program in assisting their clients in translating
investor needs, preferences and attitudes into suggested portfolio allocations.
In addition, the Manager may provide some or all of the administrative services
to the investment advisers for the Consulting Programs such as the preparation,
printing and processing of investment questionnaires and investment literature
and other client communications. The Manager receives a fee from the investment
adviser for these services.

The fee payable by the client for the Consulting Programs is subject to
negotiation between the client and his or her investment advisor and is paid
directly by each advisory client to his or her investment advisor either by
redemption of Portfolio shares or by separate payment.

Other Advisory Programs. Shares of the Portfolios are also available for
purchase by certain registered investment advisers (other than the investment
advisers for the Consulting Programs) as a means of implementing asset
allocation recommendations based on an investor's investment objectives and risk
tolerance. In order to qualify to purchase shares on behalf of its clients, the
investment advisor must be approved by the Manager. Investors purchasing shares
through these investment advisory programs will bear different fees for
different levels of services as agreed upon with the investment advisers
offering the programs. Registered investment advisers interested in utilizing
the Portfolios for the purposes described above should call 800-807-FUND
(800-807-3863).

Continuous Offering. For Class I shares of the Trust, the minimum initial
investment in the Trust is $10,000 and the minimum investment in any individual
Portfolio (other than the U.S. Government Money Market Portfolio) is $250; there
is no minimum investment for the U.S. Government Money Market Portfolio. For
employees and relatives of: the Manager, firms distributing shares of the Trust,
and the Trust service providers and their affiliates, the minimum initial
investment is $1,000 with no individual Portfolio minimum. There is no minimum
initial investment for employee benefit plans, associations, and individual
retirement accounts. The minimum subsequent investment in the Trust is $100 and
there is no minimum subsequent investment for any Portfolio. The Trust reserves
the right at any time to vary the initial and subsequent investment minimums.

The Trust offers an Automatic Investment Plan under which purchase orders
of $100 or more may be placed periodically in the Trust. The purchase price is
paid automatically from cash held in the shareholder's designated account. For
further information regarding the Automatic Investment Plan, shareholders should
contact their Consulting Broker or the Trust at 800-807-FUND (800-807-3863).

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

The Distributor will from time to time provide compensation to dealers in
connection with sales of shares of the Trust including financial assistance to
dealers in connection with conferences, sales or training programs for their
employees, seminars for the public and advertising campaigns.

REDEMPTION OF SHARES

Shares of a Portfolio may be redeemed at no charge on any day that the
Portfolio calculates its net asset value. Redemption requests received in proper
form prior to the close of regular trading on the NYSE will be effected at the
net asset value per share determined on that day. Redemption requests received
after the close of regular trading on the NYSE will be effected at the net asset
value next determined. A Portfolio is required to transmit redemption proceeds
for credit to the shareholder's account at no charge within seven days after
receipt of a redemption request Redemption of shares purchased by check will not
be effected until the check clears, which may take up to 15 days from the
purchase date.

Redemption requests may be given to a dealer having a selling agreement
with the Distributor (who is responsible for transmitting them to the Trust's
Transfer Agent) or directly to the Transfer Agent, if the shareholder purchased
shares directly from the Distributor. In order to be effective, certain
redemption requests of a shareholder may require the submission of documents
commonly required to assure the safety of a particular account.

The agreement relating to participation in a Consulting Program between a
client and the investment adviser typically will provide that, absent separate
payment by the participant, fees charged pursuant to that agreement may be paid
through automatic redemptions of a portion of the participant's Trust account.

The Trust may suspend redemption procedures and postpone redemption payment
during any period when the NYSE is closed other than for customary weekend or
holiday closing or when the SEC has determined an emergency exists or has
otherwise permitted such suspension or postponement.

Certain requests require a signature guarantee. To protect you and the
Trust from fraud, certain transactions and redemption requests must be in
writing and must include a signature guarantee in the following situations
(there may be other situations also requiring a signature guarantee in the
discretion of the Trust or Transfer Agent):

1. Re-registration of the account.
2. Changing bank wiring instructions on the account.
3. Name change on the account.
4. Setting up/changing systematic withdrawal plan to a secondary address.
5. Redemptions greater than $25,000.
6. Any redemption check that is made payable to someone other than the
shareholder(s).
7. Any redemption check that is being mailed to a different address than
the address of record.
8. Your account registration has changed within the last 30 days.

You should be able to obtain a signature guarantee from a bank or trust
company, credit union, broker-dealer, securities exchange or association,
clearing agency or savings association, as defined by federal law.

Involuntary Redemptions. Due to the relatively high cost of maintaining
small accounts, the Trust may redeem an account having a current value of $7,500
or less as a result of redemptions, but not as a result of a fluctuation in a
Portfolio's net asset value or redemptions to pay fees for Consulting Programs,
after the shareholder has been given at least 30 days in which to increase the
account balance to more than that amount. Involuntary redemptions may result in
the liquidation of Portfolio holdings at a time when the value of those holdings
is lower than the investor's cost of the investment or may result in the
realization of taxable capital gains.

Exchange Privilege. Shares of a Portfolio may be exchanged without payment
of any exchange fee for shares of another Portfolio of the same Class at their
respective net asset values.

An exchange of shares is treated for federal income tax purposes as a
redemption (sale) of shares given in exchange by the shareholder, and an
exchanging shareholder may, therefore, realize a taxable gain or loss in
connection with the exchange. The exchange privilege is available to
shareholders residing in any state in which Portfolio shares being acquired may
be legally sold.

The Manager reserves the right to reject any exchange request and the
exchange privilege may be modified or terminated upon notice to shareholders in
accordance with applicable rules adopted by the Securities and Exchange
Commission.

With regard to redemptions and exchanges made by telephone, the Distributor
and the Trust's Transfer Agent will request personal or other identifying
information to confirm that the instructions received from shareholders or their
account representatives are genuine. Calls may be recorded. If our lines are
busy or you are otherwise unable to reach us by phone, you may wish to ask your
investment representative for assistance or send us written instructions, as
described elsewhere in this prospectus. For your protection, we may delay a
transaction or not implement one if we are not reasonably satisfied that the
instructions are genuine. If this occurs, we will not be liable for any loss.
The Distributor and the Transfer Agent also will not be liable for any losses if
they follow instructions by phone that they reasonably believe are genuine or if
an investor is unable to execute a transaction by phone.

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

DIVIDENDS AND DISTRIBUTIONS

Net investment income (i.e., income other than long and short term capital
gains) and net realized long and short term capital gains will be determined
separately for each Portfolio. Dividends derived from net investment income and
distributions of net realized long and short term capital gains paid by a
Portfolio to a shareholder will be automatically reinvested (at current net
asset value) in additional shares of that Portfolio (which will be deposited in
the shareholder's account) unless the shareholder instructs the Trust, in
writing, to pay all dividends and distributions in cash. Dividends attributable
to the net investment income of the U.S. Government Money Market Portfolio, the
Municipal Bond Portfolio and the Investment Quality Bond Portfolio will be
declared daily and paid monthly. Shareholders of those Portfolios receive
dividends from the day following the purchase up to an including the date of
redemption. Dividends attributable to the net investment income of the remaining
Portfolios are declared and paid annually. Distributions of any net realized
long term and short term capital gains earned by a Portfolio will be made
annually.

TAX CONSEQUENCES

The following tax information in this Prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in the Trust.

Taxes on Distributions. Your distributions are normally subject to federal
and state income tax when they are paid, whether you take them in cash or
reinvest them in shares. A distribution also may be subject to local income tax.
Any income dividend distributions and any short-term capital gain distributions
are taxable to you as ordinary income. Any long-term capital gain distributions
are taxable as long-term capital gains, no matter how long you have owned shares
in the Trust.

With respect to the Municipal Bond Portfolio, distributions designated as
'exempt - interest dividends' generally will be exempt from regular federal
income tax. However, income exempt from regular federal income tax may be
subject to state or local tax. In addition, income derived from certain
municipal securities may be subject to the federal 'alternative minimum tax.'
Certain tax-exempt securities whose proceeds are used to finance private,
for-profit organizations are subject to this special tax system that ensures
that individuals pay at least some federal taxes. Although interest on these
securities is generally exempt from federal income tax, some taxpayers who have
many tax deductions or exemptions nevertheless may have to pay tax on the
income.

You will be sent annually a statement (IRS Form 1099-DIV) showing the
taxable distributions paid to you in the previous year. The statement provides
information on your dividends and capital gains for tax purposes.

Taxes on Sales. Your sale of Portfolio shares normally is subject to
federal and state income tax and may result in a taxable gain or loss to you. A
sale also may be subject to local income tax. Your exchange of Portfolio shares
for shares of another Portfolio is treated for tax purposes like a sale of your
original Portfolio shares and a purchase of your new shares. Thus, the exchange
may, like a sale, result in a taxable gain or loss to you and will give you a
new tax basis for your new shares.

When you open your Portfolio account, you should provide your social
security or tax identification number on your investment application. By
providing this information, you can avoid being subject to a federal backup
withholding tax of 31% on taxable distributions and redemption proceeds. Any
withheld amount would be sent to the IRS as an advance tax payment.

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)

The financial highlights table is intended to help you understand each
Portfolio's financial performance for the life of each Portfolio. The total
returns in the table represent the rate an investor would have earned or lost on
an investment in each respective Portfolio (assuming reinvestment of all
dividends and distributions).

The information for 2000, 1999 and 1998 has been audited by Ernst & Young
LLP, Independent Auditors whose report, along with the financial statements for
each Portfolio is included in the annual report, which is available upon
request. The information for periods prior to 1998 was audited by other
auditors, whose report thereon was unqualified.

--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a share outstanding throughout each period)
--------------------------------------------------------------------------------

<TABLE>

INCOME FROM DIVIDENDS AND
INVESTMENT OPERATIONS DISTRIBUTIONS RATIOS
--------------------------------------------------------------------- -----------------------------

Ratio
Distributions Ratio of Net
Net to of Net Investment
Realized Dividends Shareholders Operating Income
Net Asset And to from Net Net Net Expenses (Loss)
Value, Unrealized Total Shareholders Realized Asset Assets to to
Beginning Net Investment Gain(Loss) from Net Gains Value, End of Average Average Portfolio
of Income on Investment Investment on End of Total Period Net Net Turnover
Period (Loss) Investments Operations Income Investments Period Return* (000's) Assets Assets Rate

--------------------------------------------------------------------------------
Large Capitalization Value Portfolio (Class I)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000 $20.59 $0.12 ($0.23) ($0.11) ($0.17) ($1.80)$18.51 (0.49%) $75,516 1.02%(1) 0.68%(1) 90%

Year Ended
August 31, 1999 18.15 0.13 3.40 3.53 (0.09) (1.00) 20.59 19.84% 78,484 1.10%(1) 0.84%(1) 67%

Year Ended
August 31, 1998 18.57 0.14 0.07 0.21 (0.39) (0.24) 18.15 0.96% 42,641 1.30%(1) 0.69%(1) 54%

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%

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%

(1) During the fiscal year ended August 31, 2000 Saratoga did not waive any
of its management fees. During the fiscal years ended August 31,1999, August 31,
1998 and August 31,1997, Saratoga Capital Management waived a portion of its
management fees. During 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 1.02%
and 0.68%, respectively, for the year ended August 31, 2000, 1.12% and 0.86%,
respectively, for the year ended August 31, 1999, 1.39% and 0.60%, respectively,
for the year ended August 31,1998, 1.56% and 0.35%, respectively, for the year
ended August 31,1997 and 2.19% and 0.04%, respectively, for the year ended
August 31,1996.

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

--------------------------------------------------------------------------------
Large Capitalization Growth Portfolio (Class I)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000 $26.98 ($0.11) $8.40 $8.29 -- ($1.66) $33.61 31.45% $142,600 0.89%(1) (0.35%)(1) 33%

Year Ended
August 31, 1999 17.83 (0.09) 9.65 9.56 -- (0.41) 26.98 54.03% 115,586 1.02%(1) (0.36%)(1) 39%

Year Ended
August 31, 1998 17.87 (0.07) 0.81 0.74 -- (0.78) 17.83 3.91% 66,537 1.18%(1) (0.34%)(1) 45%

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%

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%

(1) During the fiscal year ended August 31, 2000 Saratoga did not waive any
of its management fees. During the fiscal years ended August 31,1999, August 31,
1998 and 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 0.94%
and (0.31%), respectively, for the year ended August 31, 2000, 1.02% and(0.36%),
respectively, for the year ended August 31, 1999, 1.25% and (0.41%),
respectively for the year ended August 31,1998, 1.36% and (0.20%), respectively,
for the year ended August 31,1997 and 1.67% and (0.60%), respectively, for the
year ended August 31, 1996.

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

--------------------------------------------------------------------------------
Small Capitalization Portfolio (Class I)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000$10.10 ($0.04) $2.96 $2.92 -- ($0.12) $12.90 29.41% $48,275 1.25%(1) (0.37%)(1) 59%

Year Ended
August 31, 1999 9.82 0.05) 3.02 2.97 -- (2.69) 10.10 34.91% 38,225 1.21%(1) (0.60%)(1) 32%

Year Ended
August 31, 1998 15.05 (0.10) (4.20) (4.30) -- (0.93) 9.82 (30.64%) 23,235 1.28%(1) (0.63%)(1) 96%

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%

Year Ended
August 31, 1996 12.62 (0.09) 1.44 1.35 ($0.00)(2) (0.39) 13.58 11.03% 22,071 1.25%(1) (0.83%)(1) 95%

(1) During the fiscal years ended August 31, 2000, August 31,1999, August
31, 1998 and 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 1.26%
and (0.33%), respectively, for the year ended August 31, 2000, 1.31% and
(0.70%), respectively, for the year ended August 31, 1999, 1.44% and 0.98%,
respectively, for the year ended August 31,1998, 1.64% and (1.04%),
respectively, for the year ended August 31,1997 and 1.84% and (1.42%),
respectively, for the year ended August 31,1996.

(2) Amount rounds to less than $0.01.

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

--------------------------------------------------------------------------------
International Equity Portfolio (Class I)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000$13.18 ($0.01) $2.74 $2.73 ($0.08) ($0.18)$15.65 20.72% $35,887 1.28%(1) (0.08%)(1) 45%

Year Ended
August 31, 1999 10.92 0.11 2.25 2.36 (0.10) -- 13.18 21.70% 28,743 1.45%(1) 1.00%(1) 46%

Year Ended
August 31, 1998 10.74 0.13 0.09 0.22 (0.04) -- 10.92 2.08% 18,967 1.40% (1) 1.14%(1)58%

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%

Year Ended
August 31, 1996 9.33 0.00(2) 0.34 0.34 (0.03) (0.05)9.59 3.68% 6,857 1.65%(1) 0.23%(1)58%

(1) During the fiscal year ended August 31, 2000 Saratoga did not waive any
of its management fees. During the fiscal years ended August 31,1999, August 31,
1998 and August 31, 1997, Saratoga Capital Management waived a Portion of its
management fees. During 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 1.45%
and 0.08%, respectively, for the year ended August 31, 2000, 1.49% and 1.04%,
respectively, for the year ended August 31,1999, 1.96% and 0.59%, respectively,
for the year ended August 31,1998, 2.76% and (1.00%), respectively, for the year
ended August 31,1997 and 3.91% and (2.33%), respectively, for the year ended
August 31,1996.

(2) Amount rounds to less than $0.01.

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

--------------------------------------------------------------------------------
Investment Quality Bond Portfolio (Class I)
--------------------------------------------------------------------------------
Year Ended
Augusy 31, 2000 $9.88 0.54 $0.02 $0.56 ($0.54) -- $9.90 5.83% $33,199 1.11%(1) 5.47%(1) 52%

Year Ended
August 31, 1999 10.29 0.49 (0.35) 0.14 (0.49) (0.06) 9.88 1.33% 41,070 1.05%(1) 4.85%(1) 62%

Year Ended
August 31, 1998 10.09 0.50 0.21 0.71 (0.50) (0.01) 10.29 7.21% 35,724 1.19%(1) 4.86%(1) 44%

Year Ended
August 31, 1997 9.91 0.51 0.18 0.69 (0.51) 0.00(2)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%

(1) During the fiscal year ended August 31, 2000 Saratoga did not waive any
of its management fees. During the fiscal years ended August 31,1999, August 31,
1998 and August 31,1997, Saratoga Capital Management waived a portion of its
management fees. During 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 1.16%
and 5.51%, respectively, for the year ended August 31, 2000, 1.06% and 4.86%,
respectively, for the year ended August 31, 1999, 1.37% and 4.69%, respectively,
for the year ended August 31,1998, 1.52% and 4.71%, respectively, for the year
ended August 31,1997 and 2.12% and 3.90%, respectively, for the year ended
August 31,1996.

(2) Amount rounds to less than $0.01.

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

--------------------------------------------------------------------------------
Municipal Bond Portfolio (Class I)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000$10.00 $0.43 $0.15 $0.58 ($0.43) ($0.06) $10.09 6.08% $10,021 1.20%(1) 4.43%(1) 12%

Year Ended
August 31, 1999 10.72 0.42 (0.68) (0.26) (0.42) (0.04) 10.00 (2.55%) 11,556 1.20%(1) 3.96%(1) 23%

Year Ended
August 31, 1998 10.33 0.43 0.42 0.85 (0.44) (0.02)10.72 8.42% 9,794 1.20%(1) 4.07%(1) 18%

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%

(1) During the fiscal years ended August 31,1999, August 31, 1998 and
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 1.79% and
3.84%, respectively, for the year ended August 31, 2000, 1.68% and 4.54%,
respectively, for the year ended August 31, 1999, 2.15% and 3.12%, respectively,
for the year ended August 31,1998, 2.96% and 2.43%, respectively, for the year
ended August 31,1997 and 5.32% and (0.12%), respectively, for the year ended
August 31,1996.

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

--------------------------------------------------------------------------------
U.S. Government Money Market Portfolio (Class I)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000$1.000 $0.048 -- $0.048 ($0.048) -- $1.000 4.96% $35,605 1.04%(1) 4.82(1) n/a

Year Ended
August 31, 1999 1.000 0.044 0.000 0.044 (0.044) -- 1.000 4.11% 48,358 1.00%(1) 4.02%(1) n/a

Year Ended
August 31, 1998 1.000 0.045 0.000 0.045 (0.045) -- 1.000 4.59% 38,492 1.12%(1) 4.41%(1) n/a
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) n/a

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) n/a

(1) During the fiscal year ended August 31, 2000 Saratoga did not waive any
of its management fees. During the fiscal years ended August 31,1999, August 31,
1998 and August 31,1997, Saratoga Capital Management waived a portion of its
management fees. During 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 1.04%
and 4.82%, respectively, for the year ended August 31, 2000,1.02% and 4.04%,
respectively, for the year ended August, 31 1999, 1.30% and 4.24%, respectively,
for the year ended August 31,1998, 1.35% and 4.08%, respectively, for the year
ended August 31,1997 and 1.79% and 3.64%, respectively, for the year ended
August 31,1996.

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

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

</TABLE>

CLASS I SHARES
PROSPECTUS

THE SARATOGA
ADVANTAGE TRUST

Additional information about each Portfolio's investments is available in
the Trust's Annual and Semi-Annual Reports to Shareholders. In the Trust's
Annual Report, you will find a discussion of the market conditions and
investment strategies that significantly affected each Portfolio's performance
during its last fiscal year. The Trust's Statement of Additional Information
also provides additional information about each Portfolio. The Statement of
Additional Information is incorporated herein by reference (legally is part of
this Prospectus). For a free copy of any of these documents, to request other
information about the Trust, or to make shareholder inquiries, please call:

(800) 807-FUND

You also may obtain information about the Trust by calling your financial
advisor or by visiting our Internet site at:

http://www.saratogacap.com

Information about the Trust (including the Statement of Additional
Information) can be viewed and copied at the Securities and Exchange
Commission's Public Reference Room in Washington, DC. Information about the
Reference Room's operations may be obtained by calling the SEC at (202)
942-8090. Reports and other information about the Trust are available on the
EDGAR Database on the SEC's Internet site (www.sec.gov) and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following e-mail address: [email protected], or by writing the
Public Reference Section of the SEC, Washington, DC 20549-0102.

The Trust's Investment Company Act file number is 811-08542.

THE SARATOGA
ADVANTAGE TRUST

CLASS B SHARES
PROSPECTUS - January 1, 2001

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

The Saratoga Advantage Trust is a mutual fund company comprised of 7
separate mutual fund portfolios, each with its own distinctive investment
objectives and policies. The Portfolios are:

U.S. Government Money Market Large Capitalization Value Portfolio
Portfolio
Large Capitalization Growth Portfolio

Investment Quality Bond Portfolio Small Capitalization Portfolio

Municipal Bond Portfolio International Equity Portfolio

The Portfolios are managed by Saratoga Capital Management (the "Manager").
Each Portfolio is advised by an investment adviser selected and supervised by
the Manager.

The Trust is designed to help investors to implement an asset allocation
strategy to meet their individual needs as well as select individual investments
within each asset category among the myriad choices available. The Trust makes
available assistance to help certain investors identify their risk tolerance and
investment objectives through use of an investor questionnaire, and to select an
appropriate model allocation of assets among the Portfolios. As further
assistance, the Trust makes available to certain investors the option of
automatic reallocation or rebalancing of their selected model. The Trust also
provides, on a periodic basis, a report to the investor containing an analysis
and evaluation of the investor's account.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

---------------------------------------------------------- ---------
Page
THE PORTFOLIOS
U.S. Government Money Market Portfolio 3
Investment Quality Bond Portfolio 5
Municipal Bond Portfolio 8
Large Capitalization Value Portfolio 11
Large Capitalization Growth Portfolio 13
Small Capitalization Portfolio 15
International Equity Portfolio 18
Summary of Trust Expenses 21
Additional Investment Strategy Information 23
Additional Risk Information 23
Investment Manager 24
Advisers 25
Administration 26

SHAREHOLDER INFORMATION
Pricing of Portfolio Shares 26
Purchase of Shares 26
Contingent Deferred Sales Charge 27
Plan of Distribution 28
Redemption of Shares 29
Dividends and Distributions 31
Tax Consequences 31
Financial Highlights 32
--------------------------------------------------------------------------------

THE PORTFOLIOS

U.S. GOVERNMENT MONEY MARKET PORTFOLIO

Investment Objective

The U.S. Government Money Market Portfolio seeks to provide maximum current
income to the extent consistent with the maintenance of liquidity and the
preservation of capital.

The Adviser

The Portfolio is advised by Sterling Capital Management Company. All
investment decisions for the Portfolio are made by Sterling Capital's investment
committee.

Principal Investment Strategies

The U.S. Government securities that the Portfolio may purchase include:

o U.S. Treasury bills, notes and bonds, all of which are direct obligations
of the U.S. Government.

In addition, the Portfolio may invest in repurchase agreements with respect
to securities issued by the U.S. Government, its agencies and instrumentalities.

Principal Risks

There is no assurance that the Portfolio will achieve its investment objectives.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years*
This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's shares has varied
from year to year over the life of
the Portfolio.
-------------- ----------------------
Calendar Years Average Annual Returns
-------------- ----------------------
1995 5.40%
1996 4.32%
1997 4.47%
1998 4.44%
1999 3.23%

During the period shown in the bar chart, the highest return for a calendar
quarter was 1.50% (quarter ended June 30, 1995) and the lowest return for a
calendar quarter was 0.62% (quarter ended June 30, 1999). Year-to-date total
return as of September 30, 2000 for Class B shares was 3.23%.

*Class B shares of the Portfolio commenced operations on January 4, 1999.
The returns shown in the chart for the calendar years 1995 through 1998 are for
Class I shares of the Portfolio which are offered in a separate prospectus.
Class I and B shares are invested in the same portfolio of securities. The
returns for Class B shares would differ from those for Class I only to the
extent that the Classes have different expenses.

AVERAGE ANNUAL TOTAL RETURNS

--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)

U.S. Government Money Market
Portfolio(1) -1.77% 2.57% 2.57%

90 Day T-Bills 4.60% 5.02% 5.26%

Lipper U.S. Treasury Money
Market Index(2) 4.30% 4.81% 4.79%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class B shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class B shares as
described under "Contingent Deferred Sales Charge."

(2) 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. Investors may not invest directly in the Index.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

INVESTMENT QUALITY BOND PORTFOLIO

Investment Objective

The Investment Quality Bond Portfolio seeks current income and reasonable
stability of principal.

The Adviser

Principal Investment Strategies

In addition, the Portfolio may invest up to 5% of its net assets in
fixed-income securities rated lower than investment grade, commonly known as
"junk bonds."

Principal Risks

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

AVERAGE ANNUAL TOTAL RETURNS

This table compares the average annual returns of the Portfolio's shares
with those of a broad measure of market performance over time, as well as with
an index of funds with similar investment objectives. The Portfolio's returns
assume you sold the shares at the end of each period and you were charged a
contingent deferred sales charge. Of course, if you did not sell your shares at
the end of the period, your return would be higher.
--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
Investment Quality Bond
Portfolio(1) -5.85% 3.64% 3.00%

Lehman Intermediate
Government/Corporate Bond
Index(2) 0.39% 7.09% 6.43%

Lipper Short-Intermediate
Investment Grade Debt Funds
Index(3) 1.19% 6.41% 5.89%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class B shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class B shares as
described under "Contingent Deferred Sales Charge."

(2) The Lehman Intermediate Government/Corporate Bond Index is composed of
the bonds in the Lehman Government/Corporate Bond Index that have maturities
between 1 and 9.99 years. The Lehman Government/Corporate Bond Index consists of
approximately 5,400 issues. The securities must be investment grade (BAA or
higher) with amounts outstanding in excess of $1 million and have at least one
year to maturity. The Lehman Index is an unmanaged index that does not include
fees and expenses. Investors may not invest directly in the Index.

(3) The Lipper Short-Intermediate Investment Grade Debt Funds Index
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. Investors may not invest
directly in the Index.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the '"Summary of Trust Expenses"' section.

MUNICIPAL BOND PORTFOLIO

Investment Objective

The Adviser

Principal Investment Strategies

Principal Risks

Credit and Interest Rate Risks. Municipal obligations, like other debt
securities, are subject to two types of risks: credit risk and interest rate
risk.

Interest rate risk refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest rates. When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. Zero coupon securities are
typically subject to greater price fluctuations than comparable securities that
pay current interest.

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the "Additional Risk
Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

During the period shown in the bar chart, the highest return for a calendar
quarter was 5.85% (quarter ended March 31, 1995) and the lowest return for a
calendar quarter was -2.94% (quarter ended June 30, 1999). Year-to-date total
return as of September 30, 2000 for Class B shares was 6.91%.

* Class B shares of the Portfolio commenced operations on January 4, 1999.
The returns shown in the chart for the calendar years 1995 through 1998 are for
Class I shares of the Portfolio which are offered in a separate prospectus.
Class I and B shares are invested in the same portfolio of securities. The
returns for Class B shares would differ from those for Class I only to the
extent that the Classes have different expenses.

AVERAGE ANNUAL TOTAL RETURNS

Lehman Municipal Bond Index(2) -2.06% 6.90% 5.88%

Lipper General Municipal Debt
Funds Index(3) -4.07% 6.14% 5.12%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class B shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class B shares as
described under "Contingent Deferred Sales Charge."

(2) The Lehman Brothers Municipal Bond Index consists of approximately
25,000 municipal bonds which are selected to be representative of the long-term,
investment grade tax-exempt bond market. The bonds selected for the index have
the following characteristics: a minimum credit rating of at least Baa; an
original issue of at least $50 million; at least $3 million of the issue
outstanding; issued within the last five years; and a maturity of at least one
year. The Lehman Index is an unmanaged index that does not include fees and
expenses. Investors may not invest directly in the Index.

(3) 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 ratings. Investors may not invest directly in the
Index.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

LARGE CAPITALIZATION VALUE PORTFOLIO

Investment Objective

The Large Capitalization Value Portfolio seeks total return consisting of
capital appreciation and dividend income.

The Adviser

The Portfolio is advised by OpCap Advisors. It is managed by a portfolio
team comprised of senior professionals of OpCap Advisors. One member of the
team, Frank LeCates, has primary supervisory authority over implementation of
the management team's purchase and sale recommendations. Mr. LeCates is the
Director of Research at Oppenheimer Capital, the parent of OpCap Advisors. Mr.
LeCates brings 32 years of investment experience to his current position.
Formerly with Donaldson, Lufkin & Jenrette for 18 years, he has served as head
of institutional equity sales, Director of Research and as a securities analyst.
Mr. LeCates, a Chartered Financial Analyst, is a graduate of Princeton
University and earned his MBA in finance from Harvard Business School.

Principal
Investment Strategies

In addition, the Portfolio may invest in stock index futures contracts and
options.

Principal Risks

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments including the risks associated with stock index futures contracts
and options. For information about these risks, see the "Additional Risk
Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

During the period shown in the bar chart, the highest return for a calendar
quarter was 14.90% (quarter ended December 31, 1998) and the lowest return for a
calendar quarter was -13.09% (quarter ended September 30, 1998). Year-to-date
total return as of September 30, 2000 for Class B shares was -0.27%.

AVERAGE ANNUAL TOTAL RETURNS

--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
Large Capitalization Value
Portfolio(1) -4.58% 17.21% 15.24%

S&P/Barra Value Index(2) 12.73% 22.94% 20.37%

Morningstar Large Value
Average(3) 6.62% 19.59% 17.60%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class B shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class B shares as
described under "Contingent Deferred Sales Charge."

(2) The S&P/Barra Value Index is constructed by dividing the stocks in the
S&P 500 Index according to price-to-book ratios. This unmanaged Index contains
stocks with lower price-to-book ratios and is market capitalization weighted.
The S&P/Barra Value Index does not include fees and expenses, and investors may
not invest directly in the Index.

(3) The Morningstar Large Value Average, as of August 31, 2000, consisted
of 669 mutual funds comprised of large market capitalization stocks with the
lowest combinations of price-to-earnings and price-to-book scores. Investors may
not invest in the Average directly

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

LARGE CAPITALIZATION GROWTH PORTFOLIO

Investment Objective

The Large Capitalization Growth Portfolio seeks capital appreciation.

The Adviser

Principal Investment Strategies

Principal Risks

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the "Additional Risk
Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

During the period shown in the bar chart, the highest return for a calendar
quarter was 34.27% (quarter ended December 31, 1998) and the lowest return for a
calendar quarter was -13.18% (quarter ended September 30, 1998). Year-to-date
total return as of September 30, 2000 for Class B shares was -3.78%.

AVERAGE ANNUAL TOTAL RETURNS

--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
Large Capitalization Growth
Portfolio(1) 28.62% 26.82% 24.79%

S&P/Barra Growth Index(2) 28.25% 33.64% 31.05%

Morningstar Large Growth
Average(3) 38.48% 29.46% 26.78%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class B shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class B shares as
described under "Contingent Deferred Sales Charge."

(2) The S&P/Barra Growth Index is constructed by dividing the stocks in the
S&P 500 Index according to price-to-book ratios. This unmanaged Index contains
stocks with higher price-to-book ratios and is market capitalization weighted.
The S&P/Barra Growth Index does not include fees and expenses, and investors may
not invest directly in the Index.

(3) The Morningstar Large Growth Average, as of August 31, 2000, consisted
of 698 mutual funds comprised of large market capitalization stocks with the
highest combinations of price-to-earnings and price-to-book scores. Investors
may not invest in the Average directly.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the '"Summary of Trust Expenses"' section.

SMALL CAPITALIZATION PORTFOLIO

Investment Objective

The Small Capitalization Portfolio seeks maximum capital appreciation.

The Adviser

Principal Investment Strategies

Principal Risks

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the 'Additional Risk
Information' section. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

During the period shown in the bar chart, the highest return for a calendar
quarter was 22.62% (quarter ended June 30, 1999) and the lowest return for a
calendar quarter was -28.41% (quarter ended September 30, 1998). Year-to-date
total return as of September 30, 2000 for Class B shares was 13.65%.

AVERAGE ANNUAL TOTAL RETURNS

This table compares the average annual returns of the Portfolio's shares
with those of a broad measure of market performance over time, as well as with
an index of funds with similar investment objectives. The Portfolio's returns
assume you sold the shares at the end of each period and you were charged a
contingent deferred sales charge. Of course, if you did not sell your shares at
the end of the period, your return would be higher.
--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
Small Capitalization 7.33% 8.82% 7.52%
Portfolio(1)

Russell 2000 Index(2) 21.26% 16.69% 15.09%

Morningstar Small Value
Average(3) 4.33% 14.62% 13.09%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class B shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class B shares as
described under "Contingent Deferred Sales Charge."

(2) The Russell 2000 Index is comprised of the 2,000 smallest U.S.
domiciled publicly traded common stocks which are included in the Russell 3000
index. The common stocks included in the Russell 2000 Index represent
approximately 10% of the U.S. equity market as measured by market
capitalization. The Russell 3000 Index is an unmanaged index of the 3,000
largest U.S. domiciled publicly traded common stocks by market capitalization
representing approximately 98% of the U.S. publicly traded equity market. The
Russell 2000 Index is an unmanaged index which does not include fees and
expenses, and whose performance reflects reinvested dividends. Investors may not
invest in the Index directly.

(3) The Morningstar Small Value Average, as of August 31, 2000, consisted
of 211 mutual funds comprised of small market capitalization stocks with the
lowest combinations of price-to-earnings and price-to-book scores. Investors may
not invest in the Average directly.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

INTERNATIONAL EQUITY PORTFOLIO

Investment Objective

The Portfolio seeks long-term capital appreciation.

The Adviser

Principal Investment Strategy

Principal Risks

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the "Additional Risk
Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

During the period shown in the bar chart, the highest return for a calendar
quarter was 27.38% (quarter ended December 31, 1999) and the lowest return for a
calendar quarter was -16.13% (quarter ended March 31, 1999). Year-to-date total
return as of September 30, 2000 for Class B shares was -13.53%.

AVERAGE ANNUAL TOTAL RETURNS

--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5-Years (since 9/2/94)
--------------------------------------------------------------------------------
International Equity 30.56% 11.23% 9.06%
Portfolio(1)

Morgan Stanley EAFE Index (U.S.
Dollars)(2) 26.97% 12.83% 11.10%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class B shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class B shares as
described under "Contingent Deferred Sales Charge."

(2) The Europe, Australia, Far East Index ("EAFE") is a widely recognized
index prepared by Morgan Stanley Capital International. This unmanaged index
consists of non-U.S. companies which are listed on one of twenty foreign markets
and assumes the reinvestment of dividends. This Index does not include fees and
expenses, and investors may not invest in the Index directly. The Gross Domestic
Product (GDP) version of the Index is used above.

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

SUMMARY OF TRUST EXPENSES

U.S.
Government Investment Large Large
Money Market Quality Municipal Capitalization Capitalization Small International
Portfolio Bond Bond Value Growth Capitalization Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ----------- --------- -------------- -------------- --------- ----------
Shareholder Fees
Maximum Sales Charge on Purchases of
Shares None None None None None None None
(as a % of offering price)
Sales Charge on Reinvested Dividends
(as a % None None None None None None None
of offering price)
Maximum Contingent Deferred Sales
Charge
(as a % of net asset value at the 5% 5% 5% 5% 5% 5% 5%
time of
purchase or sale, whichever is
less)(1)
Exchange Fee None None None None None None None
Annual Portfolio Operating Expenses
(expenses that are deducted form
Portfolio assets as a percentage of
average net assets)
Management Fees .475% 0.55% 0.55% 0.65% 0.65% 0.65% 0.75%
Distribution (Rule 12b-1 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses)(2)(3)
Other Expenses .395% 0.41% 1.56% 0.13% 0.07% 0.42% 0.43%
Total Annual Portfolio Operating 1.87% 1.96% 3.11% 1.78% 1.72% 2.07% 2.18%
Expenses(3)
Fee Waiver (and/or Expense Reimbursement)* -------- (0.04%) (0.92%) -------- (0.05%) (0.03%) (0.16%)

Net Expenses 1.87% 1.92% 2.19% 1.78% 1.67% 2.04% 2.02%

</TABLE>

(1) The Contingent Deferred Sales Charge is scaled down to 1.00% during the
sixth year, reaching zero thereafter.

(2) The 12b-1 fee is accrued daily and payable monthly, at the annual rate
of 1% of the average net assets of Class B Shares. Up to 0.25% of the average
daily net assets may be paid directly to the Manager for support services. A
portion of the fee payable pursuant to the plan to the Plan, equal to 0.25% of
the average daily net assets, is currently characterized as a service fee. A
service fee is a payment made for personal service and/or maintenance of
shareholder accounts.

(3) Upon conversion of Class B shares to Class I shares, such shares will
not be subject to a 12b-1 Fee. No sales charge is imposed at the time of
conversion of Class B shares to Class I shares (see "Shareholder Information -
Contingent Deferred Sales Charge").

(4) "Total Annual Portfolio Operating Expenses," as shown above, are based
upon the sum of Management Fees, 12b-1 Fees and "Other Expenses."

* Management Fees, Other Expenses, Fee Waiver and/or Reimbursement, and Net
Expenses: Each Portfolio pays the Manager a fee for its services that is
computed daily and paid monthly at an annual rate ranging from .475% to .75% of
the value of the average daily net assets of the Portfolio. The fees of each
Adviser are paid by the Manager. The nature of the services provided to, and the
aggregate management fees paid by each Portfolio are described under 'Investment
Manager.' Class B Shares commenced operations on January 4, 1999. The Portfolios
benefit from expense offset arrangements with the Trust's custodian bank where
uninvested cash balances earn credits that reduce monthly fees. The amount of
the expense offset for each respective portfolio was as follows: U.S. Government
Money Market, 0%; Investment Quality Bond, 0.04%; Municipal Bond, 0.02%; Large
Capitalization Value, 0%; Large Capitalization Growth, 0.04%; Small
Capitalization, 0%; and International Equity, 0.16%. Under applicable SEC
regulations, the amount by which Portfolio expenses are reduced by an expense
offset arrangement is required to be added to 'Other Expenses.' "Other Expenses"
also include fees for shareholder services, administration, custodial fees,
legal and accounting fees, printing costs, registration fees, the costs of
regulatory compliance, a Portfolio's allocated portion of the costs associated
with maintaining the Trust's legal existence and the costs involved in the
Trust's communications with shareholders. The Trust and the Manager have entered
into an Excess Expense Agreement (the "Expense Agreement") effective January 1,
1999. In connection with the Expense Agreement, the Manager is currently waiving
its management fees and/or assuming certain other operating expenses of the
Portfolios in order to maintain the expense ratios of each class of the
Portfolios at or below predetermined levels (each an "Expense Cap"). Under the
terms of the Expense Agreement, expenses borne by the Manager are subject to
reimbursement by the Portfolios up to five years from the date the fee or
expense was incurred, but no reimbursement payment will be made by a Portfolio
if it would result in the Portfolio exceeding its Expense Cap. The following are
the Expense Caps for each of the Portfolios: U.S. Government Money Market,
2.125%; Investment Quality Bond, 2.20%; Municipal Bond, 2.20%; Large
Capitalization Value, 2.30%; Large Capitalization Growth, 2.30%; Small
Capitalization, 2.30%; and International Equity, 2.40%. The Expense Agreement
can be terminated by either party, without penalty, upon 60 days prior notice.
For the year ended August 31, 2000, reimbursement payments were made by the
following Portfolios to the Manager under the terms of the Expense Agreement:
$5,648, $1,276, $4,904, $936 and $9,358 for the Large Capitalization Value,
Large Capitalization Growth, International Equity, Investment Quality Bond and
Money Market Portfolios, respectively.

- If You SOLD Your Shares:

- If You HELD Your Shares:

--------- ---------- --------- -------------- -------------- -------------- ------------
1 year $196 $205 $231 $186 $180 $217 $228
3 years 607 635 711 578 559 670 705
5 years 1,043 1,091 1,218 994 962 1,149 1,208
10 years 2,031 2,139 2,349 1,949 1,876 2,257 2,385

</TABLE>

ADDITIONAL INVESTMENT STRATEGY INFORMATION

This section provides additional information relating to each Portfolio's
principal strategies.

ADDITIONAL RISK INFORMATION

This section provides additional information relating to principal risks of
investing in the Portfolios.

The risks set forth below are applicable to a Portfolio only to the extent
the Portfolio invests in the investment described.

INVESTMENT MANAGER

The total amount of investment management fees payable by each Portfolio to
the Manager may not be changed without shareholder approval.

Portfolio Manager's Fee
--------------

ADVISERS

The following set forth certain information about each of the Advisers:

OpCap Advisors ("OpCap"), a registered investment adviser, located at 1345
Avenue of the Americas, New York, NY 10105, serves as Adviser to the Municipal
Bond Portfolio and the Large Capitalization Value Portfolio. OpCap is a majority
owned subsidiary of Oppenheimer Capital, a registered investment adviser,
founded in 1968. Oppenheimer Capital is an indirect wholly owned subsidiary of
PIMCO Advisors, L.P. ("PIMCO"), a registered investment adviser. On May 5, 2000,
Allianz AG acquired majority ownership of PIMCO Advisors, in part by acquiring
all of the publicly traded units of PIMCO Advisors Holdings LP, which owns about
44% of PIMCO Advisors. Allianz has indicated that it intends to maintain the
current subsidiaries of PIMCO Advisors, including Oppenheimer Capital, as
independent operating units. Allianz is a holding company that owns several
insurance and financial service companies and is a subsidiary of Allianz AG, the
world's second largest insurance company as measured by premium income. As of
August 31, 2000, Oppenheimer Capital and its subsidiary OpCap had assets under
management of approximately $38.3 billion.

ADMINISTRATION

Funds Distributor, Inc. provides administrative services and manages the
administrative affairs of the Trust.

SHAREHOLDER INFORMATION

PRICING OF PORTFOLIO SHARES

The price of shares of each Portfolio called "net asset value," is based on
the value of the Portfolio's investments.

PURCHASE OF SHARES

The Trust is designed to help investors to implement an asset allocation
strategy to meet their individual needs as well as select individual investments
within each asset category among the myriad choices available. The Trust offers
several Classes of shares to investors designed to provide them with the
flexibility of selecting an investment best suited to their needs.

The Trust makes available assistance to help certain investors identify
their risk tolerance and investment objectives through use of an investor
questionnaire, and to select an appropriate model allocation of assets among the
Portfolios. As further assistance, the Trust makes available to certain
investors the option of automatic reallocation or rebalancing of their selected
model. The Trust also provides, on a periodic basis, a report to the investor
containing an analysis and evaluation of the investor's account.

CONTINGENT DEFERRED SALES CHARGE

Shares are sold at net asset value next determined without an initial sales
charge so that the full amount of an investor's purchase payment may be invested
in the Trust. A CDSC, however, will be imposed on most shares redeemed within
six years after purchase. The CDSC will be imposed on any redemption of shares
if after such redemption the aggregate current value of an account with the
Trust falls below the aggregate amount of the investor's purchase payments for
shares made during the six years preceding the redemption. In addition, shares
are subject to an annual 12b-1 fee of 1.0% of the average daily net assets.

Shares of the Trust which are held for six years or more after purchase
will not be subject to any CDSC upon redemption. Shares redeemed earlier than
six years after purchase may, however, be subject to a CDSC which will be a
percentage of the dollar amount of shares redeemed and will be assessed on an
amount equal to the lesser of the current market value or the cost of the shares
being redeemed. The size of this percentage will depend upon how long the shares
have been held, as set forth in the following table:

Year Since
Purchase CDSC as a Percentage
Payment Made of Amount Redeemed

First 5.0%
Second 4.0%
Third 4.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None

CDSC Waivers. A CDSC will not be imposed on: (i) any amount which
represents an increase in value of shares purchased within the six years
preceding the redemption; (ii) the current net asset value of shares purchased
more than six years prior to the redemption; and (iii) the current net asset
value of shares purchased through reinvestment of dividends or distributions.
Moreover, in determining whether a CDSC is applicable it will be assumed that
amounts described in (i), (ii), and (iii) above (in that order) are redeemed
first.

In addition, the CDSC, if otherwise applicable, will be waived in the case of:

(1) redemptions of shares held at the time a shareholder dies or becomes
disabled, only if the shares are: (a) registered either in the name of an
individual shareholder (not a trust), or in the names of such shareholder and
his or her spouse as joint tenants with right of survivorship; or (b) held in a
qualified corporate or self-employed retirement plan, Individual Retirement
Account ("IRA") or Custodial Account under Section 403(b)(7) of the Internal
Revenue Code ("403(b) Custodial Account"), provided in either case that the
redemption is requested within one year of the death or initial determination of
disability;

(2) redemptions in connection with the following retirement plan
distributions: (a) lump-sum or other distributions from a qualified corporate or
self-employed retirement plan following retirement (or, in the case of a 'key
employee' of a 'top heavy' plan, following attainment of age 59 1/2); (b)
distributions from an IRA or 403(b) Custodial Account following attainment of
age 70 1/2; or (c) a tax-free return of an excess contribution to an IRA;

(3) certain redemptions pursuant to the Portfolio's Systematic Withdrawal
Plan (see "Redemption of Shares-Systematic Withdrawal Plan").

With reference to (1) above, for the purpose of determining disability, the
Distributor utilizes the definition of disability contained in Section 72(m)(7)
of the Internal Revenue Code, which relates to the inability to engage in
gainful employment. With reference to (2) above, the term 'distribution' does
not encompass a direct transfer of an IRA, 403(b) Custodial Account or
retirement plan assets to a successor custodian or trustee. All waivers will be
granted only following receipt by the Distributor of written confirmation of the
shareholder's entitlement.

Conversion to Class I Shares. Class B shares will convert automatically to
Class I shares, based on the relative net asset values of the shares of the two
Classes on the conversion date, which will be approximately eight (8) years
after the date of the original purchase, or if acquired through an exchange or a
series of exchanges, from the date the original shares were purchased. The
conversion of shares will take place in the month following the eighth
anniversary of the purchase. There will also be converted at that time such
proportion of shares acquired through automatic reinvestment of dividends and
distributions owned by the shareholder as the total number of his or her shares
converting at the time bears to the total number of outstanding shares purchased
and owned by the shareholder.

Currently, the Class I share conversion is not a taxable event, the
conversion feature may be canceled if it is deemed a taxable event in the future
by the Internal Revenue Service.

PLAN OF DISTRIBUTION

The Portfolios have adopted a Plan of Distribution pursuant to Rule 12b-1
under the Investment Company Act of 1940 with respect to the sale and
distribution of shares of the Portfolios. The Plan provides that each Portfolio
will pay the Distributor or other entities a fee, which is accrued daily and
paid monthly, at the annual rate of 1.0% of the average net assets. Up to 0.25%
of average daily net assets may be paid directly to the Manager for support
services. The fee is treated by each Portfolio as an expense in the year it is
accrued. Because the fee is paid out of each Portfolio's assets on an ongoing
basis, over time the fee may increase the costs of your investment and may cost
you more than paying other types of service charges. A portion of the fee
payable pursuant to the Plan, equal to 0.25% of the average daily net assets, is
currently characterized as a service fee. A service fee is a payment made for
personal service and/or the maintenance of shareholder accounts.

Additional amounts paid under the Plan are paid to the Distributor or other
entities for services provided and the expenses borne by the Distributor and
others in the distribution of the shares, including the payment of commissions
for sales of the shares and incentive compensation to and expenses of Dealers
and others who engage in or support distribution of shares or who service
shareholder accounts, including overhead and telephone expenses; printing and
distribution of prospectuses and reports used in connection with the offering of
the Portfolios' shares to other than current shareholders; and preparation,
printing and distribution of sales literature and advertising materials. In
addition, the Distributor or other entities may utilize fees paid pursuant to
the Plan to compensate Dealers or other entities for their opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses.

Continuous Offering. For Class B shares of the Trust, the minimum initial
investment in the Trust is $10,000 and the minimum investment in any individual
Portfolio (other than the U.S. Government Money Market Portfolio) is $250; there
is no minimum investment for the U.S. Government Money Market Portfolio. For
employees and relatives of: the Manager, firms distributing shares of the Trust,
and the Trust service providers and their affiliates, the minimum initial
investment is $1,000 with no individual Portfolio minimum. There is no minimum
initial investment for employee benefit plans, associations, and individual
retirement accounts. The minimum subsequent investment in the Trust is $100 and
there is no minimum subsequent investment for any Portfolio. The Trust reserves
the right at any time to vary the initial and subsequent investment minimums.

REDEMPTION OF SHARES

Shares of a Portfolio may be redeemed on any day that the Portfolio
calculates its net asset value. Redemption requests received in proper form
prior to the close of regular trading on the NYSE will be effected at the net
asset value per share determined on that day less the amount of any applicable
CDSC. Redemption requests received after the close of regular trading on the
NYSE will be effected at the net asset value next determined less the CDSC. A
Portfolio is required to transmit redemption proceeds for credit to the
shareholder's account within seven days after receipt of a redemption request
Redemption of shares purchased by check will not be effected until the check
clears, which may take up to 15 days from the purchase date.

Systematic Withdrawal Plan. A systematic withdrawal plan (the "Withdrawal
Plan") is available for shareholders. Any Portfolio from which redemptions will
be made pursuant to the Plan will be referred to as a "SWP Portfolio". The
Withdrawal Plan provides for monthly, quarterly, semi-annual or annual payments
in any amount not less than $25, or in any whole percentage of the value of the
SWP Portfolio's shares, on an annualized basis. Any applicable CDSC will be
imposed on shares redeemed under the Withdrawal Plan (see "Purchase of Shares"),
except that the CDSC, if any, will be waived on redemptions under the Withdrawal
Plan of up to 12% annually of the value of each SWP Portfolio account, based on
the Share values next determined after the shareholder establishes the
Withdrawal Plan. Redemptions for which this CDSC waiver policy applies may be in
amounts up to 1% per month, 3% per quarter, 6% semi-annually or 12% annually.
Under this CDSC waiver policy, amounts withdrawn each period will be paid by
first redeeming shares not subject to a CDSC because the shares were purchased
by the reinvestment of dividends or capital gains distributions, the CDSC period
has elapsed or some other waiver of the CDSC applies. If shares subject to a
CDSC must be redeemed, shares held for the longest period of time will be
redeemed first followed by shares held the next longest period of time until
shares held the shortest period of time are redeemed. Any shareholder
participating in the Withdrawal Plan will have sufficient shares redeemed from
his or her account so that the proceeds (net of any applicable CDSC) to the
shareholder will be the designated monthly, quarterly, semi-annual or annual
amount.

A shareholder may suspend or terminate participation in the Withdrawal Plan
at any time. A shareholder who has suspended participation may resume payments
under the Withdrawal Plan, without requiring a new determination of the account
value for the 12% CDSC waiver. The Withdrawal Plan may be terminated or revised
at any time by the Portfolios.

The addition of a new SWP Portfolio will not change the account value for
the 12% CDSC waiver for the SWP Portfolios already participating in the
Withdrawal Plan.

Withdrawal Plan payments should not be considered dividends, yields or
income. If periodic Withdrawal Plan payments continuously exceed net investment
income and net capital gains, the shareholder's original investment will be
correspondingly reduced and ultimately exhausted. Each withdrawal constitutes a
redemption of shares and any gain or loss realized must be recognized for
federal income tax purposes. Shareholders should contact their dealer
representative or the Manager for further information about the Withdrawal Plan.

Reinstatement Privilege. A shareholder who has had his or her shares
redeemed or repurchased and has not previously exercised this reinstatement
privilege may, within 35 days after the date of the redemption or repurchase,
reinstate any portion or all of the proceeds of such redemption or repurchase in
shares of the Portfolios in the same Class from which such shares were redeemed
or repurchased, at net asset value next determined after a reinstatement request
(made in writing to and approved by the Manager), together with the proceeds, is
received by the Transfer Agent and receive a pro-rata credit for any CDSC paid
in connection with such redemption or repurchase.

Involuntary Redemptions. Due to the relatively high cost of maintaining
small accounts, the Trust may redeem an account having a current value of $7,500
or less as a result of redemptions, but not as a result of a fluctuation in a
Portfolio's net asset value after the shareholder has been given at least 30
days in which to increase the account balance to more than that amount.
Involuntary redemptions may result in the liquidation of Portfolio holdings at a
time when the value of those holdings is lower than the investor's cost of the
investment or may result in the realization of taxable capital gains. No CDSC
will be imposed on any involuntary redemption.

No CDSC is imposed at the time of any exchange of shares, although any
applicable CDSC will be imposed upon ultimate redemption. The Trust may in the
future offer an exchange feature involving shares of an unaffiliated Fund group
subject to receipt of appropriate regulatory relief.

Exchange Privilege. Shares of a Portfolio may be exchanged without payment
of any exchange fee for shares of another Portfolio of the same Class at their
respective net asset values.

DIVIDENDS AND DISTRIBUTIONS

TAX CONSEQUENCES

The following tax information in this Prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in the Trust.

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)

This information has been audited by Ernst & Young LLP, Independent
Auditors whose report, along with the financial statements for each Portfolio is
included in the annual report, which is available upon request.

INCOME FROM DIVIDENDS AND
INVESTMENT OPERATIONS DISTRIBUTIONS RATIOS
--------------------------------------------------------------------- -----------------------------

--------------------------------------------------------------------------------
Large Capitalization Value Portfolio (Class B)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000 $20.50 $0.13 ($0.41) ($0.28) ($0.17) ($1.80) $18.25 (1.33%) $1,280 1.78% (0.03%) 90%

January 4, 1999 (2)
to August 31, 1999 20.21 (0.02) 0.31 0.29 -- -- 20.50 1.43% 172 1.72%(1,3)(0.53%)(1,3) 67%

(1) During the fiscal period ended August 31, 1999, Saratoga Capital
Management waived a portion of its management fees. 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 1.78% and (0.03%),
respectively, for the year ended August 31, 2000, 2.21% and 1.02%, respectively,
for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
Large Capitalization Growth Portfolio (Class B)
--------------------------------------------------------------------------------
Year Ended
Augusy 31, 2000$26.75 ($0.13) $8.03 $7.90 -- ($1.66) $32.99 30.22% $2,801 1.67%(1) (1.16%)(1) 33%

January 4, 1999 (2)
to August 31, 1999 24.74 (0.04) 2.05 2.01 -- -- 26.75 8.12% 204 1.19%(1,3)(0.73%)(1,3) 39%

(1) During the fiscal periods ended August 31, 2000 and August 31, 1999,
Saratoga Capital Management waived a portion of its management fees.
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 1.72% and
(1.11%), respectively, for the year ended August 31, 2000, 3.31% and (2.86%),
respectively, for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
Small Capitalization Portfolio (Class B)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000$10.04 ($0.06) $2.84 $2.78 -- ($0.12) $12.70 28.17% $436 2.04%(1)(1.11%)(1) 59%

January 4, 1999 (2)
To August 31, 1999 9.33 (0.02) 0.73 0.71 -- -- 10.04 7.61% 73 1.42%(1,3)(1.02%)(1,3) 32%

(1) During the fiscal periods ended August 31, 2000 and August 31, 1999,
Saratoga Capital Management waived a portion of its management fees.
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 2.07% and
(1.08%), respectively, for the year ended August 31, 2000, 1.43% and (1.02%),
respectively, for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
International Equity Portfolio (Class B)
--------------------------------------------------------------------------------
Year ended
August 31, 2000$13.09 $- $2.58 $2.58 ($0.08) ($0.18) $15.41 19.71% $420 2.02% (0.67%) 45%

January 4, 1999 (2)
to August 31, 1999 12.29 (0.02) 0.82 0.80 -- -- 13.09 6.51% 68 2.16%(1,3) (0.77%)(1,3) 46%

(1) During the fiscal period ended August 31, 1999, Saratoga Capital
Management waived a portion of its management fees. 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 2.18% and (0.51%),
respectively, for the year ended August 31, 2000, 2.84% and (1.45%),
respectively, for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
Investment Quality Bond Portfolio (Class B)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000$9.88 $0.46 $0.01 $0.47 ($0.46) -- $9.89 4.88% $125 1.92% 4.68% 53%

January 4, 1999 (2)
to August 31, 1999 10.29 0.28 (0.41) (0.13) (0.28) -- 9.88 (1.32%) 64 1.07%(1,3)2.23%(1,3) 62%

(1) During the fiscal period ended August 31, 1999, Saratoga Capital
Management waived a portion of its management fees. 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 1.96% and 4.72%,
respectively, for the year ended August 31, 2000, 1.13% and 2.29%, respectively,
for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
Municipal Bond Portfolio (Class B)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000 $10.00 $0.34 $0.16 $0.50 ($0.34) ($0.06) $10.10 5.14% $16 2.19%(1) 3.38%(1) 12%

January 4, 1999 (2)
to August 31, 1999 10.66 0.25 (0.66) (0.41) (0.25) -- 10.00 (3.91%) 8 1.24%(1,3) 1.76%(1,3) 23%

(1) During the fiscal periods ended August 31, 2000 and August 31, 1999,
Saratoga Capital Management waived a portion of its management fees.
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 3.11% and
2.78%, respectively, for the year ended August 31, 2000,1.44% and 1.96%,
respectively, for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
U.S. Government Money Market Portfolio (Class B)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000 $1.000 $0.040 -- $0.040 ($0.040) -- $1.000 4.10% $115 1.87% 4.06% n/a

January 4, 1999 (2)
to August 31, 1999 1.000 0.022 -- 0.022 (0.022) -- 1.000 1.94% 70 1.06%(1,3) 1.82%(1,3) n/a

(1) During the fiscal period ended August 31, 1999, Saratoga Capital
Management waived a portion of its management fees. 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 1.87% and 4.06%,
respectively, for the year ended August 31, 2000, 1.10% and 1.86%, respectively,
for the year ended August 31, 1999
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

</TABLE>

CLASS B SHARES
PROSPECTUS

THE SARATOGA
ADVANTAGE TRUST

(800) 807-FUND

You also may obtain information about the Trust by calling your financial
advisor or by visiting our Internet site at:

http://www.saratogacap.com

THE SARATOGA
ADVANTAGE TRUST

CLASS C SHARES
PROSPECTUS - January 1, 2001

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

The Saratoga Advantage Trust is a mutual fund company comprised of 7
separate mutual fund portfolios, each with its own distinctive investment
objectives and policies. The Portfolios are:

U.S. Government Money Market Large Capitalization Value Portfolio
Portfolio
Large Capitalization Growth Portfolio

Investment Quality Bond Portfolio Small Capitalization Portfolio

Municipal Bond Portfolio International Equity Portfolio

The Portfolios are managed by Saratoga Capital Management (the "Manager").
Each Portfolio is advised by an investment adviser selected and supervised by
the Manager.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

--------------------------------------------------------------------------------
Page
THE PORTFOLIOS
U.S. Government Money Market Portfolio 3
Investment Quality Bond Portfolio 5
Municipal Bond Portfolio 8
Large Capitalization Value Portfolio 11
Large Capitalization Growth Portfolio 13
Small Capitalization Portfolio 15
International Equity Portfolio 18
Summary of Trust Expenses 20
Additional Investment Strategy Information 23
Additional Risk Information 23
Investment Manager 24
Advisers 25
Administration 26

THE PORTFOLIOS

U.S. GOVERNMENT MONEY MARKET PORTFOLIO

Investment Objective

The U.S. Government Money Market Portfolio seeks to provide maximum current
income to the extent consistent with the maintenance of liquidity and the
preservation of capital.

The Adviser

The Portfolio is advised by Sterling Capital Management Company. All
investment decisions for the Portfolio are made by Sterling Capital's investment
committee.

Principal Investment Strategies

The U.S. Government securities that the Portfolio may purchase include:

o U.S. Treasury bills, notes and bonds, all of which are direct obligations
of the U.S. Government.

In addition, the Portfolio may invest in repurchase agreements with respect
to securities issued by the U.S. Government, its agencies and instrumentalities.

Principal Risks

There is no assurance that the Portfolio will achieve its investment
objectives.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years*
This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's shares has varied
from year to year over the life of
the Portfolio.
---------------------------------------
Calendar Years Average Annual Return
---------------------------------------
1995 5.40%
1996 4.32%
1997 4.47%
1998 4.44%
1999 3.28%

* Class C shares of the Portfolio commenced operations on January 4, 1999.
The returns shown in the chart for the calendar years 1995 through 1998 are for
Class I shares of the Portfolio which are offered in a separate prospectus.
Class I and C shares are invested in the same portfolio of securities. The
returns for Class C shares would differ from those for Class I only to the
extent that the Classes have different expenses.

AVERAGE ANNUAL TOTAL RETURNS

This table compares the average annual returns of the Portfolio's shares
with those of a broad measure of market performance over time, as well as with
an index of funds with similar investment objectives. The Portfolio's returns
assume you sold the shares at the end of each period and you were charged a
contingent deferred sales charge. Of course, if you did not sell your shares at
the end of the period, your return would be higher.
--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
U.S. Government Money Market
Portfolio(1) 2.28% 4.57% 4.57%

90 Day T-Bills 4.60% 5.02% 5.26%

Lipper U.S. Treasury Money
Market Index(2) 4.30% 4.81% 4.79%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class C shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class C shares as
described under "Contingent Deferred Sales Charge."

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

INVESTMENT QUALITY BOND PORTFOLIO

Investment Objective

The Investment Quality Bond Portfolio seeks current income and reasonable
stability of principal.

The Adviser

Principal Investment Strategies

In addition, the Portfolio may invest up to 5% of its net assets in
fixed-income securities rated lower than investment grade, commonly known as
'junk bonds.'

Principal Risks

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years*
This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's shares has varied
from year to year over the life of
the Portfolio.
---------------------------------------
Calendar Years Average Annual Return
---------------------------------------
1995 12.44%
1996 3.15%
1997 6.58%
1998 6.47%
1999 (0.73%)

AVERAGE ANNUAL TOTAL RETURNS

Lehman Intermediate
Government/Corporate Bond
Index(2) 0.39% 7.09% 6.43%

Lipper Short-Intermediate
Investment Grade Debt Funds
Index(3) 1.19% 6.41% 5.89%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class C shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class C shares as
described under "Contingent Deferred Sales Charge."

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

MUNICIPAL BOND PORTFOLIO

Investment Objective

The Adviser

Principal Investment Strategies

Principal Risks

Credit and Interest Rate Risks. Municipal obligations, like other debt
securities, are subject to two types of risks: credit risk and interest rate
risk.

Interest rate risk refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest rates. When the
general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. Zero coupon securities are
typically subject to greater price fluctuations than comparable securities that
pay current interest.

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the "Additional Risk
Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years*
This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's shares has varied
from year to year over the life of
the Portfolio.
---------------------------------------
Calendar Years Average Annual Return
---------------------------------------
1995 15.21%
1996 3.05%
1997 8.27%
1998 5.38%
1999 (6.72%)

AVERAGE ANNUAL TOTAL RETURNS

Lehman Municipal Bond Index(2) -2.06% 6.90% 5.88%

Lipper General Municipal Debt
Funds Index(3) -4.07% 6.14% 5.12%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class C shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class C shares as
described under "Contingent Deferred Sales Charge."

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

LARGE CAPITALIZATION VALUE PORTFOLIO

Investment Objective

The Large Capitalization Value Portfolio seeks total return consisting of
capital appreciation and dividend income.

The Adviser

The Portfolio is advised by OpCap Advisors. It is managed by a portfolio
team comprised of senior professionals of OpCap Advisors. One member of the
team, Frank LeCates, has primary supervisory authority over implementation of
the management team's purchase and sale recommendations. Mr. LeCates is the
Director of Research at Oppenheimer Capital, the parent of OpCap Advisors. Mr.
LeCates brings 32 years of investment experience to his current position.
Formerly with Donaldson, Lufkin & Jenrette for 18 years, he has served as head
of institutional equity sales, Director of Research and as a securities analyst.
Mr. LeCates, a Chartered Financial Analyst, is a graduate of Princeton
University and earned his MBA in finance from Harvard Business School.

Principal Investment Strategies

In addition, the Portfolio may invest in stock index futures contracts and
options.

Principal Risks

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments including the risks associated with stock index futures contracts
and options. For information about these risks, see the "Additional Risk
Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years*
This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's shares has varied
from year to year over the life of
the Portfolio.
---------------------------------------
Calendar Years Average Annual Return
---------------------------------------
1995 36.98%
1996 23.98%
1997 25.49%
1998 11.77%
1999 0.52%

AVERAGE ANNUAL TOTAL RETURNS

This table compares the average annual returns of the Portfolio's shares
with those of a broad measure of market performance over time, as well as with
an index of funds with similar investment objectives. The Portfolio's returns
assume you sold the shares at the end of each period and you were charged a
contingent deferred sales charge. Of course, if you did not sell your shares at
the end of the period, your return would be higher.
--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
Large Capitalization Value
Portfolio(1) -0.48% 19.21% 17.24%

S&P/Barra Value Index(2) 12.73% 22.94% 20.37%

Morningstar Large Value
Average(3) 6.62% 19.59% 17.60%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class C shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class C shares as
described under "Contingent Deferred Sales Charge."

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

LARGE CAPITALIZATION GROWTH PORTFOLIO

Investment Objective

The Large Capitalization Growth Portfolio seeks capital appreciation.

The Adviser

Principal Investment Strategies

Principal Risks

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the 'Additional Risk
Information' section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years*
This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's shares has varied
from year to year over the life of
the Portfolio.
---------------------------------------
Calendar Years Average Annual Return
---------------------------------------
1995 28.98%
1996 13.43%
1997 35.52%
1998 36.44%
1999 33.83%

AVERAGE ANNUAL TOTAL RETURNS

This table compares the average annual returns of the Portfolio's shares
with those of a broad measure of market performance over time, as well as with
an index of funds with similar investment objectives. The Portfolio's returns
assume you sold the shares at the end of each period and you were charged a
contingent deferred sales charge. Of course, if you did not sell your shares at
the end of the period, your return would be higher.
--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
Large Capitalization Growth
Portfolio(1) 32.83% 28.82% 26.79%

S&P/Barra Growth Index(2) 28.25% 33.64% 31.05%

Morningstar Large Growth
Average(3) 38.48% 29.46% 26.78%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class C shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class C shares as
described under "Contingent Deferred Sales Charge."

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

SMALL CAPITALIZATION PORTFOLIO

Investment Objective

The Small Capitalization Portfolio seeks maximum capital appreciation.

The Adviser

Principal Investment Strategies

Principal Risks

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the 'Additional Risk
Information' section. Shares of the Portfolio are not bank deposits and are not
guaranteed or insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years*
This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's shares has varied
from year to year over the life of
the Portfolio.
---------------------------------------
Calendar Years Average Annual Return
---------------------------------------
1995 27.31%
1996 15.89%
1997 23.20%
1998 (18.61%)
1999 12.77%

AVERAGE ANNUAL TOTAL RETURNS

This table compares the average annual returns of the Portfolio's shares
with those of a broad measure of market performance over time, as well as with
an index of funds with similar investment objectives. The Portfolio's returns
assume you sold the shares at the end of each period and you were charged a
contingent deferred sales charge. Of course, if you did not sell your shares at
the end of the period, your return would be higher.
--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5 Years (since 9/2/94)
--------------------------------------------------------------------------------
Small Capitalization 11.77% 10.82% 9.52%
Portfolio(1)

Russell 2000 Index(2) 21.26% 16.69% 15.09%

Morningstar Small Value
Average(3) 4.33% 14.62% 13.09%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class C shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class C shares as
described under "Contingent Deferred Sales Charge."

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

INTERNATIONAL EQUITY PORTFOLIO

Investment Objective

The Portfolio seeks long-term capital appreciation.

The Adviser

Principal Investment Strategy

Principal Risks

Other Risks. The performance of the Portfolio also will depend on whether
the Adviser is successful in pursuing the Portfolio's investment strategy. In
addition, the Portfolio is subject to other risks from its permissible
investments. For information about these risks, see the "Additional Risk
Information" section.

Shares of the Portfolio are not bank deposits and are not guaranteed or
insured by the FDIC or any other government agency.

Past Performance

The bar chart and table below provide some indication of the risks of
investing in the Portfolio. The Portfolio's past performance does not indicate
how the Portfolio will perform in the future.

ANNUAL TOTAL RETURNS Annual Total Returns - Calendar Years*
This chart shows how the performance [OBJECT OMITTED]
of the Portfolio's shares has varied
from year to year over the life of
the Portfolio.
---------------------------------------
Calendar Years Average Annual Return
---------------------------------------
1995 3.08%
1996 6.56%
1997 6.91%
1998 13.22%
1999 35.64%

*Class C shares of the Portfolio commenced operations on January 4, 1999.
The returns shown in the chart for the calendar years 1995 through 1998 are for
Class I shares of the Portfolio which are offered in a separate prospectus.
Class I and C shares are invested in the same portfolio of securities. The
returns for Class C shares would differ from those for Class I only to the
extent that the Classes have different expenses.

AVERAGE ANNUAL TOTAL RETURNS

This table compares the average annual returns of the Portfolio's shares
with those of a broad measure of market performance over time. The Portfolio's
returns assume you sold the shares at the end of each period and you were
charged a contingent deferred sales charge. Of course, if you did not sell your
shares at the end of the period, your return would be higher.
--------------------------------------------------------------------------------
Average Annual Total Returns (as of December 31, 1999)
Past Past Life of Portfolio
1 Year 5-Years (since 9/2/94)
--------------------------------------------------------------------------------
International Equity 34.64% 13.23% 11.06%
Portfolio(1)

Morgan Stanley EAFE Index (U.S.
Dollars)(2) 26.97% 12.83% 11.10%
--------------------------------------------------------------------------------
(1) The return for the past 1 year (since 1/4/99) is for Class C shares.
The returns for the past 5 year period and life of Portfolio are for Class I
shares of the Portfolio. The returns for all periods indicated reflect the
imposition of a contingent deferred sales charge assessed on Class C shares as
described under "Contingent Deferred Sales Charge."

Fees and Expenses

For a description of the fees and expenses that you may pay if you buy and
hold shares of the Portfolio, see the "Summary of Trust Expenses" section.

SUMMARY OF TRUST EXPENSES

U.S.
Government Investment Large Large
Money Market Quality Municipal Capitalization Capitalization Small International
Portfolio Bond Bond Value Growth Capitalization Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ---------- --------- -------------- -------------- ------------- ----------
Shareholder Fees
Maximum Sales Charge on Purchases of
Shares None None None None None None None
(as a % of offering price)
Sales Charge on Reinvested Dividends
(as a % None None None None None None None
of offering price)
Maximum Contingent Deferred Sales
Charge
(as a % of net asset value at the 1% 1% 1% 1% 1% 1% 1%
time of
purchase or sale, whichever is
less)(1)
Exchange Fee None None None None None None None
Annual Portfolio Operating Expenses
(expenses that are deducted form
Portfolio assets as a percentage of
average net assets)
Management Fees 0.475% 0.55% 0.55% 0.65% 0.65% 0.65% 0.75%
Distribution (Rule 12b-1 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses)(2)
Other Expenses .395% 0.42% 1.29% 0.20% (0.20%) 0.09% 0.23%
Total Annual Portfolio Operating 1.87% 1.97% 2.84% 1.85% 1.63% 1.74% 1.98%
Expenses(3)
Fee Waiver (and/or Expense Reimbursement)* -------- (0.05%) (0.64%) -------- (0.04%) (0.02%) (0.16%)

Net Expenses 1.87% 1.92% 2.20% 1.85% 1.59% 1.72% 1.82%

</TABLE>

(1) Only applicable to redemptions made witin one year after purchase (see
"Contingent Deferred Sales Charge")

(2) The 12b-1 fee is accrued daily and payable monthly, at the annual rate
of 1% of the average net assets of Class C Shares. Up to 0.25% of the average
daily net assets may be paid directly to the Manager for support services. A
portion of the fee payable pursuant to the plan to the Plan, equal to 0.25% of
the average daily net assets, is currently characterized as a service fee. A
service fee is a payment made for personal service and/or maintenance of
shareholder accounts.

(3) "Total Annual Portfolio Operating Expenses," as shown above, are based
upon the sum of Management Fees, 12b-1 Fees and "Other Expenses."

* Management Fees, Other Expenses, Fee Waiver and/or Reimbursement, and Net
Expenses: Each Portfolio pays the Manager a fee for its services that is
computed daily and paid monthly at an annual rate ranging from .475% to .75% of
the value of the average daily net assets of the Portfolio. The fees of each
Adviser are paid by the Manager. The nature of the services provided to, and the
aggregate management fees paid by each Portfolio are described under 'Investment
Manager.' Class C Shares commenced operations on January 4, 1999. The Portfolios
benefit from expense offset arrangements with the Trust's custodian bank where
uninvested cash balances earn credits that reduce monthly fees. The amount of
the expense offset for each respective portfolio was as follows: U.S. Government
Money Market, 0%; Investment Quality Bond, 0.04%; Municipal Bond, 0.02%; Large
Capitalization Value, 0%; Large Capitalization Growth, 0.04%; Small
Capitalization, 0%; and International Equity, 0.16%. Under applicable SEC
regulations, the amount by which Portfolio expenses are reduced by an expense
offset arrangement is required to be added to "Other Expenses." "Other Expenses"
also include fees for shareholder services, administration, custodial fees,
legal and accounting fees, printing costs, registration fees, the costs of
regulatory compliance, a Portfolio's allocated portion of the costs associated
with maintaining the Trust's legal existence and the costs involved in the
Trust's communications with shareholders. The Trust and the Manager have entered
into an Excess Expense Agreement (the "Expense Agreement") effective January 1,
1999. In connection with the Expense Agreement, the Manager is currently waiving
its management fees and/or assuming certain other operating expenses of the
Portfolios in order to maintain the expense ratios of each class of the
Portfolios at or below predetermined levels (each an "Expense Cap"). Under the
terms of the Expense Agreement, expenses borne by the Manager are subject to
reimbursement by the Portfolios up to five years from the date the fee or
expense was incurred, but no reimbursement payment will be made by a Portfolio
if it would result in the Portfolio exceeding its Expense Cap. The following are
the Expense Caps for each of the Portfolios: U.S. Government Money Market,
2.125%; Investment Quality Bond, 2.20%; Municipal Bond, 2.20%; Large
Capitalization Value, 2.30%; Large Capitalization Growth, 2.30%; Small
Capitalization, 2.30%; and International Equity, 2.40%. The Expense Agreement
can be terminated by either party, without penalty, upon 60 days prior notice.
For the year ended August 31, 2000, reimbursement payments were made by the
following Portfolios to the Manager under the terms of the Expense Agreement:
$5,648, $1,276, $4,904, $936 and $9,358 for the Large Capitalization Value,
Large Capitalization Growth, International Equity, Investment Quality Bond and
Money Market Portfolios, respectively.

- If You SOLD Your Shares:

- If You HELD Your Shares:

--------- ----------- ---------- -------------- --------------- -------------- --------------
1 year $196 $206 $231 $194 $171 $182 $207
3 years 607 638 711 600 530 565 642
5 years 1,043 1,096 1,218 1,032 913 973 1,102
10 years 2,254 2,363 2,610 2,232 1,988 2,111 2,374

</TABLE>

ADDITIONAL INVESTMENT STRATEGY INFORMATION

This section provides additional information relating to each Portfolio's
principal strategies.

ADDITIONAL RISK INFORMATION

This section provides additional information relating to principal risks of
investing in the Portfolios.

The risks set forth below are applicable to a Portfolio only to the extent
the Portfolio invests in the investment described.

INVESTMENT MANAGER

The total amount of investment management fees payable by each Portfolio to
the Manager may not be changed without shareholder approval.

Portfolio Manager's Fee
--------------

ADVISERS

The following set forth certain information about each of the Advisers:

OpCap Advisors ("OpCap"), a registered investment adviser, located at 1345
Avenue of the Americas, New York, NY 10105, serves as Adviser to the Municipal
Bond Portfolio and the Large Capitalization Value Portfolio. OpCap is a majority
owned subsidiary of Oppenheimer Capital, a registered investment adviser,
founded in 1968. Oppenheimer Capital is an indirect wholly owned subsidiary of
PIMCO Advisors, L.P. ("PIMCO"), a registered investment adviser. On May 5, 2000,
Allianz AG acquired majority ownership of PIMCO Advisors, in part by acquiring
all of the publicly traded units of PIMCO Advisors Holdings LP, which owns about
44% of PIMCO Advisors. Allianz has indicated that it intends to maintain the
current subsidiaries of PIMCO Advisors, including Oppenheimer Capital, as
independent operating units. Allianz is a holding company that owns several
insurance and financial service companies and is a subsidiary of Allianz AG, the
world's second largest insurance company as measured by premium income. As of
August 31, 2000, Oppenheimer Capital and its subsidiary OpCap had assets under
management of approximately $38.3 billion.

ADMINISTRATION

Funds Distributor, Inc. provides administrative services and manages the
administrative affairs of the Trust.

SHAREHOLDER INFORMATION

PRICING OF PORTFOLIO SHARES

The price of shares of each Portfolio called "net asset value," is based on
the value of the Portfolio's investments.

PURCHASE OF SHARES

The Trust is designed to help investors to implement an asset allocation
strategy to meet their individual needs as well as select individual investments
within each asset category among the myriad choices available. The Trust offers
several Classes of shares to investors designed to provide them with the
flexibility of selecting an investment best suited to their needs.

CONTINGENT DEFERRED SALES CHARGE

Shares are sold at net asset value next determined without an initial sales
charge so that the full amount of an investor's purchase payment may be invested
in the Trust. A CDSC of 1%, however, will be imposed on most shares redeemed
within one year after purchase. The CDSC will be imposed on any redemption of
shares if after such redemption the aggregate current value of an account with
the Trust falls below the aggregate amount of the investor's purchase payments
for shares made during the one year preceding the redemption. In addition,
shares are subject to an annual 12b-1 fee of 1.0% of the average daily net
assets. Shares of the Trust which are held for one year or more after purchase
will not be subject to any CDSC upon redemption.

CDSC Waivers. A CDSC will not be imposed on: (i) any amount which
represents an increase in value of shares purchased within the one year
preceding the redemption; (ii) the current net asset value of shares purchased
more than one year prior to the redemption; and (iii) the current net asset
value of shares purchased through reinvestment of dividends or distributions.
Moreover, in determining whether a CDSC is applicable it will be assumed that
amounts described in (i), (ii), and (iii) above (in that order) are redeemed
first.

In addition, the CDSC, if otherwise applicable, will be waived in the case
of:

(3) certain redemptions pursuant to the Portfolio's Systematic Withdrawal
Plan (see "Redemption of Shares-Systematic Withdrawal Plan").

PLAN OF DISTRIBUTION

The Portfolios have adopted a Plan of Distribution pursuant to Rule 12b-1
under the Investment Company Act of 1940 with respect to the sale and
distribution of shares of the Portfolios. The Plan provides that each Portfolio
will pay the Distributor or other entities a fee, which is accrued daily and
paid monthly, at the annual rate of 1.0% of the average net assets. Up to 0.25%
of average daily net assets may be paid directly to the Manager for support
services. The fee is treated by each Portfolio as an expense in the year it is
accrued. Because the fee is paid out of each Portfolio's assets on an ongoing
basis, over time the fee may increase the cost of your investment and may cost
you more than paying other types of sales charges. A portion of the fee payable
pursuant to the Plan, equal to 0.25% of the average daily net assets, is
currently characterized as a service fee. A service fee is a payment made for
personal service and/or the maintenance of shareholder accounts.

Continuous Offering. For Class C shares of the Trust, the minimum initial
investment in the Trust is $10,000 and the minimum investment in any individual
Portfolio (other than the U.S. Government Money Market Portfolio) is $250; there
is no minimum investment for the U.S. Government Money Market Portfolio. For
employees and relatives of: the Manager, firms distributing shares of the Trust,
and the Trust service providers and their affiliates, the minimum initial
investment is $1,000 with no individual Portfolio minimum. There is no minimum
initial investment for employee benefit plans, associations, and individual
retirement accounts. The minimum subsequent investment in the Trust is $100 and
there is no minimum subsequent investment for any Portfolio. The Trust reserves
the right at any time to vary the initial and subsequent investment minimums.

REDEMPTION OF SHARES

Shares of a Portfolio may be redeemed on any day that the Portfolio
calculates its net asset value. Redemption requests received in proper form
prior to the close of regular trading on the NYSE will be effected at the net
asset value per share determined on that day less the amount of any applicable
CDSC. Redemption requests received after the close of regular trading on the
NYSE will be effected at the net asset value next determined less any applicable
CDSC. A Portfolio is required to transmit redemption proceeds for credit to the
shareholder's account within seven days after receipt of a redemption request
Redemption of shares purchased by check will not be effected until the check
clears, which may take up to 15 days from the purchase date.

The addition of a new SWP Portfolio will not change the account value for
the 12% CDSC waiver for the SWP Portfolios already participating in the
Withdrawal Plan.

Involuntary Redemptions. Due to the relatively high cost of maintaining
small accounts, the Trust may redeem an account having a current value of $7,500
or less as a result of redemptions, but not as a result of a fluctuation in a
Portfolio's net asset value after the shareholder has been given at least 30
days in which to increase the account balance to more than that amount.
Involuntary redemptions may result in the liquidation of Portfolio holdings at a
time when the value of those holdings is lower than the investor's cost of the
investment or may result in the realization of taxable capital gains. No CDSC
will be imposed on any involuntary redemption.

Exchange Privilege. Shares of a Portfolio may be exchanged without payment
of any exchange fee for shares of another Portfolio of the same Class at their
respective net asset values.

DIVIDENDS AND DISTRIBUTIONS

TAX CONSEQUENCES The following tax information in this Prospectus is
provided as general information. You should consult your own tax professional
about the tax consequences of an investment in the Trust.

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)

INCOME FROM DIVIDENDS AND
INVESTMENT OPERATIONS DISTRIBUTIONS RATIOS
--------------------------------------------------------------------- -----------------------------

--------------------------------------------------------------------------------
Large Capitalization Value Portfolio (Class C)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000 $20.52 $0.05 ($0.33) ($0.28) ($0.17) ($1.80) $18.27 (1.39%) $3,509 1.85% (0.13%) 90%

January 4, 1999 (2)
to August 31, 1999 20.21 0.04 0.27 0.31 -- -- 20.52 1.53% 1,138 0.61%(1,3)(0.56%)(1,3) 67%

(1) During the fiscal period ended August 31, 1999, Saratoga Capital
Management waived a portion of its management fees. 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 1.85% and (0.13%),
respectively, for the year ended August 31, 2000, 1.41% and 1.36%, respectively,
for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
Large Capitalization Growth Portfolio (Class C)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000$26.78 ($0.26) $8.19 $7.93 -- ($1.66) $33.05 30.30% $7,017 1.59%(1) (1.06%)(1) 33%

January 4, 1999 (2)
to August 31, 1999 24.74 (0.10) 2.14 2.04 -- -- 26.78 8.25% 2,209 1.22%(1,3)(0.82%)(1,3) 39%

(1) During the fiscal periods ended August 31, 2000 and August 31,1999,
Saratoga Capital Management waived a portion of its management fees.
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 1.63% and
(1.02%), respectively, for the year ended August 31, 2000, 1.34% and 0.94%,
respectively, for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
Small Capitalization Portfolio (Class C)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000$10.06 ($0.07) $2.86 $2.79 -- ($0.12) $12.73 28.22% $1,693 1.72%(1)(0.79%)(1) 59%

January 4, 1999 (2)
To August 31, 1999 9.33 (0.02) 0.75 0.73 -- -- 10.06 7.82% 243 1.46%(1,3)(1.09%)(1,3) 32%

(1) During the fiscal periods ended August 31, 2000 and August 31, 1999,
Saratoga Capital Management waived a portion of its management fees.
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 1.74% and
(0.76%), respectively, for the year ended August 31, 2000, 1.56% and (1.19%),
respectively, for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
International Equity Portfolio (Class C)
--------------------------------------------------------------------------------
Year ended
August 31, 2000$13.10 $- $2.56 $2.56 ($0.08) ($0.18) $15.40 19.54% $1,534 1.82% (0.45%) 45%

January 4, 1999 (2)
to August 31, 1999 12.29 0.02 0.79 0.81 -- -- 13.10 6.59% 380 1.15%(1,3) 0.20%(1,3) 46%

(1) During the fiscal period ended August 31, 1999, Saratoga Capital
Management waived a portion of its management fees. 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 1.98% and (0.29%),
respectively, for the year ended August 31, 2000, 1.29% and 0.34%, respectively,
for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
Investment Quality Bond Portfolio (Class C)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000$9.89 $0.46 $0.01 $0.47 ($0.46) -- $9.90 4.88% $1,361 1.92% 4.69% 53%

January 4, 1999 (2)
to August 31, 1999 10.29 0.28 (0.40) (0.12) (0.28) -- 9.89 (1.21%) 284 1.26%(1,3)2.69%(1,3) 62%

(1) During the fiscal period ended August 31, 1999, Saratoga Capital
Management waived a portion of its management fees. 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 1.97% and 4.74%,
respectively, for the year ended August 31, 2000, 1.30% and 2.73%, respectively,
for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
Municipal Bond Portfolio (Class C)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000 $10.00 $0.35 $0.13 $0.48 ($0.33) ($0.06) $10.09 4.97% $114 2.20%(1) 3.40%(1) 12%

January 4, 1999 (2)
to August 31, 1999 10.66 0.25 (0.68) (0.43) (0.23) -- 10.00 (4.12%) 38 0.68%(1,3) 2.64%(1,3) 23%

(1) During the fiscal periods ended August 31, 2000 and August 31, 1999,
Saratoga Capital Management waived a portion of its management fees.
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 2.84% and
2.76%, respectively, for the year ended August 31, 2000, 1.82% and 3.78%,
respectively, for the year ended August 31, 1999.
(2) Commencement of offering.
(3) Not Annualized
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

--------------------------------------------------------------------------------
U.S. Government Money Market Portfolio (Class C)
--------------------------------------------------------------------------------
Year Ended
August 31, 2000 $1.000 $0.040 -- $0.040 ($0.040) -- $1.000 4.10% $805 1.87% 4.11% n/a

January 4, 1999 (2)
to August 31, 1999 1.000 0.022 -- 0.022 (0.022) -- 1.000 1.99% 295 1.22%(1,3) 2.03%(1,3) n/a

(1) During the fiscal period ended August 31, 1999, Saratoga Capital
Management waived a portion of its management fees. 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 1.87% and 4.11%,
respectively, for the year ended August 31, 2000, 1.26% and 2.07%, respectively,
for the year ended August 31, 1999.
(2) Commencement of offering.
* Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.

</TABLE>

CLASS C SHARES
PROSPECTUS

THE SARATOGA
ADVANTAGE TRUST

(800) 807-FUND

You also may obtain information about the Trust by calling your financial
advisor or by visiting our Internet site at:

http://www.saratogacap.com

The Trust's Investment Company Act file number is 811-08542.

The Saratoga Advantage Trust
Statement of Additional Information

January 1, 2001

Income Portfolios: Equity Portfolios:

U.S. Government Money Market Portfolio Large Capitalization Value Portfolio
Investment Quality Bond Portfolio Large Capitalization Growth Portfolio
Municipal Bond Portfolio Small Capitalization Portfolio
International Equity Portfolio

(each a "Portfolio" and collectively the "Portfolios")

This Statement of Additional Information is not a Prospectus. Investors
should understand that this Statement of Additional Information should be read
in conjunction with the Trust's Class I Prospectus, the Trust's Class B
Prospectus, or the Trust's Class C Prospectus, each dated January 1, 2001. A
copy of each Prospectus may be obtained by written request to Saratoga Capital
Management at the address or phone listed below.

Saratoga Capital Management
1501 Franklin Avenue
Mineola, New York
11501-4803

800-807-FUND
(800-807-3863)

TABLE OF CONTENTS

Page

FUND HISTORY..................................................................3

INVESTMENT OF THE TRUST'S ASSETS..............................................3

INVESTMENT RESTRICTIONS.......................................................11

PRINCIPAL HOLDERS OF SECURITIES AND CONTROL PERSONS OF THE PORTFOLIOS.........13

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

MANAGEMENT AND OTHER SERVICES.................................................16

INVESTMENT ADVISORY SERVICES..................................................18

DETERMINATION OF NET ASSET VALUE..............................................21

PORTFOLIO YIELD AND TOTAL RETURN INFORMATION..................................24

CERTAIN TAX CONSIDERATIONS....................................................30

ADDITIONAL INFORMATION........................................................34

FINANCIAL STATEMENTS..........................................................39

APPENDIX A -- RATINGS.........................................................40

FUND HISTORY

The Trust was organized as an unincorporated business trust under the laws
of Delaware on April 8, 1994 and is a trust fund commonly known as a 'business
trust.' The Trust is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a diversified, open-end management investment
company.

INVESTMENT OF THE TRUST'S ASSETS

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

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

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

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

CONVERTIBLE SECURITIES. As specified in the Prospectus, certain of the
Portfolios may invest in fixed-income securities which are convertible into
common stock. Convertible securities rank senior to common stocks in a
corporation's capital structure and, therefore, entail less risk than the
corporation's common stock. The value of a convertible security is a function of
its 'investment value' (its value as if it did not have a conversion privilege),
and its 'conversion value' (the security's worth if it were to be exchanged for
the underlying security, at market value, pursuant to its conversion privilege).

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

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

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

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

HEDGING. Certain Portfolios may use certain hedging instruments. To engage
in short hedging, a Portfolio would: (i) sell financial futures; (ii) purchase
puts on such futures or on individual securities held by it ("Portfolio
securities") or securities indexes; or (iii) write calls on Portfolio securities
or on financial futures or securities indexes. To engage in long hedging, a
Portfolio would: (i) purchase financial futures, or (ii) purchase calls or write
puts on such futures or on Portfolio securities or securities indexes.

Additional information about the Hedging Instruments a Portfolio may use is
provided below.

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

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

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

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

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

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

A Portfolio may effect a closing purchase transaction to realize a profit
on an outstanding put option it has written or to prevent an underlying security
from being put to it. Furthermore, effecting such a closing purchase transaction
will permit the Portfolio to write another put option to the extent that the
exercise price thereof is secured by the deposited assets, or to utilize the
proceeds from the sale of such assets for other investments by the Portfolio.
The Portfolio will realize a profit or loss from a closing purchase transaction
if the cost of the transaction is less or more than the premium received from
writing the option.

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

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

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

Due to requirements under the 1940 Act when a Portfolio sells a future, it
will segregate on its books, cash or readily marketable short-term (maturing in
one year or less) debt instruments in an amount equal to the market value of
such future, less the margin deposit applicable to it.

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

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

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

Transactions in Hedging Instruments may also result in certain Federal
income tax consequences described below under the heading 'Certain Tax
Considerations.'

TYPE OF SECURITIES IN WHICH THE INTERNATIONAL EQUITY PORTFOLIO MAY INVEST.
As discussed in the Prospectus, the International Equity Portfolio seeks to
achieve its investment objectives through investment primarily in equity
securities. It is expected that the Portfolio will invest principally in
American Depositary Receipts ("ADRs"), Global Depositary Receipts ('GDRs'), and
European Depositary Receipts ("EDRs") although it also may invest directly in
equity securities. Generally, ADRs and GDRs in registered form are U.S. dollar
denominated securities designed for use in the U.S. securities markets, which
represent and may be converted into the underlying foreign security. EDRs are
typically issued in bearer form and are deigned for use in the European
securities markets. Issuers of the stock of ADRs not sponsored by such
underlying issuers are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of such ADRs. The Portfolio also may purchase
shares of investment companies or trusts which invest principally in securities
in which the Portfolio is authorized to invest. The return on the Portfolio's
investments in investment companies will be reduced by the operating expenses,
including investment advisory and administrative fees, of such companies. The
Portfolio's investment in an investment company may require the payment of a
premium above the net asset value of the investment company's shares, and the
market price of the investment company assets. The Portfolio will not invest in
any investment company of trust unless it is believed that the potential
benefits of such investment are sufficient to warrant the payment of any such
premium. Under the 1940 Act, the Portfolio may not invest more than 10% of its
assets in investment companies or more than 5% of its total assets in the
securities of any one investment company, nor may it own more than 3% of the
outstanding voting securities of any such company. To the extent the Portfolio
invests in securities in bearer form it may be more difficult to recover
securities in the event such securities are lost or stolen.

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

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

FOREIGN CURRENCY TRANSACTIONS. When a Portfolio agrees to purchase or sell
a security in a foreign market it will generally be obligated to pay or entitled
to receive a specified amount of foreign currency and will then generally
convert dollars to that currency in the case of a purchase or that currency to
dollars in the case of a sale. The Portfolios will conduct their foreign
currency exchange transactions either on a spot basis (i.e., cash) at the spot
rate prevailing in the foreign currency exchange market, or through entering
into forward foreign currency contracts ("forward contracts") to purchase or
sell foreign currencies. A Portfolio may enter into forward contracts in order
to lock in the U.S. dollar amount it must pay or expects to receive for a
security it has agreed to buy or sell. A Portfolio may also enter into forward
currency contracts with respect to the Portfolio's portfolio positions when it
believes that a particular currency may change unfavorably compared to the U.S.
dollar. A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract. These contracts are traded in the interbank market conducted
directly between currency traders (usually large, commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades.

A Portfolio will segregate on its books, U.S. Government securities or debt
securities in a separate account of the Portfolio in an amount equal to the
value of the Portfolio's total assets committed to the consummation of any such
contract in such account. If, rather than cash, portfolio securities are used to
secure such a forward contract, on the settlement of the forward contract for
delivery by the Portfolio of a foreign currency, the Portfolio may either sell
the portfolio security and make delivery of the foreign currency, or it may
retain the security and terminate its contractual obligation to deliver the
foreign currency by purchasing an 'offsetting' contract obligating it to
purchase, on the same settlement date, the same amount of foreign currency.

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

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

The transactions described in this section may also give risk to certain
Federal income tax consequences described below under the heading 'Certain Tax
Considerations.'

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

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

Opinions relating to the validity of municipal securities and to the
exemption of interest thereon from federal income tax (and also, when available,
from the federal alternative minimum tax) are rendered by bond counsel to the
issuing authorities at the time of issuance. Neither the Municipal Bond
Portfolio nor the Portfolio's Adviser will review the proceedings relating to
the issuance of municipal securities or the basis for such opinions. An issuer's
obligations under its municipal securities are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors (such as the federal bankruptcy laws) and federal, state and local
laws that may be enacted to extend the time for payment of principal or
interest, or both, or to impose other constraints upon enforcement of such
obligations. There also is the possibility that, as a result of litigation or
other conditions, the power or ability of issuers to meet their obligations for
the payment of principal of an interest on their municipal securities may be
materially adversely affected.

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

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

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

INVESTMENT RESTRICTIONS

FUNDAMENTAL POLICIES. The Trust on behalf the each Portfolio has adopted
certain investment restrictions. Each Portfolio may not, with respect to 75% of
its total assets taken at market value, invest more than 5% of its total assets
in the securities of any one issuer, except U.S. Government Securities, or
acquire more than 10% of any class of the outstanding voting securities of any
one issuer. In addition, except as described above with respect to the Municipal
Bond Portfolio, each Portfolio may not invest 25% or more of its total assets in
securities of issuers in any one industry. The Trust on behalf of a Portfolio
may borrow money as a temporary measure from banks in an aggregate amount not
exceeding one-third of the value of the Portfolio's total assets to meet
redemptions and for other temporary or emergency purposes not involving
leveraging. A Portfolio may not purchase securities while borrowings exceed 5%
of the value of the Portfolio's assets. The Portfolios each may purchase
securities which are not registered under the 1933 Act but which can be sold to
'qualified institutional buyers' in accordance with Rule 144A under the 1933
Act. Any such security will not be considered illiquid so long as it is
determined by the Board of Trustees or the Portfolio's Adviser, acting under
guidelines approved and monitored by the Board, which has the ultimate
responsibility for any determination regarding liquidity, that an adequate
trading market exists for that security. This investment practice could have the
effect of increasing the level of illiquidity in each of the Portfolios during
any period that qualified institutional buyers become uninterested in purchasing
these restricted securities. The ability to sell to qualified institutional
buyers under Rule 144A is a recent development and it is not possible to predict
how this market will develop. The Board will carefully monitor any investments
by each of the Portfolios in these securities.

The following are also fundamental policies and cannot be changed without
the vote of a majority of the outstanding voting securities of that Portfolio,
as defined in the 1940 Act. Such a majority is defined as the lesser of (a) 67%
or more of the shares of the Portfolio present at a meeting of shareholders of
the Trust, if the holders of more than 50% of the outstanding shares of the
Portfolio are present or represented by proxy or (b) more than 50% of the
outstanding shares of the Portfolio. For purposes of the following restrictions
and those contained in the Prospectus: (i) all percentage limitations apply
immediately after a purchase or initial investment; and (ii) any subsequent
change in any applicable percentage resulting from market fluctuations or other
changes in the amount of total assets does not require elimination of any
security from a Portfolio.

Under these additional restrictions, each Portfolio cannot: (a) invest in
physical commodities or physical commodity contracts or speculate in financial
commodity contracts or speculate in financial commodity contracts, but all
Portfolios are authorized to purchase and sell financial futures contracts and
options on such futures contracts exclusively for hedging and other
non-speculative purposes to the extent specified in the Prospectus; (b) invest
in real estate or real estate limited partnerships (direct participation
programs); however, each Portfolio may purchase securities of issuers which
engage in real estate operations and securities which are secured by real estate
or interests therein; (c) underwrite securities of other companies except in so
far as the Portfolio may be deemed to be an underwriter under the 1933 Act in
disposing of a security; (d) purchase warrants if as a result the Portfolio
would then have either more than 5% of its total assets (determined at the time
of investment) invested in warrants or more than 2% of its total assets invested
in warrants not listed on the New York or American Stock Exchange; (e) pledge
its assets or assign or otherwise encumber its assets in excess of 33 1/3% of
its net assets (taken at market value at the time of Pledging) and then only to
secure borrowings effected within the limitations set forth in the Prospectus;
(f) issue senior securities as defined in the 1940 Act except insofar as the
Portfolio may be deemed to have issued a senior security by reason of:
(i) entering into a repurchase agreement; (ii) borrowing money in accordance
with restrictions described above; or (iii) lending Portfolio securities; and
(g) make loans to any person or individual except that Portfolio securities may
be loaned by all Portfolios within the limitations set forth in the Prospectus.

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

The investment restrictions listed above as well as the Portfolio's
investment objectives are fundamental policies and, accordingly, may not be
changed with respect to any Portfolio without the approval of a majority of the
outstanding shares of that Portfolio, as defined in the 1940 Act.

NON-FUNDAMENTAL POLICIES. The following policies may be changed by the
Board of Trustees without shareholder approval. A Portfolio will not invest more
than 15% (10% with respect to the U.S. Government Money Market Portfolio) of the
value of its net assets in securities that are illiquid, including certain
government stripped mortgage related securities, repurchase agreements maturing
in more than seven days and that cannot be liquidated prior to maturity and
securities that are illiquid by virtue of the absence of a readily available
market. Securities that have legal or contractual restrictions on resale but
have a readily available market are deemed not illiquid for this purpose. In
addition, each portfolio cannot: (a) purchase securities on margin (except for
such short-term loans as are necessary for the clearance of purchases of
Portfolio securities) or make short sales of securities except 'against the box'
(collateral arrangements in connection with transactions in futures and options
are not deemed to be margin transactions); (b) invest for the purpose of
exercising control or management of another company.

PRINCIPAL HOLDERS OF SECURITIES AND
CONTROL PERSONS OF THE PORTFOLIOS

The following persons owned 5% or more of the outstanding Class B Shares of
the Small Capitalization Portfolio as of December 4, 2000: NFSC/FMTC IRA, FBO
Gerald D. Arzoumanian, 26 Danielwood Dr., Loudonville, NY 12211-1512 - 11.07%;
Stifel Nicolaus & Co. Inc., A/C 8922-8757, Jonathan F. Young IRA, 501 North
Broadway St. Louis, MO 63102-2102 - 5.74%; Stifel Nicolaus & Co. Inc., A/C
8925-1605, Marlene G. Young SEP IRA, 501 North Broadway, St. Louis, MO
63102-2102 - 8.62%; First Clearing Corporation, A/C 4952-9223, Midwest
Consolidators Intl., TTEE Target Benefit Plan, Haywood, 1001 Labore Industrial
Ct., St. Paul, MN 551100-5114 - 5.14%; First Clearing Corporation, A/C
8437-7029, Midwest Consolidators Intl., Target Benefit Plan,1001 Labore
Industrial Ct., St. Paul, MN 551100-5114 - 6.00%. The following persons owned 5%
or more of the outstanding Class B Shares of the International Equity Portfolio
as of December 4, 2000: Stifel Nicolaus & Co. Inc., A/C 8925-1605, Marlene G.
Young SEP IRA, 501 North Broadway, St. Louis, MO 63102-2102 - 6.56%; First
Clearing Corporation, A/C 4952-9223, Midwest Consolidators Intl., TTEE Target
Benefit Plan, Haywood, 1001 Labore Industrial Ct., St. Paul, MN 55110-5114 -
5.05%; First Clearing Corporation, A/C 8437-7029, Midwest Consolidators Intl.,
Target Benefit Plan, 1001 Labore Industrial Ct., St. Paul, MN 551100-5114 -
5.48%. The following persons owned 5% or more of the outstanding Class B Shares
of the Investment Quality Bond Portfolio as of December 4, 2000: State Street
Bank & Trust Co., Cust. for the IRA R/O, FBO Janice W Mounteer, PO Box 903,
Huntington, UT 84528-0903 - 8.61%; State Street Bank & Trust Co., Cust. for the
IRA, FBO Daniel J. Harty, 52 Academy Ave., Atkinson, NH 03811-2205 - 9.42%;
Fahnestock & Co. Inc., Custodian FBO Leslie A. Wickham Rlvr. IRA, 706 Georgetown
Pkwy., Fenton, MI 48430-3622 - 7.54%; First Clearing Corporation, A/C 3678-3444,
Jacqueline A. Goldberg, 1870 Worcester Ave., St. Paul, MN 55116-2627 - 11.05%;
First Clearing Corporation, A/C 4952-9223, Midwest Consolidators Intl., TTEE
Target Benefit Plan, Haywood, 1001 Labore Industrial Ct., St. Paul, MN
55110-5114 - 32.21%; First Clearing Corporation, A/C 8437-7029, Midwest
Consolidators Intl., Target Benefit Plan, 1001 Labore Industrial Ct., St. Paul,
MN 551100-5114 - 20.60%. The following persons owned 5% or more of the
outstanding Class B Shares of the Municipal Bond Portfolio as of December 4,
2000: Kevin Queen, 1540 Kings Bridge, Grand Blanc, MI 48439-8713 - 15.32%; James
T. Vaughan Trustee, James T. Vaughan Rev. Trust, U/A DTD 9/16/97, 5011
Sandalwood, Grank Blanc, MI 48439-4261 - 30.26%; First Clearing Corporation, A/C
4263-8203, Mark Haywood & Patricia Haywood JT TEN, 4399 Meadowwood
Circle,Vadnais Heights, MN 55127-6013 - 52.45%. The following persons owned 5%
or more of the outstanding Class B Shares of the U.S. Government Money Market
Portfolio as of December 4, 2000: State Street Bank & Trust Co., Cust. for the
IRA of Beatrice A. Young, Box 191, Henniker, NH 03242 - 5.30%; State Street Bank
& Trust Co., Cust. for the IRA R/O, FBO Janice W. Mounteer, PO Box 903,
Huntington, UT 84528-0903 - 7.81%; State Street Bank & Trust Co., Cust. for the
IRA, FBO Daniel J. Harty, 52 Academy Ave., Atkinson, NH 03811-2205 - 9.20%;
First Clearing Corporation, A/C 3678-3444,Jacqueline A. Goldberg, 1870 Worcester
Ave., St. Paul, MN 55116-2627 - 10.84%; First Clearing Corporation, A/C
4263-8203, Mark Haywood & Patricia Haywood JT TEN, 4399 Meadowood Circle,
Vadnais Heights, MN 55127-6013 - 7.22%; First Clearing Corporation, A/C
4952-9223, Midwest Consolidators Intl., TTEE Target Benefit Plan, Haywood, 1001
Labore Industrial Ct., St. Paul, MN 555110-5114 - 31.66%; First Clearing
Corporation, A/C 8437-7029, Midwest Consolidators Intl., Target Benefit Plan,
1001 Labore Industrial Ct., St. Paul, MN 551100-5114 - 12.84%. The following
persons owned 5% or more of the outstanding Class C Shares of the Large
Capitalization Value Portfolio as of December 4, 2000: State Street Bank & Trust
Co., Cust for the IRA of FBO Herbert L. Collier, 8201 E. Kalil Dr., Scottsdale,
AZ 85260-5736 - 6.34%; CIBC World Markets Corp., FBO 028-15798-13, PO Box 3484,
Church Street Station, New York, NY 10008-3484 - 5.20%; The following person
owned 5% or more of the outstanding Class C Shares of the Large Capitalization
Growth Portfolio as of December 4, 2000: State Street Bank & Trust Co., Cust.
for the IRA of FBO Herbert L. Collier, 8201 E. Kalil Dr., Scottsdale, AZ
85260-5736 - 8.45%. The following persons owned 5% or more of the outstanding
Class C Shares of the Small Capitalization Portfolio as of December 4, 2000:
State Street Bank & Trust Co., Cust. for the IRA of FBO Herbert L. Collier, 8201
E. Kalil Dr., Scottsdale, AZ 85260-5736 - 14.17%; Herbert L. Collier TTEE,
Sharon L. Collier TTEE, Herbert L. & Sharon L. Collier JT TR, U/A DTD 6/27/2000,
8201 E. Kalil Dr., Scottsdale, AZ 85260-5736 - 7.01%; CIBC World Markets Corp.,
FBO 028-15798-13, PO Box 3484, Church Street Station, New York, NY 10008-3484 -
11.60%; CIBC World Markets Corp., FBO 327-14554-16, PO Box 3484, Church Street
Station, New York, NY 10008-3484 - 8.07%. The following persons owned 5% or more
of the outstanding Class C Shares of the International Equity Portfolio as of
December 4, 2000: CIBC World Markets Corp., FBO 028-15798-13, PO Box 3484,
Church Street Station, New York, NY 10008-3484 - 10.04%; CIBC World Markets
Corp., FBO 327-14554-16, PO Box 3484, Church Street Station, New York, NY
10008-3484 - 6.98%. The following persons owned 5% or more of the outstanding
Class C Shares of the Investment Quality Bond Portfolio as of December 4, 2000:
State Street Bank & Trust Co., Cust. for the IRA of FBO Herbert L. Collier, 8201
E. Kalil Dr., Scottsdale, AZ 85260-5736 - 15.30%; Herbert L. Collier TTEE,
Sharon L. Collier TTEE, Herbert L. & Sharon L. Collier JT TR, U/A DTD 6/27/2000,
8201 E. Kalil Dr., Scottsdale, AZ 85260-5736 - 7.59%; Raymond James & Assoc.
Inc. CSDN, Lita Mae Godziszewski IRA, 4206 N. Overhill Ave., Norridge, IL
60706-1009 - 9.66%; Anna M. Grubbs, 204 Wiley Road, PO Box 311, Douglas, MI
49406-0311 - 5.36%. The following persons owned 5% or more of the outstanding
Class C Shares of the Municipal Bond Portfolio as of December 4, 2000: Gabriel F
Garguilo, 963 Elms Common Dr., Apt 305, Rocky Hill, CT 06067-1819 - 12.26%;
Concetta Pascale & Marian Bruzzese JTWROS, 723 Patterson Ave., Franklin Sq., NY
11010-4107 - 17.48%; Pauline Frederick, 25-C Esquire Dr., Manchester, CT
06040-1409 - 16.80%; Cynthia Milne, 7 Braeside Cres., Manchester, CT 06040-6954
- 10.72%; Elizabeth G. Engelbrecht, 530 S. Cherry St., Paxton, IL 60957-1602 -
26.34%; Gregory Crays and Pamela Crays, JT TEN WROS, Dad's Money, 170 Wrights
Mill Way, Canton, GA 30115-7507 - 9.50%. The following persons owned 5% or more
of the outstanding Class C Shares of the U.S. Government Money Market Portfolio
as of December 4, 2000: State Street Bank & Trust Co., Cust. for the IRA of FBO
Stanley Prowler, 139 E. 63rd St., New York, NY 10021-7408 - 16.33%; Norman J.
Dion & Raymond Dion JT TEN, 3 Katie Ln., Enfield, CT 06082-4249 - 6.68%. The
following persons owned 5% or more of the outstanding Class I Shares of the U.S.
Government Money Market Portfolio as of December 4, 2000: Mellon Bank (DE) NA
Enhanced Cash Fund Mellon Bank, 135 Santilli Hwy., Everett, MA 02149-1906 -
14.61%. The following persons owned 5% or more of the outstanding Class I Shares
of the Small Capitalization Portfolio as of December 4, 2000: Northern Trust Co.
As Cust. FBO American Medical Association Pension PL., PO Box 92956, Chicago IL,
60675-2956 - 27.70%.

TRUSTEES AND OFFICERS

The trustees and officers of the Trust, and their principal occupations
during the past five years, are set forth below. Trustees who are 'interested
persons,' as defined in the 1940 Act, are denoted by an asterisk. As of December
6, 2000, the trustees and officers of the Trust as a group owned less than 1% of
the outstanding shares of each Portfolio.

Bruce E. Ventimiglia,
President, CEO, and Chairman of the Board of Trustees*
1501 Franklin Avenue
Mineola, NY 11501
Age 45

Chairman, President and Chief Executive Officer of Saratoga Capital
Management; prior thereto, Senior Vice President of Oppenheimer Capital and
OpCap Advisers; Senior Vice President of Prudential Securities, Inc.

Patrick H. McCollough, Trustee
One Michigan Avenue Building
120 North Washington Square
Lansing, Michigan 48933
Age 58

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

Udo W. Koopmann, Trustee
11500 Governor's Drive
Chapel Hill, NC 27514
Age 58

President, the CapCo Group, LLC; prior thereto, Chief Financial and
Administrative Executive of the North American subsidiary of Klockner and
Company AG, a multi-national company; member of National Committee of Steel
Service Centre Institute.

Floyd E. Seal, Trustee
7565 Industrial Court
Alpharetta, GA 30004
Age 50

Chief Executive Officer and 50% owner of TARAHILL, INC., d.b.a. Pet Goods
Manufacturing & Imports, Alpharetta, GA; Partner of S&W Management, Gwinnet, GA.

Stephen Ventimiglia, Vice President and Secretary*
1501 Franklin Avenue
Mineola, NY 11501
Age 44

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

William P. Marra, Treasurer
1501 Franklin Avenue
Mineola, NY 11501
Age 49

Chief Financial Officer of Saratoga Capital Management since 1997; prior
thereto, he was an Account Representative at MetLife, 1995-1997; various
positions held at Prudential Securities from 1978-1994.

* Bruce Ventimiglia and Stephen Ventimiglia are brothers.

REMUNERATION OF OFFICERS AND TRUSTEES. All of the above officers of the
Trust are officers of Saratoga Capital Management and all officers of the Trust
receive no salary or fee from the Trust. Until a Portfolio has net assets of $25
million, no trustees' fees will be paid by that Portfolio. When a Portfolio has
net assets of at least $25 million but not more than $50 million, the Trustees,
other than Mr. Ventimiglia, will be paid an annual fee of $3,500 plus $500 for
each trustees' meeting attended and $100 for each committee meeting attended.
The following table sets forth the aggregate compensation paid by the Trust to
each of the Trustees for the year ended August 31, 2000.

Aggregate Compensation
Name of Trustee From the Trust

Bruce Ventimiglia $0
Patrick McCollough $24,075
Udo Koopmann $18,575
Floyd Seal $24,075

MANAGEMENT AND OTHER SERVICES

The manager of the Trust is Saratoga Capital Management ("Saratoga" or the
"Manager"), 1501 Franklin Avenue, Mineola, New York 11501. Pursuant to the
Management Agreement with the Trust (the "Management Agreement"), Saratoga,
subject to the supervision of the Trustees and in conformity with the stated
policies of the Trust, manages the operations of the Trust and reviews the
performance of the Advisers, and makes recommendations to the Trustees with
respect to the retention and renewal of contracts.

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

Total
Management
Portfolio Fee

Large Capitalization Growth Portfolio 0.65%
Large Capitalization Value Portfolio 0.65%
Small Capitalization Portfolio 0.65%
International Equity Portfolio 0.75%
Investment Quality Bond Portfolio 0.55%
Municipal Bond Portfolio 0.55%
U.S. Government Money Market Portfolio 0.475%

The fee is computed daily and payable monthly. Currently, the Manager is
voluntarily limiting expenses of the Portfolios as follows: for Class I Shares
-- 1.125% with respect to U.S. Government Money Market Portfolio, 1.20% with
respect to Investment Quality Bond Portfolio, 1.20% with respect to Municipal
Bond Portfolio, 1.30% with respect to Large Capitalization Value Portfolio,
1.30% with respect to Large Capitalization Growth Portfolio, 1.30% with respect
to Small Capitalization Portfolio and 1.40% with respect to International Equity
Portfolio; for each of Class B and Class C Shares -- 2.125% with respect to U.S.
Government Money Market Portfolio, 2.20% with respect to Investment Quality Bond
Portfolio, 2.20% with respect to Municipal Bond Portfolio, 2.30% with respect to
Large Capitalization Value Portfolio, 2.30% with respect to Large Capitalization
Growth Portfolio, 2.30% with respect to Small Capitalization Portfolio and 2.40%
with respect to International Equity Portfolio. For the year ended August 31,
1998, the Manager voluntarily waived all of its management fees in the amount of
$46,053 and assumed $32,002 in other operating expenses for Municipal Bond. The
Manager also voluntarily waived $33,711; $7,982; $52,919; $43,500; $21,840 and
$53,369 in management fees for Large Capitalization Value, Large Capitalization
Growth, Small Capitalization, International Equity, Investment Quality Bond and
U.S. Government Money Market Portfolios respectively, for the year ended August
31, 1998. For the year ended August 31, 1999, the Manager voluntarily waived all
of its management fees in the amount of $60,077 and assumed $3,027 in other
operating expenses for Municipal Bond Portfolio. The Manager also voluntarily
waived $17,055; $32,279; $9,858; $2,113 and $8,784 in management fees for Large
Capitalization Value, Small Capitalization, International Equity, Investment
Quality Bond and U.S. Government Money Market Portfolios respectively, for the
year ended August 31, 1999. The Manager did not waive any fees for Large
Capitalization Growth Portfolio. For the year ended August 31, 2000, the Manager
voluntarily waived $10,487, $11,138 and $58,261 in management fees for Large
Capitalization Growth, Small Capitalization, and Municipal Bond Portfolios,
respectively.

Expenses not expressly assumed by Saratoga under the Management Agreement
or by Funds Distributor, Inc. under the Administration Agreement are paid by the
Trust. Expenses incurred by a Portfolio are allocated among the various Classes
of shares pro rata based on the net assets of the Portfolio attributable to each
Class, except that 12b-1 fees relating to a particular Class are allocated
directly to that Class. In addition, other expenses associated with a particular
Class, except advisory or custodial fees, may be allocated directly to that
Class, provided that such expenses are reasonably identified as specifically
attributable to that Class, and the direct allocation to that Class is approved
by the Trust's Board of Trustees. The fees payable to each Adviser pursuant to
the Investment Advisory Agreements between each Adviser and Saratoga with
respect to the Portfolios are paid by Saratoga. Under the terms of the
Management Agreement, the Trust is responsible for the payment of the following
expenses among others: (a) the fees payable to the Manager, (b) the fees and
expenses of Trustees who are not affiliated persons of the Manager or the
Trust's Advisers, (c) the fees and certain expenses of the Custodian and
Transfer and Dividend Disbursing Agent, including the cost of maintaining
certain required records of the Trust and of pricing the Trust's shares, (d) the
charges and expenses of legal counsel and independent accountants for the Trust,
(e) brokerage commissions and any issue or transfer taxes chargeable to the
Trust in connection with its securities transactions, (f) all taxes and
corporate fees payable by the Trust to governmental agencies, (g) the fees of
any trade association of which the Trust may be a member, (h) the cost of share
certificates representing shares of the Trust, (i) the cost of fidelity and
liability insurance, (j) the fees and expenses involved in registering and
maintaining registration of the Trust and of its shares with the SEC, qualifying
its shares under state securities laws, including the preparation and printing
of the Trust's registration statements and prospectuses for such purposes, (k)
all expenses of shareholders and Trustees' meetings (including travel expenses
of trustees and officers of the Trust who are directors, officers or employees
of the Manager or Advisers) and of preparing, printing and mailing reports,
proxy statements and prospectuses to shareholders in the amount necessary for
distribution to the shareholders and (l) litigation and indemnification expenses
and other extraordinary expenses not incurred in the ordinary course of the
Trust's business.

The Management Agreement provides that Saratoga will not be liable for any
error of judgment or for any loss suffered by the Trust in connection with the
matters to which the Management Agreement relates, except a loss resulting from
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
The Management Agreement will continue in effect for a period of more than one
year from the date of execution only so long as such continuance is specifically
approved at least annually in conformity with the 1940 Act. The Management
Agreement was last approved by the Trustees of the Trust including all of the
Trustees who are not parties to the contract or interested persons of any such
party as defined in the 1940 Act on April 10, 2000, for a period of one year
effective as of April 14, 2000.

CODE OF ETHICS. The Portfolios, the Manager, the Advisers and Funds
Distributor, Inc. have adopted codes of ethics pursuant to Rule 17j-1 under the
1940 Act with respect to their personnel with access to information about the
purchase or sale of securities by the Portfolios. These codes are designed to
protect the interests of the Portfolios' shareholders. While these codes contain
provisions reasonably necessary to prevent personnel subject to the codes from
engaging in unlawful conduct and require compliance review of securities
transactions, they do not prohibit such personnel from investing in securities,
including securities that may be purchased or held by the Portfolios so long as
such investments are made pursuant to the code's requirements.

ADMINISTRATION AGREEMENT. Funds Distributor, Inc. acts as the Trust's
Administrator pursuant to an Administration Agreement which was approved by the
Trust's trustees on September 1, 1999. The Administration Agreement will remain
in effect for three years from the date of its effectiveness, September 21,
1999, and may be continued annually thereafter if approved in accordance with
requirements of the 1940 Act. Prior to the Administration Agreement currently in
effect, Unified Fund Services, Inc. served as the Trust's Administrator. For the
year ended August 31, 1998, each Portfolio accrued the following amounts in
administrative fees: U.S. Government Money Market, $35,159; Investment Quality
Bond, $31,607; Municipal Bond, $9,425; Large Capitalization Value, $43,563;
Large Capitalization Growth, $70,934; Small Capitalization, $38,677; and
International Equity, $16,802. For the year ended August 31, 1999, each
Portfolio accrued the following amounts in administrative fees: U.S. Government
Money Market, $30,261; Investment Quality Bond, $30,006; Municipal Bond, $9,230;
Large Capitalization Value, $43,226; Large Capitalization Growth, $72,939; Small
Capitalization, $22,662; and International Equity, $17,017. For the year ended
August 31, 2000, each Portfolio accrued the following amounts in administrative
fees: U.S. Government Money Market, $36,600; Investment Quality Bond, $29,280;
Municipal Bond, $9,150; Large Capitalization Value, $51,240; Large
Capitalization Growth, $80,520; Small Capitalization, $25,620; and International
Equity, $18,300.

INVESTMENT ADVISORY SERVICES

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

The Advisory Agreements for the Portfolios were last approved by the
Trustees, including a majority of the Trustees who are not parties to such
contract or interested persons of any such parties, on April 10, 2000, for a
period of one year effective as of April 14, 2000.

Each Advisory Agreement provides that it will terminate in the event of its
assignment (as defined in the 1940 Act). Each Advisory Agreement may be
terminated by the Trust, Saratoga, or by vote of a majority of the outstanding
voting securities of the Trust, upon written notice to the Adviser, or by the
Adviser upon at least 100 days' written notice. Each Advisory Agreement provides
that it will continue in effect for a period of more than one year from its
execution only so long as such continuance is specifically approved at least
annually in accordance with the requirements of the 1940 Act.

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

PLAN OF DISTRIBUTION. The Trust has adopted a Plan of Distribution pursuant
to Rule 12b-1 under the 1940 Act (the "Plan") pursuant to which each Class,
other than Class I, pays the Distributor or other entities compensation accrued
daily and payable monthly at the annual rate of 1.0% of average daily net assets
of Class B and Class C, respectively. The Distributor or other entities also
receive the proceeds and contingent deferred sales charges imposed on certain
redemptions of shares, which are separate and apart from payments made pursuant
to the Plan.

The Distributor has informed the Trust that a portion of the fees payable
each year pursuant to the Plan equal to 0.25% of such Class's average daily net
assets are currently each characterized as a 'service fee' under the Rules of
the National Association of Securities Dealers, Inc. (of which the Distributor
is a member). The 'service fee' is a payment made for personal service and/or
the maintenance of shareholder accounts. The remaining portion of the Plan fees
payable by a Class is characterized as an 'asset-based sales charge' as defined
in the aforementioned Rules of the Association.

The Plan was adopted by a majority vote of the Board of Trustees, including
all of the Trustees of the Trust who are not 'interested persons' of the Trust
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of the Plan (the "Independent 12b-1 Trustees"), cast
in person at a meeting called for the purpose of voting on the Plan, on October
9, 1998 and was last approved on April 10, 2000, effective as of April 26, 2000.

Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report provided
by the Distributor of the amounts extended by the Distributor or other entities
under the Plan and the purpose for which such expenditures were made.

The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval of the shareholders of the
affected Class or Classes of the Trust, and all material amendments of the Plan
must also be approved by the Trustees in the manner described above. The Plan
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Trust (as defined in the 1940 Act) on not
more than thirty days' written notice to any other party to the Plan. So long as
the Plan is in effect, the election and nomination of Independent Trustees shall
be committed to the discretion of the Independent Trustees.

At any given time, the expenses in distributing shares of each Portfolio
may be in excess of the total of (i) the payments made by the Portfolio pursuant
to the Plan, and (ii) the proceeds of CDSCs paid by investors upon the
redemption of shares. For example, if $1 million in expenses in distributing
shares of a Portfolio had been incurred and $750,000 had been received as
described in (i) and (ii) above, the excess expense would amount to $250,000.
Because there is not a requirement under the Plan that the Distributor or other
entities be reimbursed for all distribution expenses or any requirement that the
Plan be continued from year to year, such excess amount does not constitute a
liability of the Portfolio. Although there is no legal obligation for the
Portfolio to pay expenses incurred in excess of payments made to the Distributor
under the Plan, and the proceeds of CDSCs paid by investors upon redemption of
shares, if for any reason the Plan is terminated the Trustees will consider at
that time the manner in which to treat such expenses. Any cumulative expenses
incurred, but not yet recovered through distribution fees or CDSCs, may or may
not be recovered through future distribution fees or CDSCs. If expenses in
distributing shares are less than payments made for distributing shares, the
Distributor or other entities will retain the full amount of the payments.

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

Sales of shares of each Portfolio, subject to applicable rules covering the
Distributor's activities in this area, will also be considered as a factor in
the direction of portfolio transactions to dealers, but only in conformity with
the price, execution and other considerations and practices discussed above. A
Portfolio will not purchase any securities from or sell any securities to a
broker that is affiliated with any of the Advisers (an "affiliated broker") that
is acting as principal for its own account. Each of the Advisers currently
serves as investment manager to a number of clients, including other investment
companies, and may in the future act as investment manager or adviser to others.
It is the practice of each Adviser to cause purchase or sale transactions to be
allocated among the Portfolios and others whose assets it manages in such manner
as it deems equitable. In making such allocations among the Portfolios and other
client accounts, the main factors considered are the respective investment
objectives, the relative size of Portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of investment
commitments generally held and the opinions of the persons responsible for
managing the Portfolios of each Portfolio and other client accounts. When orders
to purchase or sell the same security on identical terms are placed by more than
one of the Portfolios and/or other advisory accounts managed by an Adviser or
its affiliates, the transactions are generally executed as received, although a
Portfolio or advisory account that does not direct trades to a specific broker
("free trades") usually will have its order executed first. Purchases are
combined where possible for the purpose of negotiating brokerage commissions,
which in some cases might have a detrimental effect on the price or volume of
the security in a particular transaction as far as the Portfolio is concerned.
Orders placed by accounts that direct trades to a specific broker will generally
be executed after the free trades. All orders placed on behalf of the Portfolio
are considered free trades. However, having an order placed first in the market
does not necessarily guarantee the most favorable price.

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

The following tables present information as to the allocation of brokerage
commissions by the Portfolios of the Trust for the year ended August 31, 2000,
to Hoenig & Co, Inc. ("Hoenig"), which is an affiliated person of Axe-Houghton
Associates, Inc., and was considered an affiliated broker of the Trust during
that time period, and information as to the allocation of brokerage commissions
by the Portfolios for the years ended August 31, 1998 and August 31, 1999 to
Oppenheimer & Co., Inc. ("OpCap"), which was an affiliated person of OpCap
Advisers, and was considered an affiliated broker of the Trust during those time
periods.

Commissions Paid % of total % of Total Dollar
Portfolio Period To Hoenig* Commissions Paid Amount of Transactions

Large Capitalization Year Ended
Value 8/31/00 $700 0.01% 0%

</TABLE>

* Transactions with Hoenig & Co, Inc. were on an agency basis since
principal transactions between the Portfolio and an affiliated broker are
restricted by the 1940 Act.

Commissions Paid % of Total % of Total Dollar
Portfolio Period to OpCo Commissions Paid Amount of Transactions

Large Capitalization Year ended $1,045 2.2% 2.2%
Value 8/31/98

Year ended $1,210 1.1% 0.1%
8/31/99

</TABLE>

DETERMINATION OF NET ASSET VALUE

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

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

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

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

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

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

The Portfolio's use of the amortized cost method to value its portfolio
securities and the maintenance of the per share net asset value of $1.00 is
permitted pursuant to Rule 2a-7 of the 1940 Act (the "Rule"), and is conditioned
on its compliance with various conditions including: (a) the Trustees are
obligated, as a particular responsibility within the overall duty of care owed
to the Portfolio's shareholders, to establish procedures reasonably designed,
taking into account current market conditions and the Portfolios investment
objectives, to stabilize the net asset value per share as computed for the
purpose of distribution and redemption at $1.00 per share; (b) the procedures
include (i) calculation, at such intervals as the Trustees determine are
appropriate and as are reasonable in light of current market conditions, of the
deviation, if any, between net asset value per share using amortized cost to
value portfolio securities and net asset value per share based upon available
market quotations with respect to such portfolio securities; (ii) periodic
review by the Trustees of the amount of deviation as well as methods used to
calculate it; and (iii) maintenance of written records of the procedures, the
Trustees' considerations made pursuant to them and any actions taken upon such
considerations; (c) the Trustees should consider what steps should be taken, if
any, in the event of a difference of more than 1/2 of 1% between the two methods
of valuation; and (d) the Trustees should take such action as they deem
appropriate (such as shortening the average portfolio maturity, realizing gains
or losses or as provided by the Agreement and Declaration of Trust, reducing the
number of the outstanding shares of the Portfolio to eliminate or reduce to the
extent reasonably practicable material dilution or other unfair results to
investors or existing shareholders). Any reduction of outstanding shares will be
effected by having each shareholder proportionately contribute to the
Portfolio's capital the necessary shares that represent the amount of excess
upon such determination. Each shareholder will be deemed to have agreed to such
contribution in these circumstances by investment in the Portfolio.

The Rule further requires that the Portfolio limit its investments to U.S.
dollar-denominated instruments which the Trustees determine present minimal
credit risks and which are Eligible Securities (as defined below). The Rule also
requires the Portfolio to maintain a dollar-weighted average portfolio maturity
(not more than 90 days) appropriate to its objective of maintaining a stable net
asset value of $1.00 per share and precludes the purchase of any instrument with
remaining maturity of more than thirteen months. Should the disposition of a
Portfolio security result in a dollar-weighted average portfolio maturity of
more than 90 days, the Portfolio would be required to invest its available cash
in such a manner as to reduce such maturity to 90 days or less as soon as
reasonably practicable.

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

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

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

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

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

The Portfolio will manage its portfolio in an effort to maintain a constant
$1.00 per share price, but it cannot assure that the value of its shares will
never deviate from this price. Since dividends from net investment income are
declared and reinvested on a daily basis, the net asset value per share, under
ordinary circumstances, is likely to remain constant. Otherwise, realized and
unrealized gains and losses will not be distributed on a daily basis but will be
reflected in the Portfolio's net asset value. The amounts of such gains and
losses will be considered by the Trustees in determining the action to be taken
to maintain the Trust's $1.00 per share net asset value. Such action may include
distribution at any time of part or all of the then accumulated undistributed
net realized capital gains, or reduction or elimination of daily dividends by an
amount equal to part or all of the then accumulated net realized capital losses.
However, if realized losses should exceed the sum of net investment income plus
realized gains on any day, the net asset value per share on that day might
decline below $1.00 per share. In such circumstances, the Trust may eliminate
the payment of daily dividends for a period of time in an effort to restore the
Trust's $1.00 per share net asset value. A decline in prices of securities could
result in significant unrealized depreciation on a mark-to-market basis. Under
these circumstances the Portfolio may reduce or eliminate the payment of
dividends and utilize a net asset value per share as determined by using
available market quotations or reduce the number of its shares outstanding.

PORTFOLIO YIELD AND TOTAL RETURN INFORMATION

U.S. GOVERNMENT MONEY MARKET PORTFOLIO

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

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

OTHER PORTFOLIOS

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

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

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

YIELD = 2[(x + 1)6 - 1]
---------------
cd

------------------------------------------
Where:

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

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

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

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

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

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

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

AVERAGE ANNUAL TOTAL RETURN

The Trust may from time to time advertise the average annual total return
of a Portfolio. These figures are computed separately for Class I, Class B and
Class C shares. Average annual total return is computed by finding the average
annual computed rates of return over the 1, 5 and 10 year periods that would
equate the initial amount invested to the ending redeemable value according to
the following formula:

P (1+t)n = ERV

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

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

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

AGGREGATE TOTAL RETURN

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

ERV - P
-------
P

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

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

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

The average annual total return for Class I on an investment made in Class
I Shares of the Portfolios for the one- and five-year periods ended August 31,
2000 and for the period of inception (September 2, 1994) through August 31, 2000
are as follows:
<TABLE>
<S> <C> <C> <C>
..................................... ............................. ........................... ............................
Average Annual Total Average Annual Total
Average Annual Total Return for the five-year Return for period of
Return for the year ended period ended inception through
Name of Portfolio August 31, 2000 August 31, 2000 August 31, 2000
..................................... ............................. ........................... ............................
Large Capitalization Value -0.49% 13.65% 15.26%
..................................... ............................. ........................... ............................
Large Capitalization Growth 31.45% 24.03% 24.83%
..................................... ............................. ........................... ............................
Small Capitalization 29.41% 9.71% 12.34%
..................................... ............................. ........................... ............................
International Equity 20.72% 12.21% 8.83%
..................................... ............................. ........................... ............................
Investment Quality Bond 5.83% 4.94% 5.30%
..................................... ............................. ........................... ............................
Municipal Bond 6.08% 4.83% 4.81%
..................................... ............................. ........................... ............................

</TABLE>

The average annual total return for Class B on an investment made in Class
B Shares of the Portfolios for the one-year period ended August 31, 2000 and for
the period of inception (January 4, 1999) through August 31, 2000 are as
follows:

<TABLE>
<S> <C> <C>
..................................... .................................. .............................
Average Annual Total
Average Annual Total Return for period of
Return for the year ended inception through
Name of Portfolio August 31, 2000 August 31, 2000
..................................... .................................. .............................
Large Capitalization Value -1.33% 0.05%
..................................... .................................. .............................
Large Capitalization Growth 30.22% 23.00%
..................................... .................................. .............................
Small Capitalization 28.17% 21.47%
..................................... .................................. .............................
International Equity 19.71% 15.83%
..................................... .................................. .............................
Investment Quality Bond 4.88% 2.10%
..................................... .................................. .............................
Municipal Bond 5.14% 0.56%
..................................... .................................. .............................

</TABLE>

The average annual total return for Class C on an investment made in Class
C Shares of the Portfolios for the one-year period ended August 31, 2000 and for
the period of inception (January 4, 1999) through August 31, 2000 are as
follows:

<TABLE>
<S> <C> <C>
..................................... .................................. .............................
Average Annual Total
Average Annual Total Return for period of
Return for the year ended inception through
Name of Portfolio August 31, 2000 August 31, 2000
..................................... .................................. .............................
Large Capitalization Value -1.39% 0.13%
..................................... .................................. .............................
Large Capitalization Growth 30.30% 23.13%
..................................... .................................. .............................
Small Capitalization 28.22% 21.65%
..................................... .................................. .............................
International Equity 19.54% 15.79%
..................................... .................................. .............................
Investment Quality Bond 4.88% 2.17%
..................................... .................................. .............................
Municipal Bond 4.97% 0.39%
..................................... .................................. .............................

</TABLE>

YIELD FOR 30-DAY PERIOD
ENDED AUGUST 31, 2000

Portfolio
Investment Quality Bond Portfolio
Class I 6.10%
Class B 5.31%
Class C 5.30%

Municipal Bond Portfolio
Class I 4.47%
Class B 3.47%
Class C 3.38%

TAX EQUIVALENT YIELD FOR 30-DAY PERIOD

At Federal Income At Federal At Federal At Federal Income
30 Day Period Tax Income Tax Rate Income Tax Rate Tax
Portfolio Ended Rate of 28% of 31% of 36% Rate of 39%

Municipal
Bond-Class I 8/31/00 6.21% 6.48% 6.98% 7.33%

Municipal
Bond-Class B 8/31/00 4.82% 5.03% 5.43% 5.69%

Municipal
Bond-Class C 8/31/00 4.70% 4.90% 5.28% 5.54%
</TABLE>

YIELD FOR SEVEN-DAY PERIOD

<TABLE>
<S> <C> <C> <C>
.......................................... ....................... ...................... ..........................
Portfolio Period Ended Current Effective
.......................................... ....................... ...................... ..........................
U.S. Government Money Market
Portfolio-Class I August 31, 2000 5.49% 5.64%
.......................................... ....................... ...................... ..........................
U.S. Government Money Market
Portfolio-Class B August 31, 2000 4.66% 4.77%
.......................................... ....................... ...................... ..........................
U.S. Government Money Market
Portfolio-Class C August 31, 2000 4.66% 4.77%
.......................................... ....................... ...................... ..........................
</TABLE>

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

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

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

Saratoga Capital Management or Funds Distributor, Inc. (the "Distributor")
(which replaced Unified Management Corporation as the Trust's distributor
effective September 21, 1999) may provide information designed to help
individuals understand their investment goals and explore various financial
strategies such as general principles of investing, such as asset allocation,
diversification, risk tolerance, goal setting, and a questionnaire designed to
help create a personal financial profile.

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

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

In advertising materials, the Distributor may reference or discuss its
products and services, which may include: retirement investing; brokerage
products and services; the effects of dollar-cost averaging and saving for
college; and the risks of market timing. In addition, the Distributor may quote
financial or business publications and periodicals, including model Portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques.

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

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

Momentum indicators indicate the Portfolios' price movements over specific
periods of time. Each point on the momentum indicator represents the Portfolios'
percentage change in price movements over that period.

The Portfolios may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against a loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
during periods of low price levels.

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

CERTAIN TAX CONSIDERATIONS

GENERAL. The following discussion is only a summary of certain tax
considerations generally affecting the Trust, each Portfolio of the Trust, and
shareholders of Portfolios, and is not intended as a substitute for careful tax
planning. The discussion does not purport to deal with all of the Federal, state
and local tax consequences applicable to an investment in each Portfolio or to
all categories of investors, some of which may be subject to special rules.
Shareholders are urged to consult their tax advisors with specific reference to
their own tax situations.

Each Portfolio generally will make two basic types of distributions:
ordinary dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's income tax return and
they are also subject to different rates of tax (or, in the case of ordinary
dividends of the Municipal Bond Portfolio, may be 'exempt-interest dividends
generally exempt from Federal income tax). The tax treatment of the investment
activities of each Portfolio will affect the amount and timing and character of
the distributions made by such Portfolio. Shareholders are urged to consult
their own tax professionals regarding specific questions as to federal, state or
local taxes.

INVESTMENT COMPANY TAXATION. Each Portfolio intends to remain qualified as
a 'regulated investment company' under Subchapter M of the Internal Revenue Code
of 1986. As such, a Portfolio will not be subject to federal income tax on its
net investment income and capital gains, if any, to the extent that it
distributes such income and capital gains to its shareholders.

Each Portfolio in the Trust generally intends to distribute sufficient
income and gains so that the Fund will not pay corporate income tax on its
earnings. Each Portfolio also generally intends to distribute to its
shareholders in each calendar year a sufficient amount of ordinary income and
capital gains to avoid the imposition of a 4% excise tax. If a Portfolio retains
all or part of any net long-term capital gains in any year for reinvestment, the
Portfolio will pay federal income tax (and possibly excise tax) on such retained
gains.

Gains or losses on sales of securities by a Portfolio will be long-term
capital gains or losses if the securities have a tax holding period of more than
one year. Gains or losses on the sale of securities with a tax holding period of
one year or less will be short-term gains or losses.

As a general rule, a Portfolio's transactions in futures contracts and
options will increase or decrease the amount of long-term and short-term capital
gains or losses realized by the Portfolio and, accordingly, will affect the
amount of capital gains distributed to the Portfolio's shareholders. Gains or
losses on a Portfolio's transactions in regulated futures contracts, options on
broad-based stock indices, options on stock index futures, certain other futures
contracts and options thereon generally are treated as 60% long-term capital
gain or loss and 40% short-term capital gain or loss. When a Portfolio engages
in options and futures transactions, various tax rules may accelerate or defer
recognition of certain gains and losses, change the character of certain gains
or losses, or alter the holding period of other investments held by the Fund.
The application of these rules would therefore also affect the amount, timing
and character of distributions made by the Portfolio.

A Portfolio's foreign currency gains or losses from forward contracts,
futures contracts that are not 'regulated futures contracts', and unlisted
options, and certain other foreign currency gains or losses derived with respect
to fixed-income securities, are treated as ordinary income or loss. In general,
such foreign currency gains or losses will increase or decrease the amount of
the Portfolio's income available to be distributed to shareholders as ordinary
income, rather than increasing or decreasing the amount of the Portfolio's net
capital gain. Additionally, if such foreign currency losses exceed other
ordinary income during a taxable year, a Portfolio would not be able to make
ordinary income distributions for the year.

Under certain tax rules, a Portfolio may be required to include an amount
in income with respect to a security even though the Portfolio does not receive
payments in cash attributable to such income in respect of the security during
the year. For example, a Portfolio may be required to accrue a portion of any
discount at which it purchases a debt security as income in each year. In
addition, if the Portfolio invests in an equity security of a non-U.S.
corporation classified as a 'passive foreign investment company' for U.S. tax
purposes, the application of certain technical tax provisions applying to
investments in such companies may result in the Portfolio being required to
accrue income in respect of the security without any receipt of cash
attributable to such income. To the extent that a Portfolio invests in any
securities producing such 'phantom income', the Portfolio will nonetheless be
required to make income distributions of such phantom income in order to avoid
taxation of such income at the Portfolio level. Such distributions will be
required to be made from available cash of the Portfolio or by liquidation or
Portfolio securities if necessary. If a distribution of cash necessitates the
liquidation of Portfolio securities, the Portfolio may realize a gain or loss
from such sales. Any net capital gains realized from such transactions may
result in larger capital gain distributions (if any) to shareholders than they
would have received in the absence of such transactions.

THE MUNICIPAL BOND PORTFOLIO

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

Each shareholder of the Municipal Bond Portfolio will receive after the
close of the calendar year an annual statement as to the Federal income tax
status of his or her dividends and distributions from the Portfolio for the
prior calendar year. These statements also will designate the amount of
exempt-interest dividends that is a specified preference in term for purposes of
the Federal individual and corporate alternative minimum taxes. Each shareholder
of the Municipal Bond Portfolio will also receive a report of the percentage and
source on a state-by-state basis of interest income on municipal obligations
received by the Portfolio during the preceding year. Shareholders should consult
their tax advisers as to any other state and local taxes that may apply to these
dividends and distributions. In the event that the Municipal Bond Portfolio
derives taxable net investment income, it intends to designate as taxable
dividends the same percentage of each day's dividend as its actual taxable net
investment income bears to its total taxable net investment income earned on
that day. Therefore, the percentage of each day's dividend designated as
taxable, if any, may vary from day to day.

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

Individuals are often exempt from state and local personal income taxes on
distributions of tax-exempt interest income derived from obligations of issuers
located in the state in which they reside when these distributions are received
directly from these issuers, but are usually subject to such taxes on income
derived from obligations of issuers located in other jurisdictions. The
discussion does not purport to deal with all of the Federal, state and local tax
consequences applicable to an investment in the Municipal Bond Portfolio, or to
all categories of investors, some of which may be subject to special rules.
Shareholders are urged to consult their tax advisers with specific reference to
their own tax situations.

ALL PORTFOLIOS

TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have to
pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from any Portfolio in the Trust
(other than 'exempt-interest dividends' received from the Municipal Bond
Portfolio). Any dividends and distributions, to the extent that they are derived
from net investment income or short-term capital gains, are taxable to the
shareholder as ordinary income regardless of whether the shareholder receives
such payments in additional shares or in cash.

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

At August 31, 2000, 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:

Name of Portfolio Total 2005 2006 2007 2008

U.S. Government Money Market $2,533 $32 $187 $2,090 $224
Municipal Bond $61,929 $0 $0 $0 $61,929
Investment Quality Bond $57,972 $0 $0 $0 $57,972

</TABLE>

Any dividend or capital gains distribution received by a shareholder from
any regulated investment company will have the effect of reducing the net asset
value of the shareholder's stock in that company by the exact amount of the
dividend or capital gains distribution. Furthermore, such dividends and capital
gains distributions are subject to federal income taxes. If the net asset value
of the shares should be reduced below a shareholder's cost as a result of the
payment of dividends or the distribution of realized long-term capital gains,
such payment or distribution would represent economically in part a return of
the shareholder's investment but nonetheless would be taxable to the
shareholder. Therefore, an investor should consider the tax implications of
purchasing Portfolio shares immediately prior to a distribution record date.

Subject to certain exceptions, a domestic corporate shareholder may be
eligible for a 70% dividends received deduction to the extent that each
Portfolio earns and distributes qualifying dividends from its investments.
Distributions of net capital gains by a Portfolio will not be eligible for the
dividends received deduction.

Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax on
distributions made by a Portfolio.

REDEMPTIONS AND EXCHANGES. In general, a sale of shares results in capital
gain or loss and, for individual shareholders, is taxable at a federal rate
dependent upon the length of time the shares were held. A redemption of a
shareholder's Portfolio shares is normally treated as a sale for tax purposes.
Portfolio shares held for a period of one year or less will, for tax purposes,
generally result in short-term gains or losses and those held for more than one
year generally result in long-term gain or loss. Under current law, the maximum
tax rate on long-term capital gains is 20%. Any loss realized by shareholders
upon a redemption of shares within six months of the date of their purchase will
be treated as a long-term capital loss to the extent of any distributions of net
long-term capital gains with respect to such shares during the six-month period.

Exchange of a Portfolio's shares for shares of another fund, including
shares of other Portfolios in the Saratoga Advantage Trust, are also subject to
similar tax treatment. Such an exchange is treated for tax purposes as a sale of
the original shares in the first fund, followed by the purchase of shares in the
second fund.

If a shareholder realizes a loss on the redemption or exchange of a
Portfolio's shares and reinvests in that Portfolio's shares within 30 days
before or after the redemption or exchange, the transactions may be subject to
the 'wash sale' rules, resulting in a postponement of the recognition of such
loss for tax purposes.

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

ADDITIONAL INFORMATION

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

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

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

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

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

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

INDEPENDENT AUDITORS. Ernst & Young, LLP, 787 Seventh Avenue, New York, New
York 10019 serves as the independent auditors of the Trust and of each
Portfolio. Their services include auditing the annual financial statements and
financial highlights of each Portfolio as well as other related services.

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

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

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

RETIREMENT PLANS. The Distributor may print advertisements and brochures
concerning retirement plans, lump sum distributions and 401-k plans. These
materials may include descriptions of tax rules, strategies for reducing risk
and descriptions of 401-k programs. From time to time hypothetical investment
programs illustrating various tax-deferred investment strategies will be used in
brochures, sales literature, and omitting prospectuses. The following examples
illustrate the general approaches that will be followed. These hypotheticals
will be modified with different investment amounts, reflecting the amounts that
can be invested in different types of retirement programs, different assumed tax
rates, and assumed rates of return. They should not be viewed as indicative of
past or future performance of any of the Distributor's products.

REDEMPTION IN KIND. If the Board of Trustees determines that it would be
detrimental to the best interests of a Portfolio's shareholders to make a
redemption payment wholly in cash, the Portfolio may pay, in accordance with
rules adopted by the SEC, any portion of a redemption in excess of the lesser of
$250,000 or 1% of the Portfolio's net assets by a distribution in kind of
readily marketable portfolio securities in lieu of cash. Redemptions failing to
meet this threshold must be made in cash. Shareholders receiving distributions
in kind of portfolio securities may incur brokerage commissions when
subsequently disposing of those securities.

EXAMPLES

Benefits of Long Term Tax-Free Compounding - Single Sum

Amount of Contribution: $100,000
Rates of Return

Years
8.00% 10.00% 12.00%
Value at end
5 $ 146,933 $ 161,051 $ 176,234
10 $ 215,892 $ 259,374 $ 310,585
15 $ 317,217 $ 417,725 $ 547,357
20 $ 466,096 $ 672,750 $ 964,629
25 $ 684,848 $ 1,083,471 $ 1,700,006
30 $ 1,006,266 $ 1,744,940 $ 2,995,992

Benefits of Long Term Tax-Free Compounding - Periodic Investment

Amount Invested Annually: $2,000
Rates of Return

Years
8.00% 10.00% 12.00%
Value at End
5 $ 12,672 $ 13,431 $ 14,230
10 $ 31,291 $ 35,062 $ 39,309
15 $ 58,649 $ 69,899 $ 83,507
20 $ 98,846 $126,005 $161,397
25 $157,909 $216,364 $298,668
30 $244,692 $361,887 $540,585

Comparison of Taxable and Tax-Free Investing - Periodic Investments
(Assumed Tax Rate: 28%)

Amount of Annual Contribution (Pre-Tax): $2,000

Tax Deferred Rates of Return
Years
8.00% 10.00% 12.00%
Value at End
5 $ 12,672 $ 13,431 $ 14,230
10 $ 31,291 $ 35,062 $ 39,309
15 $ 58,649 $ 69,899 $ 83,507
20 $ 98,846 $126,005 $161,397
25 $157,909 $216,364 $298,668
30 $244,692 $361,887 $540,585

Annual Contribution (After Tax): $1,440
Fully Taxed Rates of Return

Years
5.76% 7.20% 8.64%
Value at End
5 $ 8,544 $ 8,913 $ 9,296
10 $ 19,849 $ 21,531 $ 23,364
15 $ 34,807 $ 39,394 $ 44,654
20 $ 54,598 $ 64,683 $ 76,874
25 $ 80,785 $100,485 $125,635
30 $115,435 $151,171 $199,429

Comparison of Tax Deferred Investing -- Deducting Taxes at End
(Assumed Tax Rate at End: 28%)

Amount of Annual Contribution: $2,000
Tax Deferred Rates of Return

Years
8.00% 10.00% 12.00%
Value at end
5 $ 11,924 $ 12,470 $ 13,046
10 $ 28,130 $ 30,485 $ 33,903
15 $ 50,627 $ 58,728 $ 68,525
20 $ 82,369 $101,924 $127,406
25 $127,694 $169,782 $229,041
30 $192,978 $277,359 $406,021

FINANCIAL STATEMENTS

The financial statements and independent auditor's report required to be
included in this Statement of Additional Information are incorporated herein by
reference to the Trust's Annual Report to Shareholders for the year ended August
31, 2000. The Trust will provide the Annual Report without charge upon request
by calling the Trust at 1-800-807-FUND (1-800-807-3863).

APPENDIX A -- RATINGS

DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:

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

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

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

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

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

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

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

DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS

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

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

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

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

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

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

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

DESCRIPTION OF S&P CORPORATE BOND RATINGS

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

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

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

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

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

DESCRIPTION OF S&P'S MUNICIPAL BOND RATINGS

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

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

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

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

BB. Debt rated BB has less near-term vulnerability to default than other
speculative grade debt, however, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payment.

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

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

DESCRIPTION OF FITCH'S MUNICIPAL BOND RATINGS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DESCRIPTION OF COMMERCIAL PAPER RATINGS

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

Issuers (or related supporting institutions) rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

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

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

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

Part C
Other Information

Item 23. Exhibits.

(a) (1) Agreement and Declaration of Trust.*

(2) Amendment No. 1 to the Agreement and Declaration of Trust.*

(b) By-laws of Registrant.*

(d) (1) Form of Management Agreement.**

(2)(a) Form of Investment Advisory Agreement between Saratoga Capital
Management and Sterling Capital Management Company with respect
to the U.S. Government Money Market Portfolio.**

(2)(b) Amendment to the Investment Advisory Agreement. *****

(3)(a) Form of Investment Advisory Agreement between Saratoga Capital
Management and Fox Asset Management, Inc. with respect to the
Investment Quality Bond Portfolio. **

(3)(b) Amendment to the Investment Advisory Agreement. *****

(4) Form of Investment Advisory Agreement between Saratoga Capital
Management and OpCap Advisors with respect to the Municipal Bond
Portfolio. **

(5) Form of Investment Advisory Agreement between Saratoga Capital
Management and OpCap Advisors with respect to the Large
Capitalization Value Portfolio. **

(6) Form of Investment Advisory Agreement between Saratoga Capital
Management and Harris Bretall Sullivan & Smith, L.L.C. with
respect to the Large Capitalization Growth Portfolio. **

(7) Form of Investment Advisory Agreement between Saratoga Capital
Management and Fox Asset Management, Inc. with respect to the
Small Capitalization Portfolio is filed herewith.

(8) Form of Investment Advisory Agreement between Saratoga Capital
Management and Ivory & Sime International, Inc. with respect to
the International Equity Portfolio. **

(9) Form of Sub-Investment Advisory Agreement between Ivory & Sime
International, Inc. and Ivory & Sime plc with respect to the
International Equity Portfolio. **

(e) (1) General Distributor's Agreement. *****

(2) Soliciting Dealer Agreement. *****

(f) Not Applicable.

(g) Custodian Contract.*

(h) Administration Agreement. *****

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

(j) Consent of Ernst & Young LLP is filed herewith.

(k) Not Applicable.

(l) Agreement relating to initial capital.*

(m) (1) Distribution plan relating to Class B shares. ****

(2) Distribution plan relating to Class C shares. ****

(n) Rule 18f-3 Plan. ****

(p) (1) Code of Ethics of Registrant and Saratoga Capital Management is
filed herewith.

(2) Code of Ethics of Sterling Capital Management Company is filed
herewith.

(3) Code of Ethics of Fox Asset Management, Inc. is filed herewith.

(4) Code of Ethics of OpCap Advisors is filed herewith.

(5) Code of Ethics of Harris Bretall Sullivan & Smith, L.L.C. is
filed herewith.

(6) Code of Ethics of Ivory & Sime, Inc. is filed herewith.

(7) Code of Ethics of Funds Distributor, Inc. is filed herewith.

Other Exhibits:

Powers of Attorney. ***

* Filed with Post-effective Amendment No. 1 on May 5, 1995 to the
Registrant's Registration Statement, and hereby incorporated by
reference.

** Filed with Post-effective Amendment No. 4 on March 7, 1997 to the
Registrant's Registration Statement, and hereby incorporated by
reference.

*** Filed with Post-effective Amendment No. 5 on November 3, 1997 to the
Registrant's Registration Statement, and hereby incorporated by
reference.

**** Filed with Post-effective Amendment No. 6 on November 3, 1998 to the
Registrant's Registration Statement, and hereby incorporated by
reference.

***** Filed with Post-effective Amendment No. 8 on December 30, 1999 to the
Registrant's Registration Statement, and hereby incorporated by
reference.

Item 24. Persons Controlled by or Under Common Control with Registrant.

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

Item 25. Indemnification.

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

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

Item 26. Business and Other Connections of Investment Advisers.

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

Item 27. Principal Underwriters.

(a) Funds Distributor, Inc. ('Funds Distributor') acts as principal
underwriter for the following investment companies.

American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
CDC MPT+ Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.
Dresdner RCM Investment Funds Inc.
GMO Trust
J. P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Merrimac Series
Monetta Fund, Inc.
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Nomura Pacific Basin Fund, Inc.
Orbitex Group of Funds
The Saratoga Advantage Trust
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
St. Clair Funds, Inc.
The Skyline Funds
TD Waterhouse Trust
TD Waterhouse Family of Funds, Inc.

Funds Distributor is registered with the Securities and Exchange Commission
as a broker-dealer and is a member of the National Association of Securities
Dealers. Funds Distributor is located at 60 State Street, Suite 1300, Boston,
Massachusetts 02109. Funds Distributor is an indirect wholly-owned subsidiary of
Boston Institutional Group, Inc., a holding company all of whose outstanding
shares are owned by key employees.

(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
<TABLE>
<S> <C> <C>
Position and Offices Position and Offices
With Funds Distributor Name with Registrant

Director, President and Chief Executive Officer Marie E. Connolly None
Director and Executive Vice President George A. Rio None
Executive Vice President and Chief Administrative Gary S. MacDonald None
Officer
Executive Vice President William S. Nichols None
Executive Vice President C. Wesley Carr None
Executive Vice President, General Counsel, Chief Margaret W. Chambers None
Compliance Officer, Secretary and Clerk
Senior Vice President and Treasurer Joseph F. Tower, III None
Senior Vice President and Chief Financial Officer William J. Stetter None
Senior Vice President and Deputy General Counsel Christopher J. Kelley Assistant Secretary
Senior Vice President Mary A. Nelson Assistant Treasurer
Senior Vice President Eric A. Liik None
Chairman and Director William J. Nutt None
</TABLE>

Item 28. Location of Accounts and Records.

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

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

OpCap Advisors
1345 Avenue of the Americas
New York, NY 10105

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

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

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

Large Capitalization Harris Bretall Sullivan & Smith, L.L.C.
Growth Portfolio One Sansome Street
Suite 3300
San Francisco, CA 94104

U.S. Government Sterling Capital Management Company
Money Market Portfolio One First Union Center
301 S. College Street
Suite 3200
Charlotte, NC 28202

International Equity Friends Ivory & Sime plc
Portfolio 100 Wood Street
London, England EC2V 7AN

Item 29. Management Services.

Not Applicable.

Item 30. Undertakings.

Not Applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in the
City of Mineola, and State of New York, on the 22nd day of December, 2000.

THE SARATOGA ADVANTAGE TRUST

By: /s/ Bruce E. Ventimiglia
Bruce E. Ventimiglia
President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

Signature Title Date

/s/ Bruce E. Ventimiglia Trustee, Chairman of the Board December 22, 2000
Bruce E. Ventimiglia and President
(principal executive officer)

/s/ William P. Marra Treasurer December 22, 2000
William P. Marra (principal financial officer and
principal accounting officer)

Patrick H. McCollough* Trustee December 22, 2000

Udo W. Koopmann* Trustee December 22, 2000

Floyd E. Seal* Trustee December 22, 2000

*By: /s/ Stuart M. Strauss, Esq.
Stuart M. Strauss
Attorney-in-Fact pursuant to a power of attorney

EXHIBIT INDEX

Exhibit Description

d(7) Form of Investment Advisory Agreement between Saratoga Capital
Management and Fox Asset Management, Inc.

j Consent of Ernst & Young LLP

p(1) Code of Ethics of Registrant and Saratoga Capital Management

p(2) Code of Ethics of Sterling Capital Management Company

p(3) Code of Ethics of Fox Asset Management, Inc.

p(4) Code of Ethics of OpCap Advisors

p(5) Code of Ethics of Harris Bretall Sullivan & Smith, L.L.C.

p(6) Code of Ethics of Friends Ivory & Sime, Inc.

p(7) Code of Ethics of Funds Distributor, Inc.