CAMBRIDGE SERIES TRUST, 485APOS, 1994-01-28

CAMBRIDGE SERIES TRUST
485APOS, 1994-01-28

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1933 Act File No. 33-45315
1940 Act File No. 811-6550

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X

Pre-Effective Amendment No. ________. . . . . . .

Post-Effective Amendment No. 5 . . . . . . . X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940. . . . . . . . . . . . . . . . . X

Amendment No. 6 . . . . . . . . . . . . . . X

CAMBRIDGE SERIES TRUST

(Exact Name of Registrant as Specified in Charter)

Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)

(412) 288-1900
(Registrant's Telephone Number)

John W. McGonigle, Esquire
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
on ____________ pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a), or such earlier date as
the Commission may declare the filing effective
on ____________ pursuant to paragraph (a) of Rule 485.

Registrant has filed with the Securities and Exchange Commission a declaration
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and:

X filed the Notice required by that Rule on November 29, 1993; or
intends to file the Notice required by that Rule on or about ___________
__, 1994; or
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.

Copies to:

David M. Carter, Esquire Byron F. Bowman, Esquire
Hunton & Williams 1001 Liberty Avenue
Riverfront Plaza, East Tower Pittsburgh, PA 15222-
3779
951 East Byrd Street
Richmond, VA 23219-4074
CROSS-REFERENCE SHEET

This Amendment to the Registration Statement of Cambridge Series Trust,

which
consists of six portfolios ((1) Cambridge Growth Portfolio, (2) Cambridge
Capital Growth

Portfolio, (3) Cambridge Government Income Portfolio, (4) Cambridge Municipal
Income
Portfolio, (5) Cambridge Income and Growth Portfolio, and (6) Cambridge Global
Portfolio;
all six portfolios offering two separate classes of shares, (a) Class A and (b)
Class B),
relates only to two of the portfolios, Cambridge Government Income Portfolio and
Cambridge
Global Portfolio. A combined prospectus is being filed for the first five
portfolios, a
separate prospectus is being filed for the Cambridge Global Portfolio, and a
combined
Statement of Additional Information is being filed herewith for all six
portfolios. The
portfolios are comprised of the following:

PART A. INFORMATION REQUIRED IN A PROSPECTUS.

Prospectus Heading
(Rule 404(c) Cross Reference)

Item 1. Cover Page. . . . . . . . . . . (1-6) Cover Page.

Item 2. Synopsis. . . . . . . . . . . . (1-6) Summary of Portfolio Expenses.

Item 3. Condensed Financial Information (1-6) Financial Highlights; (1-6)
Performance Information.

Item 4. General Description of
Registrant. . . . . . . . . . (1-6) Cambridge Family of Funds; (1-6)
Investment Information; (1-6)
Investment Objectives and Policies;
(1-6) Investment Practices; (1,2,5,6)
Currency Risks; (4) Risks of
Lower-Grade Municipal Securities.

Item 5. Management of the Fund. . . . .(1-6) Cambridge Series Trust
Information; (1-6) Investment
Management of the Trust; (1-6)
General Information; (1-6) Board of
Trustees; (1-6) Investment Adviser;
(1-6) Investment Advisory Fees; (1-6)
Investment Adviser's Profile; (1-6)
The Sub-Advisers; (1-6) Sub-Advisory
Fees; (1-6) Sub-Advisers' Profiles;
(1-6) Administration of the Trust;
(1-6) Brokerage Transactions; (1-6)
Shareholder Servicing Plan; (1-6)
Expenses of the Portfolios and
Class A and Class B Shares.

Item 6. Capital Stock and Other
Securities. . . . . . . . . . . (1-6) Dividends; (1-6) Capital Gains;
(1-6) Shareholder Information; (1-6)
Voting Rights; (1-6) Massachusetts
Partnership Law; (1-6) Tax
Information.
Item 7. Purchase of Securities Being
Offered . . . . . . . . . . . .(1-6) Net Asset Value; (1-6) How to
Buy Shares; (1-6) Alternative Purchase
Arrangements; (1-6) Through a Financial
Institution; (1-6) Distribution of Fund
Shares; (1b-6b) Distribution Plan;
(1-6) Minimum Investment Required;
(1-6) What Shares Cost; (1-6) When
Net Asset Value is Determined; (1-6)
Purchases at Net Asset Value; (1a-6a)
Reducing the Sales Charge for Class A
Shares; (1-6) Systematic Investment
Program; (1-6) Certificates and
Confirmations; (1-6) Retirement Plans.

Item 8. Redemption or Repurchase. . . .(1-6) Exchange Privilege; (1-6)
Requirements for Exchange; (1-6) Tax
Consequences; (1-6) Making an Exchange;
(1-6) Telephone Instructions; (1-6)
Redeeming Shares; (1-6) Contingent
Deferred Sales Charge; (1-6) Through a
Financial Institution; (1-6) Directly
from the Portfolios; (1-6) Redemption
Before Purchase Instruments Clear;
(1-6) Systematic Withdrawal Program;
(1-6) Accounts with Low Balances.

Item 9. Pending Legal Proceedings. . . None.

PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.

Prospectus Heading
(Rule 404(c) Cross Reference)

Item 10. Cover Page. . . . . . . . . . (1-6) Cover Page.

Item 11. Table of Contents. . . . . . .(1-6) Table of Contents.

Item 12. General Information
and History. . . . . . . . . .(1-6) General Information About the
Trust.

Item 13. Investment Objectives and
Policies. . . . . . . . . . . (1-6) Investment Objectives and
Policies of the Portfolios; (1-6)
Investment Limitations.

Item 14. Management of the Fund. . . . (1-6) Management of the Trust.

Item 15. Control Persons and Principal
Holders of Securities . . . . Not applicable.

Item 16. Investment Advisory and Other
Services. . . . . . . . . . . (1-6) Investment Advisory Services;
(1-6) Administrative Services; (1-6)
Shareholder Servicing Plan.

Item 17. Brokerage Allocation. . . . . (1-6) Brokerage Transactions.

Item 18. Capital Stock and Other
Securities. . . . . . . . . . Not applicable.

Item 19. Purchase, Redemption and Pricing
of Securities Being Offered . (1-6) How to Buy Shares; (1-6)
Determining Net Asset Value; (1-6)
Exchange Privilege; (1-6) Redeeming
Shares.

Item 20. Tax Status . . . . . . . . . .(1-6) Tax Status.

Item 21. Underwriters. . . . . . . . . (1b-6b) Distribution Plan (Class B
Shares).

Item 22. Calculation of Performance
Data. . . . . . . . . . . . . (1-6) Total Return; (1-6) Yield; (4)
Tax-Equivalent Yield; (1-6)
Performance Comparisons.

Item 23. Financial Statements. . . . . (1-6) Incorporated into Part B by
reference to Registrant's Annual
Report dated September 30, 1993.

SUBJECT TO COMPLETION, DATED JANUARY 28, 1994

Cambridge Global Portfolio
(A Portfolio of Cambridge Series Trust)

Prospectus

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").

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

Information contained herein is subject to completion of amendment. A
registration statement relating to these securities has been filed with the

Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.

Table of Contents

Summary of Portfolio Expenses. . . . . . . . . . . . . . . . . 1

Cambridge Family of Funds. . . . . . . . . . . . . . . . . . . 3

Investment Information . . . . . . . . . . . . . . . . . . . . 3
Investment Objective and Policies. . . . . . . . . . . . . . 3
Investment Practices . . . . . . . . . . . . . . . . . . . . 5

Net Asset Value. . . . . . . . . . . . . . . . . . . . . . . . 8

How to Buy Shares. . . . . . . . . . . . . . . . . . . . . . . 8
Minimum Investment Required. . . . . . . . . . . . . . . . . 9
What Shares Cost . . . . . . . . . . . . . . . . . . . . . . 9
When Net Asset Value is Determined . . . . . . . . . . . . . 10
Purchases at Net Asset Value . . . . . . . . . . . . . . . . 10
Reducing the Sales Charge for Class A Shares . . . . . . . . 10
Systematic Investment Program. . . . . . . . . . . . . . . . 12
Certificates and Confirmations . . . . . . . . . . . . . . . 12
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Capital Gains. . . . . . . . . . . . . . . . . . . . . . . . 12
Retirement Plans . . . . . . . . . . . . . . . . . . . . . . 12

Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . 12

Redeeming Shares . . . . . . . . . . . . . . . . . . . . . . . 13

Contingent Deferred Sales Charge . . . . . . . . . . . . . . . 13
Through a Financial Institution. . . . . . . . . . . . . . . 14
Directly from the Portfolio. . . . . . . . . . . . . . . . . 15
Redemptions Before Purchase Instruments Clear. . . . . . . . 16
Systematic Withdrawal Program. . . . . . . . . . . . . . . . 16
Accounts with Low Balances . . . . . . . . . . . . . . . . . 16

Cambridge Series Trust Information . . . . . . . . . . . . . . 16

Investment Management of the Trust . . . . . . . . . . . . . . 17
Investment Adviser . . . . . . . . . . . . . . . . . . . . . 17
Sub-Adviser. . . . . . . . . . . . . . . . . . . . . . . . . 17
Sub-Adviser's Profile. . . . . . . . . . . . . . . . . . . . 18
Distribution of Portfolio Shares . . . . . . . . . . . . . . 18
Administration of the Trust. . . . . . . . . . . . . . . . . 19

Brokerage Transactions . . . . . . . . . . . . . . . . . . . 19
Shareholder Servicing Plan . . . . . . . . . . . . . . . . . 19
Expenses of the Portfolios and the Class A and Class B Shares 20

Shareholder Information. . . . . . . . . . . . . . . . . . . . 20
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . 20
Massachusetts Partnership Law. . . . . . . . . . . . . . . . 21

Tax Information. . . . . . . . . . . . . . . . . . . . . . . . 21

Performance Information. . . . . . . . . . . . . . . . . . . . 21
Summary of Portfolio Expenses

Shareholder Transaction Expenses

Class A Shares Class B Shares

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

Annual Portfolio Operating Expenses*
(As a percentage of average net assets)

Class A Shares
Investment Advisory Fee. . . . . . . . . . . . . . . . . 1.10%(2)
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . None
Total Other Expenses (after waiver)(3) . . . . . . . . . [ ]
Shareholder Service Plan Fees . . . . . . . . . . . 0.25
Total Portfolio Operating Expenses(4) . . . . . . . [ ]

Class B Shares
Investment Advisory Fee. . . . . . . . . . . . . . . . . 1.10%(2)
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . 0.75
Total Other Expenses (after waiver)(3) . . . . . . . . . [ ]
Shareholder Service Plan Fees . . . . . . . . . . . 0.25
Total Portfolio Operating Expenses(4) . . . . . . . [ ]

(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.

(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 fiscal year
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 % for Class A shares and % 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.

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

1 year 3 years 5 years 10 years
You would pay the following expenses on a
$1,000 investment assuming (1) 5% annual
return and (2) no redemption at the end
of each time period:

Class A Shares . . . . . .

Class B Shares . . . . . .

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 Cash Equivalent Fund (which includes the
Money Market Portfolio, Government Securities Portfolio, and Tax-Exempt
Portfolio, each of 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 [ ] years of investment experience and currently
manage or supervise in excess of $[ ] billion on behalf of over [ ]
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 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. 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 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 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.

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 particular 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.

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 for
Class A shares is determined by adding the interest of Class A shares in the
market value of all securities and other assets of the Portfolio, subtracting
the interest of Class A shares in the liabilities of the Portfolio and those
attributable to Class A shares, and dividing the remainder by the total number
of Class A shares outstanding. Likewise, the net asset value for Class B
shares of the Portfolio is determined by adding the interest of Class B shares
in the market value of all securities and other assets of the Portfolio,
subtracting the interest of Class B shares in the liabilities of the Portfolio
and those attributable to Class B shares, and dividing the remainder by the
total number of Class B shares outstanding. The net asset value for Class A

shares will, from time to time, exceed that of Class B shares due to the
variance in daily net income realized by each class of shares. Such variance
will reflect only accrued net income to which the shareholders of a particular
class are entitled.

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 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:

Sales Charge Sales Charge
as a Percentage as a Percentage
of Public of Net Amount Dealer
Offering Price Invested Commission
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)

Commissions will be paid to dealers who initiate and are responsible for
purchases as set forth in the Statement of Additional Information.

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.

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.

$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.

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
Cash Equivalent Fund, which includes the Money Market Portfolio, Government
Securities Portfolio, and Tax-Exempt Portfolio, 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.

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.

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).

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.

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.

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 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
five 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.

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 [ years] of
investment experience and currently manage or supervise in excess of $[ ]
billion on behalf of over [ ] 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
$[ ] 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. Federated Securities Corp., located at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, acts as co-distributor
for Class A and Class B shares of the Portfolios. In addition, Federated
Securities Corp. provides certain marketing and distribution services.
Federated Securities Corp. is an affiliate of the Sub-Adviser to the Cambridge
Government Income Portfolio and of the Administrator. (Cambridge
Distributors, Inc., and Federated Securities Corp. may be referred to
collectively as the "Distributors" or individually as "Distributor.")

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 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;
investment advisory services; taxes and commissions; custodian fees; insurance
provisions; auditors" 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.

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.

Cambridge Global Portfolio

A Diversified Portfolio of Cambridge
Series Trust, an Open-End,

Management Investment Company

Prospectus

Cambridge Series Trust

Cambridge Series Trust (the "Trust"), an open-end management investment company
(a mutual
fund), offers investors interests in the five separate diversified investment
portfolios
described below (collectively, the "Portfolios," and each individually, the
"Portfolio").

Cambridge Growth Portfolio-a Portfolio advised by Kemper Financial Services,
Inc., seeking
growth of capital through professional management and diversification of
investment
securities having potential of capital appreciation.

Cambridge Capital Growth Portfolio-a Portfolio seeking long-term appreciation of
capital
by investing primarily in common stock of companies believed by Phoenix
Investment
Counsel, Inc., the Portfolio's Sub-Adviser, to have appreciation potential.

Cambridge Government Income Portfolio-a Portfolio advised by Pacific Investment
Management Company seeking current income by investing primarily in securities
which are
either issued or guaranteed as to payment of principal and interest by the U.S.
government
or its agencies or instrumentalities.

Cambridge Municipal Income Portfolio-a Portfolio seeking to provide investors
with a high
level of current income exempt from federal regular income tax, consistent with
preservation of capital, by investing, under normal market conditions, at least
80% of its
total assets in tax-exempt municipal securities rated investment grade, or
deemed by Van
Kampen Merritt Management Inc., the Portfolio's Sub-Adviser, to be of comparable
quality.

Cambridge Income and Growth Portfolio-a Portfolio advised by Wellington
Management Company
seeking to provide a conservative combination of income and growth of capital,
consistent
with capital protection.

There can be no assurance that any Portfolio will achieve its investment
objective. Each
Portfolio may also invest in certain other types of securities as further
described in the
prospectus.

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 combined prospectus contains the information you should read and know
before you
invest in any of the Portfolios of the Trust. Keep this prospectus for future
reference.

The Trust has also filed a combined Statement of Additional Information for each
Portfolio, dated November 30, 1993, 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
any of the Portfolios by writing the particular Portfolio or Portfolios 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

Table of Contents

Summary of Portfolio Expenses . . . . . . . . . . . . . . . . . . . . . 1

Cambridge Series Trust
Financial Highlights
Class A Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Cambridge Series Trust
Financial Highlights
Class B Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Cambridge Family of Funds . . . . . . . . . . . . . . . . . . . . . . . 6

Investment Information. . . . . . . . . . . . . . . . . . . . . . . . . 6
Investment Objectives and Policies. . . . . . . . . . . . . . . . . . 6
Cambridge Growth Portfolio. . . . . . . . . . . . . . . . . . . . . . 6
Cambridge Capital Growth Portfolio. . . . . . . . . . . . . . . . . . 7
Cambridge Government Income Portfolio . . . . . . . . . . . . . . . . 7
Cambridge Municipal Income Portfolio. . . . . . . . . . . . . . . . . 8
Cambridge Income and Growth Portfolio . . . . . . . . . . . . . . . . 11
Investment Practices. . . . . . . . . . . . . . . . . . . . . . . . . 12

Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

How to Buy Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Minimum Investment Required . . . . . . . . . . . . . . . . . . . . . 18
What Shares Cost. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
When Net Asset Value is Determined. . . . . . . . . . . . . . . . . . 20
Purchases at Net Asset Value. . . . . . . . . . . . . . . . . . . . . 20
Reducing the Sales Charge for Class A Shares. . . . . . . . . . . . . 20
Systematic Investment Program . . . . . . . . . . . . . . . . . . . . 21
Certificates and Confirmations. . . . . . . . . . . . . . . . . . . . 21
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Capital Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Retirement Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Exchange Privilege. . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Redeeming Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Contingent Deferred Sales Charge. . . . . . . . . . . . . . . . . . . 23
Through a Financial Institution . . . . . . . . . . . . . . . . . . . 24
Directly from the Portfolios. . . . . . . . . . . . . . . . . . . . . 24
Redemptions Before Purchase Instruments Clear . . . . . . . . . . . . 25
Systematic Withdrawal Program . . . . . . . . . . . . . . . . . . . . 26
Accounts with Low Balances. . . . . . . . . . . . . . . . . . . . . . 26

Cambridge Series Trust Information. . . . . . . . . . . . . . . . . . . 26

Investment Management of the Trust. . . . . . . . . . . . . . . . . . . 26
Investment Adviser. . . . . . . . . . . . . . . . . . . . . . . . . . 26
The Sub-Advisers. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Sub-Advisers' Profiles. . . . . . . . . . . . . . . . . . . . . . . . 28
Distribution of Portfolio Shares. . . . . . . . . . . . . . . . . . . 30
Administration of the Trust . . . . . . . . . . . . . . . . . . . . . 30
Brokerage Transactions. . . . . . . . . . . . . . . . . . . . . . . . 31
Shareholder Servicing Plan. . . . . . . . . . . . . . . . . . . . . . 31
Expenses of the Portfolios and the Class A and Class B Shares . . . . 32

Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . 32
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Massachusetts Partnership Law . . . . . . . . . . . . . . . . . . . . 33

Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Performance Information . . . . . . . . . . . . . . . . . . . . . . . . 34

Summary of Portfolio Expenses

<TABLE>
Shareholder Transaction Expenses

Class A Shares Class B Shares
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)
Cambridge Growth Portfolio . . . . . . . 5.50% None
Cambridge Capital Growth Portfolio . . . 5.50% None
Cambridge Government Income Portfolio. . 4.75% None
Cambridge Municipal Income Portfolio . . 4.75% None
Cambridge Income and Growth Portfolio. . 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

Annual Portfolio Operating Expenses
(As a percentage of average net assets)

Cambridge Cambridge Cambridge Cambridge
Cambridge Capital Government Municipal Income and
Growth Growth Income Income Growth
Class A Shares Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee
(after waiver)(2). . . . 0.80% 0.80% 0.60% 0.53% 0.75%
12b-1 Fees. . . . . . . . None None None None None
Total Other Expenses
(after waiver)(3). . . . . . . . 0.61% 0.51% 0.41% 0.42% 0.62%
Shareholder Service Plan Fees 0.25% 0.25% 0.25% 0.25% 0.25%
Total Portfolio Operating
Expenses(4). . . . . . . . . 1.66% 1.56% 1.26% 1.20% 1.62%

Cambridge Cambridge Cambridge Cambridge
Cambridge Capital Government Municipal Income and
Growth Growth Income Income Growth
Class B Shares Portfolio Portfolio Portfolio Portfolio Portfolio*
<S> <C> <C> <C> <C> <C>
Investment Advisory Fee
(after waiver)(2). . . . . 0.80% 0.80% 0.60% 0.53% 0.75%
12b-1 Fees. . . . . . . . . 0.75% 0.75% 0.50% 0.50% 0.75%
Total Other Expenses
(after waiver)(3). . . . . 0.61% 0.51% 0.41% 0.42% 0.62%
Shareholder Service Plan Fees 0.25% 0.25% 0.25% 0.25% 0.25%
Total Portfolio Operating
Expenses(4). . . . . . . . . 2.41% 2.31% 1.76% 1.70% 2.37%

<FN>

(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 on the Cambridge Municipal Income Portfolio has been
reduced to reflect the anticipated voluntary waiver of a portion of the investment
advisory fee by the investment adviser. The investment adviser can terminate this
voluntary waiver of fees at any time in its sole discretion. The maximum investment
advisory fee is 0.60% on the Cambridge Municipal Income Portfolio.

(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 fiscal year 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 for Class A shares, absent the voluntary

waivers of the investment advisory fee and administrative fee for the Cambridge
Municipal Income Portfolio and administrative fees for the Cambridge Growth
Portfolio, Cambridge Capital Growth Portfolio, and Cambridge Government Income
Portfolio are estimated to be 1.71% on Cambridge Growth Portfolio, 1.61% on
Cambridge Capital Growth Portfolio, 1.28% on Cambridge Government Income Portfolio,
and 1.32% on Cambridge Municipal Income Portfolio. Such expenses for Class B shares
would be 2.46% on Cambridge Growth Portfolio, 2.36% on Cambridge Capital Growth
Portfolio, 1.78% on Cambridge Government Income Portfolio, and 1.82% on Cambridge
Municipal Income Portfolio. With respect to the Cambridge Income and Growth
Portfolio, the total Portfolio operating expenses absent the anticipated voluntary
waiver of administrative fees and the voluntary waivers of certain operating
expenses are estimated to be 1.69% for Class A shares and 2.44% for Class B shares.
</TABLE>

The Annual Portfolio Operating Expenses for Class A Shares were 1.66% for
Cambridge
Growth Portfolio, 1.49% for Cambridge Capital Growth Portfolio, 1.04% for
Cambridge
Government Income Portfolio, 0.71% for the Cambridge Municipal Income Portfolio
and 1.56%
for the Cambridge Income and Growth Portfolio for the fiscal year ended
September 30,
1993. Such expenses for Class B Shares were 2.41% for Cambridge Growth
Portfolio, 2.24%
for Cambridge Capital Growth Portfolio, 1.54% for Cambridge Government Income
Portfolio,
1.21% for the Cambridge Municipal Income Portfolio and 2.31% for the Cambridge
Income and

Growth Portfolio. The Annual Portfolio Operating Expenses in the above table
are based on
expenses expected during the fiscal year ending September 30, 1994.

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>
Cambridge Cambridge Cambridge Cambridge
Cambridge Capital Government Municipal Income and
Growth Growth Income Income Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
You would pay the following
expenses on a $1,000
investment assuming (1) 5%
annual return and (2) no
redemption at the end
of each time period:

Class A Shares
1 year . . . . . . . . . $ 71 $ 70 $ 60 $ 59 $ 71
3 years. . . . . . . . . 104 102 86 84 103
5 years. . . . . . . . . 140 135 113 110
10 years . . . . . . . . 241 230 193 186

Class B Shares
1 year . . . . . . . . . $ 24 $ 23 $ 18 $ 17 $ 24
3 years. . . . . . . . . 75 72 55 54 74
5 years. . . . . . . . . 129 124 95 92
10 years . . . . . . . . 275 265 207 201

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
1 year . . . . . . . . . $ 71 $ 70 $ 60 $ 59 $ 71
3 years. . . . . . . . . 104 102 86 84 103

5 years. . . . . . . . . 140 135 113 110
10 years . . . . . . . . 241 230 193 186

Class B Shares
1 year . . . . . . . . . $ 35 $ 34 $ 28 $ 28 $ 34
3 years. . . . . . . . . 75 72 55 54 74
5 years. . . . . . . . . 129 124 95 92
10 years . . . . . . . . 275 265 207 201
</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 Series Trust
Financial Highlights
Class A Shares

(For a share outstanding throughout each period)

The following table has been audited by KPMG Peat Marwick, the Trust's
independent
auditors. Their report dated November 12, 1993 on the Portfolios" financial
statements
for the period ended September 30, 1993 is included in the Combined Annual
Report dated
September 30, 1993, which is incorporated by reference. This table should be
read in

conjunction with each of the Portfolio's financial statements and notes thereto,
which may
be obtained free of charge from the Trust.

<TABLE>
Cambridge Cambridge
Cambridge Cambridge Government Cambridge Income and
Growth Capital Growth Income Municipal Income Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
September 30, September 30, September 30, September 30, September 30,
1993 1992* 1993 1992* 1993 1992** 1993 1992* 1993***
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value

per share,
beginning of
period $14.14 $14.18 $14.21 $14.18 $14.39 $14.30 $14.76 $14.29 $14.14

Income from
investment
operations

Net investment
income (loss) (0.07) 0.03 0.14 0.08 1.06 0.44 0.92 0.32 0.09

Net realized and
unrealized gain
(loss) on
investments 2.65 (0.07) 1.02 0.03 (0.31) 0.09 1.32 0.47 0.73

Total from
investment
operations 2.58 (0.04) 1.16 0.11 0.75 0.53 2.24 0.79 0.82

Less distributions
Dividends from
income - - (0.11) (0.08) (1.06) (0.44) (0.92) (0.32) (0.08)

Distributions
from
capital gains - - - - - - - - -

Distributions
in excess of
net
investment
income (0.03)(d) - - - (0.04)(d) - (0.03)(d) - -

Net asset
value per
share,
end of
period $16.69 $14.14 $15.26 $14.21 $14.04 $14.39 $16.05 $14.76 $14.88

Total
return*** 18.23% (0.28%)(a) 8.21% 0.78%(a) 5.41% 3.37%(a) 16.00% 5.43%(a) 5.54%(a)

Ratios to
Average Net
Assets

Expenses 1.66% 1.33% 1.49% 1.14%(b) 1.04% 0.36%(b) 0.71% 0.00%(b) 1.56%(a)

Net
investment
income
(loss) (0.49%) 0.59%(b) 0.95% 1.54%(b) 7.31% 8.00%(b) 5.92% 6.21%(b) 2.35%(b)

Expense
adjust-
ment(c) 0.12% 0.39% 0.10% 0.29% 0.18% 0.85% 0.68% 1.26% 0.38%

Supplemental Data
Net assets,
end of
period
(000
omitted) $19,708 $11,464 $31,360 $20,864 $47,780 $36,740 $29,245 $18,801 $9,849

Portfolio
turnover
rate 137% 26% 192% 61% 102% 9% 88% 0% 13%

<FN>

* Reflects operations for the period from April 29, 1992 (date of initial public
investment), to September 30, 1992.

** Reflects operations for the period from April 29, 1992 (date of initial public
investment) to September 30, 1992. For the period from the start of business, March
31, 1992, to April 28, 1992, net investment income aggregating $0.05 per share ($319)
was distributed to the Portfolio's investment adviser. Such distribution represented
the net investment income of the Portfolio prior to the initial public investment in
Portfolio shares.

*** Reflects operations for the period from May 24, 1993 (date of initial public
investment) to September 30, 1993.

**** Based on net asset value.

(a) Cumulative total return based on net asset value.

(b) Computed on an annualized basis.

(d) These distributions did not represent a return of capital for federal income tax
purposes for the year ended September 30, 1993.
</TABLE>

Further information about each Portfolio's performance is contained in the
Combined Annual
Report dated September 30, 1993, which can be obtained free of charge.

Cambridge Series Trust
Financial Highlights
Class B Shares

(For a share outstanding throughout each period)

<TABLE>

Cambridge Cambridge Cambridge
Cambridge Cambridge Government Municipal Income and
Growth Capital Growth Income Income Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
September 30, September 30, September 30, September 30, September 30,
1993 1992* 1993 1992* 1993 1992** 1993 1992* 1993****
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value
per share,
beginning of
period $14.14 $14.18 $14.22 $14.18 $14.40 $14.30 $14.78 $14.29 $14.14

Income from
investment
operations

Net investment
income
(loss) (0.14) (0.01) 0.05 0.46 0.99 0.41 0.82 0.29 0.05

Net realized
and unrealized
gain (loss) on
investments 2.59 (0.03) 1.02 0.04 (0.31) 0.10 1.32 0.49 0.77

Total from
investment
operations 2.45 (0.04) 1.07 0.50 0.68 0.51 2.14 0.78 0.82

Less
distributions

Dividends
from income - - (0.05) (0.46) (0.99) (0.41) (0.82) (0.29) (0.05)

Distributions

from capital
gains - - - - - - - - -

Distributions
in excess
of net
investment
income - - (0.01)(d) - (0.03)(d) - (0.04)(d) - -

Net asset
value per
share,
end of
period $16.59 $14.14 $15.23 $14.22 $14.06 $14.40 $16.06 $14.78 $14.91

Total
return**** 17.33% (0.28%)(a) 7.52% 0.61%(a) 4.86% 3.24%(a) 15.27% 5.28%(a) 5.54%(a)

Ratios to
Average Net
Assets

Expenses 2.41% 2.07%(b) 2.24% 1.86%(b) 1.54% 0.83%(b) 1.21% 0.50%(b) 2.31%(b)

Net
investment
income
(loss) (1.24%) (0.17%)(b) 0.21% 0.83%(b) 6.81% 7.53%(b) 5.42% 5.80%(b) 1.60%(b)

Expense
adjust-
ment(c) 0.12% 0.40% 0.10% 0.30% 0.18% 0.84% 0.68% 1.26% 0.38%

Supplemental
Data

Net assets,
end of
period
(000
omitted) $35,069 $13,828 $57,030 $25,468 $127,346 $65,661 $50,976 $24,265 $18,127

Portfolio
turnover
rate 137% 26% 192% 61% 102% 9% 88% 0% 13%

<FN>
* Reflects operations for the period from April 29, 1992 (date of initial public
investment) to September 30, 1992.

** Reflects operations for the period from May 24, 1993 (date of initial public

investment) to September 30, 1993.

*** Based on net asset value.

(a) Cumulative total return based on net asset value.

(b) Computed on an annualized basis.

(d) These distributions did not represent a return of capital for federal income tax
purposes for the year ended September 30, 1993.
</TABLE>

Further information about each Portfolio's performance is contained in the
Combined Annual
Report dated September 30, 1993, which can be obtained free of charge.
Cambridge Family of Funds

The Portfolios, together with the Cash Equivalent Fund (which includes the
Money Market Portfolio, Government Securities Portfolio, and Tax-Exempt
Portfolio, each of 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 [ ] years of investment experience and currently
manage or supervise in excess of $[ ] billion on behalf of over [ ]
million shareholder or client accounts.

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 Objectives and Policies

Set forth below is a description of the investment objectives and policies of
each Portfolio. The investment objectives of each 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 applicable
Portfolio's outstanding voting securities. All other investment policies of a
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 Portfolios, see
"Investment Practices."

Cambridge Growth Portfolio

The investment objective of the Cambridge Growth Portfolio is growth of
capital through professional management and diversification of investments in
securities it believes to have potential of capital appreciation. The
Portfolio will be invested primarily in securities which Kemper Financial
Services, Inc. ("KFS"), the Portfolio's Sub-Adviser, believes offer the
potential for capital appreciation. The Portfolio invests primarily in common
stocks but can invest in any securities with potential for capital growth.

In seeking to obtain capital appreciation, the Portfolio may trade to some
degree in securities for the short term. To this extent, the Portfolio will
be engaged in trading operations based on short-term market considerations as
distinct from long-term investment based upon fundamental valuation of
securities. However, the Portfolio will emphasize fundamental research in
attempting to identify under-valued situations which are anticipated will
appreciate over the longer term.

In seeking to achieve its objective, it will be the Portfolio's policy to
invest primarily in securities which it believes will offer the potential for
increasing the Portfolio's total asset value.

While it is anticipated that most investments will be in common stocks of
companies with above-average growth prospects, investments may also be made to
a limited degree in other common stocks and in convertible securities, such as
bonds and preferred stocks. There may be times when a significant portion of
the Portfolio's assets may be held temporarily in cash or defensive-type

securities, depending upon the Sub-Adviser's analysis of business and economic
conditions and the outlook for security prices. For these purposes,
defensive-type securities include high-grade debt securities (rated "A" or
above); securities issued by the U.S. government, its agencies or
instrumentalities; and high-quality money market instruments, including
repurchase agreements.
Some of the factors the Sub-Adviser will consider in making investments for
the Portfolio are patterns of increasing growth in sales and earnings, the
development of new or improved products or services, favorable outlooks for
growth in the industry, the probability of increased operating efficiencies,
emphasis on research and development, cyclical conditions, or other signs that
a company is expected to show greater than average capital appreciation and
earnings growth.

Cambridge Capital Growth Portfolio

The investment objective of the Cambridge Capital Growth Portfolio is to
provide long-term appreciation of capital. Since income is not an objective,
any income generated by the investment of the Portfolio's assets will be
incidental to its objective. Phoenix Investment Counsel, Inc. ("PIC"), the
Portfolio's Sub-Adviser, intends to invest primarily in the common stock of
companies believed by management to have appreciation potential. However,
since no one class or type of security at all times necessarily affords the
greatest promise for capital appreciation, the Portfolio may invest any amount

or proportion of its assets in any class or type of security believed by the
Sub-Adviser to offer potential for capital appreciation over both the
intermediate and long term. Normally, the Portfolio's investments will
consist largely of common stocks selected for the promise that they offer
appreciation of capital. However, the Portfolio may also invest in preferred
stocks, investment-grade bonds, convertible preferred stocks, and convertible
debentures if, in the judgment of the Sub-Adviser, the investment would
further its investment objective. It is anticipated that investment in bonds
during periods of historically high interest rates or during periods of high
interest rates during the interest rate cycle will lead to capital gains in
such bonds when interest rates fall, causing the value of the bonds to
increase. Each security held will be monitored to determine whether it is
contributing to the basic objective of long-term appreciation of capital.

The Sub-Adviser believes that a portfolio of such securities provides the most
effective way to obtain capital appreciation, but when, for temporary
defensive purposes (as when market conditions for equity securities are
adverse), other types of investments appear advantageous on the basis of
combined considerations of risk and the protection of capital values,
investments may be made in fixed income securities with or without warrants or

conversion features. In an effort to protect its assets against major market
declines, or for other temporary defensive purposes, the Portfolio may
actively pursue a policy of retaining cash or investing part or all of its
assets in high-quality money market instruments and repurchase agreements.

Diversification is an important consideration in selecting investments for the
Portfolio. However, greater emphasis will be placed upon careful selection of
securities believed to have good potential for appreciation than upon wide
diversification.

Cambridge Government Income Portfolio

The investment objective of the Cambridge Government Income Portfolio is to
provide current income. The Portfolio, which is advised by Pacific
Investment Management Company ("PIMCO"), pursues this objective by investing
primarily in securities which are either issued or guaranteed as to payment of
principal and interest by the U.S. government or its agencies or
instrumentalities. The Portfolio may also invest in certain mortgage-related
securities. Under normal circumstances, the Portfolio will invest at least
65% of the value of its total assets in U.S. government securities.

The U.S. government securities in which the Portfolio invests include:

. direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and

. obligations of U.S. government agencies or instrumentalities, such as
Federal Home Loan Banks, Federal Farm Credit Banks, Federal National
Mortgage Association, Government National Mortgage Association, and
Federal Home Loan Mortgage Corporation.

The obligations of the U.S. government agencies or instrumentalities which the
Portfolio may buy are backed by:

. the full faith and credit of the U.S. Treasury;

. the issuer's right to borrow from the U.S. Treasury;

. the discretionary authority of the U.S. government to purchase certain
obligations of the agency or instrumentality; or

. the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities whose obligations are permissible

investments but may not always receive financial support from the U.S.
government are: Federal Land Banks; Central Bank for Cooperatives; Federal
Intermediate Credit Banks; Federal Home Loan Banks; and Federal National
Mortgage Association. See "Investment Practices" for additional information
regarding mortgage-related securities, stripped mortgage securities, and
dollar roll transactions.

Cambridge Municipal Income Portfolio

The investment objective of the Cambridge Municipal Income Portfolio is to
provide investors with a high level of current income exempt from federal
regular income tax, consistent with preservation of capital. Van Kampen
Merritt Management Inc. ("VKMMI"), serves as the Sub-Adviser to the Portfolio.
Under normal market conditions, the Portfolio will invest at least 80% of its
total assets in tax-exempt municipal securities rated investment grade, or
deemed by the Sub-Adviser to be of comparable quality, at the time of
investment.

Investment-grade securities are securities rated BBB or higher by Standard and
Poor's Corporation ("S&P") or Baa or higher by Moody's Investors Service, Inc.
("Moody's"), in the case of long-term obligations, or which have equivalent
ratings in the case of short-term obligations. Securities rated BBB by S&P
are regarded by S&P as having an adequate capacity to pay interest and repay
principal. Whereas such securities normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest or repay principal for
debt in this category than in higher rated categories. Securities rated Baa
by Moody's are considered by Moody's as medium-grade obligations. Such
securities 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. They lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.

Up to 20% of the Portfolio's total assets may be invested in tax-exempt
municipal securities rated between BB and B-(inclusive) by S&P or between Ba
and B3 (inclusive) by Moody's (or equivalently rated short-term obligations)
and unrated tax-exempt securities that the Sub-Adviser considers to be of
comparable quality. These securities are below investment grade and are
regarded by S&P, on balance, as predominantly speculative with respect to the
capacity to pay interest and repay principal in accordance with the terms of
the obligation. While such securities will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions. These securities are regarded by
Moody's as generally lacking characteristics of a desirable investment.
Assurance of interest and principal payments or of maintenance of other terms

of the securities" contract over any long period of time may be small. Debt
securities rated below investment grade are commonly referred to as "junk
bonds." The Portfolio will not invest in securities rated below B- by S&P or
below B3 by Moody's at the time of purchase. For a description of S&P's and
Moody's ratings, see the Appendix to the combined Statement of Additional
Information.

From time to time, the Portfolio temporarily may also invest up to 10% of its
assets in tax-exempt money market funds, subject to the restrictions of
Section 12(d)(1)(A) of the Investment Company Act of 1940. Such instruments
will be treated as investments in municipal securities.
The Portfolio may invest a substantial portion of its assets in municipal
securities that pay interest that is subject to the federal alternative
minimum tax. The Portfolio may not be a suitable investment for investors who
are already subject to the federal alternative minimum tax or who would become
subject to the federal alternative minimum tax as a result of an investment in
the Portfolio.

Municipal Securities. Tax-exempt municipal securities are debt obligations
issued by or on behalf of the governments of states, territories, or
possessions of the United States; the District of Columbia; their political
subdivisions, agencies, and instrumentalities; and certain interstate
agencies, the interest on which, in the opinion of bond counsel or other
counsel to the issuer of such securities, is exempt from federal regular
income tax. Under normal market conditions, up to 100%, but not less than
80%, of the Portfolio's assets will be invested in such municipal securities.
The foregoing is a fundamental policy of the Portfolio and cannot be changed
without approval of the shareholders of the Portfolio.

The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit, and taxing power for the payment of
principal and interest. Revenue bonds are usually 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. Industrial development bonds are usually revenue bonds, the credit
quality of which is normally directly related to the credit standing of the
industrial user involved.

There are, in addition, a variety of hybrid and special types of municipal
securities, including variable rate securities, municipal notes, and municipal
leases. Variable rate securities bear rates of interest that are adjusted
periodically according to formulae intended to minimize fluctuation in values
of the instruments. Municipal notes include tax, revenue, and bond
anticipation notes of short maturity, generally less than three years, which
are issued to obtain temporary funds for various public purposes. Municipal
leases are obligations issued by state and local governments or authorities to
finance the acquisition of equipment and facilities and may be considered not
to be liquid. They may take the form of a lease, an installment purchase
contract, a conditional sales contract, or a participation certificate on any
of the above. A more detailed description of the types of municipal
securities in which the Portfolio may invest is included in the Statement of
Additional Information.

From time to time, proposals have been introduced before Congress that would

have the effect of reducing or eliminating the federal tax exemption on
municipal securities. If such a proposal were enacted, the ability of the
Portfolio to pay tax-exempt interest dividends might be adversely affected.

Risks of Lower-Grade Municipal Securities. The Portfolio may invest up to 20%
of its total assets in lower-grade tax-exempt municipal securities or in
unrated municipal securities considered by the Sub-Adviser to be of comparable
quality. Lower-grade municipal securities are rated between BB and B-by S&P
or between Ba and B3 by Moody's, in each case inclusive of such rating
categories. Higher yields are generally available from municipal securities
of such grade. With respect to such 20% of the Portfolio's total assets, the
Portfolio has not established any limit on the percentage of its portfolio
which may be invested in securities in any one rating category.

Investment in lower-grade municipal securities involves special risks as
compared with investment in higher-grade municipal securities. The market for
lower-grade municipal securities is considered to be less liquid than the
market for investment-grade municipal securities, which may adversely affect
the ability of the Portfolio to dispose of such securities in a timely manner
at a price which reflects the value of such securities. The market price for
less liquid securities tends to be more volatile than the market price for
more liquid securities. Illiquid securities and the absence of readily
available market quotations with respect thereto may make the valuation of
such securities more difficult, and the judgment of the Trust's officers and
Trustees may play a greater role in the valuation of the Portfolio's
securities. Lower-grade municipal securities generally involve greater credit
risk than higher-grade municipal securities and are more sensitive to adverse
economic changes, significant increases in interest rates, and individual
issuer developments. Because issuers of lower-grade municipal securities
frequently choose not to seek a rating of their municipal securities, the
Portfolio will rely more heavily on the Sub-Adviser's ability to determine the
relative investment quality of such securities than if the Portfolio invested
exclusively in higher-grade municipal securities. The Portfolio may, if
deemed appropriate by the Sub-Adviser, retain a security whose rating has been
downgraded below B-by S&P or below B3 by Moody's, or whose rating has been
withdrawn. More detailed information concerning the risks associated with
instruments in lower-grade municipal securities is included in the Statement
of Additional Information.

The Sub-Adviser seeks to minimize the risks involved in investing in
lower-grade municipal securities through diversification and careful
investment analysis. To the extent that there is no established retail market

for some of the lower-grade municipal securities in which the Portfolio may
invest, trading in such securities may be relatively inactive. During periods
of reduced market liquidity and in the absence of readily available market
quotations for lower-grade municipal securities held in the Portfolio, the
ability to value the Portfolio's securities becomes more difficult and the use
of judgment may play a greater role in the valuation of the Portfolio's
securities due to the reduced availability of reliable objective data. The
effects of adverse publicity and investor perceptions may be more pronounced
for securities for which no established market exists as compared with the
effects on securities for which such a market does exist. Further, the
Portfolio may have more difficulty selling such securities in a timely manner
and at their stated value than would be the case for securities for which an
established market does exist.

Investors should carefully consider the risks of owning shares of an
investment company which invests in lower-grade municipal securities before
making an investment in the Portfolio. The higher yield on certain securities
held by the Portfolio reflects a greater possibility that the financial
condition of the issuer, or adverse changes in general economic conditions, or
both, may impair the ability of the issuer to make payments of income and
principal.

Concentration. The Portfolio generally will not invest more than 25% of its
total assets in any industry, nor will the Portfolio generally invest more
than 5% of its assets in the securities of any single issuer. Governmental
issuers of municipal securities are not considered part of any "industry."
However, municipal securities backed only by the assets and revenues of
nongovernmental users may for this purpose be deemed to be issued by such
nongovernmental users, and the 25% limitation would apply to such obligations.
It is nonetheless possible that the Portfolio may invest more than 25% of its
assets in a broader segment of the municipal securities market, such as
revenue obligations of hospitals and other health care facilities, housing
agency revenue obligations, or airport revenue obligations if the Sub-Adviser
determines that the yields available from obligations in a particular segment
of the market justify the additional risks associated with a large investment
in such segment. Although such obligations could be supported by the credit
of governmental users, or by the credit of nongovernmental users engaged in a
number of industries, economic, business, political, and other developments
generally affecting the revenues of such users (for example, proposed
legislation or pending court decisions affecting the financing of such
projects and market factors affecting the demand for their services or
products) may have a general adverse effect on all municipal securities in
such a market segment. The Portfolio reserves the right of investing more
than 25% of its assets in industrial development bonds or in issuers located

in any individual state, although the Sub-Adviser has no present intention to
invest more than 25% of the Portfolio's assets in issuers located in the same
state. If the Portfolio were to invest more than 25% of its assets in issuers
located in one individual state, it would be more susceptible to adverse
economic, business, or regulatory conditions in that state.

Cambridge Income and Growth Portfolio

The investment objective of the Cambridge Income and Growth Portfolio is to
provide a conservative combination of income and growth of capital, consistent
with capital protection. To achieve the Portfolio's objective, Wellington
Management Company ("WMC"), the Portfolio's Sub-Adviser, will invest the
Portfolio's assets in a diversified portfolio of equity securities of
companies that it believes exhibit sound fundamental characteristics and
investment-grade fixed-income securities, as well as U.S. government
securities, as described below. The Portfolio's holdings in common stocks
provide long-term appreciation potential and dividend growth, while
diversification into bonds provides current income and reduces the overall
volatility of returns. The Portfolio will typically exhibit less investment
risk than a portfolio consisting entirely of common stocks.

The Sub-Adviser will manage the allocation of assets among asset classes based
upon its judgment of the projected investment environment for financial
assets, relative fundamental values and attractiveness of each asset class,

and expected future returns of each asset class. The Sub-Adviser will base
its asset allocation decisions on fundamental analysis and will not attempt to
make short-term market timing decisions among asset classes. As a result,
changes in allocation to stocks and bonds are expected to be gradual, and the
Portfolio will normally have some portion of its assets invested in each asset
class at all times. The Portfolio does not have percentage limitations on the
amount allocated to each asset class.

Within the equity asset class, the Portfolio seeks to achieve long-term
appreciation of capital and a moderate income level by selecting investments
which have attractive dividend yields, improving fundamentals, and are
reasonably valued by the market. Accordingly, the Portfolio's equity
investments will generally be focused on stocks of companies which the
Sub-Adviser believes have the potential to provide above-average potential
total returns and which sell at below-average price/earnings multiples. These
equity investment decisions are based primarily on the Sub-Adviser's
fundamental research and security valuations. The primary equity investment
universe for the Portfolio will consist of companies with large market
capitalizations.

Within the fixed income asset class, the Portfolio seeks to provide as high a
level of current income as is consistent with prudent investment risk.
Investment management of the fixed income asset class will focus on relative
value and yield spreads among security types and among quality, issues, and
industry sectors, call protection, and credit research. Credit research on
corporate bonds is based on both quantitative and qualitative criteria
established by the Sub-Adviser, such as an issuer's industry, operating and
financial profiles, business strategy, management quality, and projected
financial and business conditions.

The Portfolio will contain a broadly diversified mix of investments including
the following acceptable investments:

Equity Securities. The Portfolio may invest in common stocks and other equity
securities, such as preferred stocks and debt securities with conversion
privileges or warrants. The Portfolio may also invest in equity securities,
including convertible debt securities, of real estate related companies and
real estate investment trusts. The Portfolio will limit its investment in
real estate investment trusts to 10% of its total assets. All real estate
securities will be publicly traded, primarily on an exchange.

Real Estate Securities. Although the Portfolio's investments in real
estate will be limited to publicly traded securities secured by real
estate or interests therein or issued by companies which invest in real
estate or interests therein, the Portfolio may be subject to risks
associated with direct ownership of real estate. These include declines
in the value of real estate, risks related to general and local economic
conditions and increases in interest rates.

Other risks associated with real estate investments include the fact that
equity and mortgage real estate investment trusts are dependent upon
management skill, are not diversified, and are, therefore, subject to the
risk of financing single projects or a limited number of projects. They
are also subject to heavy cash flow dependency, defaults by borrowers, and
self-liquidation.

Additionally, equity real estate investment trusts may be affected by any
changes in the value of the underlying property owned by the trust, and
mortgage real estate investment trusts may be affected by the quality of
any credit extended.

Fixed Income Securities. The debt securities in which the Portfolio invests,
including zero-coupon securities, will be rated at the time of purchase within
the four highest bond ratings by Moody's or S&P or, if unrated, deemed to be

of equivalent quality by the Sub-Adviser. While bonds carrying the fourth
highest quality rating ("Baa" by Moody's or "BBB" by S&P) are considered as
investment grade and are viewed to have adequate capacity for payment of
principal and interest, investments in such securities involve a higher degree
of risk than that associated with investments in debt securities in the higher
rating categories, and such bonds lack outstanding investment characteristics
and have speculative characteristics as well. For example, changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than is the case
with higher grade bonds. If a security's rating is reduced below the required
minimum after the Portfolio has purchased it, the Portfolio is not required to
sell the security, but may consider doing so. A description of the rating
categories is contained in the Appendix to the combined Statement of
Additional Information.

U.S. Government Securities. The Portfolio may invest in securities issued or
guaranteed as to principal or interest by the U.S. government or its agencies
or instrumentalities, including mortgage-related securities. These U.S.
government securities include:

. direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and

The obligations of the U.S. government agencies or instrumentalities which the
Portfolio may buy are backed by:

. the full faith and credit of the U.S. Treasury;

. the issuer's right to borrow from the U.S. Treasury;

. the discretionary authority of the U.S. government to purchase certain
obligations of the agency or instrumentality; or

. the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities whose obligations are permissible
investments but may not always receive financial support from the U.S.
government are: Federal Land Banks; Central Bank for Cooperatives; Federal
Intermediate Credit Banks; Federal Home Loan Banks; and Federal National
Mortgage Association. See "Investment Practices" for additional information
regarding mortgage-related securities, stripped mortgage securities, and

dollar roll transactions.

Investment Practices

Except as noted otherwise below, each of the Portfolios may engage in one or
more of the following investment practices or may purchase one or more of the
following investments.

Mortgage-Related Securities. The mortgage-related securities in which the
Cambridge Government Income Portfolio and Cambridge Income and Growth
Portfolio invest are generally issued by Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA"), and
Federal Home Loan Mortgage Corporation ("FHLMC"), or are privately issued
(such as collateralized mortgage obligations described below), and are
actively traded. The underlying mortgages which collateralize
mortgage-related securities issued by GNMA are fully guaranteed by the Federal
Housing Administration ("FHA") or Veterans Administration ("VA"), while those
collateralizing mortgage-related securities issued by FHLMC or FNMA are
typically conventional residential mortgages conforming to strict underwriting
size and maturity constraints. Mortgage-related securities provide for a
periodic payment consisting of both interest and principal. The interest
portion of these payments will be distributed by the Portfolios as income, and
the capital portion will be reinvested.

Unlike conventional bonds, mortgage-related securities pay back principal over
the life of the mortgage-related securities rather than at maturity. At the
time that a holder of a mortgage-related security reinvests the payments and
any unscheduled prepayment of principal that it receives, the holder may
receive a rate of interest which is actually lower than the rate of interest
paid on the existing mortgage-related securities. As a consequence,
mortgage-related securities may be a less effective means of "locking-in"
long-term interest rates than other types of U.S. government securities.

The Portfolios may also invest in certain collateralized mortgage obligations
("CMOs") which are rated AAA by a nationally recognized statistical rating
organization and which are issued by private entities such as investment
banking firms and companies related to the construction industry. The CMOs in
which the Portfolios may invest may be: (i) privately issued securities which
are collateralized by pools of mortgages in which each mortgage is guaranteed
as to payment of principal and interest by an agency or instrumentality of the
U.S. government; (ii) privately issued securities which are collateralized by
pools of mortgages in which payment of principal and interest are guaranteed
by the issuer and such guarantee is collateralized by U.S. government
securities; or (iii) other privately issued securities in which the proceeds
of the issuance are invested in mortgage-backed securities, and payment of the
principal and interest are supported by the credit of any agency or
instrumentality of the U.S. government.

While mortgage-related securities generally entail less risk of a decline
during periods of rapidly rising interest rates, mortgage-related securities
may also have less potential for capital appreciation than other similar
investments (e.g., investments with comparable maturities) because, as
interest rates decline, the likelihood increases that mortgages will be

prepaid. Furthermore, if mortgage-related securities are purchased at a
premium, mortgage foreclosures and unscheduled principal payments may result

in some loss of a holder's principal investment to the extent of the premium
paid. Conversely, if mortgage-related securities are purchased at a discount,
both a scheduled payment of principal and an unscheduled prepayment of
principal would increase current and total returns and would accelerate the
recognition of income, which would be taxed as ordinary income when
distributed to shareholders.

Stripped Mortgage Securities. The Cambridge Government Income Portfolio and
the Cambridge Income and Growth Portfolio may invest in stripped mortgage
securities. Stripped mortgage securities are derivative multiclass securities
which may be issued by agencies or instrumentalities of the U.S. government,
or by private originators of, or investors in, mortgage loans, such as savings
and loan associations, mortgage banks, commercial banks, investment banks, and
special purpose subsidiaries of the foregoing organizations. The market
volatility of stripped mortgage securities tends to be greater than the market
volatility of the other types of mortgage-related securities in which the
Portfolios invest. Principal-only stripped mortgage securities are used
primarily to hedge against interest rate risk to the capital assets of the
Portfolios in a changing interest rate environment. If the mortgage assets
which underlie the stripped mortgage securities were to experience greater
than anticipated prepayments of principal, a Portfolio could fail to fully
recoup its initial investment in these securities, even if they are rated in
the highest rating categories (e.g., AAA or Aaa by S&P or Moody's,
respectively).

Dollar Roll Transactions. In order to enhance portfolio returns and manage
prepayment risks, the Cambridge Government Income Portfolio and Cambridge
Income and Growth Portfolio may engage in dollar roll transactions with
respect to mortgage-related securities issued by GNMA, FNMA, and FHLMC. In a
dollar roll transaction, a 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 Portfolios 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 Portfolios exceeding the yield. When a 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.

Money Market Instruments. In order to invest cash which is awaiting long-term
investment, to maintain liquidity, or for temporary defensive purposes, each
of the Portfolios may purchase money market instruments. To the extent that
investments in money market instruments are not for defensive purposes, each
of the Portfolios, except the Cambridge Municipal Income Portfolio, agrees to
limit its investment in these securities to 35% of its total assets. To the
extent the Cambridge Municipal Income Portfolio invests in money market
instruments for other than defensive purposes, it will limit its investment in
these securities to 20% of its total assets. For these purposes, money market

instruments will be limited to short-term obligations of the U.S. government
or its agencies or instrumentalities; certificates of deposit, time deposits,
and bankers" acceptances issued by banks or savings and loan associations
having assets of at least $500 million as of the end of their most recent
fiscal year; short-term corporate debt securities; and high-quality commercial
paper. Each of the Portfolios may also invest up to 10% of its assets in
shares of money market funds whose investments are limited to money market
instruments which each Portfolio could purchase directly.

Repurchase Agreements. Each Portfolio, other than the Cambridge Municipal
Income 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.

When-Issued and Delayed Delivery Transactions. Each Portfolio may purchase
securities on a when-issued or delayed delivery basis. In when-issued and
delayed delivery transactions, the Portfolio relies on the seller to complete
the transaction. The seller's failure to complete the transaction may cause
the Portfolio to miss a price or yield considered to be advantageous.

Lending of Portfolio Securities. In order to generate additional income, each
Portfolio, other than the Cambridge Municipal Income Portfolio, may lend
portfolio securities up to one-third of the value of its total assets to
broker/dealers, banks, or other institutional borrowers of securities on a
short-term basis. A Portfolio will only enter into loan arrangements with
broker/dealers, banks, or other institutions which the particular Sub-Adviser
has determined are creditworthy under guidelines established by the Trust's

Board of Trustees and will receive collateral in the form of cash or U.S.
government securities equal to at least 100% of the value of the securities
loaned.

Borrowing. Each of the Portfolios may, under certain circumstances, borrow
money directly or through reverse repurchase agreements (arrangements in which
the Portfolio sells a money market instrument for a percentage of its cash
value with an agreement to buy it back on a set date) or pledge securities.
The Cambridge Municipal Income Portfolio may borrow up to 5% of its total
assets and may pledge up to 10% of the value of those assets to secure such
borrowings. Under certain circumstances, each remaining Portfolio may borrow
up to one-third of the value of its net assets and pledge up to 10% of the
value of those assets to secure such borrowings.

Put and Call Options. Each of the Portfolios, except the Cambridge Municipal
Income Portfolio and Cambridge Income and Growth Portfolio, may purchase put
and call options on its portfolio securities. However, the Cambridge Growth
Portfolio will only invest in options that are traded on securities exchanges
and for which it pays a premium (cost of option). Put and call options will
be used as a hedge to attempt to protect securities which the particular
Portfolio holds, or will be purchasing, against decreases or increases in
value. Each of the Portfolios, except the Cambridge Growth Portfolio and
Cambridge Income and Growth Portfolio, may also write (sell) put and call
options on all or any portion of its portfolio to generate income or enhance

potential gain. The Portfolios will write call options on securities either
held in their portfolios or for which they have the right to obtain without
payment of further consideration or for which they have segregated cash in the
amount of any additional consideration. In the case of put options written by
the Portfolios, 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.

Each of the Portfolios, except the Cambridge Growth Portfolio and Cambridge
Income and Growth 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
Portfolios are not traded on an exchange. The Portfolios purchase and write
options only with investment dealers and other financial institutions (such as
commercial banks or savings and loan associations) deemed creditworthy by the
particular Portfolio's Sub-Adviser.

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. Each 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 Portfolios (except the Cambridge Income and Growth Portfolio) may write
call options and purchase put options on financial futures contracts as a
hedge to attempt to protect securities in each portfolio against decreases in
value resulting from anticipated increases in market interest rates or broad
declines in securities prices. When a 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 Portfolios (except the Cambridge Income and Growth 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 Portfolios 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 a 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.

A 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 a
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.

When a 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 that Portfolio. This may cause the futures contract and any
related options to react differently than the portfolio securities to market
changes. In addition, the particular 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. The Cambridge Growth Portfolio, Cambridge Capital Growth
Portfolio, and Cambridge Income and Growth Portfolio may invest in foreign
securities. The Cambridge Growth Portfolio, Cambridge Capital Growth
Portfolio, and Cambridge Income and Growth Portfolio will limit investments in
foreign securities not publicly traded in the United States to less than 10%,
15%, and 10% of their total assets, respectively.

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.

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. Foreign securities are denominated in foreign currencies.
Therefore, the value in U.S. dollars of the Portfolios" assets and income
may be affected by changes in exchange rates and regulations. Although
the Portfolios value their assets daily in U.S. dollars, they will not
convert their holdings of foreign currencies to U.S. dollars daily. When
a Portfolio converts its holdings to another currency, it may incur
conversion costs. Foreign exchange dealers realize a profit on the
difference between the prices at which they buy and sell currencies.

The Cambridge Growth Portfolio, Cambridge Capital Growth Portfolio, and
Cambridge Income and Growth Portfolio will engage in foreign currency
exchange transactions in connection with their investments in foreign
securities. These Portfolios will conduct their foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or through forward
contracts to purchase or sell foreign currencies.

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 a 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, a
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.

A 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 Portfolios
generally do not enter into forward foreign currency exchange contracts
with a term longer than one year.

Restricted and Illiquid Securities. The Portfolios may invest up to 10% of
their net assets in restricted securities. Restricted securities are any
securities in which the Portfolios may otherwise invest pursuant to its
investment objective and policies but which are subject to restrictions on

resale under federal securities laws. The Portfolios 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.

Portfolio Turnover. The annual turnover rate of the Portfolios 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
Portfolios as regulated investment companies under the Internal Revenue Code,
as amended, in order to receive certain favorable tax treatment. With respect
to the Cambridge Government Income Portfolio, the Portfolio may trade or
dispose of portfolio securities as considered necessary to meet its investment
objective. Higher portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs.

For additional information concerning the Portfolios" investment policies and
limitations, see the combined Statement of Additional Information.

Net Asset Value

Each Portfolio's net asset value per share fluctuates. The net asset value
for Class A shares of each Portfolio is determined by adding the interest of
Class A shares in the market value of all securities and other assets of the
particular Portfolio, subtracting the interest of Class A shares in the
liabilities of the particular Portfolio and those attributable to Class A
shares, and dividing the remainder by the total number of Class A shares
outstanding. Likewise, the net asset value for Class B shares of each
Portfolio is determined by adding the interest of Class B shares in the market
value of all securities and other assets of the particular Portfolio,
subtracting the interest of Class B shares in the liabilities of the
particular Portfolio and those attributable to Class B shares, and dividing
the remainder by the total number of Class B shares outstanding. The net
asset value for Class A shares will, from time to time, exceed that of Class B
shares due to the variance in daily net income realized by each class of
shares. Such variance will reflect only accrued net income to which the
shareholders of a particular class are entitled.

How to Buy Shares

Class A and Class B shares of the Portfolios are sold on days on which the New
York Stock Exchange is open for business. Class A and Class B shares of each
Portfolio may be purchased through a financial institution which has a sales
agreement with the Distributor. Each Portfolio reserves the right to reject

any purchase request.

Alternative Purchase Arrangements. Each Portfolio offers two classes of
shares, Class A and Class B shares. The Class A shares of each 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 each Portfolio under the
circumstances described in the section entitled "Contingent Deferred Sales
Charge." The Class B shares of each Portfolio are sold at net asset value and
are redeemed at net asset value. However, a CDSC may be imposed on the
redemption of Class B shares of each Portfolio under the circumstances
described in the section entitled "Contingent Deferred Sales Charge." Class A

and Class B shares represent identical interests in the Portfolios and have
the same rights and are identical in all respects, except that Class B shares
of each 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 each Portfolio will be reduced by such amount to the extent
that the particular Portfolio has undistributed net income. Sales personnel
may receive different compensation for selling Class A and Class B shares of
the Portfolios.

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 a particular 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 particular 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.

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 each 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 Cambridge Growth Portfolio, Cambridge
Capital Growth Portfolio, and Cambridge Income and Growth Portfolio are sold
at their net asset value next determined after an order is received plus a
sales charge as follows:

<TABLE>
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.

Class A shares of the Cambridge Government Income Portfolio and Cambridge

Municipal Income Portfolio are sold at their net asset value next determined
after an order is received plus a sales charge as follows:

<TABLE>
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 $100,000 . . . . . . 4.75% 4.99% 4.00%
$100,000 but less than $250,000 4.00% 4.17% 3.25%
$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.

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.

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 each 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 each 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 a
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 Portfolios 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.

Reducing the Sales Charge for Class A Shares

The sales charge imposed on purchases of Class A shares of the Portfolios can
be reduced through:

. quantity discounts and accumulated purchases;

. signing a 13-month letter of intent;

. using the reinvestment privilege; or

. concurrent purchases.

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 Growth 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%.

Reinvestment Privilege. If Class A shares of any of the Portfolios 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
any of the Portfolios, 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 Growth 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 Growth Portfolio

shares.

Systematic Investment Program

Once an account with a Portfolio has been opened, shareholders may add to
their investment in that 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 particular 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 a Portfolio may only purchase Class A shares of that
Portfolio under this program.

Certificates and Confirmations

As transfer agent for the Portfolios, 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 daily and paid monthly to all shareholders
invested in the Cambridge Government Income Portfolio and the Cambridge
Municipal Income Portfolio on the record date. Any dividends for the
Cambridge Income and Growth Portfolio are declared and paid quarterly to all
shareholders invested in the Cambridge Income and Growth Portfolio on the
record date. Dividends, if any, are declared and paid semi-annually to all
shareholders invested in the Cambridge Capital Growth Portfolio on the record

date, and dividends, if any, are declared and paid annually to all
shareholders invested in the Cambridge Growth Portfolio on the record date.
Dividends will be reinvested in additional shares of the same class and
Portfolio 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 each Portfolio, if any, will be distributed at least
once every 12 months.

Retirement Plans

Class A and Class B shares of the Portfolios can be purchased as an investment

for retirement plans or for IRA accounts. For further details, including
prototype retirement plans, contact the Portfolios 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 Cash Equivalent Fund, which includes the Money Market Portfolio,
Government Securities Portfolio, and Tax-Exempt Portfolio, 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.

is being made.

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.

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.

If reasonable procedures are not followed by the Portfolios, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.

Redeeming Shares

Each 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
each Portfolio computes its net asset value. Redemptions can be made through
a financial institution or directly from each Portfolio. Redemption requests
must be received in proper form.

Contingent Deferred Sales Charge

Class A Shares. Shareholders who purchased Class A shares of the Portfolios
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 any 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
any 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.

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 Portfolios 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."

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 Portfolios of accounts with low balances (see
"Accounts with Low Balances" below).

Through a Financial Institution

A shareholder may redeem Class A or Class B shares of the Portfolios 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 Portfolios will be
redeemed at the net asset value next determined, less the applicable CDSC,
after the particular 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 particular 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 particular 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 Portfolios

By Telephone. Shareholders may redeem their Class A and Class B shares of the
Portfolios 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 Portfolios, 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
Portfolios 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.

. 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 Portfolios do not accept signatures guaranteed by a notary public.

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

Systematic Withdrawal Program

value of Class A or Class B shares redeemed under this program, redemptions
may reduce, and eventually deplete, the shareholder's investment in the
particular Portfolio. For this reason, payments under the program should not
be considered as yield or income on the shareholder's investment in the
particular Portfolio. To be eligible to participate in this program, a
shareholder must have an initial account value in the particular Portfolio of
at least $10,000.

Accounts with Low Balances

Due to the high cost of maintaining accounts with low balances, the Portfolios
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 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 any
particular 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

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 each
sub-adviser selected for the Portfolios (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.

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.

Investment Advisory Fees. The Investment Adviser receives an annual
investment advisory fee from each Portfolio. For performing its
responsibilities, the Investment Adviser receives an annual investment
advisory fee not to exceed the following percentages of the average daily net
assets of the particular Portfolio: Cambridge Growth Portfolio, 0.80%;
Cambridge Capital Growth Portfolio, 0.80%; Cambridge Government Income
Portfolio, 0.60%; Cambridge Municipal Income Portfolio, 0.60%; and Cambridge

Income and Growth Portfolio, 0.75%. The advisory fee for the Cambridge Growth
Portfolio, Cambridge Capital Growth Portfolio, and Cambridge Income and Growth
Portfolio, while higher than the advisory fee paid by other mutual funds in
general, is comparable to the advisory fees paid by many mutual funds with
similar objectives and policies. 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 respective Portfolios
for a portion of the Portfolios" 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 185 years of
investment experience and currently manage or supervise in excess of $210
billion on behalf of over 10.5 million shareholders or client accounts.

The Sub-Advisers

As discussed below under the section entitled "Sub-Advisers" Profiles," each
Portfolio has a separate Sub-Adviser. Each Sub-Adviser has complete
discretion to purchase, manage, and sell portfolio securities for the
Portfolio to which it serves as Sub-Adviser within the particular Portfolio's
investment objectives, restrictions, and policies.

Sub-Advisory Fees. The Investment Adviser pays each Sub-Adviser an annual fee
not to exceed the following percentage of Portfolio assets: Cambridge Growth
Portfolio, 0.40%; Cambridge Capital Growth Portfolio, 0.40%; Cambridge
Government Income Portfolio, 0.30%; and Cambridge Municipal Income Portfolio,
0.30%. The Sub-Adviser to the Cambridge Income and Growth Portfolio receives
from the Investment Adviser an annual fee expressed as a percentage of that

Portfolio's assets as follows: 0.325% on the first $50 million in Portfolio
assets, 0.275% on the next $150 million in assets, 0.225% on the next $300
million in assets, and 0.200% on assets over $500 million. No performance or
incentive fees are paid to the Sub-Advisers. Under certain Sub-Advisory
Agreements, the particular 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-Advisers' Profiles

Cambridge Growth Portfolio. Under the terms of a Sub-Advisory Agreement
between Kemper Financial Services, Inc. ("KFS"), and the Investment
Adviser, KFS serves as the Sub-Adviser to the Cambridge Growth Portfolio.
KFS is located at 120 South LaSalle Street, Chicago, Illinois 60603, and
is a majority-owned subsidiary of Kemper Corporation, a diversified
insurance and financial services holding company. KFS is one of the
largest investment managers in the country. KFS has been engaged in the
management of investment funds for more than 40 years. In addition to
serving as Sub-Adviser for the Cambridge Growth Portfolio, KFS and its
affiliates provide investment advice and manage investment portfolios for
the Kemper Insurance Companies, The Kemper Funds, and other corporate,
pension, profit sharing and individual accounts and acts as investment
adviser or principal underwriter for 25 open-end and 6 closed-end
investment companies with 58 separate investment portfolios, representing
more than 3.3 million shareholder accounts. Total assets under management
by KFS and its affiliates are approximately $70 billion.

Stephen E. Lewis has been co-manager of the Cambridge Growth Portfolio
since 1992. Mr. Lewis joined Kemper Financial Services in 1971 and is
currently a Senior Vice President of the firm. He has served as
co-portfolio manager of the Kemper Growth Fund since 1991; previously, he
had been Director of Equity Research since 1987. Mr. Lewis is a Chartered
Financial Analyst and received his M.B.A. from the Wharton Graduate
Division of the University of Pennsylvania.

Michael K. Arends has been co-manager of the Cambridge Growth Portfolio
since 1992. Mr. Arends joined Kemper Financial Services in 1983, and is
currently First Vice President of the firm. He has served as co-portfolio
manager of the Kemper Growth Fund since 1991; previously, he had been
Associate Director of Research from 1987 through 1991. Mr. Arends is a
Chartered Financial Analyst and Certified Public Accountant and received
his M.B.A. from Indiana University.

Cambridge Capital Growth Portfolio. Under the terms of a Sub-Advisory
Agreement between Phoenix Investment Counsel, Inc. ("PIC"), and the
Investment Adviser, PIC serves as the Sub-Adviser to the Cambridge Capital
Growth Portfolio. PIC is located at One American Row, Hartford,
Connecticut 06115-2520. PIC was originally organized in 1932 as John P.
Chase, Inc., and has been engaged in the management of mutual funds since
1958. Total assets under management by PIC are currently $10 billion.

All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning"), an indirect subsidiary of Phoenix Home
Life Mutual Insurance Company ("Phoenix Home Life") of Hartford,

Connecticut. Phoenix Home Life is in the business of writing ordinary and
group life and health insurance and annuities. Its principal offices are
located at One American Row, Hartford, Connecticut 06115. Equity Planning
is registered as a broker/dealer in 50 states and has its principal
offices at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200.

Catherine Dudley has been the portfolio manager of the Cambridge Capital
Growth Portfolio since its inception in 1992. Ms. Dudley joined Phoenix
Investment Counsel in 1985 and has been a Vice President since 1990. Ms.
Dudley is a Chartered Financial Analyst and received B.A.s in Economics
and German from the University of Connecticut.

Cambridge Government Income Portfolio. Under the terms of an interim
Sub-Advisory Agreement between PIMCO and the Investment Adviser, PIMCO
serves as Sub-Adviser to the Cambridge Government Income Portfolio. The
terms of this agreement, including compensation, are identical to those of
the previous sub-advisory agreement between Federated Advisers and the
Trust, except that the agreement will terminate upon the earlier to occur
of (1) 120 days from commencement of the agreement or (2) final
adjournment of the meeting of the shareholders of the Cambridge Government
Income Portfolio held for the purpose of approving a new advisory
agreement with PIMCO. It is currently anticipated that this shareholders
meeting will be held during the first quarter of 1994. PIMCO, established
in 1971, provides investment advisory services to investment companies,
pension plans, foundations, endowments and other institutions located both
in the U.S. and abroad. As of November 30, 1993, PIMCO had over $52.6
billion of assets under management, of which approximately $26.0
billion were invested in U.S. Government securities. PIMCO, a wholly
owned subsidiary of Pacific Mutual Life Insurance Company, is located at
840 Newport Center Drive, Suite 360, Newport Beach, California 92660.

David H. Edington serves as the portfolio manager of the Cambridge
Government Income Portfolio. An Executive Vice President of PIMCO, Mr.
Edington joined the firm in 1987. He received a Bachelor's degree in
Engineering from the California Polytechnic State University and a
Master's degree in Management from the Sloan School of Management at
M.I.T.

Cambridge Municipal Income Portfolio. Under the terms of a Sub-Advisory
Agreement between Van Kampen Merritt Management Inc. ("VKMMI") and the
Investment Adviser, VKMMI serves as the Sub-Adviser to the Cambridge
Municipal Income Portfolio. VKMMI, located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, was incorporated in 1990 and commenced
operations in 1992. VKMMI currently provides investment advice to a wide
variety of individual, institutional, and investment company clients.
VKMMI is a wholly-owned subsidiary of The Van Kampen Merritt Companies,
Inc., which, in turn, is a wholly-owned subsidiary of VKM Holding, Inc.
VKM Holding, Inc., is indirectly controlled by Clayton & Dubilier
Associates IV Limited Partnership, the general partners of which are

Joseph L. Rice, III, B. Charles Ames, Alberto Cribiore, Donald J. Gogel,
and Hubbard C. Howe, each of whom is a principal of Clayton, Dubilier &
Rice, Inc., a New York-based private investment firm.

The current Sub-Advisory Agreement between VKMMI and the Investment
Adviser was approved by shareholders of the Portfolio on February 5, 1993.
On February 17, 1993, the Sub-Advisory Agreement between the Portfolios"
previous sub-adviser, Van Kampen Merritt Investment Advisory Corp.
("Advisory Corp."), and the Investment Adviser terminated. The rate of
the sub-advisory fee to be paid to VKMMI under the current Sub-Advisory
Agreement is identical to that paid to Advisory Corp. under the former
Sub-Advisory Agreement, and the terms of the two contracts are
substantially identical. VKMMI is staffed by personnel formerly employed
by Advisory Corp. and continues to use the resources of Advisory Corp. in
managing client accounts. As of June 30, 1993, VKMMI, together with
Advisory Corp., managed or supervised approximately $37.5 billion of
assets.

David C. Johnson has been co-manager of the Cambridge Municipal Income
Portfolio since 1992. Mr. Johnson joined Van Kampen Merritt in 1989, and
is currently First Vice President of the firm. He has served as portfolio
manager of the VKM Municipal Income Portfolio since 1989 and is
responsible for the municipal fund desk. He was previously associated
with The Chicago Corporation, where he marketed financial futures and
options. Mr. Johnson received his M.B.A. from Loyola University.

William V. Grady has been co-manager of the Cambridge Municipal Income
Portfolio since 1992. Mr. Grady is Vice President of Van Kampen Merritt,
which he joined in 1992. He is portfolio manager for several national and
speciality state funds. He was previously associated with Municipal Bond
Investors Assurance Corporation where he structured insured tax-exempt
financings for two years, and was employed by CIGNA Investments Inc. from
1984-1990 as a portfolio manager and research analyst. Mr. Grady is a
Chartered Financial Analyst, and received his B.B.A. in Finance from the
University of Notre Dame.

Cambridge Income and Growth Portfolio. The Investment Adviser employs
Wellington Management Company ("WMC") to manage the investment and
reinvestment of the assets of the Cambridge Income and Growth Portfolio
and to continuously review, supervise, and administer the Portfolio's
investment program. WMC, located at 75 State Street, Boston,
Massachusetts 02109, is a professional investment counseling firm which
provides investment services to investment companies, employee benefit
plans, endowments, foundations, and other institutions and individuals. As

of September 30, 1993, WMC had discretionary investment management
authority with respect to approximately $80.0 billion in assets. WMC and
its predecessor organizations have provided investment advisory services
to investment companies since 1933 and to investment counseling clients
since 1960.

Paul D. Kaplan, Senior Vice President of WMC, and Arnold C. Schneider III,
Senior Vice President of WMC, have served as portfolio managers to the
Portfolio since its inception in May 1993, when WMC became Sub-Adviser to
the Portfolio. Mr. Kaplan manages the fixed-income and U.S. government
securities portion of the Portfolio, and Mr. Schneider manages the equity
securities portion of the Portfolio. Mr. Kaplan has been a portfolio
manager with WMC since 1982 and Mr. Schneider has been a portfolio manager
with WMC since 1987.

Distribution of Portfolio Shares

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 Cambridge Growth Portfolio, Cambridge Capital
Growth Portfolio, and Cambridge Income and Growth 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 particular Portfolio to finance any activity which is
principally intended to result in the sale of those Class B shares. The Class
B shares of the Cambridge Government Income Portfolio and the Cambridge
Municipal Income Portfolio will pay an amount computed at an annual rate of
0.50% of the average daily net asset value of Class B shares of the particular
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 particular 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 Portfolios. 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 Plan is a compensation type plan. As such, the Portfolios make no
payments to the Distributor except as described above. Therefore, the
Portfolios do 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 Portfolios under the Plan.

Administration of the Trust

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

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 a 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 a Portfolio.

Shareholder Servicing Plan

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.

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.

Shareholder Information

Voting Rights

Massachusetts Partnership Law

Tax Information

General. The Portfolios do not anticipate having to pay federal income tax
because each Portfolio 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.

Each 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 a 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 Portfolios, other than Cambridge
Municipal Income Portfolio, which is discussed below, 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.

Cambridge Municipal Income Portfolio. With respect to the Cambridge Municipal
Income Portfolio, shareholders are not required to pay the federal regular
income tax on any dividends received from the Portfolio that represent net
interest on tax-exempt municipal bonds. However, under the Tax Reform Act of
1986, dividends representing net interest earned on some municipal bonds may
be included in calculating the federal individual alternative minimum tax or
the federal alternative minimum tax for corporations.

The alternative minimum tax, equal to up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it exceeds the
regular tax for the taxable year. Alternative minimum taxable income is equal
to the regular taxable income of the taxpayer increased by certain "tax
preference" items not included in regular taxable income and reduced by only a
portion of the deductions allowed in the calculation of the regular tax.

The Tax Reform Act of 1986 treats interest on certain "private activity" bonds
issued after August 7, 1986, as a tax preference item. Unlike traditional
governmental purpose municipal bonds, which finance roads, schools, libraries,
prisons and other public facilities, private activity bonds provide benefits
to private parties. The Portfolio may purchase all types of municipal bonds,
including private activity bonds.

In addition, in the case of a corporate shareholder, dividends of the
Portfolio which represent interest on municipal bonds may be subject to the
20% corporate alternative minimum tax because the dividends are included in a
corporation's "adjusted current earnings." The corporate alternative minimum
tax treats 75% of the excess of a taxpayer's pre-tax "adjusted current
earnings" over the taxpayer's alternative minimum taxable income as a tax
preference item. "Adjusted current earnings" is based upon the concept of a
corporation's "earnings and profits." Since "earnings and profits" generally
includes the full amount of any Portfolio dividend, and alternative minimum
taxable income does not include the portion of the Portfolio's dividend
attributable to municipal bonds which are not private activity bonds, the
difference will be included in the calculation of the corporation's
alternative minimum tax.

Dividends of the Portfolio representing net interest income earned on some

temporary investments and any realized net short-term gains are taxed as
ordinary income.

Information on the tax status of dividends and distributions is provided
annually.

Performance Information

From time to time, each Portfolio advertises its total return, yield, and, as
applicable, tax-equivalent yield.

Total return represents the change, over a specified period of time, in the
value of an investment in a particular 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 each Portfolio is calculated by
dividing the net investment income per share (as defined by the Securities and
Exchange Commission) earned by the particular Portfolio over a thirty-day
period by the maximum offering price per Class A and Class B share of that
Portfolio on the last day of the period. This number is then annualized using
semi-annual compounding. With respect to the Cambridge Municipal Income
Portfolio, the tax-equivalent yield of the Portfolio is calculated similarly
to the yield but is adjusted to reflect the taxable yield that the Portfolio
would have had to earn to equal its actual yield, assuming a specific tax
rate. The yield and tax-equivalent yield do not necessarily reflect income
actually earned by each 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 each Portfolio, and other non-recurring charges,
such as the CDSC, in the case of Class A and Class B shares of each
Portfolio, which, if excluded, would increase the total return, yield and, as
applicable, tax-equivalent yield. Each 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 particular Portfolio.

From time to time, the Trust may advertise its performance using certain
reporting services and/or compare its performance to certain indices.

[THIS PAGE INTENTIONALLY LEFT BLANK]

Cambridge Series Trust

Prospectus

An Open-End Management
Investment Company

. Cambridge Growth Portfolio

. Cambridge Capital Growth Portfolio

. Cambridge Government Income Portfolio

. Cambridge Municipal Income Portfolio

. Cambridge Income and Growth Portfolio

January , 1994

SUBJECT TO COMPLETION, DATED JANUARY 28, 1994

Cambridge Series Trust
Cambridge Growth Portfolio
Cambridge Capital Growth Portfolio
Cambridge Government Income Portfolio
Cambridge Municipal Income Portfolio
Cambridge Income and Growth Portfolio
Cambridge Global Portfolio

Statement of Additional Information

This combined Statement of Additional Information should be read with
the combined Prospectus of Cambridge Series Trust (the "Trust") dated
, 1994. This Statement is not a prospectus itself. To
receive a copy of the Prospectus, write to the Trust or call 1-800-382-
0016.

Statement dated , 1994

Information contained herein is subject to completion of amendment. A
registration
statement relating to these securities has been filed with the Securities and
Exchange
Commission. These securities may not be sold nor may offers to buy be accepted
prior to
the time the registration statement becomes effective. This prospectus shall
not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any
sale of these securities in any State in which such offer, solicitation or sale
would be
unlawful prior to registration or qualification under the securities laws of any
such
State.

Table of Contents

General Information About the
Trust 1

Investment Objectives and Policies
of the Portfolios 1
Repurchase Agreements 1
When-Issued and Delayed
Delivery Transactions 1
Lending of Portfolio Securities1
Bank Instruments 2
Restricted Securities 2
Lower-Grade Municipal
Securities 2
Zero-Coupon Securities 4
Reverse Repurchase
Agreements 5
Futures and Options
Transactions 5
Futures Contracts 5
Put Options on Futures
Contracts 5
Call Options on Futures
Contracts 6
"Margin" in Futures
Transactions 7
Regulatory Restrictions 7
Purchasing Put Options on
Portfolio Securities 7
Writing Covered Call Options
on Portfolio Securities 7
Over-the-Counter Options 7
Collateralized Mortgage
Obligations (CMOs) 8
Convertible Securities 8
Warrants 8
Dollar Rolls 8
Swaps, Caps, Floors and
Collars 9
10
High Yield, High Risk Debt
Securities 10
Indexed Securities 10
Currency Transactions 11
Risk of Currency
Transactions 11
Eurodollar Instruments 12
Portfolio Turnover 12

Investment Limitations 12

Management of the Trust 15
Officers and Trustees 15
Ownership of Portfolios 16
Trustee Liability 16

Investment Advisory Services 16
Investment Adviser 16
Investment Adviser Fees 16
The Sub-Advisers 17

Distribution of Portfolio
Shares 18

Administrative Services 19

Shareholder Servicing Plan 19

Brokerage Transactions 20

How to Buy Shares 21
Distribution Plan (Class B
Shares) 21
Conversion to Federal Funds 21
Purchases at Net Asset Value 22

Determining Net Asset Value 22
Determining Market Value of
Securities 22

Exchange Privilege 22

Redeeming Shares 23
Contingent Deferred Sales
Charge 23
Redemptions in Kind 23

Tax Status 23
The Portfolios' Tax Status 23
Shareholders' Tax Status 24

Total Return 25

Yield 25

Tax-Equivalent Yield (Municipal
Income Portfolio) 26
Tax-Equivalency Table 26

Performance Comparisons 27

Financial Statements 29

Appendix 30

General Information About the Trust

The Trust was established as a Massachusetts business trust on January 20, 1992.
As of

the date of this Statement, the Trust consists of two classes of shares of
beneficial
interest, Class A and Class B shares, in each of the following six separate
portfolios
of securities (collectively, the "Portfolios" and each individually, the
"Portfolio"):
Cambridge Growth Portfolio ("Growth Portfolio"); Cambridge Capital Growth
Portfolio
("Capital Growth Portfolio"); Cambridge Government Income Portfolio ("Government
Income
Portfolio"); Cambridge Municipal Income Portfolio ("Municipal Income
Portfolio"); and
Cambridge Income and Growth Portfolio ("Income and Growth Portfolio"); and
Cambridge
Global Portfolio ("Global Portfolio").

Investment Objectives and Policies of the Portfolios

The Prospectus discusses the objective of each Portfolio and the policies it
employs to
achieve those objectives. The following discussion supplements the description
of the
Portfolios' investment policies in the Prospectus. The Portfolios' respective
investment
objectives cannot be changed without approval of shareholders. Except as noted,
the
investment policies described below may be changed by the Board of Trustees

without
shareholder approval. Shareholders will be notified before any material change
in these
policies becomes effective.

Repurchase Agreements

The Portfolios or their custodian will take possession of the securities subject
to
repurchase agreements and these securities will be marked to market daily. In
the event
that a defaulting seller filed for bankruptcy or became insolvent, disposition
of such
securities by a Portfolio might be delayed pending court action. The Portfolios
believe
that, under the regular procedures normally in effect for custody of a
Portfolio's
portfolio securities subject to repurchase agreements, a court of competent
jurisdiction
would rule in favor of a Portfolio and allow retention or disposition of such
securities.
The Portfolios will only enter into repurchase agreements with banks and other
recognized
financial institutions, such as broker/dealers, which are deemed by the adviser
to be
creditworthy pursuant to guidelines established by the Board of Trustees.

When-Issued and Delayed Delivery Transactions

The Portfolios may engage in when-issued and delayed delivery transactions.
These
transactions are arrangements in which a Portfolio purchases securities with
payment and
delivery scheduled for a future time. A Portfolio engages in when-issued and
delayed
delivery transactions only for the purpose of acquiring portfolio securities
consistent
with its investment objective and policies, not for investment leverage, but a
Portfolio
may sell such securities prior to settlement date if such a sale is considered
to be
advisable. No income accrues to the Portfolios on securities in connection with
such
transactions prior to the date the Portfolios actually take delivery of

securities. In
when-issued and delayed delivery transactions, a Portfolio relies on the seller
to
complete the transaction. The seller's failure to complete the transaction may
cause a
Portfolio to miss a price or yield considered to be advantageous.

These transactions are made to secure what is considered to be an advantageous
price or
yield for a Portfolio. Settlement dates may be a month or more after entering
into these
transactions, and the market values of the securities purchased may vary from
the purchase
prices. No fees or other expenses, other than normal transaction costs, are
incurred.
However, liquid assets of a Portfolio sufficient to make payment for the
securities to be
purchased are segregated at the trade date. These securities are marked to
market daily
and are maintained until the transaction is settled. As a matter of policy, the
Portfolios, other than the Municipal Income Portfolio, do not intend to engage
in when-
issued and delayed delivery transactions to an extent that would cause the
segregation of
more than 20% of the total value of their respective assets.

Lending of Portfolio Securities

The collateral received when a Portfolio lends portfolio securities must be
valued daily
and, should the market value of the loaned securities increase, the borrower
must furnish
additional collateral to the particular Portfolio. During the time portfolio
securities
are on loan, the borrower pays a Portfolio any dividends or interest paid on
such
securities. Loans are subject to termination at the option of a Portfolio or

the
borrower. A Portfolio may pay reasonable administrative and custodial fees in
connection
with a loan and may pay a negotiated portion of the interest earned on the cash
or
equivalent collateral to the borrower or placing broker.

A Portfolio would not have the right to vote securities on loan, but would
terminate the
loan and regain the right to vote if that were considered important with respect
to the
investment.

Bank Instruments

The Portfolios may invest in the instruments of banks and savings and loans
whose deposits
are insured by the Bank Insurance Fund or the Savings Association Insurance
Fund, both of
which are administered by the Federal Deposit Insurance Corporation ("FDIC"),
such as
certificates of deposit, demand and time deposits, savings shares, and bankers'
acceptances. However, the above-mentioned instruments are not necessarily
guaranteed by
those organizations. In addition to domestic bank obligations, such as
certificates of
deposit, demand and time deposits, savings shares, and bankers' acceptances, the
Portfolios may invest in:

. Eurodollar Certificates of Deposit ("ECDs") issued by foreign branches of U.S.
or foreign banks;

. Eurodollar Time Deposits ("ETDs"), which are U.S. dollar-denominated deposits
in foreign branches of U.S. or foreign banks;

. Canadian Time Deposits, which are U.S. dollar-denominated deposits issued by
branches of major Canadian banks located in the U.S.; and

. Yankee Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-
denominated certificates of deposit issued by U.S. branches of foreign
banks and held in the U.S.

Restricted Securities

The Portfolios may invest in restricted securities. Restricted securities are
any
securities in which each Portfolio may otherwise invest pursuant to its
investment
objective and policies but which are subject to restriction on resale under
federal
securities law.

The ability of the Board of Trustees to determine the liquidity of certain
restricted
securities is permitted under a Securities and Exchange Commission ("SEC") Staff

position
set forth in the adopting release for Rule 144A under the Securities Act of 1933
(the
"Rule"). The Rule is a non-exclusive, safe-harbor for certain secondary market
transactions involving securities subject to restrictions on resale under
federal
securities laws. The Rule provides an exemption from registration for resales
of
otherwise restricted securities to qualified institutional buyers. The Rule was
expected
to further enhance the liquidity of the secondary market for securities eligible
for
resale under the Rule. The Trust, on behalf of the Portfolios, believes that
the Staff of
the SEC has left the question of determining the liquidity of all restricted
securities
(eligible for resale under Rule 144A) for determination of the Trust's Board of
Trustees.
The Board of Trustees considers the following criteria in determining the
liquidity of
certain restricted securities.

. the frequency of trades and quotes for the security;

. the number of dealers willing to purchase or sell the security and the number
of other potential buyers;

. dealer undertakings to make a market in the security; and

. the nature of the security and the nature of the marketplace trades.

Lower-Grade Municipal Securities

In normal circumstances, at least 80% of the Municipal Income Portfolio's total
assets
will be invested in investment-grade tax-exempt municipal securities and up to
20% of the
Municipal Income Portfolio's total assets may be invested in lower-grade tax-
exempt
municipal securities. The amount of available information about the financial
condition
of municipal securities issuers is generally less extensive than that for
corporate
issuers with publicly traded securities, and the market for tax-exempt municipal
securities is considered to be generally less liquid than the market for
corporate debt
obligations. Liquidity relates to the ability of a Portfolio to sell a security
in a
timely manner at a price which reflects the value of that security. As
discussed below,
the market for lower-grade tax-exempt municipal securities is considered

generally to be
less liquid than the market for investment-grade tax-exempt municipal
securities.
Further, municipal securities in which the Municipal Income Portfolio may invest

include
special obligation bonds, lease obligations, participation certificates and
variable rate
instruments. The market for such securities may be particularly less liquid.
The
relative illiquidity of some of the Municipal Income Portfolio's securities may
adversely
affect the ability of the Municipal Income Portfolio to dispose of such
securities in a
timely manner and at a price which reflects the value of such security in the
Trust's
judgment. Although the issuer of some such municipal securities may be
obligated to
redeem such securities at face value, such redemption could result in capital
losses to
the Municipal Income Portfolio to the extent that such municipal securities were
purchased
by the Municipal Income Portfolio at a premium to face value. The market for
less liquid
securities tends to be more volatile than the market for more liquid securities,
and
market values of relatively illiquid securities may be more susceptible to
change as a
result of adverse publicity and investor perceptions than are the market values
of higher
grade, more liquid securities.

The Municipal Income Portfolio's net asset value will change with changes in the
value of
its portfolio securities. Because the Municipal Income Portfolio will invest
primarily in
fixed income municipal securities, the Municipal Income Portfolio's net asset
value can be
expected to change as general levels of interest rates fluctuate. When interest
rates
decline, the value of a portfolio invested in fixed income securities can be
expected to
rise. Conversely, when interest rates rise, the value of a portfolio invested
in fixed
income securities can be expected to decline. Net asset value and market value

may be
volatile due to the Municipal Income Portfolio's investment in lower-grade and
less liquid
municipal securities. Volatility may be greater during periods of general
economic
uncertainty.

To the extent that there is no established retail market for some of the
securities in
which the Municipal Income Portfolio may invest, there may be relatively
inactive trading
in such securities and the ability of the Trust to accurately value such
securities may be
adversely affected. During periods of reduced market liquidity and in the
absence of

readily available market quotations for securities held in the Municipal Income
Portfolio,
the responsibility of the Trust to value the Municipal Income Portfolio's
securities
becomes more difficult and the Trust's judgment may play a greater role in the
valuation
of the Municipal Income Portfolio's securities due to the reduced availability
of reliable
objective data. To the extent that the Municipal Income Portfolio invests in
illiquid
securities and securities which are restricted as to resale, the Municipal
Income
Portfolio may incur additional risks and costs. Illiquid and restricted
securities are
particularly difficult to dispose of. When determining whether municipal leases
purchased
by the Municipal Income Portfolio will be classified as a liquid or illiquid
security, the
Board of Trustees has directed the Sub-Adviser to consider the following
factors: the
frequency of trades and quotes for the security; the volatility of quotations
and trade
prices for the security; the number of dealers willing to purchase or sell the
security
and the number of potential purchases; dealer undertaking to make a market in
the
security; the nature of the security and the nature of the marketplace trades
(e.g., the
time needed to dispose of the security, the method of soliciting offers, and the

mechanics
of transfer); the rating of the security and the financial condition and
prospects of the
issuer of the security; whether the lease can be terminated by the lessee; the
potential
recovery, if any, from a sale of the leased property upon termination of the
lease; the
lessee's general credit strength (e.g., its debt, administrative, economic and
financial
characteristics and prospects); the likelihood that the lessee will discontinue
appropriating funding for the leased property because the property is no longer
deemed
essential to its operations (e.g., the potential for an "event of
nonappropriation"); any
credit enhancement or legal recourse provided upon an event of nonappropriation
or other
termination of the lease; and such other factors as may be relevant to the
Portfolio's
ability to dispose of the security.

Lower-grade tax-exempt municipal securities generally involve greater credit
risk than
higher-grade municipal securities. A general economic downturn or a significant
increase
in interest rates could severely disrupt the market for lower-grade tax-exempt
municipal

securities and adversely affect the market value of such securities. In
addition, in such
circumstances, the ability of issuers of lower-grade tax-exempt municipal
securities to
repay principal and to pay interest, to meet projected financial goals and to
obtain
additional financing may be adversely affected. Such consequences could lead to
an
increased incidence of default for such securities and adversely affect the
value of the
lower-grade tax-exempt municipal securities in the Municipal Income Portfolio
and, thus,
the Portfolio's net asset value. The secondary market prices of lower-grade
tax-exempt
municipal securities are less sensitive to changes in interest rates than are
those for
higher rated tax-exempt municipal securities, but are more sensitive to adverse
economic

changes or individual issuer developments. Adverse publicity and investors'
perceptions,
whether or not based on rational analysis, may also affect the value and
liquidity of
lower-grade tax-exempt municipal securities.

Yields on the Municipal Income Portfolio's securities can be expected to
fluctuate over
time. In addition, periods of economic uncertainty and changes in interest
rates can be
expected to result in increased volatility of the market prices of the lower-
grade tax-
exempt municipal securities in the Municipal Income Portfolio's portfolio and,
thus, in
the net asset value of the Portfolio. Net asset value and market value may be
volatile
due to the Municipal Income Portfolio's investment in lower-grade and less
liquid
municipal securities. Volatility may be greater during periods of general
economic
uncertainty. The Municipal Income Portfolio may incur additional expenses to
the extent
it is required to seek recovery upon a default in the payment of interest or a
repayment
of principal on its portfolio holdings, and the Municipal Income Portfolio may
be unable
to obtain full recovery thereof. In the event that an issuer of securities held
by the
Municipal Income Portfolio experiences difficulties in the timely payment of
principal or
interest, and such issuer seeks to restructure the terms of its borrowings, the
Municipal
Income Portfolio may incur additional expenses and may determine to invest
additional
capital with respect to such issuer or the project or projects to which the
Municipal
Income Portfolio's securities relate. Recent and proposed legislation may have

an adverse
impact on the market for lower-grade tax-exempt municipal securities. Recent
legislation
requires federally-insured savings and loan associations to divest their
investments in
lower-grade bonds. Other legislation has, from time to time, been proposed
which, if

enacted, could have an adverse impact on the market for lower-grade tax-exempt
municipal
securities.

The Municipal Income Portfolio will rely on the Sub-Adviser's judgment,
analysis, and
experience in evaluating the creditworthiness of an issue. In this evaluation,
the Sub-
Adviser will take into consideration, among other things, the issuer's financial
resources, its sensitivity to economic conditions and trends, its operating
history, the
quality of the issuer's management and regulatory matters. The Sub-Adviser also
may
consider, although it does not rely primarily on, the credit ratings of Standard
& Poor's
Corporation ("S&P") and Moody's Investors Service, Inc. ("Moody's"), in
evaluating tax-
exempt municipal securities. Such ratings evaluate only the safety of principal
and
interest payments, not market value risk. Additionally, because the
creditworthiness of
an issuer may change more rapidly than is able to be timely reflected in changes
in credit
ratings, the Sub-Adviser continuously monitors the issuers of tax-exempt
municipal
securities held in the Municipal Income Portfolio. The Municipal Income
Portfolio may, if
deemed appropriate by the Sub-Adviser, retain a security whose rating has been
downgraded
below B-by S&P or below B3 by Moody's, or whose rating has been withdrawn.

Because issuers of lower-grade tax-exempt municipal securities frequently choose
not to
seek a rating of their municipal securities, the Sub-Adviser will be required to
determine
the relative investment quality of many of the municipal securities in the
Municipal
Income Portfolio. Further, because the Municipal Income Portfolio may invest up
to 20% of
its total assets in these lower-grade municipal securities, achievement by the
Municipal
Income Portfolio of its investment objective may be more dependent upon the Sub-
Adviser's
investment analysis than would be the case if the Municipal Income Portfolio
were
investing exclusively in higher-grade municipal securities. The relative lack
of
financial information available with respect to issuers of municipal securities

may
adversely affect the Sub-Adviser's ability to successfully conduct the required
investment
analysis.

Zero-Coupon Securities

Zero-coupon securities in which the Income and Growth and Global Portfolios may
invest
are debt obligations which are generally issued at a discount and payable in
full at
maturity, and do not provide for current payments of interest prior to maturity.
Zero-
coupon securities usually trade at a deep discount from their face or par value
and are
subject to greater market value fluctuations from changing interest rates than
debt
obligations of comparable maturities which make current distributions of
interest. As a
result, the net asset value of shares of a Portfolio investing in zero-coupon
securities
may fluctuate over a greater range than shares of other Portfolios and other
mutual funds
investing in securities making current distributions of interest and having
similar
maturities.

Zero-coupon securities may include U.S. Treasury bills issued directly by the
U.S.
Treasury or other short-term debt obligations, and longer-term bonds or notes
and their
unmatured interest coupons which have been separated by their holder, typically
a
custodian bank or investment brokerage firm. A number of securities firms and
banks have
stripped the interest coupons from the underlying principal (the "corpus") of
U.S.
Treasury securities and resold them in custodial receipt programs with a number
of
different names, including Treasury Income Growth Receipts ("TIGRS") and
Certificates of
Accrual on Treasuries ("CATS"). The underlying U.S. Treasury bonds and notes
themselves
are held in book-entry form at the Federal Reserve Bank or, in the case of
bearer
securities (i.e., unregistered securities which are owned ostensibly by the
bearer or
holder thereof), in trust on behalf of the owners thereof.

In addition, the Treasury has facilitated transfers of ownership of zero-coupon
securities

by accounting separately for the beneficial ownership of particular interest
coupons and
corpus payments on Treasury securities through the Federal Reserve book-entry
recordkeeping system. The Federal Reserve program as established by the

Treasury
Department is known as "STRIPS" or "Separate Trading of Registered Interest and
Principal
of Securities." Under the STRIPS program, a Portfolio will be able to have its
beneficial
ownership of U.S. Treasury zero-coupon securities recorded directly in the book-
entry
recordkeeping system in lieu of having to hold certificates or other evidence of
ownership
of the underlying U.S. Treasury securities.

When debt obligations have been stripped of their unmatured interest coupons by
the
holder, the stripped coupons are sold separately. The principal or corpus is
sold at a
deep discount because the buyer receives only the right to receive a future
fixed payment
on the security and does not receive any rights to periodic cash interest
payments. Once
stripped or separated, the corpus and coupons may be sold separately.
Typically, the
coupons are sold separately or grouped with other coupons with like maturity
dates and
sold in such bundled form. Purchasers of stripped obligations acquire, in
effect,
discount obligations that are economically identical to the zero-coupon
securities issued
directly by the obligor.

Reverse Repurchase Agreements

The Portfolios may also enter into reverse repurchase agreements. These
transactions are
similar to borrowing cash. In a reverse repurchase agreement, the Portfolio
transfers
possession of a portfolio instrument to another person, such as a financial
institution,
broker, or dealer, in return for a percentage of the instrument's market value
in cash,
and agrees that on a stipulated date in the future the Portfolio will repurchase

the
portfolio instrument by remitting the original consideration plus interest at an
agreed
upon rate. The use of reverse repurchase agreements may enable the Portfolio to
avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the
Portfolio will be able to avoid selling portfolio instruments at a
disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of the Portfolio, in
a dollar
amount sufficient to make payment for the obligations to be purchased, are

segregated at
the trade date. These securities are marked to market daily and are maintained
until the
transaction is settled.

Futures and Options Transactions

The Portfolios may engage in futures and options hedging transactions. The
Income and
Growth Portfolio will not, however, utilize options on its futures. In an
effort to
reduce fluctuations in the net asset value of shares of a Portfolio, a Portfolio
may
attempt to hedge all or a portion of its portfolio by buying and selling
financial futures
contracts, buying put options on portfolio securities and listed put options on
futures
contracts, and writing call options on futures contracts. A Portfolio may also
write
covered call options on portfolio securities to attempt to increase its current
income. A
Portfolio will maintain its positions in securities, option rights, and
segregated cash
subject to puts and calls until the options are exercised, closed, or have
expired. An
option position on financial futures contracts may be closed out only on the
exchange on
which the position was established.

Futures Contracts

The Portfolios may engage in transactions in futures contracts. A futures
contract is a
firm commitment by two parties: the seller who agrees to make delivery of the
specific
type of security called for in the contract ("going short") and the buyer who
agrees to
take delivery of the security ("going long") at a certain time in the future.
However, a
stock index futures contract is an agreement pursuant to which two parties agree
to take
or make delivery of an amount of cash equal to the difference between the value
of the
index at the close of the last trading day of the contract and the price at
which the
index contract was originally written. No physical delivery of the underlying
securities
in the index is made.

The purpose of the acquisition or sale of a futures contract by a Portfolio is
to protect
the Portfolio from fluctuations in the value of its securities caused by
anticipated
changes in interest rates or market conditions without necessarily buying or
selling the

securities. For example, in the fixed income securities market, price generally
moves
inversely to interest rates. A rise in rates generally means a drop in price.
Conversely, a drop in rates generally means a rise in price. In order to hedge
their
holdings of fixed income securities against a rise in market interest rates,
Government
Income Portfolio, Municipal Income Portfolio, and Income and Growth Portfolio
[Global
Portfolio] could enter into contracts to deliver securities at a predetermined
price
(i.e., "go short") to protect themselves against the possibility that the prices
of their
fixed income securities may decline during the anticipated holding period. Any
of these
Portfolios would "go long" (i.e., agree to purchase securities in the future at
a
predetermined price) to hedge against a decline in market interest rates.

Put Options on Futures Contracts

The Portfolios, with the exception of the Income and Growth Portfolio, may
engage in
transactions in put options on futures contracts. A Portfolio may purchase
listed put
options on futures contracts. Unlike entering directly into a futures contract,
which
requires the purchaser to buy a financial instrument on a set date at a
specified price,
the purchase of a put option on a futures contract entitles (but does not
obligate) its
purchaser to decide on or before a future date whether to assume a short
position at the
specified price. A Portfolio would purchase put options on futures contracts to
protect
portfolio securities against decreases in value resulting from market factors,
such as an
anticipated increase in interest rates.

Generally, if the hedged portfolio securities decrease in value during the term
of an
option, the related futures contracts will also decrease in value and the option
will
increase in value. In such an event, a Portfolio will normally close out its
option by
selling an identical option. If the hedge is successful, the proceeds received
by a
Portfolio upon the sale of the second option may be large enough to offset both
the
premium paid by the Portfolio for the original option plus the decrease in value
of the
hedged securities. Alternatively, a Portfolio may exercise its put option to
close out
the position. To do so, it would simultaneously enter into a futures contract
of the type

underlying the option (for a price less than the strike price of the option) and
exercise
the option. The Portfolio would then deliver the futures contract in return for
payment
of the strike price. If the Portfolio neither closes out nor exercises an
option, the
option will expire on the date provided in the option contract, and only the

premium paid
for the contract will be lost.

When a Portfolio sells a put on a futures contract, it receives a cash premium
which can
be used in whatever way is deemed most advantageous to the Portfolio. In
exchange for
such premium, the Portfolio grants to the purchaser of the put the right to
receive from
the Portfolio, at the strike price, a short position in such futures contract,
even though
the strike price upon exercise of the option is greater than the value of the
futures
position received by such holder. If the value of the underlying futures
position is not
such that exercise of the option would be profitable to the option holder, the
option will
generally expire without being exercised. The Portfolio has no obligation to
return
premiums paid to it whether or not the option is exercised. It will generally
be the
policy of each Portfolio, in order to avoid the exercise of an option sold by
it, to
cancel its obligation under the option by entering into a closing purchase
transaction, if
available, unless it is determined to be in such Portfolio's interest to deliver
the
underlying futures position. A closing purchase transaction consists of the
purchase by
the Portfolio of an option having the same term as the option sold by the
Portfolio, and
has the effect of canceling the Portfolio's position as a seller. The premium
which the
Portfolio will pay in executing a closing purchase transaction may be higher
than the
premium received when the option was sold, depending in large part upon the
relative price
of the underlying futures position at the time of each transaction.

Call Options on Futures Contracts

The Portfolios, with the exception of the Income and Growth Portfolio, may
engage in
transactions in call options on futures contracts. In addition to purchasing
put options
on futures, the Portfolios may write listed call options on futures contracts to
hedge
their respective portfolios against, for example, an increase in market interest

rates.
When a Portfolio writes a call option on a futures contract, it is undertaking
the
obligation of assuming a short futures position (selling a futures contract) at
the fixed
strike price at any time during the life of the option if the option is
exercised. As
market interest rates rise (in the case of the Government Income Portfolio,
Municipal
Income Portfolio and Global Portfolio) or as stock prices fall (in the case of
the Growth
Portfolio, Capital Growth Portfolio and Global Portfolio), causing the prices
of
futures to go down, a Portfolio's obligation under a call option on a future (to
sell a
futures contract) costs less to fulfill, causing the value of a Portfolio's call
option
position to increase. In other words, as the underlying future's price goes
down below
the strike price, the buyer of the option has no reason to exercise the call, so
that a
Portfolio keeps the premium received for the option. This premium can help
substantially
to offset the drop in value of a Portfolio's portfolio securities. Prior to the
expiration of a call written by a Portfolio, or exercise of it by the buyer, a
Portfolio
may close out the option by buying an identical option. If the hedge is
successful, the
cost of the second option will be less than the premium received by a Portfolio
for the
initial option. The net premium income of a Portfolio will then help offset the
decrease
in value of the hedged securities.

When a Portfolio purchases a call on a financial futures contract, it receives
in exchange
for the payment of a cash premium the right, but not the obligation to enter
into the
underlying futures contract at a strike price determined at the time the call
was
purchased, regardless of the comparative market value of such futures position
at the time
the option is exercised. The holder of a call option has the right to receive a
long (or
buyer's) position in the underlying futures contract.

A Portfolio will not maintain open positions in futures contracts it has sold or
call
options it has written on futures contracts if, in the aggregate, the value of
the open
positions (marked to market) exceeds the current market value of its securities

portfolio
(including cash or cash equivalents) plus or minus the unrealized gain or loss
on those
open positions, adjusted for the correlation of volatility between the hedged

securities
and the futures contracts. If this limitation is exceeded at any time, a
Portfolio will
take prompt action to close out a sufficient number of open contracts to bring
its open
futures and options positions within this limitation.

"Margin" in Futures Transactions

Unlike the purchase or sale of a security, the Portfolios do not pay or receive
money upon
the purchase or sale of a futures contract. Rather, the Portfolios are required
to
deposit an amount of "initial margin" in cash or U.S. Treasury bills with the
custodian
(or the broker, if legally permitted). The nature of initial margin in futures
transactions is different from that of margin in securities transactions in that
futures
contracts initial margin does not involve a borrowing by a Portfolio to finance
the
transactions. Initial margin is in the nature of a performance bond or good
faith deposit
on the contract which is returned to a Portfolio upon termination of the futures
contract,
assuming all contractual obligations have been satisfied.

A futures contract held by a Portfolio is valued daily at the official
settlement price of
the exchange on which it is traded. Each day a Portfolio pays or receives cash,
called
"variation margin," equal to the daily change in value of the futures contract.
This
process is known as "marking to market." Variation margin does not represent a
borrowing
or loan by a Portfolio but is instead settlement between a Portfolio and the
broker of the
amount one would owe the other if the futures contract expired. In computing
its daily
net asset value, a Portfolio will mark to market its open futures positions.
The

Portfolios are also required to deposit and maintain margin when they write call
options
on futures contracts.

Regulatory Restrictions

To the extent required to comply with Commodity Futures Trading Commission
Regulation 4.5
and thereby avoid status as a "commodity pool operator," the Portfolios will not
enter
into a futures contract, or purchase an option thereon, if immediately
thereafter the
initial margin deposits for futures contracts held by a Portfolio, plus premiums
paid by
it for open options of futures, would exceed 5% of the total assets of the

Portfolio. The
Portfolios will not engage in transactions in futures contracts or options
thereon for
speculation, but only to attempt to hedge against changes in market conditions
affecting
the values of assets which the Portfolios hold or intend to purchase. When
futures
contracts or options thereon are purchased in order to protect against a price
increase on
securities or other assets intended to be purchased later, it is anticipated
that at least
75% of such intended purchases will be completed. When other futures contracts
or options
thereon are purchased, the underlying value of such contracts will at all times
not exceed
the sum of (1) accrued profit on such contracts held by the broker; (2) cash or
high-
quality money market instruments set aside in an identifiable manner; and (3)
cash
proceeds from investments due in 30 days or less.

Purchasing Put Options on Portfolio Securities

With the exception of the Income and Growth Portfolio, the Portfolios may
purchase put
options on portfolio securities to protect against price movements in particular
securities in their respective portfolios. A put option gives a Portfolio, in
return for
a premium, the right to sell the underlying security to the writer (seller) at a

specified
price during the term of the option.

Writing Covered Call Options on Portfolio Securities

The Capital Growth, Government Income, and Municipal Income [and Global]
Portfolios may
write covered call options to generate income. As a writer of a call option, a
Portfolio
has the obligation upon exercise of the option during the option period to
deliver the
underlying security upon payment of the exercise price. A Portfolio may only
sell call
options either on securities held in its portfolio or on securities which it has
the right
to obtain without payment of further consideration (or has segregated cash in
the amount
of any additional consideration).

Over-the-Counter Options

The Capital Growth, Government Income, and Municipal Income [and Global]
Portfolios may
purchase and write over-the-counter options on portfolio securities in
negotiated
transactions with the buyers or writers of the options for those options on

portfolio
securities held by a Portfolio and not traded on an exchange.

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.

Collateralized Mortgage Obligations (CMOs)

The Government Income and Income and Growth Portfolios may invest in CMOs.
Privately
issued CMOs generally represent an ownership interest in a pool of federal

agency mortgage
pass-through securities such as those issued by the Government National Mortgage
Association. The terms and characteristics of the mortgage instruments may vary
among
pass-through mortgage loan pools.

The market for such CMOs has expanded considerably since its inception. The
size of the
primary issuance market and the active participation in the secondary market by
securities
dealers and other investors make government-related pools highly liquid.

Convertible Securities

The Growth, Capital Growth, Income and Growth and Global Portfolios may invest
in
convertible securities. Convertible securities are fixed income securities
which may be
exchanged or converted into a predetermined number of the issuer's underlying
common stock
at the option of the holder during a specified time period. Convertible
securities may
take the form of convertible preferred stock, convertible bonds or debentures,
units
consisting of "usable" bonds and warrants or a combination of the features of
several of
these securities. The investment characteristics of each convertible security
vary
widely, which allows convertible securities to be employed for a variety of
investment
strategies.

A Portfolio will exchange or convert the convertible securities held in its
portfolio into
shares of the underlying common stock when, in the Sub-Adviser's opinion, the
investment
characteristics of the underlying common shares will assist the Portfolio in

achieving its
investment objectives. Otherwise, the Portfolio may hold or trade convertible
securities.
In selecting convertible securities for the Portfolio, the Portfolio's Sub-
Adviser
evaluates the investment characteristics of the convertible security as a fixed

income
instrument and the investment potential of the underlying equity security for
capital
appreciation. In evaluating these matters with respect to a particular
convertible
security, the Portfolio's Sub-Adviser considers numerous factors, including the
economic
and political outlook, the value of the security relative to other investment
alternatives, trends in the determinants of the issuer's profits, and the
issuer's
management capability and practices.

Warrants

The Growth, Capital Growth, and Income and Growth [and Global] Portfolios may
invest in
warrants. Warrants are basically options to purchase common stock at a specific
price
(usually at a premium above the market value of the optioned common stock at
issuance)
valid for a specific period of time. Warrants may have a life ranging from less
than a
year to twenty years or may be perpetual. However, most warrants have
expiration dates
after which they are worthless. In addition, if the market price of the common
stock does
not exceed the warrant's exercise price during the life of the warrant, the
warrant will
expire as worthless. Warrants have no voting rights, pay no dividends, and have
no rights
with respect to the assets of the corporation issuing them. The percentage
increase or
decrease in the market price of the warrant may tend to be greater than the
percentage
increase or decrease in the market price of the optioned common stock. A
Portfolio will
not invest more than 5% of the value of its total assets in warrants. No more
than 2% of
this 5% may be warrants which are not listed on the New York or American Stock
Exchanges.
Warrants acquired in units or attached to securities may be deemed to be without
value for
purposes of this policy.

Dollar Rolls

The Global Portfolio may enter into "dollar roll" transactions, which consist of
the sale
by the Global Portfolio to a bank or broker/dealer (the "counterparty") of GNMA

certificates or other mortgage-backed securities together with a commitment to
purchase
similar, but not identical, securities at a future date, at the same price. The
counterparty receives all principal and interest payments, including
prepayments, made on
the security while the counterparty is the holder. The Global Portfolio
receives a fee
from the counterparty as consideration for entering into the commitment to
purchase.
Dollar rolls may be renewed over a period of several months with a different
repurchase
price and a cash settlement made at each renewal without physical delivery of
securities.
Moreover, the transaction may be preceded by a firm commitment agreement
pursuant to which
the Global Portfolio agrees to buy a security on a future date.

The Global Portfolio will not use such transactions for leveraging purposes and,
accordingly, will segregate cash, U.S. Government securities or other high grade
debt
obligations in an amount sufficient to meet its purchase obligations under the
transactions. The Global Portfolio will also maintain asset coverage of at
least 300% for
all outstanding firm commitments, dollar rolls and other borrowings.

Dollar rolls are treated for purposes of the Investment Company Act of 1940 as
borrowings
of the Global Portfolio because they involve the sale of a security coupled with
an
agreement to repurchase. Like all borrowings, a dollar roll involves costs to
the Global
Portfolio. For example, while the Global Portfolio receives a fee as
consideration for
agreeing to repurchase the security, the Global Portfolio forgoes the right to
receive all
principal and interest payments while the counterparty holds the security.
These payments
to the counterparty may exceed the fee received by the Global Portfolio, thereby
effectively charging the Global Portfolio interest on its borrowing. Further,
although
the Global Portfolio can estimate the amount of expected principal prepayment
over the
term of the dollar roll, a variation in the actual amount of prepayment could
increase or
decrease the cost of the Global Portfolio's borrowing.

The entry into dollar rolls involves potential risks of loss which are different
from
those of the securities underlying the transactions. For example, if the
counterparty

becomes insolvent, the Global Portfolio's right to purchase from the
counterparty might be
restricted. Additionally, the value of such securities may change adversely
before the
Global Portfolio is able to purchase them. Similarly, the Global Portfolio may

be
required to purchase securities in connection with a dollar roll at a higher
price than
may otherwise be available on the open market. Since, as noted above, the
counterparty is
required to deliver a similar, but not identical security to the Global
Portfolio, the
security which the Global Portfolio is required to buy under the dollar roll may
be worth
less than an identical security. Finally, there can be no assurance that the
Global
Portfolio's use of the cash that it receives from a dollar roll will provide a
return that
exceeds borrowing costs.

The Board of Trustees of the Trust on behalf of the Global Portfolio have
adopted
guidelines to ensure that those securities received are substantially identical
to those
sold. To reduce the risk of default, the Global Portfolio will engage in such
transactions only with banks and broker-dealers selected pursuant to such
guidelines.

Swaps, Caps, Floors and Collars

The Global Portfolio may enter into interest rate, currency and index swaps and
the
purchase or sale of related caps, floors and collars. The Global 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 Global Portfolio anticipates purchasing at a later date. The
Global
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 Global Portfolio may be obligated to
pay.
Interest rate swaps involve the exchange by the Global Portfolio with another
party of
their respective commitments to pay or receive interest, e.g., an exchange of
floating
rate payments for fixed rate payments with respect to a notional amount of
principal. A
currency swap is an agreement to exchange cash flows on a notional amount of two
or more
currencies based on the relative value differential among them and an index swap
is an
agreement to swap cash flows on a notional amount based on changes in the values
of the
reference indices. The purchase of a cap entitles the purchaser to receive

payments on a
notional principal amount from the party selling such cap to the extent that a
specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles
the purchaser to receive payments on a notional principal amount from the party
selling
such floor to the extent that a specified index falls below a predetermined
interest rate
or amount. A collar is a combination of a cap and a floor that preserves a
certain return
within a predetermined range of interest rates or values.

The Global Portfolio will usually enter into swaps on a net basis, i.e., the two
payment
streams are netted out in a cash settlement on the payment date or dates
specified in the
instrument, with the Global Portfolio receiving or paying, as the case may be,
only the
net amount of the two payments. Inasmuch as these swaps, caps, floors and
collars are
entered into for good faith hedging purposes, the Global Portfolio and its Sub-
Adviser
believe such obligations do not constitute senior securities under the
Investment Company
Act of 1940 and, accordingly, will not treat them as being subject to its
borrowing
restrictions. The Global Portfolio will not enter into any swap, cap, floor or

collar
transaction unless, at the time of entering into such transaction, the unsecured
long-term
debt of the Counterparty, combined with any credit enhancements, is rated at
least A by
S&P or Moody's or has an equivalent rating from a NRSRO or is determined to be
of
equivalent credit quality by the Global Portfolio's Sub-Adviser. If there is a
default by
the Counterparty, the Global Portfolio may have contractual remedies pursuant to
the
agreements related to the transaction. The swap market has grown substantially
in recent
years with a large number of banks and investment banking firms acting both as
principals
and as agents utilizing standardized swap documentation. As a result, the swap
market has
become relatively liquid. Caps, floors and collars are more recent innovations
for which
standardized documentation has not yet been fully developed and, accordingly,
they are
less liquid than swaps.

High Yield, High Risk Debt Securities

The Global Portfolio may invest up to 5% of its net assets in securities rated

Baa/BBB or
lower and in unrated securities of equivalent quality in the Sub-Adviser's
judgment. The
Global Portfolio may invest in debt securities which are rated as low as C by
Moody's or D
by S&P. Such securities may be in default with respect to payment of principal
or
interest.

Below investment grade securities (rated below Baa by Moody's and below BBB by
S&P) or
unrated securities of equivalent quality in the Sub-Adviser's judgment, carry a
high
degree of risk (including the possibility of default or bankruptcy of the
issuers of such
securities), generally involve greater volatility of price and risk of principal
and

income, and may be less liquid, than securities in the higher rating categories
and are
considered speculative. The lower the ratings of such debt securities, the
greater their
risks render them like equity securities. See the Appendix to this Statement of
Additional Information for a more complete description of the ratings assigned
by ratings
organizations and their respective characteristics.

An economic downturn could disrupt the high yield market and impair the ability
of issuers
to repay principal and interest. Also, an increase in interest rates would
likely have a
greater adverse impact on the value of such obligations than on higher quality
debt
securities. During an economic downturn or period of rising interest rates,
highly
leveraged issues may experience financial stress which could adversely affect
their
ability to service their principal and interest payment obligations. Prices and
yields of
high yield securities will fluctuate over time and, during periods of economic
uncertainty, volatility of high yield securities may adversely affect the Global
Portfolio's net asset value. In addition, investments in high yield zero coupon
or pay-
in-kind bonds, rather than income-bearing high yield securities, may be more
speculative
and may be subject to greater fluctuations in value due to changes in interest
rates.

The trading market for high yield securities may be thin to the extent that
there is no
established retail secondary market. A thin trading market may limit the
ability of the
Global Portfolio to accurately value high yield securities in its portfolio and
to dispose
of those securities. Adverse publicity and investor perceptions may decrease
the values

and liquidity of high yield securities. These securities may also involve
special
registration responsibilities, liabilities and costs, and liquidity and
valuation
difficulties.

Credit quality in the high-yield securities market can change suddenly and
unexpectedly,
and even recently issued credit ratings may not fully reflect the actual risks
posed by a
particular high-yield security. For these reasons, it is the policy of the Sub-
Adviser
not to rely exclusively on ratings issued by established credit rating agencies,
but to
supplement such ratings with its own independent and on-going review of credit
quality.
The achievement of the Global Portfolio's investment objective by investment in
such
securities may be more dependent on the Sub-Adviser's credit analysis than is
the case for
higher quality bonds. Should the rating of a portfolio security be downgraded,
the Sub-
Adviser will determine whether it is in the best interest of the Global
Portfolio to
retain or dispose of such security.

Prices for below investment-grade securities may be affected by legislative and
regulatory
developments. For example, new federal rules require savings and loan
institutions to
gradually reduce their holdings of this type of security. Also, recent
legislation
restricts the issuer's tax deduction for interest payments on these securities.
Such
legislation may significantly depress the prices of outstanding securities of
this type.

Indexed Securities

The Global Portfolio may invest in indexed securities, the value of which is
linked to
currencies, interest rates, commodities, indices or other financial indicators
("reference
instruments"). Most indexed securities have maturities of three years or less.

Indexed securities differ from other types of debt securities in which the
Global
Portfolio may invest in several respects. First, the interest rate or, unlike
other debt
securities, the principal amount payable at maturity of an indexed security may
vary based
on changes in one or more specified reference instruments, such as an interest
rate
compared with a fixed interest rate or the currency exchange rates between two
currencies

(neither of which need be the currency in which the instrument is denominated).
The
reference instrument need not be related to the terms of the indexed security.
For
example, the principal amount of a U.S. dollar denominated indexed security may
vary based
on the exchange rate of two foreign currencies. An indexed security may be
positively or
negatively indexed; that is, its value may increase or decrease if the value of
the
reference instrument increases. Further, the change in the principal amount
payable or
the interest rate of an indexed security may be a multiple of the percentage
change
(positive or negative) in the value of the underlying reference instrument(s).

Investment in indexed securities involves certain risks. In addition to the
credit risk
of the security's issuer and the normal risks of price changes in response to
changes in
interest rates, the principal amount of indexed securities may decrease as a
result of
changes in the value of reference instruments. Further, in the case of certain
indexed
securities in which the interest rate is linked to a reference instrument, the
interest
rate may be reduced to zero, and any further declines in the value of the
security may
then reduce the principal amount payable on maturity. Finally, indexed
securities may be
more volatile than the reference instruments underlying indexed securities.

Currency Transactions

The Global 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. A forward currency contract involves a privately negotiated
obligation to
purchase or sell (with delivery generally required) 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. A currency swap is an
agreement to

exchange cash flows based on the notional difference among two or more
currencies and
operates similarly to an interest rate swap, which is described below. A Global
Portfolio
may enter into currency transactions with Counterparties which have received (or

the
guarantors of the obligations which have received) a credit rating of A-1 or P-1
by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC
currency options) are determined to be of equivalent credit quality by the Sub-
Adviser.

The Global 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 Global 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 Global Portfolio will not enter into a transaction to hedge currency
exposure to an
extent greater, after netting all transactions intended wholly or partially to
offset
other transactions, than the aggregate market value (at the time of entering
into the
transaction) of the securities held in its portfolio that are denominated or
generally
quoted in or currently convertible into such currency, other than with respect
to proxy
hedging as described below.

The Global Portfolio may also cross-hedge currencies by entering into
transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to

other currencies to which the Global Portfolio has or in which a Global
Portfolio expects
to have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated
holdings of portfolio securities, the Global Portfolio may also engage in proxy
hedging.
Proxy hedging is often used when the currency to which the Portfolio is exposed
is
difficult to hedge or to hedge against the dollar. Proxy hedging entails
entering into a
forward contract to sell a currency whose changes in value are generally
considered to be
linked to a currency or currencies in which some or all of the Global
Portfolio's

securities are or are expected to be denominated, and to buy U.S. dollars. The
amount of
the contract would not exceed the value of the Global Portfolio's securities
denominated
in linked currencies. For example, if the Sub-Adviser considers that the
Austrian
schilling is linked to the German deutschemark (the "D-mark"), the Global
Portfolio holds
securities denominated in schillings and the Sub-Adviser believes that the value
of
schillings will decline against the U.S. dollar, the Sub-Adviser may enter into
a contract
to sell D-marks and buy dollars. Currency hedging involves some of the same
risks and
considerations as other transactions with similar instruments. Currency
transactions can
result in losses to the Global Portfolio if the currency being hedged fluctuates
in value
to a degree or in a direction that is not anticipated. Further, there is the
risk that
the perceived linkage between various currencies may not be present or may not
be present
during the particular time that the Global Portfolio is engaging in proxy
hedging. Except
when the Global Portfolio enters into a forward contract for the purchase or
sale of a
security denominated in a particular currency, which requires no segregation, a
currency

contract which obligates the Global Portfolio to buy or sell currency will
generally
require the Global Portfolio to hold an amount of that currency or liquid
securities
denominated in that currency equal to the Global Portfolio's obligations or to
segregate
liquid high grade assets equal to the amount of the Global Portfolio's
obligation.

Risk of Currency Transactions

Currency transactions are subject to risks different from those of other
portfolio
transactions. Because currency control is of great importance to the issuing
governments
and influences economic planning and policy, purchases and sales of currency and
related
instruments can be negatively affected by government exchange controls,
blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses
to the Global Portfolio if it is unable to deliver or receive currency or funds
in
settlement of obligations and could also cause hedges it has entered into to be
rendered
useless, resulting in full currency exposure as well as incurring transaction
costs.

Buyers and sellers of currency futures are subject to the same risks that apply
to the use
of futures generally. Further, settlement of a currency futures contract for
the purchase
of most currencies must occur at a bank based in the issuing nation. Trading
options on
currency futures is relatively new, and the ability to establish and close out
positions
on such options is subject to the maintenance of a liquid market which may not
always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that
country's economy.

Eurodollar Instruments

The Global Portfolio may make investments in Eurodollar instruments. Eurodollar

instruments are U.S. dollar-denominated futures contracts or options thereon
which are
linked to the London Interbank Offered Rate ("LIBOR"), although foreign
currency-
denominated instruments are available from time to time. Eurodollar futures
contracts
enable purchasers to obtain a fixed rate for the lending of funds and sellers to
obtain a
fixed rate for borrowings. The Global Portfolio might use Eurodollar futures
contracts
and options thereon to hedge against changes in LIBOR, to which many interest
rate swaps
and fixed income instruments are linked.

Portfolio Turnover

The annual turnover rate of the Portfolios may vary from year to year, and may
also be
affected by cash requirements for redemptions and repurchases of Portfolio
shares and by
the necessity of maintaining the Portfolios as regulated investment companies
under the
Internal Revenue Code, as amended, in order to receive certain favorable tax
treatment.

The Portfolios will not attempt to set or meet a portfolio turnover rate since
any
turnover would be incidental to transactions undertaken in an attempt to achieve
each
Portfolio's investment objective. During the fiscal year ended September 30,
1993, and
the period from April 29, 1992 (date of initial public investment), to September
30, 1992,
the respective portfolio turnover rates for the indicated Portfolios were as
follows:
Growth Portfolio, 137% and 26%; Capital Growth Portfolio, 192% and 61%;
Government Income
Portfolio, 102% and 9%; and Municipal Income Portfolio, 88% and 0%. During the

period May
24, 1993 (date of initial public investment), to September 30, 1993, the
portfolio
turnover rate for the Income and Growth Portfolio was 19% for the equity portion
and 0%

for the debt portion. The difference between the portfolio turnover rates for
the fiscal
year ended September 30, 1992, and September 30, 1993, for the Growth Portfolio
and
Capital Growth Portfolio were a result of the fact that the first fiscal year
was
substantially less than twelve months and that, since the period ended September
30, 1992,
was the initial start-up period for the Portfolios, the portfolio turnover would
be
expected to be substantially less than on a fund with a longer operating
history. It is
anticipated that the portfolio turnover rate for the first year of the Global
Portfolio's
operations will not exceed %.

Investment Limitations

Issuing Senior Securities and Borrowing Money

The Portfolios will not issue senior securities except that a Portfolio
(other than
the Municipal Income Portfolio) may borrow money directly or through
reverse
repurchase agreements in amounts up to one-third of the value of its net
assets,
including the amount borrowed; and except to the extent that a Portfolio
may enter
into futures contracts. The Municipal Income Portfolio may borrow money
from banks
for temporary purposes in amounts up to 5% of its total assets. The
Portfolios will
not borrow money or engage in reverse repurchase agreements for investment
leverage,
but rather as a temporary, extraordinary, or emergency measure or to
facilitate
management of the Portfolio by enabling it to meet redemption requests when
the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous.
The Portfolios will not purchase any securities while any borrowings in
excess of 5%
of its total assets are outstanding. During the period any reverse
repurchase
agreements are outstanding, the Government Income Portfolio will restrict
the
purchase of portfolio securities to money market instruments maturing on or
before
the expiration date of the reverse repurchase agreements, but only to the
extent

necessary to assure completion of the reverse repurchase agreements.
Notwithstanding this restriction, the Portfolios may enter into when-issued
and
delayed delivery transactions.

Selling Short and Buying on Margin

The Portfolios will not sell any securities short or purchase any
securities on
margin, but may obtain such short-term credits as are necessary for
clearance of
purchases and sales of securities. The deposit or payment by a Portfolio
of initial
or variation margin in connection with futures contracts or related options
transactions is not considered the purchase of a security on margin.

Pledging Assets

The Portfolios will not mortgage, pledge, or hypothecate any assets, except
to
secure permitted borrowings. In these cases the Portfolios may pledge
assets having
a value of 10% of assets taken at cost. For purposes of this restriction,
(a) the
deposit of assets in escrow in connection with the writing of covered put
or call
options and the purchase of securities on a when-issued basis; and (b)
collateral
arrangements with respect to (i) the purchase and sale of stock options
(and options
on stock indexes) and (ii) initial or variation margin for futures
contracts, will
not be deemed to be pledges of a Portfolio's assets. Margin deposits for
the
purchase and sale of futures contracts and related options are not deemed
to be a
pledge.

Lending Cash or Securities

The Portfolios will not lend any of their respective assets except
portfolio
securities up to one-third of the value of total assets. (The Municipal
Income
Portfolio will not lend portfolio securities.) This shall not prevent a
Portfolio
from purchasing or holding U.S. government obligations, money market
instruments,
variable amount demand master notes, bonds, debentures, notes, certificates

of
indebtedness, or other debt securities, entering into repurchase
agreements, or
engaging in other transactions where permitted by a Portfolio's investment
objective, policies and limitations or Declaration of Trust. The Municipal
Income

Portfolio will not make loans except to the extent the obligations the
Portfolio may
invest in are considered to be loans.

Investing in Restricted Securities

The Portfolios will not invest more than 10% of the value of their net
assets in
restricted securities.

Investing in Commodities

None of the Portfolios will invest in commodities, except to the extent
that the
Portfolios may engage in transactions involving futures contracts or
options on
futures contracts, and except to the extent the securities the Municipal
Income
Portfolio invests in are considered interests in commodities or commodities
contracts or to the extent the Portfolio exercises its rights under
agreements
relating to such municipal securities.

Investing in Real Estate

None of the Portfolios will purchase or sell real estate, including limited
partnership interests, except to the extent the securities the Income and
Growth
Portfolio and Municipal Income Portfolio may invest in are considered to be
interests in real estate or to the extent the Municipal Income Portfolio
exercises
its rights under agreements relating to such municipal securities (in which
case the
Portfolio may liquidate real estate acquired as a result of a default on a
mortgage), although the Portfolios may invest in securities of issuers
whose
business involves the purchase or sale of real estate or in securities
which are

secured by real estate or interests in real estate.

Diversification of Investments

With respect to 75% of the value of its respective total assets, a
Portfolio will
not purchase securities issued by any one issuer (other than cash, cash
items or
securities issued or guaranteed by the government of the United States or
its
agencies or instrumentalities and repurchase agreements collateralized by
such
securities), if as a result more than 5% of the value of its total assets
would be
invested in the securities of that issuer. A Portfolio will not acquire
more than
10% of the outstanding voting securities of any one issuer.

Concentration of Investments

A Portfolio will not invest 25% or more of the value of its respective
total assets
in any one industry (other than securities issued by the U.S. government,
its
agencies or instrumentalities). As described in the Prospectus, the
Municipal
Income Portfolio may from time to time invest more than 25% of its assets
in a
particular segment of the municipal bond market; however, that Portfolio
will not
invest more than 25% of its assets in industrial development bonds in a
single
industry.

Underwriting

A Portfolio will not underwrite any issue of securities, except as a
Portfolio may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with
the sale of securities in accordance with its investment objective,
policies, and
limitations.

The above limitations cannot be changed with respect to a Portfolio without
approval of
holders of a majority of that Portfolio's shares. The following limitations may
be
changed by the Board of Trustees without shareholder approval. Shareholders
will be
notified before any material change in these limitations becomes effective.

Investing in Illiquid Securities

The Portfolios will not invest more than 15% of the value of their
respective net
assets in illiquid securities, including repurchase agreements providing
for
settlement more than seven days after notice; over-the-counter options;
certain
restricted securities not determined by the Trustees to be liquid; and non-
negotiable fixed income time deposits with maturities over seven days.

Investing in Securities of Other Investment Companies

The Portfolios will limit their respective investments in other investment
companies
to no more than 3% of the total outstanding voting stock of any investment
company,
invest no more than 5% of total assets in any one investment company, or
invest more
than 10% of total assets in investment companies in general. The

Portfolios will
purchase securities of closed-end investment companies only in open market
transactions involving only customary broker's commissions. However, these
limitations are not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets. It should be
noted that
investment companies incur certain expenses such as management fees, and
therefore
any investment by a Portfolio in shares of another investment company would
be
subject to such customary expenses.

Investing in New Issuers

Except for the Municipal Income Portfolio, no Portfolio will invest more
than 5% of

the value of its respective total assets in securities of issuers which
have records
of less than three years of continuous operations, including the operation
of any
predecessor. The Municipal Income Portfolio will not invest more than 5%
of its
total assets in industrial development bonds where the payment of principal
and
interest is the responsibility of companies with less than three years of
operating
history.

Investing in Issuers Whose Securities are Owned by Officers and Trustees
of the Trust

A Portfolio will not purchase or retain the securities of any issuer if the
officers
and Trustees of the Trust, the Investment Adviser, or Sub-Adviser own
individually
more than 1/2 of 1% of the issuer's securities or together own more than 5%
of the
issuer's securities.

Investing in Minerals

A Portfolio will not purchase interests in oil, gas, or other mineral
exploration or
development programs or leases, except it may purchase the securities of
issuers
which invest in or sponsor such programs and except pursuant to the
exercise by the
Municipal Income Portfolio of its rights under agreements relating to
municipal
securities.

Arbitrage Transactions

A Portfolio will not enter into transactions for the purpose of engaging in
arbitrage.

Purchasing Securities to Exercise Control

A Portfolio will not purchase securities of a company for the purpose of
exercising

control or management, except to the extent that exercise by the Municipal
Income
Portfolio of its rights under agreements related to municipal securities
would be
deemed to constitute such control or management.

None of the Portfolios borrowed money or loaned portfolio securities in excess
of 5% of
the value of its net assets during the last fiscal year, and no Portfolio has
any present
intent to do so in the coming fiscal year.

Except with respect to the Portfolios' policy of borrowing money, if a
percentage
limitation is adhered to at the time of investment, a later increase or decrease
in
percentage resulting from any change in value or net assets will not result in a
violation
of such restriction.

To comply with registration requirements in certain states, the Portfolios (1)
will limit
the aggregate value of the assets underlying covered call options or put options
written
by a Portfolio to not more than 25% of its net assets, (2) will limit the
premiums paid
for options purchased by a Portfolio to 5% of its net assets, (3) will limit the
margin
deposits on futures contracts entered into by a Portfolio to 5% of its net
assets, and (4)
will limit investment in warrants to 5% of its net assets. No more than 2% will
be
warrants which are not listed on the New York or American Stock Exchanges. Also
to comply
with certain state restrictions, the Growth Portfolio, Capital Growth Portfolio,
and
Income and Growth Portfolio will limit their investment in restricted securities
to 5% of
total assets. (If state requirements change, these restrictions may be revised
without
shareholder notification.)

Management of the Trust

Officers and Trustees

Officers and Trustees are listed with their addresses, principal occupations,
and present
positions, including any affiliation with Cambridge Administrative Services,
Cambridge

Distributors, Inc., Cambridge Investment Advisors, Inc., and WFS Financial, Inc.

Positions with Principal Occupations
Name and Address the Trust During Past Five Years

Daniel J. Ludeman* ** Chairman Chairman, Investment Management
901 E. Byrd Street and Trustee Group, Inc.; Managing Director,
Richmond, Virginia 23219 WFS Financial Corp.; formerly,
Managing Director, Wheat,
First Securities.

Peter J. Quinn, Jr.* ** President President, Cambridge Investment
901 E. Byrd Street and Trustee Advisors, Inc.,
Richmond, Virginia 23219 and Cambridge Distributors,
Inc.; Director, Investment
Management Group, Inc.;
formerly, Senior Vice
President/ Director of
Mutual Funds, Wheat, First
Securities.

Paul F. Costello Senior Vice Senior Vice President,
901 E. Byrd Street President, Cambridge Investment Advisors,
Richmond, Virginia 23219 Treasurer, and Inc., and Cambridge
Secretary Distributors, Inc.;
Director, Investment Management
Group., Inc.; President,
Mentor Series Trust and Cash
Resource Trust; President
and Chief Financial
Officer, Variable Investors
Series Trust; President and
Treasurer, Atlantic
Capital & Research, Inc.;
Vice President and Treasurer,
Variable Stock Fund, Inc.,
Monarch Investment Series
Trust, and GEICO Tax
Advantage Series Trust;
Vice President, Monarch
Life Insurance Company, GEICO
Investment Services Company,
Inc., Monarch Investment

Services Company, Inc.,
and Springfield Life Insurance
Company; formerly, Director,
President and Chief Executive
Officer, First Variable Life
Insurance Company.

Arnold H. Dreyfuss Trustee Formerly, Chairman and Chief
4421 Waterford Drive Executive Officer, Hamilton
Glen Allen, Virginia 23060 Beach/Proctor-Silex, Inc.;
Director, Mentor Growth Fund.

Thomas F. Keller Trustee Dean, The Fuqua School of
Duke University Business, Duke University,
Durham, North Carolina Durham, NC.
27706

Louis W. Moelchert, Jr. Trustee Vice President for Business &
Richmond, Virginia 23173 Finance, University of Richmond,
Richmond, University of
Richmond VA.

Stanley F. Pauley Trustee Chairman, E. R. Carpenter
P.O. Box 27205 Company, Inc.
Richmond, Virginia 23261

Troy A. Peery, Jr.** Trustee President, Heilig-Meyers
2235 Staples Mill Road Company; Member, Board of
Richmond, Virginia 23230 Directors, ACME Markets.

*
This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.

**
Members of the Executive Committee. The Executive Committee of the Board of
Trustees
handles the responsibilities of the Board of Trustees between meetings of the
Board.

Ownership of Portfolios

Officers and Trustees own less than 1% of the outstanding Class A shares and
Class B
shares of each Portfolio.

As of November 17, 1993, no shareholder of record owned 5% or more of the
outstanding
shares of any Portfolio.

Trustee Liability

The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors
of judgment or mistakes of fact or law. However, they are not protected against
any
liability to which they would otherwise be subject by reason of willful
misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the

conduct of
their office.

Investment Advisory Services

Investment Adviser

The Trust's Investment Adviser is Cambridge Investment Advisors, Inc. It is the
Investment Adviser's responsibility to select, subject to review and approval by
the
Trust's Board of Trustees and shareholders, the sub-advisers for the Portfolios
(collectively, the "Sub-Advisers" and each individually the "Sub-Adviser") who
have
distinguished themselves in their respective areas of expertise in asset
management and to
review their continued performance. Cambridge Investment Advisors, Inc., is a
wholly-
owned subsidiary of Investment Management Group, Inc., which in turn is a
wholly-owned
subsidiary of WFS Financial, Inc.

The Investment Adviser and the Sub-Advisers shall not be liable for any losses
that may be
sustained in the purchase, holding or sale of any security, or for anything done
or
omitted by it, except acts or omissions involving willful misfeasance, bad

faith, gross
negligence, or reckless disregard of the duties imposed upon it by its contract
with the
Trust.

Investment Adviser Fees

For performing its responsibilities, the Investment Adviser receives an annual
investment
advisory fee from each Portfolio as described in the Prospectus. The Investment
Adviser,
in turn, made payments to the Sub-Advisers for their services as stated in the
section
entitled "The Sub-Advisers."

During the fiscal year ended September 30, 1993, and for the period from April
29, 1992
(date of initial public investment), to September 30, 1992, the Investment
Adviser earned
and waived advisory fees as follows:

<TABLE>
1993 1992
Investment Investment Investment Investment
Advisory Advisory Advisory Advisory
Portfolio Fee Fee Waiver Fee Fee Waiver
<S> <C> <C> <C> <C>
Growth Portfolio. . . . . . . . . .$ 316,743 $ 18,450 $ 62,102 $ 3,881
Capital Growth Portfolio. . . . . . 570,705 35,435 98,674 6,167
Government Income Portfolio . . . . 885,963 230,311 145,774 145,774
Municipal Income Portfolio. . . . . 378,268 374,138 64,430 64,430
Income and Growth Portfolio*. . . . 45,081 - - -

* For the period May 24, 1993 (date of initial public investment), to September 30, 1993.
</TABLE>

The Investment Adviser receives an annual investment advisory fee equal to 1.10%
of the
average daily net assets of the Global Portfolio up to and including $75 million
and 1.00%
of the average daily net assets of the Global Portfolio in excess of $75
million.

State Expense Limitations

The Investment Adviser has undertaken to comply with the expense limitation
established by certain states for investment companies whose shares are
registered for sale in those states. If a Portfolio's normal operating
expenses (including the investment advisory fee, but not including brokerage

commissions, interest, taxes, and extraordinary expenses) exceed 2 1/2% per
year of the first $30 million of
average net assets, 2% per year of the next $70 million of average net
assets, and 11/2% per year of the remaining average net assets, the Investment
Adviser will reimburse the particular Portfolio for its expenses over the
limitation.

If a Portfolio's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the amount of
the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the Investment Adviser will be
limited, in any single fiscal year, by the amount of the investment advisory
fee.

This arrangement is not part of the Investment Advisory Agreement and may
be amended or rescinded in the future.

The Sub-Advisers

Pursuant to a Sub-Advisory Agreement entered into between the Investment
Adviser and each
Sub-Adviser, each Portfolio is advised by a Sub-Adviser who has complete
discretion to
purchase and sell portfolio securities for the Portfolio to which it serves as
the Sub-
Adviser within the particular Portfolio's investment objective, restrictions,
and policies.

Kemper Financial Services, Inc. ("KFS"), serves as the Sub-Adviser to the Growth
Portfolio

under the terms of a Sub-Advisory Agreement between the Investment Adviser and

KFS. KFS is a wholly-owned subsidiary of Kemper Financial Companies, Inc.
("KFC"). KFC is a
business corporation incorporated under the laws of the State of Delaware. It
was founded
in 1986 and is a financial services holding company and a subsidiary of Kemper
Corporation. Kemper Corporation was incorporated under the laws of the State
of Delaware
in 1968 and is a diversified insurance and financial services holding company.
During the
fiscal year ended September 30, 1993, and

for the period from April 29, 1992
(date of
initial public investment), to September 30, 1992, KFS earned $158,980 and
$31,051,
respectively, as its sub-advisory fee for services it provided on behalf of
the Growth Portfolio.

Phoenix Investment Counsel, Inc. ("PIC"), serves as the Sub-Adviser to the
Capital Growth
Portfolio under the terms of a Sub-Advisory Agreement between the Investment
Adviser and
PIC. PIC is a wholly-owned subsidiary
of Phoenix Equity Planning Corporation,
which was
incorporated under the laws of the State of Connecticut in 1968, and is
registered as a
broker-dealer in fifty states. Phoenix Equity Planning Corporation is an
indirect
subsidiary of Phoenix Home Life Mutual Insurance Company. Phoenix Home Life
Mutual
Insurance Company has been engaged in the business of writing ordinary and group
life and
health insurance and annuities since 1861. During the fiscal year ended
September 30,
1993, and
for the period from April 29, 1992 (date of initial public
investment), to
September 30, 1992, PIC earned $286,476 and $49,337, respectively, as its sub-
advisory fee
for services it provided on behalf of the Capital Growth Portfolio.

Pacific Investment Management Company ("PIMCO") serves as the interim Sub-
Adviser to the
Government Income Portfolio under the terms of a Sub-Advisory Agreement between
the
Investment Adviser and PIMCO. Federated Advisers is a wholly-owned subsidiary
of
Federated Investors. The terms of this agreement, including compensation, are
identical to those of the previous sub-advisory agreement between Federated
Advisers and
the
Trust, except that
the agreement will terminate upon the earlier to occur of
(1) 120
days from commencement of the agreement or (2) final adjournment of the meeting
of the

shareholders of the Government Income Portfolio held for the purpose of
approving a new
advisory agreement with PIMCO. It is currently anticipated that this
shareholders meeting
will be held during the first quarter of 1994. PIMCO, established in 1971,
provides
investment advisory services to investment companies, pension plans,
foundations,
endowments and other institutions located both in the U.S. and abroad. As of
November 30,
1993, PIMCO had over $52.6 billion of assets under management, of which
approximately
$26.0 billion were invested in U.S. Government securities. PIMCO, a wholly
owned
subsidiary of Pacific Mutual Life Insurance Company, is located at 840 Newport
Center
Drive, Suite 360, Newport Beach, California 92660.

Van Kampen Merritt Management Inc. ("VKMMI") serves as the Sub-Adviser to the
Municipal
Income Portfolio under the terms of a Sub-Advisory Agreement between the
Investment
Adviser and VKMMI. VKMMI is a wholly-owned subsidiary of The Van Kampen Merritt
Companies, Inc., which, in turn, is a wholly-owned subsidiary of VKM Holding,
Inc. VKM
Holding, Inc., is indirectly controlled by Clayton & Dubilier Associates IV
Limited
Partnership, the general partners of which are Joseph L. Rice, III, B. Charles
Ames,
Alberto Cribiore, Donald J. Gogel, and Hubbard C. Howe, each of whom is a
principal of
Clayton, Dubilier & Rice, Inc., a New York-based private investment firm.
During the
period from February 17, 1993, to September 30, 1993, VKMMI earned $132,315 as
its sub-
advisory fee for services it provided on behalf of the Municipal Income
Portfolio, of
which $130,250 was voluntarily waived. For the period from October 1, 1992,
to February
16, 1993, and from April 29, 1992 (date of initial public investment), to
September 30,
1992, Van Kampen Merritt Investment Advisory Corp., the Portfolio's former
sub-adviser,
earned $56,819 and $32,215, respectively, as its sub-advisory fees for
services it
provided on behalf of the Portfolio, all of which were voluntarily waived.

Wellington Management Company ("WMC") serves as the Sub-Adviser to the Income
and Growth
Portfolio under the terms of a Sub-Advisory Agreement between the Investment
Adviser and

WMC. WMC is a professional investment counseling firm which provides investment
services
to investment companies, employee benefit plans, endowments, foundations, and
other
institutions and individuals. During
the period from May 24, 1993 (date of

initial public
investment), to September 30, 1993, WMC earned $22,521 as it sub-advisory fee
for services
it provided on behalf of the Income and
Growth Portfolio.

Scudder, Stevens & Clark, Inc. ("Scudder") serves as the Sub-Adviser
to the
Global
e
Global
Portfolio under the terms of a Sub-Advisory Agreement between the Investment
Adviser and
Scudder. Scudder is an investment counseling firm which was established as a
partnership
in 1919. In 1953, Scudder introduced Scudder International Fund, the first
mutual fund
registered with the Commission in the U.S. investing internationally in
securities of
issuers

in several foreign countries. The Investment Adviser pays the Sub-
Adviser an
annual fee expressed as a percentage of Global Portfolio assets: .55% on the
first $75
million

in Global Portfolio assets and .50% on assets over $75 million.

Distribution of
Portfolio Shares

Cambridge Distributors, Inc., is the principal distributor of Portfolio shares,
as
explained in the prospectus. Federated Securities Corp. is the co-distributor
of
Portfolio shares. During the fiscal year ended September 30, 1993, the

distributors, both
affiliated parties of the Trust, received the following commissions and other
compensation:

<TABLE>
Net Underwriting Compensation on
Discounts and Redemption and Brokerage* Other
Name of Principal Underwriter Commissions Repurchases Commissions Compensation
<S> <C> <C> <C> <C>
Cambridge Distributors, Inc.. . . .$240,655 $ 196,488 $ - $1,823,243
Federated Securities Corp.. . . . .$ - $ - $ - $ -

* "Other Compensation" represents $1,250,734 for services performed under the Trust's
Distribution Plan and $572,509 for services performed under the Trust's Shareholder
Servicing Plan.
</TABLE>

Administrative Services

Cambridge Administrative Services, which is a subsidiary of Federated Investors,
provides
administrative personnel and services to the Portfolios for the fees set forth
in the
Prospectus. During the fiscal year ended September 30, 1993, and for the period
from
April 29, 1992 (date of initial public investment), to September 30, 1992, the
Portfolios
incurred costs for administrative services as follows:

<TABLE>
1993 1992
Administrative Administrative Administrative Administrative
Portfolio Fee Fee Waiver Fee Fee Waiver
<S> <C> <C> <C> <C>
Growth Portfolio. . . . . . $ 55,468 $ 20,121 $ 9,713 $ 5,051
Capital Growth Portfolio. . 104,427 36,269 15,410 8,013
Government Income Portfolio 184,593 41,518 30,370 30,370
Municipal Income Portfolio.. 97,110 34,261 13,423 13,423
Income and Growth Portfolio* 7,514 3,005 - -

* For the period May 24, 1993 (date of initial public investment), to September 30, 1993.
</TABLE>

Shareholder Servicing Plan

The Trust has adopted a Shareholder Servicing Plan (the "Service Plan") with
respect to
both classes of shares of each Portfolio. Pursuant to 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 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 .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. The Service Plan is designed to stimulate financial
institutions
to render administrative support services to the Portfolios and their
shareholders. These
administrative support services 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
easonably
request.

Among the benefits the Board of Trustees expects to achieve in adopting the
Service Plan
are the following: (1) an efficient and effective administrative system; (2) a
more
efficient use of shareholder assets by having them rapidly invested in the
Portfolios,
through an automatic transfer of funds from a demand deposit account to an
investment
account, with a minimum of delay and administrative detail; and (3) an efficient
and
reliable shareholder records system and prompt responses to shareholder requests
and
inquiries concerning their accounts.

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, a Sub-Adviser, and/or the administrator and will not be made from the
assets of
any of the Portfolios.

During the fiscal year ended September 30, 1993, and for the period from April
29, 1992
(date of initial public investment), to September 30, 1992, the Portfolios
incurred
shareholder service fees under the Service Plan (all of which was received by
the
Distributor) as follows:

Portfolio 1993 1992
Growth Portfolio. . . . . . . . . . . . . . . . . $98,981 $19,407
Capital Growth Portfolio. . . . . . . . . . . . . 178,345 30,836
Government Income Portfolio . . . . . . . . . . . 369,151 60,739
Municipal Income Portfolio. . . . . . . . . . . . 157,611 26,846
Income and Growth Portfolio*. . . . . . . . . . . 15,027 -

* For the period May 24, 1993 (date of initial public investment), to
September 30, 1993.

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. A Sub-Adviser makes decisions
on
portfolio transactions and selects brokers and dealers subject to guidelines
established
by the Board of Trustees.

A Sub-Adviser may select brokers and dealers who offer brokerage and research
services.
These services may be furnished directly to the Portfolios or to a Sub-Adviser

and may
include:

. advice as to the advisability of investing in securities;

. security analysis and reports;

. economic studies;

. receipt of quotations for portfolio evaluations; and

. similar services.

A Sub-Adviser and its affiliates exercise reasonable judgment in selecting
brokers who
offer brokerage and research services to execute securities transactions. They
determine
in good faith that commissions charged by such persons are reasonable in
relationship to
the value of the brokerage and research services provided.

Research services provided by brokers may be used by a Sub-Adviser in advising a
Portfolio
and other accounts. To the extent that receipt of these services may supplant
services
for which a Sub-Adviser or its affiliates might otherwise have been paid, it
would tend to
reduce their expenses, but it is not expected that such reduction will be
material.

During the fiscal year ended September 30, 1993, and for the period from April
29, 1992
(date of initial public investment), to September 30, 1992, the Portfolios paid
brokerage
commissions on brokerage transactions as follows:

Portfolio 1993 1992

Growth Portfolio. . . . . . . . . . . . . . . . . $173,167 $ 40,337
Capital Growth Portfolio. . . . . . . . . . . . . 334,227 75,352
Government Income Portfolio . . . . . . . . . . . - -
Municipal Income Portfolio. . . . . . . . . . . . - -
Income and Growth Portfolio*. . . . . . . . . . . 25,668 -

* For the period May 24, 1993 (date of initial public investment), to

September 30, 1993.

Wheat First Butcher & Singer Capital Markets ("Wheat First"), an affiliated
party of the
Investment Adviser, received for the fiscal year ended September 30, 1993, and
for the
period from April 29, 1992 (date of initial public investment), to September 30,
1992,
brokerage commissions of $120,726 and $42,656, respectively, for services
performed on
behalf of certain of the Portfolios, as follows:

1993 1992
Growth Portfolio. . . . . . . . . . . . . . . . . $ 3,297 $ -
Capital Growth Portfolio. . . . . . . . . . . . . 113,126 42,656
Income and Growth Portfolio*. . . . . . . . . . . 4,303 -

* For the period May 24, 1993 (date of initial public investment), to
September 30, 1993.

During the fiscal year ended September 30, 1993, with respect to the Growth
Portfolio, the
brokerage commissions received by Wheat First represented 1.90% of the aggregate
brokerage
commissions paid by the Portfolio and represented 2.12% of the Portfolio's
transactions
effected through brokers. Also during the same period, the brokerage
commissions received
by Wheat First on behalf of the Capital Growth Portfolio represented 32.86% of
the
aggregate brokerage commissions paid by the Portfolio and represented 38.45% of
the
Portfolio's transactions effected through brokers. With respect to the Income
and Growth
Portfolio, during the period May 24, 1993 (date of initial public investment),
to
September 30, 1993, the brokerage commissions received by Wheat First
represented 16.76%
of the aggregate brokerage commissions paid by the Portfolio and represented
10.64% of the
Portfolio's transactions effected through brokers.

How to Buy Shares

Except under certain circumstances described in the Prospectus, Class A shares
of the
Portfolios are sold at their net asset value plus an applicable sales charge on
days the

New York Stock Exchange is open for business. Class B shares of the Portfolios
are sold
at their net asset value with no sales charge on days the New York Stock
Exchange is open
for business. The procedure for purchasing Class A and Class B shares of the
Portfolios
is explained in the Prospectus under the section entitled "How to Buy Shares."

Dealers will be compensated on purchases of Class A shares in accordance to the
following
schedule:

Amount of Purchase Dealer Commission
Less than $2 million . . 1.00%
$2 million but less than $3 million .80%
$3 million but less than $50 million .50%
$50 million but less than $100 million .25%
$100 million or more . . .15%

The above commission will be paid by the Distributor and not the Trust or its
shareholders.

Distribution Plan (Class B Shares)

With respect to the Class B shares of the Portfolios, the Trust has adopted a
Plan
pursuant to Rule 12b-1, which was promulgated by the SEC under the Investment
Company Act
of 1940 (the "Plan"). The Plan provides for payment of fees to the Distributor
to finance
any activity which is principally intended to result in the sale of Class B
shares of the
Portfolios. Such activities may include the advertising and marketing of Class
B shares;
preparing, printing and distributing prospectuses and sales literature to
prospective
shareholders, brokers or administrators; and implementing and operating the
Plan.
Pursuant to the Plan, the Distributor may pay fees to brokers for distribution
services as
to Class B shares.

The Board of Trustees expects that the adoption of the Plan will result in the
sale of a
sufficient number of Class B shares of the Portfolios so as to allow each
Portfolio to
achieve economic viability. It is also anticipated that an increase in the size
of each
Portfolio will facilitate more efficient portfolio management and assist each

Portfolio in
seeking to achieve its investment objective.

Pursuant to the Plan, during the fiscal year ended September 30, 1993, and for
the period
from April 29, 1992 (date of initial public investment), to September 30, 1992,

financial
institutions (such as a broker/dealer or bank) received fees for services
provided on
behalf of Class B shares of the Portfolios as follows, all of which was received
by the
Distributor:

Portfolio 1993 1992
Growth Portfolio. . . . . . . . . . . . . . . . . $178,568 $28,703
Capital Growth Portfolio. . . . . . . . . . . . . 326,101 48,323
Government Income Portfolio . . . . . . . . . . . 512,241 73,217
Municipal Income Portfolio. . . . . . . . . . . . 193,150 27,412
Income and Growth Portfolio*. . . . . . . . . . . 26,967 -

* For the period May 24, 1993 (date of initial public investment), to
September 30, 1993.

Conversion to Federal Funds

The Shareholder Services Group, Inc., acts as the shareholder's agent in
depositing checks
and converting them to federal funds.

Purchases at Net Asset Value

Class A shares of the Portfolios may be purchased at net asset value, without a
sales
charge, by the following: advisory accounts through registered investment
advisers; bank
trust departments purchasing on behalf of their clients; Trustees, emeritus
trustees,
employees and retired employees of the Trust; or directors, emeritus directors,
employees
and 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.
Spouses and children under age 21 of the foregoing persons may also buy Class A

shares of
the Portfolios at net asset value with no sales charge.

Determining Net Asset Value

Net asset value generally changes each day. The days on which net asset value
is
calculated by each Portfolio are described in the Prospectus. Net asset value
will not be
calculated on days on which the New York Stock Exchange is closed.

Determining Market Value of Securities

Market values of each Portfolio's portfolio securities are determined as
follows:

. according to the last sale price on a national securities exchange, if

available;

. in the absence of recorded sales for equity securities, according to the mean
between
the last closing bid and asked prices, and for bonds and other fixed income
securities
as determined by an independent pricing service; or

. for short-term obligations, according to the prices as furnished by an
independent
pricing service or for short-term obligations with maturities of less than 60
days, at
amortized cost, or at fair value as determined in good faith by the Board of
Trustees.

Prices provided by independent pricing services may be determined without
relying
exclusively on quoted prices and may consider yield, quality, coupon rate,
maturity, type
of issue, trading characteristics, and other market data.

Over-the-counter put options will be valued at the mean between the bid and the
asked
prices. Covered call options will be valued at the last sale price on the
national
exchange on which such option is traded. Unlisted call options will be valued
at the

latest bid price as provided by brokers.

Following the calculation of security values in terms of currency in which the
market
quotation used is expressed ("local currency"), the valuing agent shall
calculate these
values in terms of U.S. dollars on the basis of the conversion of the local
currencies (if
other than U.S.) into U.S. dollars at the rates of exchange prevailing at the
value time
as determined by the valuing agent.

Trading in securities on European and Far Eastern securities exchanges and over-
the-
counter markets is normally completed well before the close of business on each
business
day in New York (i.e., a day on which the Exchange is open). In addition,
European or Far
Eastern securities trading generally or in a particular country or countries may
not take
place on all business days in New York. Furthermore, trading takes place in
Japanese
markets on certain Saturdays and in various foreign markets on days which are
not business
days in New York and on which the Global Portfolio's net asset value is not
calculated.
The Global Portfolio calculates net asset value per share, and therefore effects
sales,

redemptions and repurchases of its shares, as of the close of the Exchange once
on each
day on which the Exchange is open. Such calculation does not take place
contemporaneously
with the determination of the prices of the majority of the portfolio securities
used in
such calculation. If events materially affecting the value of such securities
occur
between the time when their price is determined and the time when the Global
Portfolio's
net asset value is calculated, such securities will be valued at fair value as
determined
in good faith by the Board of Trustees.

Exchange Privilege

The SEC has issued an order exempting the Trust from certain provisions of the
Investment
Company Act of 1940. As a result, shareholders of the Portfolios are allowed to
exchange
all or some of their Class A or Class B shares with no sales charge or
contingent
deferred sales charge ("CDSC"), as described in the Prospectus. For a complete
description of the exchange privilege, see the section in the Prospectus
entitled
"Exchange Privilege."

Redeeming Shares

The Portfolios redeem shares at the next computed net asset value, less the
applicable
CDSC, after the particular Portfolio receives the redemption request.
Redemption
procedures are explained in the Prospectus under the section entitled "Redeeming
Shares."
Although The Shareholder Services Group, Inc., does not charge for telephone
redemptions,
it reserves the right to charge a fee for the cost of wire-transferred
redemptions.

Contingent Deferred Sales Charge

During certain periods, Class A shares of the Portfolios were eligible to be
purchased at
net asset value (without a sales charge) with the proceeds from the redemption,
sale, or
maturity of other investments and may, therefore, be subject to a CDSC as
explained in
the prospectus. The eligible period for the Income and Growth Portfolio was
prior to July
31, 1993. For the Growth Portfolio, Capital Growth Portfolio, Government Income
Portfolio, and Municipal Income Portfolio, these eligible periods were (1)
prior to June
30, 1992, and (2) from December 1, 1992, through and including January 31, 1993.

Redemptions in Kind

Although the Trust intends to redeem Class A and Class B shares in cash, it
reserves the
right under certain circumstances to pay the redemption price in whole or in
part by a
distribution of securities from the respective Portfolio's investment portfolio.
To the
extent available, such securities will be readily marketable.

Redemption in kind will be made in conformity with applicable SEC rules, taking

such
securities at the same value employed in determining net asset value and
selecting the
securities in a manner that the Trustees determine to be fair and equitable.

The Trust has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940,
under which, with respect to each Portfolio, the Trust is obligated to redeem
Class A or
Class B shares for any one shareholder in cash only up to the lesser of $250,000
or 1% of
the respective class's net asset value during any 90-day period.

Tax Status

The Portfolios' Tax Status

The Portfolios expect to pay no federal income tax because they expect to meet
the
requirements of Subchapter M of the Internal Revenue Code, as amended,
applicable to
regulated investment companies and to receive the special tax treatment afforded
to such
companies. To qualify for this treatment, each Portfolio must, among other
requirements:

. derive at least 90% of its gross income from dividends, interest and gains
from the
sale of securities;

. derive less than 30% of its gross income from the sale of securities held less
than
three months;

. invest in securities within certain statutory limits; and

. distribute to its shareholders at least 90% of its net income earned during
the year.

Each 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 a
Portfolio will not be combined for tax purposes with income and losses realized

by any of
the other Portfolios.

The Global Portfolio intends to qualify for and may make the election permitted
under
Section 853 of the Internal Revenue Code so that shareholders may (subject to
limitations)
be able to claim a credit or deduction on their federal income tax returns for,
and may be
required to treat as part of the amounts distributed to them, their pro rata
portion of
qualified taxes paid by the Portfolio to foreign countries (which taxes relate
primarily
to investment income). The Global Portfolio may make an election under Section
853 of the
Internal Revenue Code, provided that more than 50% of the value of the total
assets of the
Global Portfolio at the close of the taxable year consists of securities in
foreign
corporations. The foreign tax credit available to shareholders is subject to
certain
limitations imposed by the Internal Revenue Code.

If the Global Portfolio invests in stock of certain foreign investment
companies, the
Global Portfolio may be subject to U.S. federal income taxation on a portion of
any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The
tax would be determined by allocating such distribution or gain ratably to each
day of the
Global Portfolio's holding period for the stock. The distribution or gain so
allocated to
any taxable year of the Global Portfolio, other than the taxable year of the
excess
distribution or disposition, would be taxed to the Global Portfolio at the
highest
ordinary income rate in effect for such year, and the tax would be further
increased by an
interest charge to reflect the value of the tax deferral deemed to have resulted
from the
ownership of the foreign company's stock. Any amount of distribution or gain
allocated to
the taxable year of the distribution or disposition would be included in the
Global
Portfolio's investment company taxable income and, accordingly, would not be
taxable to
the Global Portfolio to the extent distributed by the Global Portfolio as a
dividend to
its shareholders.

Proposed regulations have been issued which may allow the Global Portfolio to
make an
election to mark to market its shares of these foreign investment companies in
lieu of
being subject to U.S. federal income taxation. At the end of each taxable year
to which
the election applies, the Global Portfolio would report as ordinary income the
amount by
which the fair market value of the foreign company's stock exceed the Global
Portfolio's
adjusted basis in these shares. No mark to market losses would be recognized.
The effect
of the election would be to treat excess distributions and gain on dispositions
as
ordinary income which is not subject to a fund level tax when distributed to
shareholders
as a dividend. Alternatively, the Global Portfolio may elect to include as
income and
gain their share of the ordinary earnings and net capital gain of certain
foreign
investment companies in lieu of being taxed in the manner described above.

Many futures contracts (including foreign currency futures contracts) entered
into by the
Global Portfolio, certain forward foreign currency contracts, and all listed
nonequity
options written or purchased by the Global Portfolio (including options on debt
securities, options on futures contracts, options on securities indices and
options on
broad-based stock indices) will be governed by Section 1256 of the Internal
Revenue Code.
Absent a tax election to the contrary, gain or loss attributable to the lapse,
exercise or
closing out of any such position generally will be treated as 60% long-term and
40% short-
term capital gain or loss, and on the last trading day of the Global Portfolio's
fiscal
year, all outstanding Section 1256 positions will be marked to market (i.e.,
treated as if
such positions were closed out at their closing price on such day), with any
resulting
gain or loss recognized. Under certain circumstances, entry into a futures
contract to
sell a security may constitute a short sale for federal income tax purposes,
causing an
adjustment in the holding period of the underlying security or a substantially
identical
security in the Global Portfolio. Under Section 988 of the Internal Revenue

Code,
discussed below, foreign currency gains or loss from foreign currency related
forward
contracts, certain futures and similar financial instruments entered into or
acquired by a
Global Portfolio will be treated as ordinary income or loss.

Under the Internal Revenue Code, gains or losses attributable to fluctuations in
exchange
rates which occur between the time the Global Portfolio accrues receivables or
liabilities
denominated in a foreign currency and the time the Global Portfolio actually
collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or
ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign
currency and on disposition of certain futures and forward contracts, gains or
losses
attributable to fluctuations in the value of foreign currency between the date
of
acquisition of the security or contract and the date of disposition are also
treated as
ordinary gain or loss. These gains or losses, referred to under the Internal
Revenue Code
as "Section 988" gains or losses, may increase or decrease the amount of the
Global
Portfolio's investment company taxable income to be distributed to its
shareholders as
ordinary income.

A portion of the difference between the issue price of zero coupon securities
and their
face value ("original issue discount") is considered to be income to a Portfolio
each
year, even though the Portfolio will not receive cash interest payments from
these
securities. This original issue discount imputed income will comprise a part of
the
investment company taxable income of the Portfolios which must be distributed to
shareholders in order to maintain the qualification of the Portfolios as
regulated
investment companies and to avoid federal income tax at the level of the
Portfolios.

Shareholders' Tax Status

Except as described below for the Municipal Income Portfolio, unless otherwise
exempt,
shareholders are subject to federal income tax on dividends and capital gains
received as
cash or additional shares. With respect to the Government Income and Municipal
Income
Portfolios, no portion of any income dividend paid by a Portfolio is expected to
be
eligible for the dividends received deduction available to corporations. With
respect to
the Growth, Capital Growth, Income and Growth and Global Portfolios, the
dividends
received deduction for corporations will apply to ordinary income distributions
to the
extent the distribution represents amounts that would qualify for the dividends
received
deduction to a particular Portfolio if that Portfolio were a regular corporation
and to
the extent designated by a Portfolio as so qualifying. These dividends and any
short-term
capital gains are taxable as ordinary income.

Capital Gains

Shareholders will pay federal tax on long-term capital gains distributed to
them
regardless of how long they have held the shares of the particular
Portfolio.

Shareholders of the Municipal Income Portfolio are not required to pay the
federal regular
income tax on any dividends received from the Portfolio that represent net
interest on
tax-exempt municipal bonds. However, under the Tax Reform Act of 1986,
dividends
representing net interest earned on some municipal bonds may be included in
calculating
the federal individual alternative minimum tax or the federal alternative
minimum tax for
corporations.

For a more complete discussion of shareholders' tax status, including a
discussion of the
individual alternative minimum tax and the corporate alternative minimum tax,
see the
section of the prospectus entitled "Tax Information."

Total Return

The average annual total return for both classes of shares of the following
Portfolios for

the fiscal year ended September 30, 1993, were as follows:

Since Inception*
Portfolio Class A Class B Class A Class B
Growth Portfolio. . . . . . 11.75% 16.34% 7.90% 11.71%
Capital Growth Portfolio. . 2.24% 6.54% 2.13% 5.71%
Government Income Portfolio 0.38% 3.81% 2.68% 5.76%
Municipal Income Portfolio. 10.52% 14.19% 11.33% 14.64%

* For the period from April 29, 1992 (date of initial public investment), to
September 30, 1993.

The average annual total return for a Portfolio is the average compounded rate
of return
for a given period that would equate a $1,000 initial investment to the ending
redeemable
value of that investment. The ending redeemable value is computed by
multiplying the

number of shares owned at the end of the period by the maximum offering price
per share at
the end of the period. The number of shares owned at the end of the period is
based on
the number of shares purchased at the beginning of the period with $1,000, less
any
applicable sales load, adjusted over the period by any additional shares,
assuming the
monthly, quarterly, or semi-annual (as applicable) reinvestment of all dividends
and
distributions. Any applicable CDSC is deducted from the ending value of the
investment
based on the lesser of the original purchase price or the net asset value of
shares
redeemed.

The cumulative total return for Class A and Class B shares of the Income and
Growth
Portfolio for the period from May 24, 1993 (date of initial public investment),
to
September 30, 1993, were -0.33% and 4.55%, respectively.

Cumulative total return reflects a Portfolio's total performance over a specific

period of
time. This total return assumes and is reduced by the payment of the maximum
sales load
and CDSC. The Portfolio's total return is representative of only four months of
activity since the Portfolio's effective date.

Yield

The thirty-day yield for both classes of shares of the Portfolios for the period
ending
September 30, 1993, were as follows:

Portfolio Class A Class B
Growth Portfolio . . . . . . .-0.69% -1.48%
Capital Growth Portfolio . . . 0.42% -0.30%
Government Income Portfolio. . 2.66% 2.29%
Municipal Income Portfolio . . 5.14% 4.90%
Income and Growth Portfolio* . 1.66% 1.00%

* For the period May 24, 1993 (date of initial public investment), to
September 30, 1993.

The yield for both classes of each Portfolio is determined by dividing the net
investment
income per share (as defined by the SEC) earned by the particular Portfolio over
a thirty-
day period by the maximum offering price per share of the particular Portfolio
on the last
day of the period. This value is then annualized using semi-annual compounding.

This
means that the amount of income generated during the thirty-day period is
assumed to be
generated each month over a twelve-month period and is reinvested every six
months. The
yield does not necessarily reflect income actually earned by the particular
Portfolio
because of certain adjustments required by the SEC and, therefore, may not
correlate to
the dividends or other distributions paid to shareholders.

To the extent that financial institutions and broker/dealers charge fees in
connection
with services provided in conjunction with an investment in a Portfolio, the

performance
will be reduced for those shareholders paying those fees.

Tax-Equivalent Yield (Municipal Income Portfolio)

The tax-equivalent yield for Class A shares of the Municipal Income Portfolio
for the
thirty-day period ended September 30, 1993, was 8.51%. The tax-equivalent yield
for the
Class B shares was 8.11% for the same period.

The tax-equivalent yield for both classes of the Municipal Income Portfolio is
calculated
similarly to the yield, but is adjusted to reflect the taxable yield that the
Portfolio
would have had to earn to equal its actual yield, assuming a 39.6% tax rate (the
maximum
effective federal rate for individuals) and assuming that income is 100% tax-
exempt.

Tax-Equivalency Table

The Portfolio may also use a tax-equivalency table in advertising and sales
literature.
The interest earned by the municipal bonds in the Portfolio's investment
portfolio
generally remains free from federal regular income tax* but may be subject to
state and
local taxes. Capital gains, if any, are subject to federal, state and local
tax. As the
table below indicates, a "tax-fee" investment is an attractive choice for
investors,
particularly in times of narrow spreads between tax-free and taxable yields.

<TABLE>
Taxable Yield Equivalent for 1993

Federal Income Tax Bracket:
15.00% 28.00% 31.00% 36.00% 39.60%
<S> <C> <C> <C> <C> <C>
Joint Return: $1-36,900 $36,901-89,150 $89,151-140,000 $140,001-250,000 Over $250,000
Single Return: $1-22,100 $22,101-53,500 $53,501-115,000 $115,001-250,000 Over $250,000

</TABLE>

Tax-Exempt
Yield Taxable Yield Equivalent

2.50% 2.94% 3.47% 3.62% 3.91% 4.14%

3.00 3.53 4.17 4.35 4.69 4.97
3.50 4.12 4.86 5.07 5.47 5.79
4.00 4.71 5.56 5.80 6.25 6.62
4.50 5.29 6.25 6.52 7.03 7.45
5.00 5.88 6.94 7.25 7.81 8.28
5.50 6.47 7.64 7.97 8.59 9.11
6.00 7.06 8.33 8.70 9.38 9.93
6.50 7.65 9.03 9.42 10.16 10.76
7.00 8.24 9.72 10.14 10.94 11.59
7.50 8.82 10.42 10.87 11.72 12.42
8.00 9.41 11.11 11.59 12.50 13.25
8.50 10.00 11.81 12.32 13.28 14.07

Note: The maximum marginal tax rate for each bracket was used in calculating
the taxable yield equivalent.

The table above is for illustrative purposes only. It is not an indicator of
past or
future performance of the Portfolio.

* Some portion of the Portfolio's income maybe subject to the federal
alternative minimum tax and state and local taxes.

Performance Comparisons

The performance of Class A and Class B shares of each Portfolio depends upon
such
variables as:

. portfolio quality;

. average portfolio maturity;

. type of instruments in which the particular Portfolio is invested;

. changes in the expenses of the Trust or Class A or Class B shares of a
particular Portfolio; and

. various other factors.

The performance of each Portfolio's Class A and Class B shares fluctuates on a
daily basis

largely because net earnings and net asset value per share fluctuate daily.
Both net

earnings and net asset value per share are factors in the computation of yield
and total
return for each class of the Portfolios.

From time to time each Portfolio may advertise its performance of both classes
of shares
of the Portfolios compared to similar funds or portfolios using certain indices,
reporting
services, and financial publications. These may include the following:

. Lipper Analytical Services, Inc., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and
takes into account any change in net asset value over a specified period of
time. From time to time, a Portfolio
will quote its Lipper ranking in advertising and sales literature.

. Dow Jones Industrial Average ("DJIA") is an unmanaged index representing share
prices
of major industrial corporations, public utilities, and transportation
companies. Produced by the Dow Jones & Company, it is cited as a principal
indicator of market conditions.

. Standard & Poor's Daily Stock Price Index of 500 Common Stocks, a composite
index of
common stocks in industry, transportation, and financial and public utility
companies,
can be used to compare to the total returns of funds whose portfolios are
invested
primarily in common stocks. In addition, the Standard & Poor's index assumes
reinvestments of all dividends paid by stocks listed on its index. Taxes due
on any of
these distributions are not included, nor are brokerage or other fees
calculated, in
the Standard & Poor's figures.

. Consumer Price Index is generally considered to be a measure of inflation.

. CDA Mutual Fund Growth Index is a weighted performance average of other mutual
funds
with growth of capital objectives.

. Lipper Growth Fund Index is an average of the net asset-valuated total returns
for the
top 30 growth funds tracked by Lipper Analytical Services, Inc., an
independent mutual
fund rating service.

. Shearson Lehman Government/Corporate (Total) Index is comprised of
approximately 5,000
issues, which include non-convertible bonds publicly issued by the U.S.
government or
its agencies; corporate bonds guaranteed by the U.S. government and quasi-

federal
corporations; and publicly issued, fixed-rate, non-convertible domestic bonds
of
companies in industry, public utilities and finance. The average maturity of
these
bonds approximates nine years. Tracked by Shearson Lehman Brothers Inc., the
index
calculates total returns for one month, three month, twelve month and ten year
periods
and year-to-date.

. Shearson Lehman Government Index is an unmanaged index comprised of all
publicly
issued, non-convertible domestic debt of the U.S. government, or any agency
thereof, or
any quasi-federal corporation and of corporate debt guaranteed by the U.S.
government.
Only notes and bonds with a minimum outstanding principal of $1 million and a
minimum
maturity of one year are included.

. Morningstar, Inc., an independent rating service, is the publisher of the bi-
weekly
Mutual Fund Values. Mutual Fund Values rates more than 1,000 NASDAQ-listed
mutual
funds of all types, according to their risk-adjusted returns. The maximum
rating is
five stars, and ratings are effective for two weeks.

. Russell Growth 1000 (Russell 1000 Index) is a broadly diversified index
consisting of
approximately 1,000 common stocks of companies with market values between $20
million
and $300 million that can be used to compare the total returns of funds whose
portfolios are invested primarily in growth common stocks.

. Shearson Lehman Aggregate Bond Index is a total return index measuring both
the capital
price changes and income provided by the underlying universe of securities,
weighted by
market value outstanding. The Aggregate Bond Index is comprised of the
Shearson Lehman
Government Bond Index, Corporate Bond Index, Mortgage-Backed Securities Index,
and
Yankee Bond Index. These indices include: U.S. Treasury obligations,
including bonds

and notes; U.S. agency obligations, including those of the Federal Farm Credit
Bank,
Federal Land Bank, and the Bank for Cooperatives; foreign obligations; and
U.S.
investment-grade corporate debt and mortgage-backed obligations. All
corporate debt
included in the Aggregate Bond Index has a minimum S&P rating of BBB, a
minimum Moody's
rating of Baa, or a minimum Fitch rating of BBB.

. Salomon Brothers Mortgage-Backed Securities Index-15 Years includes the
average of all
15-year mortgage securities, which include Federal Home Loan Mortgage
Corporation
(Freddie Mac), Federal National Mortgage Association (Fannie Mae), and
Government
National Mortgage Association (Ginnie Mae).

. Shearson Lehman Municipal Bond Index is a total return performance benchmark
for the
long-term, investment-grade tax-exempt bond market. Returns and attributes
for the
Index are calculated semi-monthly using approximately 21,000 municipal bonds,
which are
priced by Muller Data Corporation.

From time to time, the Global Portfolio may advertise its performance of both
classes of
shares of the Portfolio compared to similar funds or portfolios using certain
indices,
reporting services, and financial publications. These may include the
following: Morgan
Stanley Capital International World Index, The Morgan Stanley Capital
International EAFE
(Europe, Australia, Far East) index, J. P. Morgan Global Traded Bond Index,
Salomon
Brothers World Government Bond Index, and the Standard & Poor's 500 Composite
Stock Price
Index (S&P 500). The Global Portfolio also may compare its performance to the
performance
of unmanaged stock and bond indices, including the total returns of foreign
government
bond markets in various countries. All index returns are translated into U.S.
dollars.

The total return calculation for these unmanaged indices may assume the
reinvestment of
dividends and any distributions, if applicable, may include withholding taxes,
and
generally do not reflect deductions for administrative and management costs.

Investors may use such indices or reporting services in addition to the Trust's
Prospectus
to obtain a more complete view of a particular Portfolio's performance before
investing.
Of course, when comparing a Portfolio's performance to any index, conditions
such as
composition of the index and prevailing market conditions should be considered
in
assessing the significance of such comparisons. When comparing funds using
reporting
services, or total return and yield, investors should take into consideration
any relevant
differences in funds, such as permitted portfolio compositions and methods used
to value

portfolio securities and compute net asset value.

Advertisements and other sales literature for the Trust may quote total returns
which are
calculated on non-standardized base periods. These total returns also represent
the
historic change in the value of an investment in the Trust based on monthly
reinvestment
of dividends over a specified period of time.

From time to time the Portfolios may advertise their performance, using charts,
graphs,
and descriptions, compared to federally insured bank products, including
certificates of
deposit and time deposits, and to money market funds using the Lipper Analytical
Service
money market instruments average.

Advertisements may quote performance information which does not reflect the
effect of the
sales load.

Financial Statements

The financial statements for the fiscal year ended September 30, 1993, are
incorporated
herein by reference to the combined Annual Report of the Trust dated September
30, 1993
(File Nos. 33-45315 and 811-6550). You may request a copy of the combined
Annual Report
free of charge by writing the Trust or by calling 1-800-382-0016.

Appendix

Moody's Investors Service, Inc., Long-Term Municipal Debt Ratings

Aaa-bonds which are rated Aaa are judged to be of 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
such
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 Ba are judged to have speculative elements; their future
cannot be
considered as well assured. Often the protection of interest and principal
payments 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.

Note:
Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the
strongest investment attributes are designated by the symbols Aa1, A1, Baa1,
Ba1 and B1.

Standard and Poor's Corporation Long-Term Municipal Debt Ratings

AAA-Debt rated AAA has the highest rating assigned by Standard & Poor's.
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 higher rated issues only in small degree.

A-Debt rated A has a strong capacity to pay interest and repay principal
although it is
somewhat more susceptible to the adverse effects of changes in circumstances and

economic
conditions than debt in higher rated categories.

BBB-Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay
principal. Whereas it normally exhibits 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 debt in this category than in higher rated
categories.

BB, B, CCC, CC-Debt rated BB, B, CCC and CC is 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 indicates the lowest degree of speculation
and CC
the highest degree of speculation. While such debt will likely have some
quality and
protective characteristics, these are outweighed by large uncertainties of major
risk
exposure to adverse conditions.

Plus (+) or Minus (-): The ratings from "A" to "B" may be modified by the
addition of a
plus or minus sign to show relative standing within the major rating categories.

Moody's Investors Service, Inc., Short-Term Loan Ratings

MIG1/VMIG1-This designation denotes best quality. There is present strong
protection by
established cash flows, superior liquidity support or demonstrated broadbased
access to
the market for refinancing.

MIG2/VMIG2-This designation denotes high quality. Margins of protection are
ample
although not so large as in the preceding group.

Standard and Poor's Corporation Municipal Note Ratings

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

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

Fitch Investors Service, Inc., Short-Term Debt Ratings

F-1+-Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as
having the strongest degree of assurance for timely payment.

F-1-Very Strong Credit Quality. Issues assigned this rating reflect an

assurance of
timely payment only slightly less in degree than issues rated F-1+.

F-2-Good Credit Quality. Issues carrying this rating have a satisfactory degree
of
assurance for timely payment.

Moody's Investors Service, Inc., Commercial Paper Ratings

P-1-Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity
for repayment of short-term promissory obligations. PRIME-1 repayment capacity
will
normally be evidenced by the following characteristics: conservative
capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in
earning coverage of fixed financial charges and high internal cash generation;
and well-
established access to a range of financial markets and assured sources of
alternate
liquidity.

P-2-Issuers rated PRIME-2 (or related supporting institutions) 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.

Standard and Poor's Corporation Commercial Paper Ratings

A-1-This designation indicates that the degree of safety regarding timely
payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming
safety characteristics are denoted with a plus (+) sign designation.

A-2-Capacity for timely payment on issues with this designation is strong.
However, the
relative degree of safety is not as high as for issues designated A-1.

PART C. OTHER INFORMATION.

Item 24. Financial Statements and Exhibits:

(a) Financial Statements (Incorporated into the Statement of
Additional Information by reference to Registrant's Annual
Report dated September 30, 1993).
(b) Exhibits:
(1)Conformed copy of Declaration of Trust of the Registrant,
with Amendment Nos. 1 and 2 (4.);
(2)Copy of By-Laws of the Registrant (2.);
(3)Not applicable;
(4)(i) Copy of Specimen Certificates for both Class A and
Class B Shares of Beneficial Interest of the
Cambridge Growth Portfolio, Cambridge Capital Growth
Portfolio, Cambridge Government Income Portfolio and
Cambridge Municipal Income Portfolio (2.);
(ii) Copy of Specimen Certificates for both Class A
and Class B Shares of Beneficial Interest of the
Cambridge Income and Growth Portfolio (4.);
(iii) Copy of Specimen Certificates for both Class A
and Class B Shares of Beneficial Interest of the
Cambridge Global Portfolio;++
(5)(i) Conformed copy of Management Agreement of the
Registrant with Cambridge Investment Advisors, Inc.
(4.);
(a) Conformed copy of new Exhibit A to Management
Agreement to include Cambridge Global
Portfolio;++
(ii) Conformed copy of Investment Advisory Agreement
for the Cambridge Growth Portfolio (4.);
(iii) Conformed copy of Investment Advisory Agreement
for the Cambridge Capital Growth Portfolio (4.);
(iv) Conformed copy of Investment Advisory Agreement
for the Cambridge Government Income Portfolio;++
(v) Conformed copy of Investment Advisory Agreement for
the Cambridge Municipal Income Portfolio (4.);

(vi) Conformed copy of Investment Advisory Agreement
for the Cambridge Income and Growth Portfolio

(5.);
(vii) Conformed copy of Investment Advisory Agreement
for the Cambridge Global Portfolio;++
(6)(i) Conformed copy of Distributor's Contract of the
Registrant with Cambridge Distributors, Inc., through
and including Exhibit F (5.);
(ii) Conformed copy of Distributor's Contract of the
Registrant with Federated Securities Corp.,
through and including Exhibit F (5.);
(7)Not applicable;
(8)(i) Conformed copy of Custodian Contract of the
Registrant (4.);
(ii) Conformed copy of Administrative Services
Agreement of the Registrant (4.);
(9)(i) Conformed copy of Transfer Agency and Registrar
Agreement of the Registrant (4.);
(ii) Conformed copy of Shareholder Services Plan of
the Registrant, through and including Exhibit B
(5.);
(iii) Copy of Shareholder Services Agreement of the
Registrant (2.);
(10) Not applicable;
(11) (i) Conformed copy of Independent Auditors Consent;++
(ii) Conformed copy of Arthur Anderson & Co. opinion
on Methodology and Procedures for Accounting for
Multiple Classes of Shares (4.);
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding (2.);
(14) Not applicable;
(15) (i) Conformed copy of Distribution Plan, through and
including Exhibit B (5.);
(ii) Copy of 12b-1 Agreement (Sales Agreement) with
Cambridge Distributors, Inc. (5.);
(iii) Copy of 12b-1 Agreement (Sales Agreement) with
Federated Securities Corp. (5.);
(16) (i) Copy of Schedules for Computation of Fund
Performance Data for Class A and Class B Shares
of Cambridge Growth Portfolio, Cambridge Capital
Growth Portfolio, Cambridge Government Income
Portfolio, and Cambridge Municipal Income
Portfolio (5.);
(ii) Copy of Schedule for Computation of Fund
Performance Data for Class A and Class B Shares
of Cambridge Income and Growth Portfolio (5.);
(17) Conformed copy of Power of Attorney (4.);
(18) Not applicable.
++ To be filed by amendment.

1. Response is incorporated by reference to Registrant's Initial Registration on
Form N-1A filed January 31, 1992 (File Nos. 33-45315 and 811-6550).

2. Response is incorporated by reference to Registrant's Pre-Effective Amendment
No. 1 on Form N-1A filed April 14, 1992 (File Nos. 33-45315 and 811-6550).

3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed August 28, 1992 (File Nos. 33-45315
and 811-6550).

4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 3 on Form N-1A filed May 14, 1993 (File Nos. 33-45315
and 811-6550).

5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed November 26, 1993 (File Nos.
33-45315 and 811-6550).

Item 25. Persons Controlled by or Under Common Control with Registrant:

None

Item 26. Number of Holders of Securities:

Number of Record Holders
Title of Class as of December 31, 1993

Shares of beneficial interest
no par value

Cambridge Growth Portfolio:
Class A Shares 1,666
Class B Shares 3,850
Cambridge Capital Growth Portfolio:
Class A Shares 2,188
Class B Shares 5,166
Cambridge Government Income Portfolio:
Class A Shares 1,631
Class B Shares 5,415
Cambridge Municipal Income Portfolio:
Class A Shares 712
Class B Shares 1,741
Cambridge Income and Growth Portfolio:
Class A Shares 735
Class B Shares 2,081
Cambridge Global Portfolio:
Class A Shares --
Class B Shares --

Item 27. Indemnification: (1.)

1. Response is incorporated by reference to Registrant's Initial Registration
on Form N-1A filed January 31, 1992 (File Nos. 33-45315 and 811-6550).

Item 28. Business and Other Connections of Investment Adviser:

(a) Cambridge Investment Advisors, Inc., located at 901 East Byrd
Street, Richmond, Virginia 23219, serves as the Company'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.

Kemper Financial Services, Inc. ("KFS"), located at 120 South
LaSalle Street, Chicago, Illinois 60603, serves as the Sub-
Adviser to the Cambridge Growth Portfolio, KFS is a wholly-
owned subsidiary of Kemper Financial Companies, Inc., which
provides investment advice and manages investment portfolios
for the Kemper Insurance Companies and other corporate,
pension, profit-sharing and individual accounts.

Phoenix Investment Counsel, Inc. ("PIC"), located at One
American Row, Hartford, Connecticut 06115-2520, serves as the
Sub-Adviser to the Cambridge Capital Growth Portfolio. All of
the outstanding stock of PIC is owned by Phoenix Equity
Planning Corporation, an indirect subsidiary of Phoenix Home
Life Mutual Insurance Company of Hartford, Connecticut.

Pacific Investment Management Company ("PIMCO"), located at
840 Newport Center Drive, Newport Beach, California 92660,
serves as the interim Sub-Adviser to the Cambridge Government
Income Portfolio. PIMCO is a subsidiary of Pacific Mutual
Life Insurance Company and serves as investment adviser to a
number of investment companies and private accounts.

Van Kampen Merritt Management Inc. ("VKMMI"), located at One

Parkview Plaza, Oakbrook Terrace, Illinois 60181, serves as
the Sub-Adviser to the Cambridge Municipal Income Portfolio.
VKMMI is a wholly-owned subsidiary of The Van Kampen Merritt
Companies, Inc., which, in turn, is a wholly-owned subsidiary
of VKM Holding, Inc. VKM Holding, Inc., is indirectly
controlled by Clayton & Dubilier Associates IV Limited
Partnership, the general partners of which are Joseph L. Rice,
III, B. Charles Ames, Alberto Cribiore, Donald J. Gogel, and
Hubbard C. Howe, each of whom is a principal of Clayton,
Dubilier & Rice, Inc., a New York-based private investment
firm. VKMMI is an investment adviser registered under the
Investment Advisers Act of 1940 and provides investment advice
to a wide variety of individual, institutional, and investment
company clients.

Wellington Management Company ("WMC"), located at 75 State
Street, Boston, Massachusetts 02109, serves as the Sub-Adviser
to the Cambridge Income and Growth Portfolio.

Scudder, Stevens & Clark, Inc. ("Scudder"), located at 345
Park Avenue, New York, New York, serves as the Sub-Adviser to
the Cambridge Global Portfolio.

The principal executive officers of the Trust's Investment
Adviser and the Portfolios' Sub-Advisers, and the Directors of
each, are set forth in the following tables.

(b)

(1) (2) (3)
Other Substantial
Position with Business, Profession,
Name the Investment Adviser Vocation or Employment

Peter J. Quinn, Jr. President and Director Senior Vice President,
Wheat, First Securities,
Inc.; Director,
Investment Management
Group, Inc.

Paul F. Costello Senior Vice President Senior Vice President,
Cambridge Distributors,
Inc.; President and Chief
Financial Officer,
Variable Investors
Series Trust; Director,
Investment Management
Group, Inc.; President,
Mentor Series Trust and
Cash Resource
Trust; President and
Treasurer, Atlantic
Capital & Research, Inc.;
Vice President and
Treasurer, Variable
Stock Fund, Inc.,
Monarch Investment Series
Trust, and GEICO Tax
Advantage Series Trust;
Vice President, Monarch
Life Insurance Company,
GEICO Investment Services
Company, Inc., Monarch
Investment Services
Company, Inc., and
Springfield Life
Insurance Company;
formerly,
Director, President, and
Chief Executive Officer,

First Variable Life
Insurance Company.

John Michael Ivan Secretary Managing Director, Senior
Vice President, and
President General Council,
Wheat, First Securities,
Inc.; Secretary, Mentor
Series Trust and Cash
Resource Trust.

Thomas Lee Souders Treasurer Manager of Internal Audit,
Heilig-Myers; Manager, Peat
Marwick & Mitchell &

Company.

(1) (2) (3)
Other Substantial
Position with Kemper Business, Profession,
Name Financial Services, Inc. Vocation or Employment

James R. Boris Director Director and Executive Vice
President, Kemper Financial
Companies, Inc.; and Chairman, CEO
and Director, Kemper Securities,
Inc.

Seamon A. Lincoln Director and Chief Director and Chairman, Kemper Asset
Investment Officer Management Company;
Director and President,
Kemper International
Management, Inc.; Director,
Kemper Investment
Management Company Limited;
Trustee, Kemper Financial
Services, Inc. Profit
Sharing Plan; Senior Vice
President, Kemper
Corporation and Kemper
Financial Companies, Inc.;
Vice President, Kemper
Closed-End Funds, Kemper
Investors Fund, and Kemper
Mutual Funds.

David B. Mathis Director President, Chief Executive
Officer and Chairman of the
Board, Kemper Corporation;
Chairman of the Board, Centre
Reinsurance Holdings Limited;
Chairman and Director, Kemper

Reinsurance London Limited;
Director, Kemper International
Insurance Company (PTE.)

Limited, Kemper Investors Life
Insurance Company, Kemper
Reinsurance (Bermuda) Limited,
Kemper Reinsurance Company,
Kemper Securities Group
Holdings, Inc., Kemper
Securities, Inc., Mound Agency
of West Virginia, Inc., Mound
Agency, Inc., Seven Continents
Insurance Company, LTD.,
Centre Reinsurance (Bermuda)
Limited, Centre Reinsurance
Company Limited, Federal
Kemper Insurance Company,
Federal Kemper Life Assurance
Company, Kemper Europe
Reassurances, S.A. (KERSA),
Kemper Financial Companies,
Inc., and KERSA Holding
Company Luxembourg; Member of
Finance Committee, Fidelity
Life Association.

Charles M. Kierscht Chairman, Chairman of the Board
President, Chief and Director, Kemper
Executive Officer Asset Management Company;
and Director Director,
Chairman of the Board, President &
CEO, Kemper Financial Companies,
Inc.; Director, Executive
Committee, ICI Mutual Insurance
Company; Director and Executive
Vice President, Kemper
Corporation; Member of Board of
Governors and Executive Committee,
Investment Company Institute;
Trustee and President, Kemper
Closed-End Funds, Kemper Investors
Fund, and Kemper Mutual Funds;
Trustee, Kemper Financial
Services, Inc. Profit Sharing
Plan; Director, Federal Kemper
Life Assurance Company, Financial
Services Council, Institute for
Illinois, Investors Fiduciary
Trust Company, Kemper Investors
Life Insurance Company, Kemper
International Management, Inc.,
Kemper Investment Management
Company Limited, Kemper Sales
Company, Kemper Securities

Holdings, Inc., Kemper Securities,
Inc., Kemper Service Company,
Selected Financial Services, Inc.,
Supervised Service Company, Inc.,
University of Iowa Foundation, and
University of Iowa Law School
Foundation.

Robert T. Jackson Senior Executive Treasurer, Chief Financial
Vice President, Officer and Director,
Chief Financial Kemper Sales Company,
Officer and Kemper Service
Director Company, and Supervised
Service Company, Inc.; Vice
President and Director, Kemper
Securities Group Holdings,
Inc., Kemper Capital Markets,
Inc., FKLA Realty Corporation,
FLA Realty Corporation, Kemper
Portfolio Corp., KFC Portfolio
Corp., and KILICO Realty
Corporation; Senior Vice
President, Kemper Corporation,
Kemper Real Estate Management
Company, and Kemper
Residential Management
Company; Senior Vice
President, Treasurer (Chief
Financial Officer), and
Director, Kemper Financial
Companies, Inc.; Treasurer and
Director, Kemper International
Management, Inc., and Kemper
Investment Management Company
Limited; Vice President,
Treasurer and Director, Kemper
Real Estate, Inc.; Director,
Bilboa International Fund,
Boettcher Investment Corp.,
Galaxy Offshore, Inc., Kemper
Investors Life Insurance
Company, Kemper/Cymrot
Management, Inc.,
Kemper/Cymrot, Inc., Kemper
Clearing Corp., Kemper Asset
Management Company, Kemper
Securities, Inc., and Selected

Financial Services, Inc.;
Trustee, Kemper Financial
Services, Inc. Profit Sharing
Plan; Vice President, KR 77
Fitness Center, Inc., KR
Avondale Redmond, Inc., KR
Black Mountain, Inc., KR
Brannan Resources, Inc., KR

Clay Capital, Inc., KR
Cranbury, Inc., KR Delta
Wetlands, Inc., KR
Gainesville, Inc., KR Gulf
Coast Factory Shops, Inc., KR
Halawa Associates, Inc., KR
Lafayette Apartments, Inc., KR
Palm Plaza, Inc., KR
Peppertree, Inc., KR Red Hill
Associates, Inc., KR
Seagate/Gateway North, Inc.,
KR Venture Way, Inc., KRKC,
Inc., and KRKFC, Inc.

Stephen B. Timbers Senior Executive President and Director,
Vice President and Galaxy Offshore, Inc.,
Director Kemper Real Estate, Inc.,
Kemper/Cymrot Management,
Inc., and Kemper/Cymrot, Inc.;
Director and Vice President,
Kemper Portfolio Corp., KFC
Portfolio Corp., KILICO Realty
Corporation; Director and
Finance Committee Member,
Federal Kemper Life Assurance
Company; Director, President,
and Chief Operating Officer,
Kemper Corporation; Trustee
and Vice President, Kemper
Mutual Funds and Kemper
Closed-End Funds; Director and
Senior Vice President, Kemper
Real Estate Management Company
and Kemper Residential
Management Company; Director
and Vice President, KR 77

Fitness Center, Inc., KR
Avondale Redmond, Inc., KR
Black Mountain, Inc., KR
Brannan Resources, Inc., KR
Clay Capital, Inc., KR
Cranbury, Inc., KR Delta
Wetlands, Inc., KR
Gainesville, Inc., KR Gulf
Coast Factory Shops, Inc., KR
Halawa Associates, Inc., KR
Lafayette Apartments, Inc., KR
Palm Plaza, Inc., KR
Peppertree, Inc., KR Red Hill
Associates, Inc., KR
Seagate/Gateway North, Inc.,
KR Venture Way, Inc., KRKC,
Inc., and KRKFC, Inc.;
Director, Bilboa International
Fund, Federal Kemper Insurance

Company, Kemper Europe
Reassurances, S.A., Kemper
Asset Management Company, FKLA
Realty Corporation, FLA Realty
Corp., Kemper Financial
Companies, Inc., Kemper
Investors Life Insurance
Company, Kemper Reinsurance
(Bermuda) Limited, Kemper
Reinsurance Company and Kemper
Reinsurance London Limited;
Vice President, Kemper Closed-
End Funds.

John E. Peters Senior Executive Director, Kemper Service Company; Vice
Vice President President, Kemper Adjustable
and Director Rate U.S. Government Fund,
Kemper Asset Management
Company, Kemper Blue Chip
Fund, Kemper Closed-End Funds,
Kemper Diversified Income
Fund, Kemper Environmental
Services Company, Kemper
Global Income Fund, Kemper
Growth Fund, Kemper High Yield

Fund, Kemper Income and
Capital Preservation Fund,
Kemper International Fund,
Kemper Investment Portfolios,
Kemper Investors Fund, Kemper
Municipal Bond Fund, Kemper
Short-Term Global Income Fund,
Kemper Small Capitalization
Equity Fund, Kemper State Tax-
Free Income Series, Kemper
Technology Fund, Kemper Total
Return Fund, Kemper U.S.
Government Securities Fund,
and Selected Financial
Services, Inc.

Frank E. Diaz Senior Executive Chairman and
Vice President Director, Supervised
Service Company,
Inc.; Director and
President, Kemper
Service Company;
Director, Kemper
Clearing Corp. and
Kemper Financial
Companies, Inc.

Robert J. Engling Executive Vice Vice President, General
President, Counsel and Secretary,
Secretary & General Supervised Service Company,

Counsel Inc.; General Counsel and
Secretary, Kemper Service
Company; General Counsel and
Assistant Secretary, Kemper
Financial Companies, Inc.;
Vice President and Secretary,
Kemper Asset Management
Company, Kemper Closed-End
Funds, Kemper International
Management, Inc., Kemper
Investors Fund, Kemper Mutual
Funds, Kemper Real Estate,
Inc., and Kemper Sales
Company; Secretary, Galaxy

Offshore, Inc., Investors
Brokerage Services Insurance
Agency, Inc., Investors
Brokerage Services, Inc., and
Selected Financial Services,
Inc.; Assistant Secretary,
AMICO Realty Corporation, BBC
Associates, FKLA Realty
Corporation, FLA Realty
Corporation, KAAL PGA Sales,
Inc., Kemper Investment
Management Company Limited,
Kemper Real Estate Management
Company, Kemper Realty
Corporation, Kemper
Residential Management
Company; KR 77 Fitness Center,
Inc., KR Avondale Redmond,
Inc., KR Black Mountain, Inc.,
KR Brannan Resources, Inc., KR
Clay Capital, Inc., KR
Cranbury, Inc., KR Delta
Wetlands, Inc.,
KR Gainesville, Inc., KR Gulf
Coast Factory Shops, Inc., KR
Halawa Associates, Inc., KR
Lafayette Apartments, Inc., KR
Palm Plaza, Inc., KR
Peppertree, Inc., KR Red Hill
Associates, Inc., KR
Seagate/Gateway North, Inc.,
KR Venture Way, Inc., KRKC,
Inc., and KRKFC, Inc.

William E. Chapman Executive Vice President Senior Vice President,
Kemper Sales Company.

James H. Coxon Executive Vice President Director and Vice
President, Galaxy Offshore,
Inc., Kemper Real Estate,
Inc., Kemper/Cymrot

Management, Inc., and
Kemper/Cymrot, Inc.; Vice
President, Kemper

Retirement Fund and Kemper
Investors Fund.

Stephen G. McConahey Executive Vice Senior Vice President
President and Director, Kemper
Financial Companies,
Inc.; Senior Vice
President, Kemper
Corporation; Director,
Supervised Service
Company, Inc.

John E. Neal Executive Vice President Director and Senior Vice
President, Kemper Real
Estate Management
Company and Kemper
Residential Management
Company; Director and
President, FKLA Realty
Corporation, FLA Realty
Corporation, KFC
Portfolio Corp., KILICO
Realty Corporation,
KR 77 Fitness Center,
Inc., KR Avondale
Redmond, Inc., KR Black
Mountain, Inc., KR
Brannan Resources, Inc.,
KR Clay Capital, Inc.,
KR Cranbury, Inc., KR
Delta Wetlands, Inc., KR
Gainesville, Inc., KR
Gulf Coast Factory
Shops, Inc., KR Halawa
Associates, Inc., KR
Lafayette Apartments,
Inc., KR Palm Plaza,
Inc., KR Peppertree,
Inc., KR Red Hill
Associates, Inc., KR
Seagate/Gateway North,
Inc., KR Venture Way,
Inc., KRKC, Inc., and
KRKFC, Inc.; Director
and Vice President,
Kemper Real Estate,
Inc., Kemper/Cymrot
Management, Inc., and
Kemper/Cymrot, Inc.;
Director, Community
Investment Corporation
and Continental

Community Development
Corporation.

Gordon P. Wilson Executive Vice President Director, Kemper
Investment Management
Company Limited; Vice
President and Director,
AMICO Realty
Corporation, BBC
Associates, FKLA Realty
Corporation, FLA Realty
Corporation, KAAL PGA
Sales, Inc., Kemper
International
Management, Inc., and
Kemper Realty
Corporation; Vice
President, Kemper Global
Income Fund, Kemper
International Fund,
Kemper Investors Fund,
Kemper Investors
Portfolios, Kemper
Short-Term Global Income
Fund, Kemper Total
Return Fund, and The
Growth Fund of Spain,
Inc.

Joseph P. Beimford Senior Vice President Vice President, Galaxy
Offshore, Inc., Kemper High
Income Trust, Kemper
Intermediate Government
Trust, Kemper Investors
Fund, Kemper Multi-Market
Income Trust, Kemper
Municipal Bond Fund, Kemper
Municipal Income Trust,
Kemper State Tax-Free
Income Series, Kemper
Strategic Municipal Income
Trust, and Kemper U.S.
Government Securities Fund.

Robert J. Butler Senior Vice President Senior Vice President,
Kemper Service Company and
Supervised Service Company,

Inc.; Vice President, BBC
Associates and Kemper
Realty Corporation.

Frank E. Collecchia Senior Vice President Senior Investment Officer,
Federal Kemper Insurance
Company, Federal Kemper
Life Assurance Company,

Fidelity Life Association,
Kemper Investors Life
Insurance Company, and
Kemper Reinsurance Company;
Vice President, Galaxy
Offshore, Inc., Kemper
Adjustable Rate U.S.
Government Fund, Kemper
Intermediate Government
Trust, Kemper Investment
Portfolios, Kemper
Investors Fund, Kemper
Multi-Market Income Trust,
Kemper Real Estate, Inc.,
KR 77 Fitness Center, Inc.,
KR Avondale Redmond, Inc.,
KR Black Mountain, Inc., KR
Brannan Resources, Inc., KR
Clay Capital, Inc., KR
Cranbury, Inc., KR Delta
Wetlands, Inc., KR
Gainesville, Inc., KR Gulf
Coast Factory Shops, Inc.,
KR Halawa Associates, Inc.,
KR Lafayette Apartments,
Inc., KR Palm Plaza, Inc.,
KR Peppertree, Inc., KR Red
Hill Associates, Inc., KR
Seagate/Gateway North,
Inc., KR Venture Way, Inc.,
KRKC, Inc., and KRKFC, Inc.

Beth C. Cotner Senior Vice President Trustee, Kemper Financial
Services, Inc. Profit Sharing
Plan; Vice President, Kemper
Investment Portfolios, Kemper

Investors Fund, and Kemper
Small Capitalization Equity
Fund.

Richard S. Curto Senior Vice President General Partner, B R
Management Associates; Vice
President, AMICO Realty
Corporation, BBC
Associates, FKLA Realty
Corporation, FLA Realty
Corporation, Investors
Brokerage Services, Inc.,
KAAL PGA Sales, Inc.,
Kemper Real Estate, Inc.,
Kemper Realty Corporation,
KILICO Realty Corporation,
and KR 77 Fitness Center,
Inc., KR Avondale Redmond,
Inc., KR Black Mountain,

Inc., KR Brannan Resources,
Inc., KR Clay Capital,
Inc., KR Cranbury, Inc., KR
Delta Wetlands, Inc., KR
Gainesville, Inc., KR Gulf
Coast Factory Shops, Inc.,
KR Halawa Associates, Inc.,
KR Lafayette Apartments,
Inc., KR Palm Plaza, Inc.,
KR Peppertree, Inc., KR Red
Hill Associates, Inc., KR
Seagate/Gateway North,
Inc., KR Venture Way, Inc.,
KRKC, Inc., and KRKFC,
Inc.; Vice President and
Assistant Secretary,
Kemper/Cymrot Management,
Inc., and Kemper/Cymrot,
Inc.

Jerome L. Duffy Senior Vice President Treasurer, Kemper Closed-
End Funds, Kemper Investors
Fund, and Kemper Mutual
Funds.

Harvey Glassman Senior Vice President Senior Vice President,
Kemper Sales Company.

Richard A. Goers Senior Vice President

Harold E. Guenther Senior Vice President Vice President, Galaxy
Offshore, Inc.

George Klein Senior Vice President Senior Vice President,
Kemper Asset Management
Company.

Frank D. Korth Senior Vice President Vice President, Kemper
Environmental Services Fund
and Kemper Retirement Fund.

Gary A. Langbaum Senior Vice President

Stephen E. Lewis Senior Vice President Vice President, Kemper
Investment Portfolios and
Kemper Investors Fund.

Michael A. McNamara Senior Vice Vice President, Kemper
President Diversified Income Fund,
Kemper High Income Trust,
Kemper High Yield Fund, Kemper
Investment Portfolios, and
Kemper Investors Fund.

Ira Nathanson Senior Vice President Vice President, Kemper

Corporation; Senior Vice
President, Kemper Sales
Company.

James R. Neel Senior Vice President Vice President, Kemper Blue
Chip Fund.

Frank J. Rachwalski, Senior Vice President Vice President, Cash
Jr. Account Trust, Cash
Equivalent Fund,
Investors Cash Trust,
Kemper Investment
Portfolios, Kemper
Investors Fund,

Kemper Money Market
Fund, Tax-Exempt
California Money
Market Fund, and Tax-
Exempt New York Money
Market Fund.

Afzal (Tony) Raza Senior Vice President Vice President, Kemper
International Management,
Inc.

Robert H. Schumacher Senior Vice Vice President, Kemper
President Adjustable Rate U.S.
Government Fund, Kemper
Intermediate Government
Trust, Kemper Investment
Portfolios, Kemper
Investors Fund, and Kemper
U.S. Government Securities
Fund.

John S. Serpe Senior Vice President

Robert S. Takazawa Senior Vice President Senior Vice President and
Director, Kemper Asset
Management Company.

Kenneth T. Urbaszewski Senior Vice Vice President, Kemper High
President Yield Fund, Kemper
Intermediate Government
Trust, Kemper Investment
Portfolios, and Kemper
Multi-Market Income Trust.

Bruce A. Ebel Senior Vice President Senior Vice President,
Kemper Asset Management
Company.

Dale S. Siligmueller Senior Vice Vice President and
President Chief Accounting Officer,
& Chief Kemper Financial Companies,

Accounting Inc., Kemper Real Estate,
Officer Inc., Kemper Sales Company,
Kemper Service Company, and

Supervised Service Company,
Inc.; Director, Vice President
and Treasurer, Selected
Financial Services, Inc.; Vice
President and Treasurer,
Investors Brokerage Services,
Inc., Kemper Asset Management
Company, Kemper Real Estate
Management Company, Kemper
Residential Management
Company, KILICO Realty
Corporation, KR 77 Fitness
Center, Inc., KR Avondale
Redmond, Inc., KR Black
Mountain, Inc., KR Brannan
Resources, Inc., KR Clay
Capital, Inc., KR Cranbury,
Inc., KR Delta Wetlands, Inc.,
KR Gainesville, Inc., KR Gulf
Coast Factory Shops, Inc., KR
Halawa Associates, Inc., KR
Lafayette Apartments, Inc., KR
Palm Plaza, Inc., KR
Peppertree, Inc., KR Red Hill
Associates, Inc., KR
Seagate/Gateway North, Inc.,
KR Venture Way, Inc., KRKC,
Inc., and KRKFC, Inc.;
Treasurer, Galaxy Offshore,
Inc., Kemper/Cymrot
Management, Inc., and
Kemper/Cymrot, Inc.

Robert J. Williams Senior Vice President

David F. Dierenfeldt First Vice President,
Associate General Counsel &
Assistant Secretary
Vice President and
Assistant Secretary, Kemper
Investors Fund; Secretary,
Kemper/Cymrot
Management, Inc., and
Kemper/Cymrot, Inc.;
Assistant Secretary, Galaxy
Offshore, Inc., Investors
Brokerage Services
Insurance Agency, Inc.,
Investors Brokerage
Services, Inc., Kemper
Asset Management Company,

Kemper International
Management, Inc., Kemper
Investment Management
Company Limited, Kemper
Real Estate Management
Company, Kemper Real
Estate, Inc., Kemper
Residential Management
Company, Kemper Sales
Company, Kemper Service
Company, KR 77 Fitness
Center, Inc., KR Avondale
Redmond, Inc., KR Black
Mountain, Inc., KR Brannan
Resources, Inc., KR Clay
Capital, Inc., KR Cranbury,
Inc., KR Delta Wetlands,
Inc., KR Gainesville, Inc.,
KR Gulf Coast Factory
Shops, Inc., KR Halawa
Associates, Inc., KR
Lafayette Apartments, Inc.,
KR Palm Plaza, Inc., KR
Peppertree, Inc., KR Red
Hill Associates, Inc., KR
Seagate/Gateway North,
Inc., KR Venture Way, Inc.,
KRKC, Inc., KRKFC, Inc.,
Selected Financial
Services, Inc., and
Supervised Service Company,
Inc.

Philip J. Collora First Vice President Vice President and
& Assistant Secretary Assistant Secretary, Kemper
Closed-End Funds, Kemper
Investors Fund, and Kemper
Mutual Funds; Assistant
Secretary, Kemper
International Management,
Inc.

Michael K. Arends First Vice President Director, Donald L. Arends,
Inc.; Vice President,
Kemper Investment
Portfolios, Kemper
Investors Fund, and Kemper

Retirement Fund.

Michael A. Barrett First Vice President

Daniel J. Bukowski First Vice President

Robert S. Cassino First Vice President

Christine Chien First Vice President

Patrick H. Dudasik First Vice President

Remy M. Fisher First Vice President

Marshall L. Greenwald First Vice President

Michael E. Harrington First Vice President

Peter M. Jacobs First Vice President

Bruce H. Lauer First Vice President

Nancy A. Link First Vice President First Vice President, Kemper
Sales Company.

Susan McCrindle First Vice President Vice President, Kemper
Sales Company.

Christopher J. Mier First Vice President Vice President, Kemper
Municipal Bond Fund, Kemper
Municipal Income Trust,
Kemper State Tax-Free
Income Series, and Kemper
Strategic Municipal Income
Trust.

Roberta L. Panozzo First Vice President

Harry E. Rasis First Vice President Vice President, Kemper High
Income Trust, Kemper Income
and Capital Preservation Fund,
and Kemper Investors Fund.

Terry Schreiner First Vice President

John E. Silvia First Vice President

Kai R. Sotorp First Vice President

David M. Swanson First Vice President Vice President, Kemper
Sales Company.

Christopher T. Vincent First Vice President

Kenneth M. Bazan Vice President

Foye P. Black Vice President Director, BBE Sound, Inc.,
Media Security, Inc., and
Sysgen, Inc.

Robert J. Boldt Vice President

Dale R. Burrow Vice President Vice President, Kemper

Strategic Municipal Income
Trust.

David H. Butler Vice President

Jerri I. Cohen Vice President

Catherine Cooper Vice President

Chris C. DeMaio Vice President Vice President, Kemper
Service Company and
Supervised Service Company,
Inc.

Stephen P. Dexter Vice President

Daniel J. Doyle Vice President

James Fenger Vice President

August L. Geraci Vice President

Judith C. Goodwin Vice President

Robert C. Hogle Vice President

Steven A. Hoostal Vice President

Robert J. Horton Vice President

Bruce D. Innes Vice President Co-President, International
Association of Corporate and
Professional Recruiters.

William M. Keating Vice President

Carol L. Kiel Vice President

Deborah L. Koch Vice President

Robert J. Korslin Vice President Senior Vice President,
Kemper Real Estate
Management Company and
Kemper Residential
Management Company.

Kathy J. Kranz Vice President

Pamela D. Krueger Vice President

Thomas J. Lefebvre Vice President

Ann T. Linehan Vice President

David J. Linehan Vice President

James C. Manthey Vice President

Karen B. McGovern Vice President

Gary L. Miller Vice President

Gene J. Miller Vice President

Edward Miner Vice President

Katherine H. Mitchell Vice President

Robert J. Moreland Vice President

G. Michael Oberst Vice President

Robert D. Payne Vice President

David A. Phillis Vice President

Susan E. Pontecore Vice President Vice President, Kemper
Money Market Fund and Tax-
Exempt California Money
Market Fund.

Steve A. Radis Vice President Vice President, Kemper
Sales Company.

William M. Reckmeyer Vice President

Carolyn D. Schloss Vice President

Robert Schramm Vice President Vice President, Kemper Service
Company.

Kathleen A. Spiller Vice President

Richard B. Stern Vice President

John W. Stuebe Vice President Vice President, Cash Account
Trust and Cash Equivalent
Fund.

Edith A. Thouin-Leerkamp Vice President

Jonathan W. Trutter Vice President

Michael L. Weisel Vice President

Elizabeth C. Werth Vice President Assistant Secretary, Kemper
Mutual Funds and Kemper
Retirement Fund.

Stephen R. Willson Vice President Vice President, Kemper

Strategic Municipal Income
Trust.

Mark E. Wittnebel Vice President

Larry R. Wonnacott Vice President Director, Interlinq
Software Corp.

William P. Kovacs Vice President and
Assistant Secretary

Paul M. Murphy Vice President and
Assistant Secretary

Diane E. Ratekin Assistant General Counsel &
Assistant Secretary

(1) (2) (3)
Other Substantial
Position with Phoenix Business, Profession,
Name Investment Counsel, Inc. Vocation or Employment

Patricia A. Bannan Director and Vice President, Common
President Stock, Phoenix Home Life
Mutual Insurance Company;
Vice President, Phoenix
Series Fund and The Phoenix
Edge Series Fund; Executive
Vice President, National
Securities & Research
Corporation; formerly,
Portfolio Manager, Phoenix
Home Life Mutual Insurance
Company.

Robert Chesek Director and Chairman Vice President, Phoenix
Home Life Mutual Insurance
Company; Trustee and
Chairman, Phoenix Multi-
Portfolio Fund, The Phoenix
Edge Series Fund, and
Phoenix Series Fund;
Director and Chairman,
Phoenix Total Return Fund,
Inc.; Director/Trustee, the
National Affiliated
Investment Companies.

Robert W. Fiondella Director President and Principal
Operating Officer, Phoenix
Home Life Mutual Insurance

Company; Director, Phoenix
Equity Planning Corporation,
PHL Mutual Funds Holdings, AH
Overseas Investments, Inc.,
National Securities & Research
Corporation, NSR Asset
Management Corp., and NSR
Distributors, Inc.

John Gummere Director Director, Chairman of the Board
and Chief Executive Officer,
Phoenix Home Life Mutual Insurance
Co.; Director, Phoenix Equity
Planning Corp., PHL Mutual Funds
Holdings, AH Overseas Investments,
Inc., National Securities &
Research Corporation, NSR Asset
Management Corp., and NSR
Distributors, Inc.

Philip R. McLoughlin Director Executive Vice President,
Investments, Phoenix Home Life
Mutual Insurance Co.; Trustee
and President, Phoenix Multi-
Portfolio Fund, The Phoenix
Edge Series Fund, and Phoenix
Series Fund; Director and
President, Phoenix Total
Return Fund, Inc.; Director
and President, Phoenix Equity
Planning Corporation, PHL
Mutual Funds Holdings, Inc.,
AH Overseas Investments, Inc.,
NSR Asset Management Corp.,
and NSR Distributors, Inc.;
Director, Chairman, and Chief
Executive Officer, National
Securities & Research
Corporation.

Richard C. Shaw Director and Senior Senior Vice President,
Vice President Phoenix Home Life
Mutual Insurance Company;
Chairman, American Phoenix
Corporation; President,
Worldwide Phoenix; Director,
American Phoenix Investment

Portfolios.

William B. Wallace Director Vice Chairman and Chief
Operating Officer, Phoenix
Home Life Mutual Insurance
Company; Director, Phoenix
Equity Planning Corporation,
PHL Mutual Funds Holdings,

Inc., AH Overseas Investments
Inc., National Securities &
Research Corporation, NSR
Asset Management Corporation,
and National Securities &
Research Corporation;
formerly, Director, Chairman
and Chief Executive Officer,
Home Life Insurance Company.

Martin J. Gavin Executive Vice President Senior Vice President,
Investment Products,
Phoenix Home Life Mutual
Insurance Company;
Director and Executive
Vice President, Phoenix
Equity Planning
Corporation, PHL Mutual
Funds Holdings, Inc., AH
Overseas Investments,
Inc., National
Securities and Research
Corporation, NSR Asset
Management Corp., and
NSR Distributors, Inc.;
Executive Vice
President, the National
Affiliated Investment
Companies.

Thomas S. Melvin, Jr. Executive Vice Portfolio Manager,
President Common Stock, Phoenix
Home Life Mutual
Insurance Co.; Vice
President, Phoenix
Multi-Portfolio Fund;

Executive Vice
President, National
Securities & Research
Corporation; formerly,
Portfolio Manager,
Constitution Capital
Management.

Paul A. Atkins Senior Vice President Vice President,
Institutional Investment
Sales, Phoenix Home Life
Mutual Insurance Co.

William R. Moyer Senior Vice Vice President, Investment
President, Products Finance,
Finance Phoenix Home Life Mutual Insurance
Co.; Senior Vice President,
Finance, Phoenix Equity Planning
Corporation, PHL Mutual Funds

Holdings, Inc., AH Overseas
Securities & Research Corporation,
NSR Asset Management Corporation
and NSR Distributors, Inc.; Vice
President, The Phoenix Edge Series
Fund, Phoenix Multi-Portfolio
Fund, Phoenix Series Fund and
Phoenix Total Return Fund, Inc.

Curtiss O. Barrows Vice President Portfolio Manager, Public
Fixed Income, Phoenix Home
Life Mutual Insurance
Company; Vice President,
Phoenix Series Fund and The
Phoenix Edge Series Fund,
National Bond Fund and
National Securities &
Research Corporation.

Kathleen A. Bloomquist Vice President Second Vice President,
Institutional Investments,
Phoenix Home Life Mutual
Insurance Co.

James C. Bly Vice President Regional Group Pension

Manager, Phoenix Home Life
Mutual Insurance Co.

Mary E. Canning Vice President Associate Portfolio
Manager, Common Stock,
Phoenix Home Life Mutual
Insurance Co.; Vice
President, Phoenix Series
Fund and The Phoenix Edge
Series Fund.

James M. Dolan Vice President, Assistant Vice President
Assistant Clerk and Compliance
and Assistant Officer, Phoenix Equity
Secretary Planning Corporation;
Vice President, Phoenix Multi-
Portfolio Fund, Phoenix Series
Fund, Phoenix Total Return
Fund, Inc., the National
Affiliated Investment
Companies and National
Securities & Research
Corporation.

Catherine Dudley Vice President Portfolio Manager, Phoenix
Home Life Mutual Insurance
Co.; Vice President,
Phoenix Series Fund,
Phoenix Multi-Portfolio
Fund, and National

Securities & Research
Corporation.

Jeanne T. Hanley Vice President Managing Director,
Research, Common Stock,
Phoenix Home Life Mutual
Insurance Company; Vice
President, The Phoenix Edge
Series Fund, Phoenix Series
Fund, and National
Securities & Research
Corporation.

Michael E. Haylon Vice President Senior Vice President,

Public Bonds, Phoenix Home
Life Mutual Insurance
Company; Vice President,
Phoenix Series Fund, The
Phoenix Edge Series Fund,
National Securities &
Research Corporation and
National Multi-Sector Fixed
Income Fund.

Bryan D. Holstrom Vice President Regional Group Pension
Manager, Phoenix Home Life
Mutual Insurance Co.

Christopher J. Kellcher Vice President Portfolio Manager, Public
Fixed Income, Phoenix Home
Life Mutual Insurance
Company; Vice President,
Phoenix Series Fund, The
Phoenix Edge Series Fund,
National Securities &
Research Corporation and
National Federal Securities
Trust.

Michael R. Matty Vice President Portfolio Manager, Common
Stock, Phoenix Home Life
Mutual Insurance Company;
Vice President, Phoenix
Series Fund and National
Securities & Research
Corporation.

Robert J. Milnamow Vice President Portfolio Manager, Common
Stock, Phoenix Home Life
Mutual Insurance Company;
Vice President, Phoenix
Total Return Fund, Inc.,
The Phoenix Edge Series
Fund, National Securities &
Research Corporation,

National Stock Fund and
National Total Return Fund.

Charles L. Olson Vice President Regional Marketing Manager,
Phoenix Home Life Mutual
Insurance Company.

Amy L. Robinson Vice President Managing Director, Trading,
Common Stock, Phoenix Home
Life Mutual Insurance
Company; Vice President,
The Phoenix Edge Series
Fund, Phoenix Series Fund,
and National Securities &
Research Corporation.

David M. Schans, C.L.U. Vice President Regional Group Pension
Manager, Phoenix Home Life
Mutual Insurance Company.

Dorothy J. Skaret Vice President Director, Public Fixed
Income, Phoenix Home Life
Mutual Insurance Company;
Vice President, Phoenix
Series Fund, The Phoenix
Edge Series Fund, and
National Securities &
Research Corporation.

Diane C. Smola Vice President Assistant Vice President,
Institutional Client Service,
Phoenix Home Life Mutual
Insurance Company.

Scott A. Southworth Vice President Regional Group Pension
Manager, Phoenix Mutual
Life Insurance Company.

Frank L. Stanley Vice President Portfolio Manager, Common
Stock, Phoenix Home Life
Mutual Insurance Company;
Vice President, Phoenix
Series Fund, The Phoenix
Edge Series Fund, and
National Securities &
Research Corporation.

George L. Tillinghast,
III Vice President Second Vice President,
Institutional Investment
Marketing, Phoenix Home
Life Mutual Insurance
Company.

James D. Wehr Vice President Managing Director, Public

Fixed Income, Phoenix Home
Life Mutual Insurance Company;
Vice President, Phoenix Multi-
Portfolio Fund, Phoenix Series
Fund, The Phoenix Edge Series
Fund, National Securities Tax-
Exempt Bond Fund, National's
California Tax-Exempt Bond
Fund, and National Securities
& Research Corporation.

James K. Salonia Assistant Vice President Director, Institutional
Client Service, Phoenix
Home Life Mutual
Insurance Company.

John R. Elder Treasurer Treasurer, Phoenix Equity
Planning Corporation;
Treasurer, Phoenix Multi-
Portfolio Fund, The Phoenix
Edge Series Fund, Phoenix
Series Fund, Phoenix Total
Return Fund, Inc., PHL
Mutual Funds Holdings,
Inc., AH Overseas
Investments, Inc., National
Securities & Research
Corporation, NSR Asset
Management Corp. and NSR
Distributors, Inc.

Eugene A. Charon Controller Controller, Phoenix Equity
Planning Corporation.

Virginia Spencer Clerk Legal Assistant, Sullivan &
Worcester; Clerk, Phoenix
Total Return Fund, Inc.

Patricia D. McLaughlin Secretary and Counsel, Phoenix Home
Assistant Life Mutual Insurance
Clerk Company.

(1) (2) (3)
Other Substantial
Business, Profession,
Name Position with PIMCO Vocation or Employment

The information required by this Item 28 with respect to PIMCO is set forth in
the Form ADV, as amended, of PIMCO (File No. 801-7260), which is incorporated
herein by reference.

(1) (2) (3)
Position with Other Substantial
Van Kampen Merritt Business, Profession,
Name Management Inc. Vocation or Employment

The information required by this Item 28 with respect to Van Kampen Merritt
Management Inc. is set forth in the Form ADV, as amended, of Van Kampen
Merritt Management Inc. (File No. 801-40808), which is incorporated herein by
reference.

(1) (2) (3)
Other Substantial
Position with Wellington Business, Profession,
Name Management Company Vocation or Employment

The information required by this Item 28 with respect to Wellington Management
Company is set forth in the Form ADV, as amended, of Wellington Management
Company (File No. 801-15908), which is incorporated herein by reference.

(1) (2) (3)
Other Substantial
Position with Scudder, Business, Profession,
Name Stevens & Clark, Inc. Vocation or Employment

The information required by this Item 28 with respect to Scudder is set forth
in the Form ADV, as amended, of Scudder (File No. 801-252), which is
incorporated herein by reference.

Item 29. Principal Underwriters:

(a) Cambridge Distributors, Inc., is the principal distributor for
Class A and Class B shares of the Registrant and acts as the
principal underwriter for the Registrant. Cambridge
Distributors, Inc., is a Virginia corporation and is an
affiliate of Cambridge Investment Advisors, Inc.

Federated Securities Corp. acts as a co-distributor for Class

A and Class B shares of the Registrant. Federated Securities
Corp. is an affiliate of Federated Advisers and of Cambridge
Administrative Services, both subsidiaries of Federated
Investors.

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriters With Registrant

Peter J. Quinn, Jr. President and Director, President and Trustee
901 East Byrd Street Cambridge Distributors,
Richmond, VA 23219 Inc.

Paul F. Costello Senior Vice President, Senior Vice President,

901 East Byrd Street Cambridge Distributors, Treasurer & Secretary
Richmond, VA 23219 Inc.

Thomas Lee Souders Treasurer, Cambridge --
901 East Byrd Street Distributors, Inc.
Richmond, VA 23219

John Mark Harris Secretary, Cambridge --
901 East Byrd Street Distributors, Inc.
Richmond, VA 23219

John Michael Ivan Assistant Secretary, --
901 East Byrd Street Cambridge Distributors,
Richmond, VA 23219 Inc.

Richard B. Fisher Director, Chairman, --
Federated Investors Chief Executive Officer,
Tower Chief Operating Officer,
Pittsburgh, PA 15222 and Assistant Treasurer,
Federated Securities
Corp.
Edward C. Gonzales Director, Executive Vice --
Federated Investors President, and
Tower Treasurer, Federated
Pittsburgh, PA 15222 Securities Corp.

John W. McGonigle Director, Executive Vice --
Federated Investors President, and Assistant
Tower Secretary, Federated
Pittsburgh, PA 15222 Securities Corp.

John A. Staley, IV Executive Vice President --
Federated Investors and Assistant Secretary,
Tower Federated Securities
Pittsburgh, PA 15222 Corp.

John B. Fisher President-Broker/Dealer, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

James F. Getz President-Institutional --
Federated Investors Sales, Federated
Tower Securities Corp.
Pittsburgh, PA 15222-
3779

Mark R. Gensheimer Executive Vice President --
Federated Investors of Bank/ Trust,
Tower Federated Securities
Pittsburgh, PA 15222- Corp.
3779

James S. Hamilton Senior Vice President, --

Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

James R. Ball Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Mark W. Bloss Vice President, --
Federated Investors Federated Securities

Tower Corp.
Pittsburgh, PA 15222-
3779

Richard W. Boyd Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Mary J. Combs Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Laura M. Deger Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Jill Ehrenfeld Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Theodore Fadool, Jr. Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Bryant R. Fisher Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Mark D. Fisher Vice President, --

Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-

3779

Christopher T. Fives Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Joseph D. Gibbons Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

James M. Heaton Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

William E. Kugler Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Dennis M. Laffey Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

J. Michael Miller Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

R. Jeffery Niss Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Keith Nixon Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Michael P. O'Brien Vice President, --
Federated Investors Federated Securities

Tower Corp.
Pittsburgh, PA 15222-
3779

Solon A. Person, IV Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Robert F. Phillips Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Timothy C. Pillion Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Eugene B. Reed Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Paul V. Riordan Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Charles A. Robison Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

David W. Spears Vice President, --
Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Thomas E. Territ Vice President, --

Federated Investors Federated Securities
Tower Corp.
Pittsburgh, PA 15222-
3779

Richard B. Watts Vice President, --
Federated Investors Federated Securities
Tower Corp.

Pittsburgh, PA 15222-
3779

R. Edmond Connell, Jr. Assistant Vice --
Federated Investors President, Federated
Tower Securities Corp.
Pittsburgh, PA 15222-
3779

Philip C. Hetzel Assistant Vice --
Federated Investors President, Federated
Tower Securities Corp.
Pittsburgh, PA 15222-
3779

H. Joseph Kennedy Assistant Vice --
Federated Investors President, Federated
Tower Securities Corp.
Pittsburgh, PA 15222-
3779

S. Elliott Cohan Secretary, Federated --
Federated Investors Securities Corp.
Tower
Pittsburgh, PA 15222-
3779

Item 30. Location of Accounts and Records: (1.)

1.Response is incorporated by reference to Registrant's Initial Registration
on Form N-1A filed January 31, 1992 (File Nos. 33-45315 and 811-6550).

Item 31. Management Services: Not applicable.

Item 32. Undertakings:

Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.

Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, CAMBRIDGE SERIES TRUST,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Pittsburgh and Commonwealth of Pennsylvania, on
the 28th day of January, 1994.

CAMBRIDGE SERIES TRUST

By: /s/ Peter J. Quinn, Jr.

Peter J. Quinn, Jr.

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:

Name Title Date

By: /s/ Peter J. Quinn, Jr. Attorney-in-Fact for January 28, 1994
Peter J. Quinn, Jr. the Persons Listed Below

Name Title Date

Daniel J. Ludeman* Chairman and Trustee
(Chief Executive Officer)

Peter J. Quinn, Jr.* President and Trustee

Paul F. Costello* Senior Vice President,
Treasurer, and Secretary
(Principal Financial and

Accounting Officer)

Arnold H. Dreyfuss* Trustee

Thomas F. Keller* Trustee

Louis W. Moelchert, Jr.* Trustee

Troy A. Peery, Jr.* Trustee

*By Power of Attorney