<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 22, 1994
PROSPECTUS
CAMBRIDGE GLOBAL PORTFOLIO
(A PORTFOLIO OF CAMBRIDGE SERIES TRUST)
Cambridge Global Portfolio (the Portfolio) is a diversified, open-end
management investment company, organized as a new portfolio of Cambridge Series
Trust (the Trust). The investment objective of Cambridge Global Portfolio is
long-term growth of capital through a diversified portfolio of marketable
securities, primarily equity securities, including common stocks, preferred
stocks and debt securities convertible into common stocks. The Portfolio invests
on a worldwide basis in equity securities of companies which are incorporated in
the United States or in foreign countries. It also may invest in the debt
securities of U.S. and foreign issuers. Income is an incidental consideration.
Scudder, Stevens & Clark, Inc. is the Portfolio's sub-adviser (the Sub-Adviser
or Scudder).
There can be no assurance that the Portfolio will achieve its investment
objective.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before
you invest in the Portfolio. Keep this prospectus for future reference.
The Trust has also filed a combined Statement of Additional Information the
Trust, dated , 1994, with the Securities and Exchange Commission. The
information contained in the combined Statement of Additional Information is
incorporated by reference in this prospectus. You may request a copy of the
combined Statement of Additional Information free of charge, obtain other
information, or make inquiries about the Trust by writing the Trust or by
calling 1-800-382-0016.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED , 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF PORTFOLIO EXPENSES................................................................................ 1
CAMBRIDGE FAMILY OF FUNDS.................................................................................... 2
INVESTMENT INFORMATION....................................................................................... 2
Investment Objective and Policies.......................................................................... 2
Investment Practices....................................................................................... 4
NET ASSET VALUE.............................................................................................. 7
HOW TO BUY SHARES............................................................................................ 7
Minimum Investment Required................................................................................ 8
What Shares Cost........................................................................................... 8
When Net Asset Value is Determined......................................................................... 9
Purchases at Net Asset Value............................................................................... 9
Reducing the Sales Charge for Class A Shares............................................................... 9
Systematic Investment Program.............................................................................. 11
Certificates and Confirmations............................................................................. 11
Dividends.................................................................................................. 11
Capital Gains.............................................................................................. 11
Retirement Plans........................................................................................... 11
EXCHANGE PRIVILEGE........................................................................................... 11
REDEEMING SHARES............................................................................................. 12
Contingent Deferred Sales Charge........................................................................... 13
Through a Financial Institution............................................................................ 14
Directly from the Portfolio................................................................................ 14
Redemptions Before Purchase Instruments Clear.............................................................. 15
Systematic Withdrawal Program.............................................................................. 15
Accounts with Low Balances................................................................................. 15
CAMBRIDGE SERIES TRUST INFORMATION........................................................................... 16
INVESTMENT MANAGEMENT OF THE TRUST........................................................................... 16
Investment Adviser......................................................................................... 16
Sub-Adviser................................................................................................ 17
Sub-Adviser's Profile...................................................................................... 17
Distribution of Portfolio Shares........................................................................... 17
Administration of the Trust................................................................................ 18
Brokerage Transactions..................................................................................... 18
Shareholder Servicing Plan................................................................................. 19
Expenses of the Portfolios and the Class A and Class B Shares.............................................. 19
SHAREHOLDER INFORMATION...................................................................................... 20
Voting Rights.............................................................................................. 20
Massachusetts Partnership Law.............................................................................. 20
TAX INFORMATION.............................................................................................. 21
PERFORMANCE INFORMATION...................................................................................... 21
</TABLE>
i
<PAGE>
SUMMARY OF PORTFOLIO EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS CLASS
A B
SHARES SHARES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)................................................................... 5.50% None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price).......................................................... None None
Maximum Deferred Sales Load (as a percentage of original purchase price or
redemption proceeds, as applicable)...................................... 1.00%(1) 1.00%(1)
Exchange Fee............................................................... None None
</TABLE>
ANNUAL PORTFOLIO OPERATING EXPENSES*
(As a percentage of average net assets)
<TABLE>
<S> <C>
CLASS A SHARES
Investment Advisory Fee............................................................................ 1.10%(2)
12b-1 Fees......................................................................................... None
Total Other Expenses (after waiver)(3)............................................................. 0.89
Shareholder Service Plan Fees.................................................................... 0.25
Total Portfolio Operating Expenses(4)............................................................ 2.24
CLASS B SHARES
Investment Advisory Fee............................................................................ 1.10%(2)
12b-1 Fees......................................................................................... 0.75
Total Other Expenses (after waiver)(3)............................................................. 0.89
Shareholder Service Plan Fees.................................................................... 0.25
Total Portfolio Operating Expenses(4)............................................................ 2.99
</TABLE>
(1) On Class A shares a contingent deferred sales charge (CDSC) is applicable
only if (1) shares are purchased during certain eligible periods with
proceeds from the redemption or sale of shares of other investment companies
at net asset value (NAV) and redeemed within four years, or (2) shares over
$1 million are purchased at NAV and redeemed within one year. On Class B
shares a CDSC is applicable only if shares purchased are redeemed within one
year of original purchase.
(2) The investment advisory fee is 1.10% on the first $75 million in Portfolio
assets and 1.00% on Portfolio assets in excess of $75 million.
(3) The estimated total other expenses have been reduced to reflect the
anticipated voluntary waiver of certain Portfolio expenses by the
administrator. The administrator can terminate this voluntary waiver at any
time in its sole discretion. Total other expenses are estimated based on
average expenses expected to be incurred during the period ending September
30, 1994. During the course of this period, expenses may be more or less
than the average amount shown.
(4) The total Portfolio operating expenses, absent the voluntary waiver of
administrative fees and the voluntary waivers of certain other operating
expenses, are estimated to be 3.33% for Class A shares and 4.09% for Class B
shares.
* Expenses in this table are estimated based on average expenses expected to be
incurred during the period ending September 30, 1994. During the course of
this period, expenses may be more or less than the average amount shown.
1
<PAGE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF A PORTFOLIO WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE HOW TO BUY SHARES, INVESTMENT MANAGEMENT OF THE TRUST, AND
CAMBRIDGE SERIES TRUST INFORMATION.
Long-term Class B shareholders may pay more than the economic equivalent of
the maximum front-end sales charges permitted under the rules of the National
Association of Securities Dealers, Inc.
EXAMPLE
<TABLE>
<CAPTION>
1 3
YEAR YEARS
<S> <C> <C>
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period:
CLASS A SHARES............................................................. $23 $68
CLASS B SHARES............................................................. 42 99
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
CAMBRIDGE FAMILY OF FUNDS
The Portfolios of the Trust (consisting of the Portfolio, Cambridge Growth
Portfolio, Cambridge Capital Growth Portfolio, Cambridge Government Income
Portfolio, Cambridge Municipal Income Portfolio, and Cambridge Income and Growth
Portfolio), together with the Government Securities Portfolio of the Cash
Equivalent Fund which is advised by Kemper Financial Services, Inc., comprise
the Cambridge Family of Funds.
The Trust is managed by Cambridge Investment Advisors, Inc. which in turn
has entered into sub-advisory agreements for each of the Portfolios. Kemper
Financial Services, Inc. serves as the sub-adviser for Cambridge Growth
Portfolio; Phoenix Investment Counsel, Inc. serves as the sub-adviser for
Cambridge Capital Growth Portfolio; Pacific Investment Management Company serves
as the interim sub-adviser for Cambridge Government Income Portfolio; Van Kampen
Merritt Management Inc. serves as the sub-adviser for Cambridge Municipal
Portfolio; and Wellington Management Company serves as the sub-adviser for
Cambridge Income and Growth Portfolio. Scudder, Stevens and Clark, Inc. will
serve as the sub-adviser to the new Global Portfolio. Such sub-advisers have
over 255 years of investment experience and currently manage or supervise in
excess of $300 billion on behalf of over 11 million shareholder or client
accounts. The Cambridge Family of Funds provides flexibility and diversification
for an investor's investment planning needs. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give an investor access to as many as nine investment vehicles.
The Cambridge Family of Funds may be utilized in connection with advisory
accounts of investment advisers registered under the Investment Advisers Act of
1940.
Information on the Cambridge Family of Funds may be obtained by calling
1-800-382-0016.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE AND POLICIES
Set forth below is a description of the investment objective and policies
of the Portfolio. The investment objective of the Portfolio, along with those
investment policies which are identified as being fundamental, may not be
changed without the affirmative vote of a majority of the Portfolio's
outstanding voting securities. All
2
<PAGE>
other investment policies of the Portfolio may be changed by the Board of
Trustees of the Trust without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective. There
can be no assurance that any Portfolio will achieve its investment objective.
For additional information concerning investment techniques utilized by the
Portfolio, see Investment Practices.
INVESTMENT OBJECTIVE. The investment objective of the Portfolio is to seek
long-term growth of capital through a diversified portfolio of marketable
securities, primarily equity securities, including common stocks, preferred
stocks and debt securities convertible into common stocks, and warrants. The
Portfolio invests on a worldwide basis in equity securities of companies which
are incorporated in the United States or in foreign countries. It also may
invest in the debt securities of U.S. and foreign issuers. Income is an
incidental consideration.
INVESTMENT POLICIES. The Portfolio will invest in companies the Sub-Adviser
believes will benefit from global economic trends, promising technologies or
products and specific country opportunities resulting from changing
geopolitical, currency, or economic relationships. It is expected that
investments will be spread broadly around the world. The Portfolio will be
invested usually in securities of at least three countries, one of which may be
the United States. The Portfolio may be invested 100% in non-U.S. issues, and
for temporary defensive purposes may be invested 100% in U.S. issues, although
under normal circumstances it is expected that both foreign and U.S. investments
will be represented in the Portfolio. It is expected that investments will
include companies of varying size as measured by assets, sales, or
capitalization.
The Portfolio is designed for investors seeking worldwide equity
opportunities, in developed, newly industrialized and developing countries (some
of these developing countries are located in Latin America and Africa). The
management of the Portfolio believes that there is substantial opportunity for
long-term capital growth from a professionally managed portfolio of securities
selected from the U.S. and foreign equity markets. The Portfolio affords the
investor access to opportunities wherever they arise, without being constrained
by the location of a company's headquarters or the trading market for its
shares. Because the Portfolio invests globally, it provides the potential to
augment returns available from the U.S. stock market. In addition, since U.S.
and foreign markets do not always move in step with each other, a global
portfolio will be more diversified than one invested solely in U.S. securities.
Investing directly in foreign securities is impractical for many investors
due to the difficulty of arranging for purchases and sales, obtaining current
information, holding securities in safekeeping and converting the value of their
investments from foreign currencies into dollars. The Portfolio manages these
problems for the investor. With an investment in the Portfolio, however, the
investor has a diversified worldwide investment portfolio which is managed
actively by experienced professionals.
The Portfolio generally will invest in equity securities of established
companies listed on U.S. or foreign securities exchanges, but also may invest in
securities traded over-the-counter. It also may invest in debt securities
convertible into common stock, and convertible and non-convertible preferred
stock, and fixed income securities of governments, government agencies,
supranational agencies and companies when the Sub-Adviser believes the potential
for appreciation will equal or exceed that available from investments in equity
securities. These debt and fixed income securities will be predominantly
investment-grade securities, that is, those rated Aaa, Aa, A or Baa by Moody's
Investors Service, Inc. (Moody's ) or AAA, AA, A or BBB by Standard & Poor's
Corporation (S&P) or those of equivalent quality as determined by the
Sub-Adviser, Scudder, Stevens & Clark, Inc. The Portfolio may not invest more
than 5% of its total assets in debt securities rated Baa or below by Moody's, or
BBB or below by S&P or deemed by the Sub-Adviser to be of comparable quality.
The Portfolio may invest in zero coupon securities which pay no cash income
and are sold at substantial discounts from their value at maturity. When held to
maturity, their entire income, which consists of accretion of discount, comes
from the difference between the issue price and their value at maturity. Zero
coupon securities
3
<PAGE>
are subject to greater market value fluctuations from changing interest rates
than debt obligations of comparable maturities which make current cash
distributions of interest. Fixed income securities also may be held for
temporary defensive purposes when the Sub-Adviser believes market conditions so
warrant and for temporary investment. Similarly, the Portfolio may invest in
cash equivalents (including foreign money market instruments, such as bankers'
acceptances, certificates of deposit, commercial paper, short-term government
and corporate obligations and repurchase agreements) for temporary defensive
purposes and for liquidity. The Portfolio may invest in closed-end investment
companies holding foreign securities.
RISK FACTORS. The Portfolio is designed for long-term investors who can
accept international investment risk. Since the Portfolio normally will be
invested in both U.S. and foreign securities markets, changes in the Portfolio's
share price may have a low correlation with movements in the U.S. markets. The
Portfolio's share price will reflect the movements of both the different stock
and bond markets in which it is invested and the currencies in which the
investments are denominated; the strength or weakness of the U.S. dollar against
foreign currencies may account for part of the Portfolio's investment
performance. Because of the Portfolio's global investment policies and the
investment considerations discussed above, investment in shares of the Portfolio
should not be considered a complete investment program. See Investment Practices
-- Foreign Securities below.
The Portfolio will invest no more than 5% of its total assets in debt
securities rated BBB or Baa or below or in unrated securities. Securities rated
B and below are commonly referred to as junk bonds. The lower the quality of
such debt securities, the greater their risks render them like equity
securities. The Portfolio may invest in securities which are rated as low as C
by Moody's or D by Standard & Poor's at the time of purchase. Securities rated D
may be in default with respect to payment of principal or interest.
INVESTMENT PRACTICES
The Portfolio may engage in one or more of the following investment
practices or may purchase one or more of the following investments.
DOLLAR ROLL TRANSACTIONS. In order to enhance portfolio returns and manage
prepayment risks, the Portfolio may engage in dollar roll transactions with
respect to mortgage-related securities issued by GNMA, FNMA, and FHLMC. In a
dollar roll transaction, the Portfolio sells a mortgage-related security to a
financial institution, such as a bank or broker/dealer, and simultaneously
agrees to repurchase a substantially similar (i.e., same type, coupon, and
maturity) security from the institution at a later date at an agreed upon price.
The mortgage-related securities that are repurchased will bear the same interest
rate as those sold, but generally will be collateralized by different pools of
mortgages with different prepayment histories. During the period between the
sale and repurchase, the Portfolio will not be entitled to receive interest and
principal payments on the securities sold. Proceeds of the sale will be invested
in short-term instruments, and the income from these investments, together with
any additional fee income received on the sale, will generate income for the
Portfolio exceeding the yield. When the Portfolio enters into a dollar roll
transaction, liquid assets of the Portfolio, in a dollar amount sufficient to
make payment for the obligations to be repurchased, are segregated at the trade
date. These securities are marked to market daily and are maintained until the
transaction is settled.
REPURCHASE AGREEMENTS. The Portfolio may engage in repurchase agreements.
Repurchase agreements are arrangements in which banks, broker/dealers, and other
recognized financial institutions sell U.S. government securities or other
securities to the Portfolio and agree at the time of sale to repurchase them at
a mutually agreed upon time and price. To the extent that the original seller
does not repurchase the securities from the Portfolio, the Portfolio could
receive less than the repurchase price on any sale of such securities.
PUT AND CALL OPTIONS. The Portfolio may purchase exchange-listed and
over-the-counter put and call options on its portfolio securities. Put and call
options will be used as a hedge to attempt to protect securities which the
Portfolio holds, or will be purchasing, against decreases or increases in value.
The Portfolio may also
4
<PAGE>
write (sell) put and call options on all or any portion of its portfolio to
generate income or enhance potential gain. The Portfolio will write call options
on securities either held in its portfolio or for which it has the right to
obtain without payment of further consideration or for which it has segregated
cash in the amount of any additional consideration. In the case of put options
written by the Portfolio, the Trust's custodian will segregate cash, U.S.
Treasury obligations, or highly liquid debt securities with a value equal to or
greater than the exercise price of the underlying securities.
The Portfolio also may purchase and write call and put options on
securities indices and other financial indices and on currencies.
The Portfolio may generally purchase and write over-the-counter options on
portfolio securities in negotiated transactions with the buyers or writers of
the options since options on the portfolio securities held by the Portfolio are
not traded on an exchange. The Portfolio purchases and writes options only with
investment dealers and other financial institutions (such as commercial banks or
savings and loan associations) deemed creditworthy by the Portfolio's
Sub-Adviser.
Over-the-counter options are two-party contracts with price and terms
negotiated between buyer and seller. In contrast, exchange-traded options are
third-party contracts with standardized strike prices and expiration dates and
are purchased from a clearing corporation. Exchange-traded options have a
continuous liquid market while over-the-counter options may not.
FINANCIAL FUTURES AND OPTIONS ON FUTURES. The Portfolio may purchase and
sell financial futures contracts to hedge all or a portion of its portfolio
against changes in interest rates or securities prices. Futures contracts on
securities call for the delivery of particular debt instruments issued or
guaranteed by the U.S. Treasury or by specified agencies or instrumentalities of
the U.S. government at a certain time in the future. The seller of the contract
agrees to make delivery of the type of instrument called for in the contract,
and the buyer agrees to take delivery of the instrument at the specified future
time. A futures contract on a securities index does not involve the actual
delivery of securities, but merely requires the payment of a cash settlement
based on changes in the securities index.
The Portfolio may write call options and purchase put options on financial
futures contracts as a hedge to attempt to protect securities in the Portfolio
against decreases in value resulting from anticipated increases in market
interest rates or broad declines in securities prices. When the Portfolio writes
a call option on a futures contract, it is undertaking the obligation of selling
the futures contract at a fixed price at any time during a specified period if
the option is exercised. Conversely, as purchaser of a put option on a futures
contract, a Portfolio is entitled (but not obligated) to sell a futures contract
at the fixed price during the life of the option.
The Portfolio may also write put options and purchase call options on
financial futures contracts as a hedge against rising purchase prices of
portfolio securities resulting from anticipated decreases in market interest
rates or broad ascents in securities prices. The Portfolio will use these
transactions to attempt to protect their ability to purchase portfolio
securities in the future at price levels existing at the time it enters into the
transactions. When the Portfolio writes a put option on a futures contract, it
is undertaking to buy a particular futures contract at a fixed price at any time
during a specified period if the option is exercised. As a purchaser of a call
option on a futures contract, the Portfolio is entitled (but not obligated) to
purchase a futures contract at a fixed price at any time during the life of the
option.
The Portfolio may not purchase or sell futures contracts or related options
if immediately thereafter the sum of the amount of margin deposits on the
Portfolio's existing futures positions and premiums paid for related options
would exceed 5% of the market value of the Portfolio's total assets. When the
Portfolio purchases futures contracts, an amount of cash and cash equivalents,
equal to the underlying commodity value of the futures contracts (less any
related margin deposits), will be deposited in a segregated account with the
Trust's custodian to collateralize the position and thereby insure that the use
of such futures contracts is unleveraged.
5
<PAGE>
When the Portfolio uses financial futures and options on financial futures
as hedging devices, there is a risk that the prices of the securities subject to
the futures contracts may not correlate perfectly with the prices of the
securities in the Portfolio. This may cause the futures contract and any related
options to react differently than the portfolio securities to market changes. In
addition, the Sub-Adviser could be incorrect in its expectations about the
direction or extent of market factors, such as interest rate or securities price
movements. In these events, the Portfolio may lose money on the futures contract
or option. It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the Sub-Adviser will
consider liquidity before entering into options transactions, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular futures contract or option at any particular time. A Portfolio's
ability to establish and close out futures and options positions depends on this
secondary market.
FOREIGN SECURITIES. Investments in foreign securities involve special risks
that differ from those associated with investments in domestic securities. The
risks associated with investments in foreign securities relate to political and
economic developments abroad, as well as those that result from the differences
between the regulation of domestic securities and issuers and foreign securities
and issuers. These risks may include, but are not limited to, expropriation,
confiscatory taxation, currency fluctuations, withholding taxes on interest,
limitations on the use or transfer of Portfolio assets, political or social
instability, ability to obtain or enforce court judgments abroad, and adverse
diplomatic developments. Moreover, individual foreign economies may differ
favorably or unfavorably from the domestic economy in such respects as growth of
gross national product, the rate of inflation, capital reinvestment, resource
self-sufficiency, and balance of payments position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include: less publicly available
information about foreign issuers; credit risks associated with certain foreign
governments; the lack of uniform financial accounting standards applicable to
foreign issuers; less readily available market quotations on foreign issues; the
likelihood that securities of foreign issuers may be less liquid or more
volatile; generally higher foreign brokerage commissions; and unreliable mail
service between countries.
CURRENCY RISKS. The Portfolio may engage in currency transactions with
counterparties in order to hedge the value of portfolio holdings denominated in
particular currencies against fluctuations in relative value. Currency
transactions include forward currency contracts, exchange listed currency
futures, exchange listed and OTC options on currencies, and currency swaps. The
Portfolio dealings in forward currency contracts and other currency transactions
such as futures, options, options on futures and swaps will be limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging is entering into a currency transaction with respect to
specific assets or liabilities of the Portfolio, which will generally arise in
connection with the purchase or sale of its portfolio securities or the receipt
of income therefrom. Position hedging is entering into a currency transaction
with respect to portfolio security positions denominated or generally quoted in
that currency. The use of currency transactions can result in the Portfolio
incurring losses as a result of a number of factors including the imposition of
exchange controls, suspension of settlements, or the inability to deliver or
receive a specified currency.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign
currency exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded directly between currency traders (usually
large commercial banks) and their customers. When the Portfolio enters into a
contract for the purchase or sale of a security denominated in a foreign
currency, it may want to establish the U.S. dollar cost or proceeds, as the case
may be. By entering into a forward contract in U.S. dollars for the purchase or
sale of the amount of foreign currency involved in an underlying security
transaction, the Portfolio is able to protect itself against a possible loss
between trade and settlement dates resulting from an adverse change in the
relationship between the U.S. dollar and such foreign currency. However, this
tends to limit potential gains which might result from a positive change in such
currency relationships.
6
<PAGE>
The Portfolio will not enter into forward foreign currency exchange
contracts or maintain a net exposure in such contracts where the Portfolio would
be obligated to deliver an amount of foreign currency in excess of the value of
the Portfolio's securities or other assets denominated in that currency or
denominated in a currency or currencies that the Portfolio's Sub-Adviser
believes will reflect a high degree of correlation with the currency with regard
to price movements. The Portfolio generally does not enter into forward foreign
currency exchange contracts with a term longer than one year.
RESTRICTED AND ILLIQUID SECURITIES. The Portfolio may invest up to 10% of
its net assets in restricted securities. Restricted securities are any
securities in which the Portfolio may otherwise invest pursuant to its
investment objective and policies but which are subject to restrictions on
resale under federal securities laws. The Portfolio will limit investments in
illiquid securities, including over-the-counter options and certain municipal
leases and certain restricted securities not determined by the Board of Trustees
to be liquid under guidelines adopted by the Board of Trustees pursuant to
Securities Act Rule 144A, to 15% of their net assets.
SWAPS, CAPS, FLOORS AND COLLARS. The Portfolio may enter into interest
rate, currency and index swaps and purchase or sell related caps, floors and
collars. The Portfolio expects to enter into these transactions primarily to
preserve a return or spread on a particular investment or portion of its
portfolio, to protect against currency fluctuations, as a duration management
technique or to protect against any increase in the price of securities the
Portfolio anticipates purchasing at a later date. The Portfolio intends to use
these transactions as hedges and not as speculative investments and will not
sell interest rate caps or floors where it does not own securities or other
instruments providing the income stream the Portfolio may be obligated to pay.
PORTFOLIO TURNOVER. The annual turnover rate of the Portfolio may vary from
year to year and may also be affected by cash requirements for redemptions and
repurchase of Portfolio shares and by the necessity of maintaining the Portfolio
as a regulated investment company under the Internal Revenue Code, as amended,
in order to receive certain favorable tax treatment. Higher portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs.
For additional information concerning the Portfolio's investment policies
and limitations, see the combined Statement of Additional Information.
NET ASSET VALUE
The Portfolio's net asset value per share fluctuates. The net asset value
per share for Class A shares is determined by dividing the net assets
attributable to the Class A shares by the total number of Class A shares
outstanding. Likewise, the net asset value per share for Class B shares of the
Portfolio is determined by dividing the net assets attributable to the Class B
shares by the total number of Class B shares outstanding. The net asset value
for Class A shares will, from time to time, differ from that of Class B shares
due to the variance in daily net income realized by and dividends paid on each
class of shares.
HOW TO BUY SHARES
Class A and Class B shares of the Portfolio are sold on days on which the
New York Stock Exchange is open for business. Class A and Class B shares of the
Portfolio may be purchased through a financial institution which has a sales
agreement with the Distributor. The Portfolio reserves the right to reject any
purchase request.
ALTERNATIVE PURCHASE ARRANGEMENTS. The Portfolio offers two classes of
shares, Class A and Class B shares. The Class A shares of the Portfolio are sold
at net asset value plus an applicable sales charge, except under the
circumstances described in the section entitled What Shares Cost, and generally
are redeemed at net asset value. However, a CDSC may be imposed on the
redemption of the Class A shares of the Portfolio under the circumstances
described in the section entitled Contingent Deferred Sales Charge. The Class B
shares of the Portfolio are sold at net asset value and are redeemed at net
asset value. However, a CDSC may be imposed
7
<PAGE>
on the redemption of Class B shares of the Portfolio under the circumstances
described in the section entitled Contingent Deferred Sales Charge. Class A and
Class B shares represent identical interests in the Portfolio and have the same
rights and are identical in all respects, except that Class B shares of the
Portfolio will pay a distribution fee, which will cause the net income
attributable to Class B shares and the dividends payable on the Class B shares
to be reduced by the amount of the distribution fee and incremental expenses
associated with the distribution fee. As a result, the net asset value of Class
B shares of the Portfolio will be reduced by such amount to the extent that the
Portfolio has undistributed net income. Sales personnel may receive different
compensation for selling Class A and Class B shares of the Portfolio.
THROUGH A FINANCIAL INSTITUTION. An investor may call his financial
institution (such as a broker/dealer or bank) to place an order to purchase
shares of the Portfolio. Orders through a financial institution are considered
received when the Distributor is notified of the purchase order. Purchase orders
through a registered broker/dealer must be received by the broker/dealer before
4:00 p.m. (Eastern time) and must be transmitted by the broker/dealer to the
Distributor before 5:00 p.m. (Eastern time) in order for shares to be purchased
at that day's price. Purchase orders through other types of financial
institutions must be received by the financial institution and transmitted to
the Portfolio before 4:00 p.m. (Eastern time) in order for shares to be
purchased at that day's price. It is the financial institution's responsibility
to transmit orders promptly.
Investors who have previously opened an account with the Trust through a
financial institution may purchase additional shares by mail or by Federal
Reserve wire. To make such purchases, an investor should contact his financial
institution for instructions.
State securities laws governing the ability of depository institutions to
act as underwriters or distributors of securities may differ from
interpretations given to the Glass-Steagall Act and, therefore, banks and other
financial institutions may be required to register as dealers pursuant to state
law.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Class A and Class B shares of the
Portfolio is $1,000, unless the investment is in a retirement plan, in which
case the minimum initial investment is $250. The minimum initial investment may
be waived for shareholders purchasing shares pursuant to the Systematic
Investment Program. Subsequent investments must be in amounts of at least $100,
except for retirement plans, which must be in amounts of $50. The minimum
initial investment may be waived for Trustees, emeritus trustees, employees and
retired employees of the Trust, or directors, emeritus directors, employees and
retired employees of the Distributor or affiliates thereof.
WHAT SHARES COST
CLASS A SHARES. Class A shares of the Portfolio are sold at their net asset
value next determined after an order is received plus a sales charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE
AS A PERCENTAGE AS A PERCENTAGE
OF PUBLIC OF NET AMOUNT
OFFERING PRICE INVESTED DEALER COMMISSION
<S> <C> <C> <C>
Less than $50,000................... 5.50% 5.82% 4.75%
$50,000 but less than $100,000...... 4.75 4.99 4.00
$100,000 but less than $250,000..... 3.75 3.90 3.00
$250,000 but less than $500,000..... 3.00 3.09 2.50
$500,000 but less than $1 million... 2.00 2.04 1.75
$1 million or more.................. 0 0 (see below)
</TABLE>
Commissions will be paid to dealers who initiate and are responsible for
purchases as set forth in the Statement of Additional Information.
8
<PAGE>
Under certain circumstances described under the section entitled Redeeming
Shares, shareholders may be charged a CDSC by the Distributor at the time Class
A shares are redeemed.
The Distributor, the Investment Adviser, or certain Sub-Advisers, or
affiliates thereof, at their own expense and out of their own assets, may also
provide other compensation to dealers in connection with sales of shares of the
Portfolios. Compensation may also include, but is not limited to, financial
assistance to dealers in connection with conferences, sales, or training
programs for their employees, seminars for the public, advertising or sales
campaigns, or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell significant amounts of shares. Dealers may not
use sales of the Trust's shares to qualify for this compensation to the extent
such may be prohibited by the laws of any state or any self-regulatory agency,
such as the National Association of Securities Dealers, Inc. None of the
aforementioned other compensation shall be paid for by the Trust or its
shareholders.
CLASS B SHARES. Class B shares of the Portfolio may be purchased at their
net asset value next determined after an order is received, without the
imposition of a sales charge. Class B shares will be subject to ongoing
distribution fees as described in the section entitled Distribution Plan.
Under certain circumstances described under the section entitled Redeeming
Shares, shareholders may be charged a CDSC by the Distributor at the time Class
B shares are redeemed.
WHEN NET ASSET VALUE IS DETERMINED
The net asset value of Class A and Class B shares of the Portfolio is
determined as of 4:00 p.m. (Eastern time), Monday through Friday, except on: (i)
days on which there are not sufficient changes in the value of the Portfolio's
securities that its net asset value might be materially affected; (ii) days
during which no shares are tendered for redemption and no orders to purchase
shares are received; and (iii) days on which the New York Stock Exchange is
closed.
PURCHASES AT NET ASSET VALUE
Class A shares of the Portfolio may be purchased at their net asset value
with no sales charge by advisory accounts through investment advisers registered
under the Investment Advisers Act of 1940 or by bank trust departments
purchasing on behalf of their clients. Trustees, emeritus trustees, employees,
and retired employees of the Trust, or directors, emeritus directors, employees,
or retired employees of the Distributor or affiliates thereof, or any financial
institution who has a sales agreement with the Distributor with regard to the
Trust, and their spouses and children under age 21 may also buy Class A shares
at net asset value with no sales charge.
PURCHASES WITH PROCEEDS FROM REDEMPTION OR SALE OF INVESTMENT COMPANY
SHARES. From the date of this prospectus to June 30, 1994, investors may
purchase Class A shares of the Portfolio at net asset value, without a sales
charge, with the proceeds from the redemption or sale of shares of another
investment company (excluding money market funds or investment company shares
subject to a deferred sales charge or CDSC) or from maturing certificates of
deposit. The purchase must be made within 60 days of the redemption or sale, and
Cambridge Distributors, Inc., must be notified of this eligibility for the net
asset value purchased by the investor in writing or by his financial institution
at the time the purchase is made. Cambridge Distributors, Inc., will offer to
pay dealers an amount of up to 1.00% of the net asset value of Class A shares
purchased by their clients or customers in this matter.
REDUCING THE SALES CHARGE FOR CLASS A SHARES
The sales charge imposed on purchases of Class A shares of the Portfolio
can be reduced through:
. quantity discounts and accumulated purchases;
. signing a 13-month letter of intent;
. using the reinvestment privilege; or
. concurrent purchases.
9
<PAGE>
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the sales charge
tables, larger purchases reduce the sales charge paid. The Distributor will
combine purchases of Class A shares made on the same day by the investor, his
spouse, and his children under age 21 when the sales charge is calculated.
If an additional purchase of Class A shares of a Portfolio is made, the
Distributor will consider the previous purchases still invested in the
Portfolios. For example, if a shareholder already owns Class A shares of one or
more of the Portfolios having a current value of $40,000 and he purchases
$10,000 or more of Class A shares of the Cambridge Global Portfolio at the
current offering price, the sales charge on the additional purchase of Class A
shares according to the schedule now in effect would be 4.75%, not 5.50%.
To receive the sales charge reduction, Cambridge Distributors, Inc., must
be notified by the shareholder in writing, or by his financial institution at
the time that the purchase is made, that Class A shares of one or more of the
Portfolios are already owned or that purchases are being combined. The
particular Portfolio will reduce the sales charge after it confirms the
purchases.
LETTER OF INTENT. If an investor intends to purchase at least $50,000 of
Class A shares of one or more Portfolios within a 13-month period, the sales
charge may be reduced by signing a letter of intent to that effect. The size of
the reduction will depend upon the sales schedule applicable to the particular
Portfolios. This letter of intent includes a provision for a sales charge
adjustment, depending upon the amount actually purchased within the 13-month
period, and a provision for the custodian to hold 5.50% or 4.75%, as the case
may be, of the total amount intended to be purchased in escrow (in Class A
shares) until such purchase is completed.
The amount held in escrow will be applied to the shareholder's account at
the end of the 13-month period unless the amount specified in the letter of
intent is not purchased. In this event, an appropriate number of escrowed Class
A shares may be redeemed in order to realize the difference in the sales charge.
This letter of intent will not obligate the shareholder to purchase Class A
shares, but if he does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. The letter of
intent may be dated as of a prior date to include any purchases made within the
past 90 days.
REINVESTMENT PRIVILEGE. If Class A shares of the Portfolio have been
redeemed, the shareholder has a one-time right, within 60 days, to reinvest the
redemption proceeds at the next-determined net asset value without any sales
charge. Cambridge Distributors, Inc., must be notified by the shareholder in
writing or by his financial institution of the reinvestment in order to
eliminate a sales charge. If the shareholder redeems his shares in the
Portfolio, there may be tax consequences.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge
reduction, a shareholder has the privilege of combining concurrent purchases of
Class A shares of two or more Portfolios, the purchase price of which includes a
sales charge. For example, if a shareholder concurrently invested $70,000 in
Class A shares of Cambridge Government Income Portfolio and $40,000 in Class A
shares of the Cambridge Global Portfolio, the sales charge imposed upon the
purchase of Class A shares of both Portfolios would be reduced in accordance
with those schedules now in effect; that is, the shareholder would pay a sales
charge of 4.00% on the purchase of Cambridge Government Income Portfolio shares
and 3.75% on the purchase of Cambridge Global Portfolio shares.
To receive this reduction on the sales charge, the Distributor must be
notified by the shareholder in writing or by his financial institution at the
time the concurrent purchases are made. The particular Portfolio or Portfolios
will reduce the sales charge after it confirms the purchases.
10
<PAGE>
SYSTEMATIC INVESTMENT PROGRAM
Once an account with the Portfolio has been opened, shareholders may add to
their investment in the Portfolio on a regular basis in a minimum amount of
$100. Under the program, funds may be automatically withdrawn periodically from
the shareholder's checking account and invested in additional shares of the
Portfolio at the net asset value next determined after an order is received by
the Distributor, plus the applicable sales charge imposed upon purchases of
Class A shares. A shareholder may apply for participation in this program
through his financial institution. However, a shareholder may purchase only the
same class of shares under this program as that held in the existing account.
Thus, for example, a shareholder who has an account in Class A shares of the
Portfolio may only purchase Class A shares of Portfolio under this program.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Portfolio, The Shareholder Services Group, Inc.
(TSSG), maintains a share account for each shareholder. Share certificates are
not issued unless requested in writing to TSSG.
Detailed confirmations of each purchase, redemption, and distribution are
sent to each shareholder.
DIVIDENDS
Dividends, if any, are declared and paid at least annually to all
shareholders invested in the Portfolio on the record date. Dividends will be
reinvested in additional shares of the same class on payment dates at the ex-
dividend date net asset value without a sales charge unless cash payments are
requested by shareholders in writing to the Trust.
CAPITAL GAINS
Capital gains realized by the Portfolio, if any, will be distributed at
least once every 12 months.
RETIREMENT PLANS
Class A and Class B shares of the Portfolio can be purchased as an
investment for retirement plans or for IRA accounts. For further details,
including prototype retirement plans, contact the Portfolio and consult a tax
adviser.
EXCHANGE PRIVILEGE
Class A shares in each Portfolio may be exchanged for Class A shares in the
other Portfolios at net asset value without a sales charge or a CDSC. Class B
shares in each Portfolio may be exchanged for Class B shares in the other
Portfolios at net asset value without a sales charge or a CDSC. Shares in the
Government Securities Portfolio of the Cash Equivalent Fund may be exchanged for
Class A shares in each Portfolio at net asset value without a sales charge or
CDSC, so long as the transferred shares have previously paid a sales charge with
respect to Class A shares of the Portfolios (unless not applicable under the
circumstances), and shares of the Cash Equivalent Fund may be exchanged for
Class B shares in each Portfolio at net asset value without a CDSC. In addition,
Class A and Class B shares of the Portfolios may be exchanged into shares of the
Cash Equivalent Fund at net asset value without a sales charge or CDSC.
11
<PAGE>
If a shareholder making such an exchange qualifies for an elimination of
the sales charge with respect to Class A shares of the Portfolios, Cambridge
Distributors, Inc., must be notified in writing by the shareholder or his
financial institution.
REQUIREMENTS FOR EXCHANGE. Shareholders using this privilege must exchange
shares having a net asset value of at least $1,000. Before the exchange, the
shareholder must receive a prospectus of the Portfolio for which the exchange is
being made.
This privilege is available to shareholders resident in any state in which
Class A or Class B shares of the Portfolio being acquired may be sold. Upon
receipt of proper instructions and required supporting documents, shares
submitted for exchange are redeemed and the proceeds invested in shares of the
other Portfolio. The exchange privilege may be modified or terminated at any
time. Shareholders will be notified of the modification or termination of the
exchange privilege.
Further information on the exchange privilege is available and the
prospectus for the Cash Equivalent Fund may be obtained by calling
1-800-382-0016.
TAX CONSEQUENCES. An exercise of the exchange privilege is treated as a
sale for federal income tax purposes. Depending on the circumstances, a
short-term or long-term capital gain or loss may be realized.
MAKING AN EXCHANGE. Instructions for exchanges may be given in writing or
by telephone. Written instructions require a signature guarantee. Shareholders
may have difficulty in making exchanges by telephone through brokers and other
financial institutions during times of drastic economic or market changes. If a
shareholder cannot contact his broker or other financial institution by
telephone, it is recommended that an exchange request be made in writing and
sent by overnight mail to Cambridge Family of Funds, c/o TSSG, One American
Express Plaza, Providence, RI 02903.
TELEPHONE INSTRUCTIONS. Telephone instructions made by the investor may be
carried out only if a telephone authorization form is completed by the investor
and is on file with TSSG. If the instructions are given by a broker, a telephone
authorization form completed by the broker must be on file with TSSG. Shares may
be exchanged between two Portfolios by telephone only if both Portfolios have
identical shareholder registrations.
Any shares held in certificate form cannot be exchanged by telephone but
must be forwarded to TSSG and deposited to the shareholder's account before
being exchanged. Telephone exchange instructions may be recorded. Such
instructions will be processed as of 4:00 p.m. (Eastern time) and must be
received by the Distributor before that time for shares to be exchanged the same
day. Shareholders exchanging into a Portfolio will not receive any dividend that
is payable to shareholders of record on that date. This privilege may be
modified or terminated at any time.
If reasonable procedures are not followed by the Portfolios, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING SHARES
The Portfolio redeems Class A and Class B shares at their net asset value
next determined, less the applicable CDSC as described below, after TSSG
receives the redemption request. Redemptions will be made on days on which the
Portfolio computes its net asset value. Redemptions can be made through a
financial institution or directly from the Portfolio. Redemption requests must
be received in proper form.
12
<PAGE>
CONTINGENT DEFERRED SALES CHARGE
CLASS A SHARES. Shareholders who purchased Class A shares of the Portfolio
at net asset value (without a sales charge) with the proceeds from the
redemption, sale, or maturity of other investments will be charged a CDSC by the
Distributor of 1.00% for redemptions made within four years from the date of
purchase of Class A shares. Also, as of the date of this prospectus,
shareholders who purchase or who have purchased $1 million or more of the Class
A shares of the Portfolio at net asset value, without a sales charge, will be
subject to a CDSC by the Distributor of 1.00% for redemptions of such Class A
shares made within one year from the date of purchase. (For those shareholders
who purchased $1 million or more of the Class A shares of the Portfolio at net
asset value, without a sales charge, prior to the date of this prospectus, the
previous four-year redemption period will be waived and such shareholders will
now only be subject to the one-year redemption period.) The CDSC will be
calculated based upon the lesser of the original purchase price of the Class A
shares being redeemed or the net asset value of those shares when redeemed.
The CDSC will not be imposed on Class A shares acquired through
reinvestment of dividends or distributions of long-term capital gains.
Redemptions are deemed to have occurred in the following order: (1) Class A
shares acquired through the reinvestment of dividends and long-term capital
gains; (2) purchases of Class A shares occurring more than four years before the
date of redemption; (3) purchases of $1 million or more of Class A shares
occurring more than one year before the date of redemption; (4) purchases of
Class A shares within the previous four years without the use of redemption
proceeds as described above; (5) purchases of Class A shares within the previous
one year through the use of redemption proceeds as described above; and (6)
purchases of $1 million or more of Class A shares within the previous year
without a sales charge.
No CDSC will be imposed when a redemption results from a total or partial
distribution from a qualified retirement plan, IRA, Keogh Plan, or a custodial
account following retirement, attainment of age 59 1/2, separation from service
(except for an IRA), or results from the death or permanent and total disability
of the beneficial owner. Also, no CDSC will be imposed in connection with
involuntary redemptions by the Portfolio of accounts with low balances (see
Accounts with Low Balances below) or with respect to Class A shares purchased
under the circumstances described in the section entitled Purchases at Net Asset
Value.
CLASS B SHARES. Shareholders who purchased Class B shares will be charged a
CDSC by the Distributor of 1.00% for redemptions of Class B shares made within
one year from the date of purchase. The CDSC will be calculated based upon the
lesser of the original purchase price of the Class B shares or the net asset
value of the Class B shares when redeemed.
The CDSC will not be imposed on Class B shares acquired through
reinvestment of dividends or distributions of long-term capital gains.
Redemptions are deemed to have occurred in the following order: (1) Class B
shares acquired through the reinvestment of dividends and long-term capital
gains; (2) purchases of Class B shares occurring more than one year before the
date of redemption; and (3) purchases of Class B shares within the previous
year.
No CDSC will be imposed when a redemption results from the total or partial
distribution from a qualified retirement plan, IRA, Keogh Plan, or a custodial
account following retirement, attainment of age 59 1/2, separation from service
(except for an IRA), or the death or permanent and total disability of the
beneficial owner. Additionally, no CDSC will be charged in connection with
redemptions by the Portfolio of accounts with low balances (see Accounts with
Low Balances below).
13
<PAGE>
Any period during which Class A shares and Class B shares are invested in
the Government Securities Portfolio of the Cash Equivalent Fund is not taken
into account when determining whether a CDSC is imposed upon redemption.
THROUGH A FINANCIAL INSTITUTION
A shareholder may redeem Class A or Class B shares of the Portfolio by
calling his financial institution (such as a broker/dealer or a bank) to request
the redemption. Class A and Class B shares of the Portfolio will be redeemed at
the net asset value next determined, less the applicable CDSC, after the
Portfolio receives the redemption request from the financial institution. The
financial institution is responsible for promptly submitting redemption requests
and providing proper written redemption instructions to the Portfolio. The
financial institution may charge customary fees and commissions for this
service. Redemption requests through a registered broker/dealer must be received
by the broker/dealer before 4:00 p.m. (Eastern time) and must be transmitted by
the broker/dealer to the Portfolio before 5:00 p.m. (Eastern time) in order for
Class A and Class B shares to be redeemed at that day's net asset value.
Redemption requests through other financial institutions must be received by the
financial institution and transmitted to the particular Portfolio before 4:00
p.m. (Eastern time) in order for Class A and Class B shares to be redeemed at
that day's net asset value.
DIRECTLY FROM THE PORTFOLIO
BY TELEPHONE. Shareholders may redeem their Class A and Class B shares of
the Portfolio by calling 1-800-382-0016. The proceeds will be mailed to the
shareholder's address of record or wire transferred to the shareholder's account
at a domestic commercial bank that is a member of the Federal Reserve System,
normally within one business day, but in no event longer than seven days after
receipt of the request. The minimum amount for a wire transfer is $1,000. Each
wire transfer may be subject to a fee of $10; additional fees may be charged by
the recipient's financial institution or bank. If at any time the Trust shall
determine it is necessary to terminate or modify this method of redemption,
shareholders will be promptly notified.
An authorization form permitting TSSG to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Cambridge Distributors, Inc. Telephone redemption instructions
may be recorded.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur,
another method of redemption, such as redeeming by mail, should be considered.
If reasonable procedures are not followed by the Portfolio, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
BY MAIL. Any shareholder may redeem Class A or Class B shares of the
Portfolio by sending a written request to Cambridge Family of Funds, c/o TSSG,
One American Express Plaza, Providence, RI 02903. The written request should
include the shareholder's name, the name of the particular Portfolio from which
Class A or Class B shares are being redeemed, the account number, and the share
or dollar amount requested.
If Class A or Class B share certificates have been issued, they must be
properly endorsed and should be sent by registered or certified mail with the
written request. Shareholders should call 1-800-382-0016 for assistance in
redeeming by mail.
14
<PAGE>
Shareholders requesting a redemption of $50,000 or more, a redemption of
any amount to be sent to an address other than that on record with the
particular Portfolio, or a redemption payable other than to the shareholder of
record must have signatures on written redemption requests guaranteed by:
. a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund (BIF), which is administered by the Federal Deposit
Insurance Corporation (FDIC);
. a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
. a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund (SAIF), which is administered
by the FDIC; or
. any other eligible guarantor institution, as defined in the Securities
Exchange Act of 1934.
The Portfolio does not accept signatures guaranteed by a notary public.
The Trust and its transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Trust may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Trust and its transfer agent reserve the
right to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but
in no event more than seven days, after receipt of a proper written redemption
request.
REDEMPTIONS BEFORE PURCHASE INSTRUMENTS CLEAR
When Class A or Class B shares are purchased by check or through the
Pre-Authorized Check (PAC), the proceeds from the redemption of those shares are
not available, and those shares may not be exchanged, until TSSG is reasonably
certain that the purchase check has cleared, which could take up to ten calendar
days.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount not
less than $100 may take advantage of the Systematic Withdrawal Program. Under
this program, Class A and Class B shares of the Portfolio are redeemed to
provide for periodic withdrawal payments in an amount directed by the
shareholder. However, the aggregate withdrawals of Class B shares in any year
are not subject to a CDSC and are generally limited to 10% of the value of the
shareholder's account at the time of the establishment of the Systematic
Withdrawal Program. Depending upon the amount of the withdrawal payments, the
amount of dividends paid and capital gains distributions with respect to Class A
or Class B shares of the Portfolio, and the fluctuation of the net asset value
of Class A or Class B shares redeemed under this program, redemptions may
reduce, and eventually deplete, the shareholder's investment in the Portfolio.
For this reason, payments under the program should not be considered as yield or
income on the shareholder's investment in the Portfolio. To be eligible to
participate in this program, a shareholder must have an initial account value in
the Portfolio of at least $10,000.
A shareholder may apply for participation in this program through Cambridge
Distributors, Inc. Due to the fact that Class A shares are normally sold with a
sales charge, it may not be advisable for shareholders to be purchasing Class A
shares while participating in the program.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the
Portfolio may redeem Class A and Class B shares in any account, except for
retirement plans, and pay the proceeds to the shareholder if the account
15
<PAGE>
balance falls below the required minimum value of $1,000. This requirement does
not apply, however, if the balance falls below $1,000 because of changes in the
Portfolio's net asset value. Before Class A or Class B shares are redeemed to
close an account, the shareholder is notified in writing and allowed 30 days to
purchase additional Class A or Class B shares, as the case may be, to meet the
required minimum value of $1,000.
CAMBRIDGE SERIES TRUST INFORMATION
GENERAL INFORMATION. The Trust, an open-end, management investment company,
was established as a Massachusetts business trust on January 20, 1992. The
Trust's Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate Portfolios. The
shares in any one Portfolio may be offered in separate classes. As of the date
of the prospectus, the Board of Trustees of the Trust has established six
Portfolios, each with two classes of shares, Class A and Class B shares.
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The
Trustees are responsible for managing the Trust's business affairs and for
exercising all the Trust's powers, except those reserved for the shareholders.
The Executive Committee of the Board of Trustees handles the Board's
responsibilities between meetings of the Board.
INVESTMENT MANAGEMENT OF THE TRUST
INVESTMENT ADVISER
The Trust is managed by Cambridge Investment Advisors, Inc. (the Investment
Adviser), pursuant to an investment advisory agreement (the Investment Advisory
Agreement ) with the Trust. The Investment Adviser, in turn, has entered into a
sub-advisory agreement (the Sub-Advisory Agreement) with Scudder, which has been
selected as sub-adviser for the Portfolio (the Sub-Adviser or Sub-Advisers). It
is the Investment Adviser's responsibility to select, subject to review and
approval by the Trust's Board of Trustees, the Sub-Advisers for each of its
Portfolios who have distinguished themselves in their respective areas of
expertise in asset management and to review their continued performance.
Subject to the supervision and direction of the Board of Trustees, the
Investment Adviser provides investment management evaluation services
principally by performing initial due diligence on the prospective Sub-Adviser
for each Portfolio and thereafter monitoring each Sub-Adviser's performance
through quantitative and qualitative analysis, as well as periodic in-person,
telephonic and written consultations with each Sub-Adviser. In evaluating
prospective Sub-Advisers, the Investment Adviser considers, among other factors,
each Sub-Adviser's level of expertise; relative performance and consistency of
performance over a minimum period of five years; level of adherence to
investment discipline or philosophy; personnel, facilities and financial
strength; and quality of service and client communications. The Investment
Adviser has responsibility for communicating performance expectations and
evaluations to the Sub-Advisers and ultimately recommending to the Board of
Trustees of the Trust whether each Sub-Adviser's contract should be renewed,
modified, or terminated. The Investment Adviser provides written reports to the
Board of Trustees regarding the results of its evaluation and monitoring
functions. The Investment Adviser is also responsible for conducting all
operations of the Trust, except those operations contracted to the Sub-Advisers,
custodian, transfer agent, and administrator. Although each Sub-Adviser's
activities are subject to oversight by the Board of Trustees and the officers of
the Trust, neither the Board of Trustees, the officers, nor the Investment
Adviser evaluates the investment merits of each Sub-Adviser's individual
security selections.
16
<PAGE>
INVESTMENT ADVISORY FEES. For performing its responsibilities, the
Investment Adviser receives an annual investment advisory fee equal to 1.10% of
the average daily net assets of the Portfolio up to and including $75 million
and 1.00% of the average daily net assets of the Portfolio in excess of $75
million. Under the Investment Advisory Agreement, the Investment Adviser may,
from time to time, voluntarily waive some or all of its investment advisory fee
and may terminate any such voluntary waiver of some or all of its investment
advisory fee at any time in its sole discretion. The Investment Adviser has
undertaken to reimburse the Portfolio for a portion of the Portfolio's operating
expenses in excess of limitations established by certain states.
INVESTMENT ADVISER'S PROFILE. Cambridge Investment Advisors, Inc., located
at 901 East Byrd Street, Richmond, Virginia 23219, serves as the Trust's
Investment Adviser. It is a wholly-owned subsidiary of Investment Management
Group, Inc., which, in turn, is a wholly-owned subsidiary of WFS Financial
Corporation, Inc., a diversified financial services holding company. The
Investment Adviser was incorporated under the laws of Virginia in 1991. Although
prior to 1992 the Investment Adviser had not managed mutual funds, it has
employed a group of Sub-Advisers which together have over 255 years of
investment experience and currently manage or supervise in excess of $300
billion on behalf of over 11 million shareholders or client accounts.
SUB-ADVISER
The Sub-Adviser has complete discretion to purchase, manage, and sell
portfolio securities for the Portfolio within the Portfolio's investment
objectives, restrictions, and policies.
SUB-ADVISORY FEES. The Investment Adviser pays the Sub-Adviser an annual
fee expressed as a percentage of Portfolio assets: .55% on the first $75 million
in Portfolio assets and .50% on assets over $75 million. No performance or
incentive fees are paid to the Sub-Adviser. Under the Sub-Advisory Agreement,
the Sub-Adviser may, from time to time, voluntarily waive some or all of its
sub-advisory fee charged to the Investment Adviser and may terminate any such
voluntary waiver at any time in its sole discretion.
SUB-ADVISER'S PROFILE
The Investment Adviser employs Scudder, Stevens & Clark, Inc., a Delaware
corporation, to manage the investment and reinvestment of the assets of the
Portfolio and to continuously review, supervise, and administer the Portfolio's
investment program. The Sub-Adviser is located at 345 Park Avenue, New York, New
York. The Sub-Adviser was founded in 1919 and, today, the Sub-Adviser manages in
excess of $90 billion for many private accounts and over 70 mutual fund
portfolios.
Scudder has been a leader in international investment management for over
30 years. Assets of international investment company clients of Scudder exceeded
$4 billion as of December 31, 1993.
Lead portfolio manager, William E. Holzer, has responsibility for worldwide
strategy and investment themes. Mr. Holzer, who has twenty years of experience
in global investing, joined the Sub-Adviser in 1980. Alice Ho, portfolio
manager, joined the Sub-Adviser in 1986 and has been involved with global
investment management since that time.
DISTRIBUTION OF PORTFOLIO SHARES
Cambridge Distributors, Inc., having its principal office at 901 East Byrd
Street, Richmond, Virginia 23219, is the principal distributor for Class A and
Class B shares of the Portfolios. Cambridge Distributors, Inc., is a Virginia
corporation organized on December 24, 1991, and is an affiliate of the
Investment Adviser. (Cambridge Distributors, Inc. is referred to as
Distributor.)
17
<PAGE>
DISTRIBUTION PLAN. Pursuant to the provisions of a distribution plan
adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940
(the Plan), Class B shares of the Portfolio will pay an amount computed at an
annual rate of 0.75% of the average daily net asset value of Class B shares of
the Portfolio to finance any activity which is principally intended to result in
the sale of those Class B shares.
The Distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan by notice to the
Class B shareholders of a the Portfolio.
The Distributor may select financial institutions (such as a broker/dealer
or bank) to provide sales support services as agents for their clients or
customers who beneficially own Class B shares of the Portfolio. Financial
institutions will receive fees from the Distributor based upon Class B shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Distributor.
The Portfolio's Plan is a compensation type plan. As such, the Portfolio
makes no payments to the Distributor except as described above. Therefore, the
Portfolio does not pay for unreimbursed expenses of the Distributor, including
amounts expended by the Distributor in excess of amounts received by it from the
Portfolios, interest, carrying, or other financing charges in connection with
excess amounts expended, or the Distributor's overhead expenses. However, the
Distributor may be able to recover such amounts or may earn a profit from future
payments made by the Portfolio under the Plan.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Cambridge Administrative Services (the
Administrator), located at Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779, provides each Portfolio with certain administrative personnel and
services necessary to operate each Portfolio, such as legal and accounting
services. The Administrator provides these services at an annual rate of 0.125%
on the first $1.5 billion of the average aggregate daily net assets of the Trust
and 0.120% on assets in excess of $1.5 billion. The administrative fee received
during any fiscal year shall aggregate at least 0.05% of average aggregate daily
net assets plus $100,000 per Portfolio. The Administrator may voluntarily
reimburse a portion of its administrative fee. Cambridge Administrative Services
is a subsidiary of Federated Investors.
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT. State Street Bank
and Trust Company, P.O. Box 8602, Boston, Massachusetts 02266, is custodian for
the securities and cash of each Portfolio. The Shareholder Services Group, Inc.,
P.O. Box 9653, Providence, Rhode Island 02940-9653, is transfer agent for Class
A and Class B shares of the Portfolios and dividend disbursing agent for the
Portfolios.
LEGAL COUNSEL. Legal counsel is provided by Hunton & Williams, 951 East
Byrd Street, Richmond, Virginia 23219-4074.
INDEPENDENT AUDITORS. The independent auditors for the Portfolios are KPMG
Peat Marwick, One Boston Place, Boston, Massachusetts 02108.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, a Sub-Adviser looks for prompt execution of the order at
the best overall terms available. In working with dealers, a Sub-Adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can be
obtained elsewhere. In selecting among firms believed to meet these criteria, a
Sub-Adviser may give consideration to those firms which have sold or are willing
to sell shares
18
<PAGE>
of the Portfolios. A Sub-Adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to review by the Board of Trustees.
Notwithstanding the foregoing, to the extent consistent with applicable
provisions of the Investment Company Act of 1940, Rule 17e-1, and other rules
and exemptions adopted by the Securities and Exchange Commission (SEC) under
that Act, the Board of Trustees of the Trust has determined that transactions
for the Portfolios may be executed by affiliated brokers if, in the judgment of
a Sub-Adviser, the use of an affiliated broker is likely to result in price and
execution at least as favorable as those of other qualified brokers. Under rules
adopted by the SEC, an affiliated broker may not execute transactions for the
Portfolio on the floor of any national securities exchange, but may effect
transactions by transmitting orders for execution, providing for clearance and
settlement and arranging for the performance of the execution function by
members of the exchange not associated with the affiliated broker. The broker
will be required to pay fees charged by those persons performing the floor
brokerage elements out of the brokerage compensation that it receives from the
Portfolio.
SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Servicing Plan (the Service Plan) with
respect to Class A and Class B shares of each Portfolio. Under the Service Plan,
financial institutions will enter into shareholder service agreements with the
Portfolios to provide administrative support services to their customers who
from time to time may be owners of record or beneficial owners of Class A or
Class B shares of one or more Portfolios. In return for providing these support
services, a financial institution may receive payments from one or more
Portfolios at a rate not exceeding 0.25% of the average daily net assets of the
Class A or Class B shares of the particular Portfolio or Portfolios beneficially
owned by the financial institution's customers for whom it is holder of record
or with whom it has a servicing relationship. These administrative services may
include, but are not limited to, the following functions: providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and redemption
transactions and automatic investments of client account cash balances;
answering routine client inquiries regarding the Portfolios; assisting clients
in changing dividend options, account designations, and addresses; and providing
such other services as the Portfolios reasonably request.
In addition to receiving payments under the Service Plan, financial
institutions may be compensated by the Investment Adviser, a Sub-Adviser, and/or
the Administrator, or affiliates thereof, for providing administrative support
services to holders of Class A or Class B shares of the Portfolios. These
payments will be made directly by the Investment Adviser, Sub-Adviser, and/or
Administrator and will not be made from the assets of any of the Portfolios.
EXPENSES OF THE PORTFOLIOS AND THE CLASS A AND CLASS B SHARES
The holders of each class of shares pay their allocable portion of their
respective Portfolio's expenses and the expenses of the Trust.
The expenses of the Trust for which holders of Class A shares and Class B
shares each pay their allocable portion include, but are not limited to: the
cost of organizing the Trust and continuing its existence; registering the
Trust; Trustees' fees; auditors' fees; the cost of meetings of the Trust; legal
fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise from time to time.
Each Portfolio's expenses for which holders of Class A shares and Class B
shares each pay their allocable portion include, but are not limited to:
registering the Portfolio and Class A and Class B shares of the Portfolio;
19
<PAGE>
investment advisory services; taxes and commissions; custodian fees; insurance
provisions; auditors' fees; transfer agent fees; accounting and investor
servicing fees; and such non-recurring and extraordinary items as may arise from
time to time.
At present, the only expenses which are allocated specifically to Class A
shares as a class are expenses under the Trust's Shareholder Servicing Plan, and
the only expenses which are allocated specifically to Class B shares as a class
are expenses under the Trust's Shareholder Servicing Plan and Rule 12b-1 Plan.
However, the Board of Trustees reserves the right to allocate certain expenses
to holders of Class A shares and Class B shares as it deems appropriate (Class
Expenses). In any case, Class Expenses would be limited to: distribution fees;
transfer agent fees as identified by the transfer agent as attributable to
holders of Class A shares or Class B shares; fees under the Trust's Shareholder
Servicing Plan; printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses, and proxies to
current shareholders; registration fees paid to the SEC and to state securities
commissions; expenses related to administrative personnel and services as
required to support holders of Class A shares or Class B shares; legal fees
relating solely to Class A shares or Class B shares; and Trustees fees incurred
as a result of issues relating solely to Class A shares or Class B shares.
SHAREHOLDER INFORMATION
VOTING RIGHTS
Each Class A share and each Class B share of a Portfolio gives the
shareholder one vote in Trustee elections and other matters submitted to
shareholders of the Trust for vote. All shares of all classes of each Portfolio
have equal voting rights, except that in matters affecting only a particular
Portfolio or class, only shares of that Portfolio or class are entitled to vote.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's or a Portfolio's operation and for the election of
Trustees under certain circumstances.
Trustees may be removed by a two-thirds vote of the number of Trustees
prior to such removal or by a two-thirds vote of the shareholders at a special
meeting. A special meeting of shareholders shall be called by the Trustees upon
the written request of shareholders owning at least 10% of the Trust's
outstanding shares of all series entitled to vote.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable
under Massachusetts law for acts or obligations of the Trust on behalf of the
Trust. To protect shareholders of the Portfolios, the Trust has filed legal
documents with the state of Massachusetts that expressly disclaim the liability
of shareholders of the Portfolios for such acts or obligations of the Trust.
These documents require notice of this disclaimer to be given in each agreement,
obligation, or instrument the Trust or its Trustees enter into or sign on behalf
of the Portfolios.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to use
the property of the Trust to protect or compensate the shareholder. On request,
the Trust will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust cannot meet its
obligations to indemnify shareholders and pay judgments against them from its
assets.
20
<PAGE>
TAX INFORMATION
GENERAL. The Portfolio does not anticipate having to pay federal income tax
because it expects to meet the requirements of the Internal Revenue Code, as
amended, applicable to regulated investment companies and to receive the special
tax treatment afforded to such companies.
The Portfolio will be treated as a single, separate entity for federal
income tax purposes so that income and losses (including capital gains and
losses) realized by the Portfolio will not be combined for tax purposes with
income and losses realized by any of the other Portfolios.
Unless otherwise exempt, shareholders of the Portfolio, are required to pay
federal income tax on any dividends and other distributions, including capital
gains distributions, received. This applies whether dividends and distributions
are received in cash or as additional shares. Distributions representing
long-term capital gains, if any, will be taxable to shareholders as long-term
capital gains irrespective of how long the shareholders have held the particular
shares. No federal income tax is due on any dividends or any capital gain
distributions earned in an IRA or qualified retirement plan or custodial account
until distributed.
Information on the tax status of dividends and distributions is provided
annually.
PERFORMANCE INFORMATION
From time to time, the Portfolio advertises its total return and yield,
tax-equivalent yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Portfolio after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of Class A and Class B shares of the Portfolio is calculated by
dividing the net investment income per share (as defined by the Securities and
Exchange Commission) earned by the Portfolio over a thirty-day period by the
maximum offering price per Class A and Class B share on the last day of the
period. The yield does not necessarily reflect income actually earned by the
Portfolio and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
The performance information reflects the effect of the maximum sales load,
in the case of Class A shares of the Portfolio, and other non-recurring charges,
such as the CDSC, in the case of Class A and Class B shares of the Portfolio,
which, if excluded, would increase the total return and yield. The Portfolio
will include the performance information for both Class A and Class B shares in
any advertisement or information that includes the performance data of the
Portfolio.
From time to time, the Trust may advertise its performance using certain
reporting services and/or compare its performance to certain indices.
<PAGE>
CAMBRIDGE GLOBAL PORTFOLIO
A Diversified Portfolio of Cambridge
Series Trust, an Open-End, Management
Investment Company
