As filed with the Securities and Exchange Commission on 
February 26, 
1999
    
Registration Nos. 33-11716
811-5018


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 
   
Post-Effective Amendment No. 22 
    
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 
   
Amendment No. 22
    
CONCERT INVESTMENT SERIES (Formerly Common Sense Trust)
(Exact Name of Registrant as Specified in Declaration of 
Trust)

388 Greenwich Street, New York, New York 10013
(Address of Principal Executive Offices)(Zip Code)

(212) 816-6474
(Registrant's Telephone Number, Including Area Code)

CHRISTINA T. SYDOR, ESQ.
Secretary

Concert Investment Series
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent for Service)

		
Approximate Date of Proposed Public Offering: Continuous

It is proposed that this filing will become effective:

[X]	immediately upon filing pursuant to paragraph (b)
[ ]	on (date) pursuant to paragraph (b) of Rule 485
[ ]	60 days after filing pursuant to paragraph (a)(i)
[ ]	on (date) pursuant to paragraph (a)(i)
[ ]	75 days after filing pursuant to paragraph (a)(ii)
[ ]	on (date) pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

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

       

CONCERT INVESTMENT SERIES

EMERGING GROWTH FUND
INTERNATIONAL EQUITY FUND
MID CAP FUND
GROWTH FUND
GROWTH AND INCOME FUND
GOVERNMENT FUND
MUNICIPAL BOND FUND

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement contains the following pages and
Documents:

Front Cover

Contents Page

Part A - Prospectus

Part B - Statement of Additional Information

Part C - Other Information

Signature Page

Exhibits

<PAGE>
 
Part A 
<PAGE>
 
                                                                  DRAFT 12/10/98
                                                                                
                                        
                                        
                                      THE
                                    CONCERT
                               INVESTMENT SERIES


                              COMBINED PROSPECTUS

                        ------------------------------
                              Emerging Growth Fund

                           International Equity Fund

                                  Mid Cap Fund

                                  Growth Fund

                             Growth and Income Fund

                                Government Fund

                              Municipal Bond Fund
                        ------------------------------


                         Class A Shares, Class B Shares
                               and Class 1 Shares


                               February 28, 1999



        The Securities and Exchange Commission has not approved the funds'
shares as an investment or determined whether this prospectus is accurate or
complete. Any statement to the contrary is a crime.
<PAGE>
 
Contents
<TABLE>   
<S>                                            <C>
Fund goals, strategies and risks:
--------------------------------------------------
 Emerging Growth Fund                            2
--------------------------------------------------
 International Equity Fund                       4
--------------------------------------------------
 Mid Cap Fund                                    6
--------------------------------------------------
 Growth Fund                                     8
--------------------------------------------------
 Growth and Income Fund                         10
--------------------------------------------------
 Government Fund                                12
--------------------------------------------------
 Municipal Bond Fund                            14
--------------------------------------------------
 More on the Funds' Investments                 16
--------------------------------------------------
Management                                      17
--------------------------------------------------
Choosing a Share Class to Buy                   18
--------------------------------------------------
Sales Charges:
--------------------------------------------------
 Class A Sales Charge                           19
--------------------------------------------------
 Class B Sales Charge                           20
--------------------------------------------------
 Class 1 Sales Charge                           21
--------------------------------------------------
Buying Shares and Exchanging Shares             22
--------------------------------------------------
Redeeming Shares                                23
--------------------------------------------------
Other Things to Know about Share Transactions   24
--------------------------------------------------
Dividends, Distributions and Taxes              25
--------------------------------------------------
Financial Highlights                            26
--------------------------------------------------
</TABLE>    
   
About the manager     
   
The funds' investment manager is SSBC Fund Management Inc., an affiliate of
Salomon Smith Barney Inc. The manager selects the funds' investments and
oversees their operations. The manager and Salomon Smith Barney are subsidiar-
ies of Citigroup Inc. Citigroup businesses produce a broad range of financial
services.     
   
About mutual fund risks     
   
An investment in any of the funds is not a bank deposit and is not insured or
guaranteed by the FDIC or any other government agency.     
 
                                        1
 
 The Concert Investment Series Prospectus
<PAGE>
 
Emerging Growth Fund
Investment objective
 
The fund seeks capital appreciation.
 
Key investments
 
The fund invests in common stocks of small and medium sized companies consid-
ered by the manager to be "emerging growth" companies. These are primarily do-
mestic companies, in the early stages of their life cycles, characterized by
relatively high earnings growth. The manager selects investments from among
companies that have market capitalizations in the lowest 25% of all publicly
traded U.S. companies.
 
How the manager selects the fund's investments
 
The manager emphasizes individual security selection while spreading invest-
ments among many industries and sectors. The manager uses quantitative analysis
to identify individual companies that it believes offer exceptionally high
prospects for growth. The manager purchases these companies' stocks when it be-
lieves they are reasonably priced. This style of stock selection is commonly
known as "growth at a reasonable price." Quantitative methods are also used to
control portfolio risk related to broad macroeconomic factors, such as interest
rate changes. The manager selects investments for their potential capital ap-
preciation; any ordinary income is incidental. In selecting individual compa-
nies for investment, the manager looks for:
 
 . Above average earnings growth
 
 . A pattern of reported earnings that exceed market expectations
 
 . Rising earnings estimates over the next several quarters
 
 . High relative return on invested capital
 
 . Reasonable price/earnings multiple
 
Principal risks of investing in the fund
 
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if any of the following occurs:
 
 . Stock prices decline generally
   
 . Emerging growth companies fall out of favor with investors     
       
 . The manager's judgment about the attractiveness, value or potential apprecia-
  tion of a particular stock proves to be incorrect
 
 . A particular product or service developed by an emerging growth company is
  unsuccessful, the company does not meet earnings expectations or other events
  depress the value of the company's stock
   
Compared to large, established companies, emerging growth companies are more
likely to have limited product lines, limited capital resources and less expe-
rienced management. In addition, securities of emerging growth companies are
more likely to:     
   
 . Experience sharper swings in market value     
   
 . Be harder to sell at times and prices the manager believes appropriate     
   
 . Offer greater potential for gains and losses     
 
Who may want to invest in the fund
 
The fund may be an appropriate investment if you:
 
 . Are seeking to participate in the long term growth potential of emerging
  growth companies
 
 . Currently have exposure to fixed income investments and less volatile equity
  investments and wish to broaden your investment portfolio
   
 . Are willing to accept the risks of investing in the stock market and the spe-
  cial risks of investing in emerging growth companies with limited track rec-
  ords     
 
                                        2
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
                                        Emerging Growth Fund, continued
Total return
--------------------------------------------------------------------------------
          
This bar chart indicates the risks of investing in the fund by showing the per-
formance of the fund's Class A shares for each of the past 3 calendar years.
Class 1 and B shares would have different performance due to their different
expenses.     
 
Past performance does not necessarily indicate how the fund will perform in the
future.
   
Quarterly returns: Highest: 25.10% in 4th quarter 1998; Lowest: (20.66)% in 3rd
quarter 1998     
   
The performance information in the bar chart does not reflect sales charges,
which would reduce your return.     

              [THE FOLLOWING DATA WAS REPRESENTED BY A BAR CHART]
         

          Calendar years ended       Percentage Total Returns 
             December 31               for Class A shares      
             -----------               ------------------

                 96                           15.17%
                 97                           20.87%
                 98                            8.43%
<TABLE>   
<CAPTION> 

Comparative performance
---------------------------------------------------------------------------------------
This table in-         Average annual total returns for periods ended December 31,    
dicates the            1998                                                           
risks of                  -------------------------------------------------------------
investing in           <S>                       <C>            <C>     <C>           
the fund by            Class                     Inception Date  1 Year Since Inception
comparing the             -------------------------------------------------------------
average annual         1                               08/08/96 (0.53)%           9.37%
total return of           -------------------------------------------------------------
each class for         A                               02/21/95   2.46%          18.96%
the periods               -------------------------------------------------------------
shown to that          B                               02/21/95   2.59%          18.50%
of the Russell            -------------------------------------------------------------
2000 Stock In-         Russell 2000 Stock Index             n/a (2.55)%         15.46%*
dex, an unman-            -------------------------------------------------------------
aged index of          * The index comparison begins on 2/28/95.                       
smaller capi-                                                                          
talization                                                                             
stocks.                                                                                
This table as-                                                                         
sumes the impo-                                                                        
sition of the                                                                          
maximum sales 
charge applica-
ble to the    
class, the re-
demption of   
shares at the 
end of the pe-
riod, and the 
reinvestment of
distributions 
and dividends. 
</TABLE>      

<TABLE>     
<CAPTION> 

Fees and expenses                                                               
---------------------------------------------------------------------------------------
This table sets        Shareholder fees (paid directly from                           
forth the fees         your investment)                         Class 1 Class A Class B
and expenses              -------------------------------------------------------------
you will pay if        <S>                                      <C>     <C>     <C>   
you invest in          Maximum sales charge on purchases (as a                        
shares of the           % of offering price)                     8.50%   5.00%    None
fund.                     -------------------------------------------------------------
                       Maximum deferred sales charge on                               
                       redemptions                                                    
                       (as a % of the lower of net asset value                        
                       at purchase or redemption)                 None   None*   5.00%
                          -------------------------------------------------------------
                       Annual fund operating expenses                                 
                       (paid from fund assets; shown as a % of                        
                       net assets)                                                    
                          -------------------------------------------------------------
                       Management fee                            0.65%   0.65%   0.65%
                          -------------------------------------------------------------
                       Distribution and service (12b-1) fee      0.00%   0.25%   1.00%
                          -------------------------------------------------------------
                       Other expenses                            0.61%   0.53%   0.53%
                          -------------------------------------------------------------
                       Total annual fund operating expenses      1.26%   1.43%   2.18%
                          -------------------------------------------------------------

                       * You may buy Class A shares in amounts of $500,000 or more
                         at net asset value (without an initial charge) but if you
                         redeem those shares within 12 months of purchase you will
                         pay a deferred sales charge of 1.00%.                     
</TABLE>      
 
<TABLE>     
<CAPTION> 

Example
---------------------------------------------------------------------------------------
This example           Number of years you own                                     
helps you com-         your shares               1 Year* 3 Years* 5 Years* 10 Years*
pare the costs            ----------------------------------------------------------
of investing in        <S>                       <C>     <C>      <C>      <C>     
the fund with          Class 1 (with or without                                    
those of other          redemption)                 $967    $1216    $1483     $2243
mutual funds.             ----------------------------------------------------------
Your actual            Class A (with or without                                    
costs may be            redemption)                 $638    $ 930    $1243     $2127
higher or low-            ----------------------------------------------------------
er.                    Class B (assuming                                           
                        redemption at end of                                       
                        period)                     $721    $ 982    $1269     $2321
                          ----------------------------------------------------------
                       Class B (assuming no                                        
                        redemption)                 $221    $ 682    $1169     $2321
                          ----------------------------------------------------------

                       * The example assumes:                                 
                       . You invest $10,000 for the period shown              
                       . You reinvest all distributions and dividends without a
                         sales charge                                         
                       . The fund's operating expenses remain the same        
                       . Your investment has a 5% return each year            
                       . Conversion of Class B shares to Class A shares after 8
                         years 
</TABLE>      
 
 The Concert Investment Series Prospectus
 
                                        3
<PAGE>
 
International Equity Fund
Investment objective
 
The fund seeks total return on its assets from growth of capital and income.
 
Key investments
 
The fund invests principally in a diversified portfolio of equity securities of
established non-U.S. issuers.
 
How the manager selects the fund's investments
 
By spreading the fund's investments across many international markets, the man-
ager seeks to reduce volatility compared to investing in a single region. Un-
like global mutual funds which may allocate a substantial portion of assets to
the U.S. markets, the fund invests substantially all of its assets in countries
outside of the U.S.
 
The manager emphasizes individual security selection while diversifying the
fund's investments across regions and countries, which can help to reduce risk.
While the manager selects investments primarily for their capital appreciation
potential, some investments have an income component as well. Companies in
which the fund invests may have large, mid-size or small market capitalizations
and may operate in any market sector. In selecting individual companies for in-
vestment, the manager looks for:
 
 . Above average earnings growth
 
 . High relative return on invested capital
 
 . Experienced and effective management
 
 . Effective research, product development and marketing
 
 . Competitive advantages
 
 . Strong financial condition or stable or improving credit quality
   
Depending on the manager's assessment of overseas potential for long-term
growth, the fund's emphasis among foreign markets (including emerging markets)
and types of issuers may vary. In allocating assets among countries and re-
gions, the manager evaluates:     
 
 . Economic stability and favorable prospects for economic growth
 
 . Low or decelerating inflation, creating a favorable environment for securi-
  ties markets
 
 . Stable governments with policies that encourage economic growth, equity in-
  vestment and development of securities markets
 
 . Currency stability
 
 . The range of individual investment opportunities
 
Principal risks of investing in the fund
 
Many foreign countries in which the fund invests have markets that are less
liquid and more volatile than markets in the U.S.
 
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if any of the following occurs:
   
 . Foreign securities prices decline     
 
 . Adverse governmental action or political, economic or market instability af-
  fects a foreign country or region
 
 . The currency in which a security is priced declines in value relative to the
  U.S. dollar
   
 . The manager's judgment about the attractiveness, value or potential apprecia-
  tion of a particular security proves to be incorrect     
   
In some foreign countries, there is also less information available about for-
eign issuers and markets because of less rigorous accounting and regulatory
standards than in the U.S. Currency fluctuations could erase investment gains
or add to investment losses. The risk of investing in foreign securities is
greater for emerging markets. In Europe, Economic and Monetary Union (EMU) and
the introduction of a single currency began in 1999. There are significant po-
litical and economic risks associated with EMU, which may increase the volatil-
ity of the fund's European securities and present valuation problems.     
 
Who may want to invest in the fund
 
The fund may be an appropriate investment if you:
 
 . Are seeking to participate in the long term total return potential of inter-
  national markets
 
 . Currently have exposure to U.S. stock markets and wish to diversify your in-
  vestment portfolio by adding non-U.S. stocks that may not move in tandem with
  U.S. stocks
   
 . Are willing to accept the risks of investing in the stock market and the spe-
  cial risks of investing in foreign securities, including emerging market se-
  curities     
 
                                        4
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
                                   International Equity Fund, continued
Total return
--------------------------------------------------------------------------------
          
This bar chart indicates the risks of investing in the fund by showing the per-
formance of the fund's Class A shares for each of the past 3 calendar years.
Class 1 and B shares would have different performance due to their different
expenses.     
       
Past performance does not necessarily indicate how the fund will perform in the
future.
   
Quarterly Returns: Highest: 19.50% in 4th quarter 1998; Lowest: (20.43)% in 3rd
quarter 1998     
   
The performance information in the chart does not reflect sales charges, which
would reduce your return.     

        

              [THE FOLLOWING DATA WAS REPRESENTED BY A BAR CHART]


          Calendar years ended       Percentage Total Returns 
             December 31               for Class A shares      
             -----------               ------------------

                 96                           17.59%
                 97                            5.10%
                 98                           22.47%

<TABLE>     
<CAPTION> 

Comparative performance
--------------------------------------------------------------------------------------- 

This table in-         Average annual total returns for periods ended December 31,    
dicates the            1998                                                           
risks of in-              -------------------------------------------------------------
vesting in the         <S>                        <C>            <C>    <C>           
fund by compar-        Class                      Inception Date 1 Year Since Inception
ing the average           -------------------------------------------------------------
annual total           1                                08/08/96 12.64%           9.71%
return of each            -------------------------------------------------------------
class for the          A                                03/17/95 15.74%          15.37%
periods shown             -------------------------------------------------------------
to that of the         B                                03/17/95 16.43%          15.78%
Morgan Stanley            -------------------------------------------------------------
Capital Inter-         Morgan Stanley EAFE Index             n/a 20.00%          9.68%*
national EAFE             -------------------------------------------------------------
Index, an un-
managed index          * The index comparison begins on 3/31/95. 
of
international
stocks. 
This table as-
sumes the impo-
sition of the
maximum sales
charge applica-
ble to the
class, the re-
demption of
shares at the
end of the
period, and the
reinvestment of
distributions
and dividends.
</TABLE>      

<TABLE>     
<CAPTION> 

Fees and expenses 
--------------------------------------------------------------------------------------- 
This table sets        Shareholder fees (paid directly from                           
forth the fees         your investment)                         Class 1 Class A Class B
and expenses              -------------------------------------------------------------
you will pay if        <S>                                      <C>     <C>     <C>   
you invest in          Maximum sales charge on purchases (as a                        
shares of the           % of offering price)                     8.50%   5.00%    None
fund.                     -------------------------------------------------------------
                       Maximum deferred sales charge on                               
                       redemptions                                                    
                       (as a % of the lower of net asset value                        
                       at purchase or redemption)                 None   None*   5.00%
                          -------------------------------------------------------------
                       Annual fund operating expenses                                 
                       (paid from fund assets; shown as a % of                        
                       net assets)                                                    
                          -------------------------------------------------------------
                       Management fee                            1.00%   1.00%   1.00%
                          -------------------------------------------------------------
                       Distribution and service (12b-1) fee      0.00%   0.25%   1.00%
                          -------------------------------------------------------------
                       Other expenses                            0.79%   1.00%   1.11%
                          -------------------------------------------------------------
                       Total annual fund operating expenses      1.79%   2.25%   3.11%
                          ------------------------------------------------------------- 

                       * You may buy Class A shares in amounts of $500,000 or more
                         at net asset value (without an initial charge) but if you
                         redeem those shares within 12 months of purchase you will
                         pay a deferred sales charge of 1.00%.                     
</TABLE>      

<TABLE>     
<CAPTION> 

Example
--------------------------------------------------------------------------------------- 
This example           Number of years you own                                     
helps you com-         your shares               1 Year* 3 Years* 5 Years* 10 Years*
pare the costs            ----------------------------------------------------------
of investing in        <S>                       <C>     <C>      <C>      <C>     
the fund with          Class 1 (with or without                                    
those of other          redemption)                $1016    $1365    $1737     $2776
mutual funds.             ----------------------------------------------------------
Your actual            Class A (with or without                                    
costs may be            redemption)                $ 717    $1168    $1645     $2956
higher or low-            ----------------------------------------------------------
er.                    Class B (assuming                                           
                        redemption at end of                                       
                        period)                    $ 814    $1260    $1730     $3243
                          ----------------------------------------------------------
                       Class B (assuming no                                        
                        redemption)                $ 314    $ 960    $1630     $3243
                          ----------------------------------------------------------

                       * The example assumes:                                    
                       . You invest $10,000 for the period shown                 
                       . You reinvest all distributions and dividends without a  
                         sales charge                                            
                       . The fund's operating expenses remain the same           
                       . Your investment has a 5% return each year               
                       . Conversion of Class B shares to Class A shares after 8   
                         years 
</TABLE>               
 
 The Concert Investment Series Prospectus
 
                                        5
<PAGE>
 
Mid Cap Fund
Investment objective
 
The fund seeks long-term growth of capital.
 
Key investments
   
The fund invests primarily in equity securities of medium sized companies,
which are companies with market capitalizations within the range of capitaliza-
tions of the companies included in the Standard & Poors MidCap 400 Index at the
time of investment. Equity securities include exchange traded and over-the-
counter common stocks, preferred stocks, debt securities convertible into eq-
uity securities and warrants and rights relating to equity securities. The fund
also may invest up to 35% of its assets in equity securities of companies with
market capitalizations smaller or larger than those of medium sized companies
(i.e., companies considered to be small or large capitalization companies), and
up to 25% of its assets in securities of foreign issuers both directly and
through depositary receipts for those securities.     
 
How the manager selects the fund's investments
 
The manager focuses on medium capitalization companies that exhibit either at-
tractive growth characteristics or attractive value characteristics. The man-
ager selects individual "growth" stocks for investment in two ways: by identi-
fying those companies which exhibit the most favorable growth prospects and by
identifying those companies which have favorable valuations relative to their
growth characteristics. This strategy is commonly known as "growth at a reason-
able price" and offers investors style diversification within a single mutual
fund. In selecting companies for investment, the manager looks for:
 
 . Growth characteristics, including high historic growth rates and high rela-
  tive growth compared with companies in the same industry or sector
 
 . Value characteristics, including low price/earnings ratios and other statis-
  tics indicating that a security is undervalued
 
 . Increasing profits and sales
 
 . Competitive advantages that could be more fully exploited by a company
 
 . Skilled management that is committed to long-term growth
 
 . Potential for a long-term investment by the fund
 
The manager uses fundamental research to find stocks with strong growth poten-
tial and also uses quantitative analysis to determine whether these stocks are
relatively undervalued or overvalued compared to stocks with similar fundamen-
tal characteristics. The manager's quantitative valuations determine whether
and when the fund will purchase and sell stocks that it identifies through fun-
damental research.
 
Principal risks of investing in the fund
 
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, because of the following:
 
 . U.S. stock markets go down, or perform poorly relative to other types of in-
  vestments
 
 . An adverse company specific event, such as an unfavorable earnings report,
  negatively affects the stock price of a company in which the fund invests
 
 . Medium capitalization stocks fall out of favor with investors
 
 . The manager's judgment about the attractiveness, growth prospects, value or
  potential appreciation of a particular stock proves to be incorrect
 
Because the fund invests primarily in medium capitalization companies, an in-
vestment in the fund may be more volatile and more susceptible to loss than an
investment in a fund which invests primarily in large capitalization companies.
Medium capitalization companies may have more limited product lines, markets
and financial resources than large capitalization companies. They may have
shorter operating histories and more erratic businesses, although they gener-
ally have more established businesses than small capitalization companies. The
prices of medium capitalization company stocks tend to be more volatile than
the prices of large capitalization company stocks.
 
Who may want to invest in the fund
 
The fund may be an appropriate investment if you:
 
 . Are seeking to participate in the long term growth potential of the U.S.
  stock market
 
 . Are looking for an investment with potentially greater return but higher risk
  than a fund that invests primarily in large cap companies
   
 . Are willing to accept the risks of investing in the stock market     
 
                                        6
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
                                                Mid Cap Fund, continued
Total return and performance
--------------------------------------------------------------------------------
 
The fund's total return will vary from year to year, and its performance will
vary compared with that of unmanaged mid-cap stock indices. Although variations
in the fund's performance are an indication of the risks of investing in the
fund, past performance does not necessarily indicate how the fund will perform
in the future.
       

<TABLE>   
<CAPTION>  
Fees and expenses
---------------------------------------------------------------------------------------
This table sets        Shareholder fees (paid directly from                           
forth the fees         your investment)                         Class 1 Class A Class B
and expenses              -------------------------------------------------------------
you will pay if        <S>                                      <C>     <C>     <C>   
you invest in          Maximum sales charge on purchases (as a                        
shares of the           % of offering price)                     8.50%   5.00%    None
fund.                     -------------------------------------------------------------
                       Maximum deferred sales charge on                               
                       redemptions                                                    
                       (as a % of the lower of net asset value                        
                       at purchase or redemption)                None    None*   5.00%
                          -------------------------------------------------------------
                       Annual fund operating expenses                                 
                       (paid from fund assets; shown as a % of                        
                       net assets)                                                    
                          -------------------------------------------------------------
                       Management fee                            0.75%   0.75%   0.75%
                          -------------------------------------------------------------
                       Distribution and service (12b-1) fee      0.00%   0.25%   1.00%
                          -------------------------------------------------------------
                       Other expenses/1/                         0.50%   0.50%   0.50%
                          -------------------------------------------------------------
                       Total annual fund operating expenses      1.25%   1.50%   2.25%
                          -------------------------------------------------------------
                
                       * You may buy Class A shares in amounts of $500,000 or more
                         at net asset value (without an initial charge)but if you 
                         redeem those shares within 12 months of purchase you will
                         pay a deferred sales charge of 1.00%.                     

                    /1/  Other expenses are based on estimated amounts. 
</TABLE>      

<TABLE>   
<CAPTION>  
Example
---------------------------------------------------------------------------------------
This example           Number of years you own                                     
helps you com-         your shares               1 Year* 3 Years* 5 Years* 10 Years*
pare the costs            ----------------------------------------------------------
of investing in        <S>                       <C>     <C>      <C>      <C>     
the fund with          Class 1 (with or without                                    
those of other          redemption)                 $967   $1,213   $1,478    $2,233
mutual funds.             ----------------------------------------------------------
Your actual            Class A (with or without                                    
costs may be            redemption)                 $645   $  950   $1,278    $2,201
higher or low-            ----------------------------------------------------------
er.                    Class B (assuming                                           
                        redemption at end of                                       
                        period)                     $728   $1,003   $1,305    $2,393
                          ----------------------------------------------------------
                       Class B (assuming no                                        
                        redemption)                 $228   $  703   $1,205    $2,393
                          ----------------------------------------------------------

                       * The example assumes:                                  
                                                                               
                       . You invest $10,000 for the period shown               
                                                                               
                       . You reinvest all distributions and dividends without a
                         sales charge                                          
                                                                               
                       . The fund's operating expenses remain the same         
                                                                               
                       . Your investment has a 5% return each year             

                       . Conversion of Class B shares to Class A shares after 8
                         years                                                  
</TABLE>    
 
 The Concert Investment Series Prospectus
 
                                        7
<PAGE>
 
Growth Fund
Investment objective
 
The fund seeks capital appreciation.
 
Key investments
   
The fund invests principally in U.S. common stocks and other equity securities,
typically of established companies with large market capitalizations.     
 
How the manager selects the fund's investments
 
The manager uses a "bottom-up" strategy, primarily focusing on individual secu-
rity selection, with less emphasis on industry and sector allocation. The man-
ager selects investments for their capital appreciation; any ordinary income is
incidental. In selecting individual companies for investment, the manager looks
for:
 
 . Growth characteristics, including high historic growth rates and high rela-
  tive growth compared with companies in the same industry or sector
 
 . Value characteristics, including low price/earnings ratios and other statis-
  tics indicating that a security is undervalued
 
 . Increasing profits and sales
 
 . Competitive advantages that could be more fully exploited by a company
 
 . Skilled management that is committed to long-term growth
 
 . Potential for a long-term investment by the fund
          
The manager uses fundamental research to find stocks with strong growth poten-
tial, and then uses quantitative analysis to determine whether these stocks are
relatively underva     lued or overvalued compared to stocks with similar fun-
|/ 7/8 2/3
damental characteristics. The manager's quantitative valuations determine
whether and when the fund will purchase or sell the stocks that it identifies
through fundamental research. This style of stock selection is commonly known
as "growth at a reasonable price."
 
Principal risks of investing in the fund
 
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if any of the following occurs:
 
 . Stock prices decline generally
 
 . Large capitalization companies fall out of favor with investors
 
 . The manager's judgment about the attractiveness, value or potential apprecia-
  tion of a particular stock proves to be incorrect
 
 . The company does not meet earnings expectations or other events depress the
  value of the company's stock
 
The fund may engage in active and frequent trading, resulting in high portfolio
turnover. This may lead to the realization and distribution to shareholders of
higher capital gains, increasing their tax liability. Frequent trading also in-
creases transaction costs, which could detract from the fund's performance.
 
Who may want to invest in the fund
 
The fund may be an appropriate investment if you:
 
 . Are an aggressive investor seeking to participate in the long term growth po-
  tential of the stock market
 
 . Are willing to accept the risks of investing in common stocks
 
                                        8
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
                                                 Growth Fund, continued
Total return
--------------------------------------------------------------------------------
          
This bar chart indicates the risks of investing in the fund by showing the per-
formance of the fund's Class 1 shares for each of the past 10 calendar years.
Class A and B shares would have different performance due to their different
expenses.     
 
Past performance does not necessarily indicate how the fund will perform in the
future.
   
Quarterly returns: Highest: 23.52% in 4th quarter 1998; Lowest: (26.08)% in 4th
quarter 1997     
   
The performance information in the chart does not reflect sales charges, which
would reduce your return.     
       

              [THE FOLLOWING DATA WAS REPRESENTED BY A BAR CHART]


          Calendar years ended       Percentage Total Returns 
             December 31               for Class 1 shares      
             -----------               ------------------

                 89                           27.95%
                 90                           -3.41%
                 91                           38.59%
                 92                            7.13%
                 93                            9.37%
                 94                           -2.29%
                 95                           32.84%
                 96                           18.87%
                 97                           27.70%
                 98                           28.50%

<TABLE>   
<CAPTION>
 
Comparative performance
--------------------------------------------------------------------------------------
This table in-         Average annual total returns for                              
dicates the            periods ended December 31, 1998                               
risks of                  ------------------------------------------------------------
investing in           <S>      <C>            <C>    <C>     <C>      <C>           
the fund by            Class    Inception Date 1 Year 5 Years 10 Years Since Inception
comparing the             ------------------------------------------------------------
average annual         1              04/14/87 17.59%  18.30%   16.61%          13.54%
total return of           ------------------------------------------------------------
each class for         A              05/03/94 21.12%     n/a      n/a          19.81%
the periods               ------------------------------------------------------------
shown to that          B              05/03/94 22.21%     n/a      n/a          20.29%
of the Standard           ------------------------------------------------------------
& Poor's 500           S&P 500                                                       
Index, an un-          Index               n/a 28.74%  24.08%   19.20%         16.45%*
managed index             ------------------------------------------------------------
of common                     
stocks.                *The index comparison begins on 4/30/87. 
This table as-  
sumes the impo- 
sition of the  
maximum sales  
charge applica-
ble to the     
class, the re- 
demption of    
shares at the  
end of the pe- 
riod, and the  
reinvestment of
distributions  
and dividends.  
</TABLE>      
 
<TABLE>     
<CAPTION> 

Fees and expenses
---------------------------------------------------------------------------------------
This table sets        Shareholder fees (paid directly from
forth the fees and     your investment)                         Class 1 Class A Class B
expenses you will         -------------------------------------------------------------
pay if you invest      <S>                                      <C>     <C>     <C>
in shares of the       Maximum sales charge on purchases (as a
fund.                   % of offering price)                     8.50%   5.00%    None
                          -------------------------------------------------------------
                       Maximum deferred sales charge on
                       redemptions
                       (as a % of the lower of net asset value
                       at purchase or redemption)                 None   None*   5.00%
                          -------------------------------------------------------------
                       Annual fund operating expenses
                       (paid from fund assets; shown as a % of
                       net assets)
                          -------------------------------------------------------------
                       Management fee                            0.65%   0.65%   0.65%
                          -------------------------------------------------------------
                       Distribution and service (12b-1) fee      0.00%   0.25%   1.00%
                          -------------------------------------------------------------
                       Other expenses                            0.13%   0.12%   0.10%
                          -------------------------------------------------------------
                       Total annual fund operating expenses      0.78%   1.02%   1.75%
                          -------------------------------------------------------------

                       * You may buy Class A shares in amounts of $500,000 or more
                         at net asset value (without an initial charge)but if you 
                         redeem those shares within 12 months of purchase you will
                         pay a deferred sales charge of 1.00%.                     
</TABLE>      

<TABLE>     
<CAPTION> 

Example
---------------------------------------------------------------------------------------
This example           Number of years you own
helps you com-         your shares               1 Year* 3 Years* 5 Years* 10 Years*
pare the costs            ----------------------------------------------------------
of investing in        <S>                       <C>     <C>      <C>      <C>
the fund with          Class 1 (with or without
those of other          redemption)                 $923   $1,078   $1,246    $1,734
mutual funds.             ----------------------------------------------------------
Your actual            Class A (with or without
costs may be            redemption)                 $599   $  808   $1,035    $1,685
higher or low-            ----------------------------------------------------------
er.                    Class B (assuming
                        redemption at end of
                        period)                     $678   $  851   $1,049    $1,862
                          ----------------------------------------------------------
                       Class B (assuming no
                        redemption)                 $178   $  551   $  949    $1,862
                          ----------------------------------------------------------

                       * The example assumes:                                 
                       . You invest $10,000 for the period shown              
                       . You reinvest all distributions and dividends without a
                         sales charge                                         
                       . The fund's operating expenses remain the same        
                       . Your investment has a 5% return each year            
                       . Conversion of Class B shares to Class A shares after 8
                         years 
</TABLE>      

 The Concert Investment Series Prospectus
 
                                        9
<PAGE>
 
Growth and Income Fund
Investment objective
 
The fund seeks reasonable growth and income.
 
Key investments
   
The fund invests in a portfolio consisting principally of equity securities,
including convertible securities, that provide dividend or interest income.
However, it may also invest in non-income producing investments for potential
appreciation in value. The fund emphasizes U.S. stocks with large market capi-
talizations. The fund's convertible securities may be of any credit quality and
may include below investment grade securities (commonly known as "junk bonds").
    
How the manager selects the fund's investments
 
The manager emphasizes individual security selection while spreading the fund's
investments among industries and sectors. The manager uses a two-step selection
process commonly known as "growth at a reasonable price."
   
First, the manager uses quantitative analysis to find stocks with strong growth
 potential, and to determine whether these securi-
ties are relatively undervalued or overvalued. Quantitative factors include:
    
 . Growth characteristics, including high historic growth rates and high rela-
  tive growth compared with companies in the same industry or sector
 
 . Value characteristics, including low price/earnings ratios and other statis-
  tics indicating that a security is undervalued
   
Then, the manager uses fundamental qualitative research to verify these equity
 securities'growth potential. Qualitative factors include: 
    
 . Management with established track records, or favorable changes in current
  management
 
 . Improvement in a company's competitive position
 
 . Positive changes in corporate strategy
   
These valuations then influence the timing of the fund's purchases and sales of
securities.     
 
Principal risks of investing in the fund
 
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if any of the following occurs:
 
 . Stock prices decline generally
 
 . Large capitalization companies fall out of favor with investors
 
 . Companies in which the fund invests suffer unexpected losses or lower than
  expected earnings
 
 . The manager's judgment about the attractiveness, value or income potential of
  a particular security proves to be incorrect
   
 . The issuer of a debt security owned by the fund defaults on its obligation to
  pay principal and/or interest or has its credit rating downgraded. This risk
  is higher for below investment grade securities. These securities are consid-
  ered speculative because they have a higher risk of issuer default, are sub-
  ject to greater price volatility and may be illiquid     
 
The fund may engage in active and frequent trading, resulting in high portfolio
turnover. This may lead to the realization and distribution to shareholders of
higher capital gains, increasing their tax liability. Frequent trading also in-
creases transaction costs, which could detract from the fund's performance.
 
Who may want to invest in the fund
 
The fund may be an appropriate investment if you:
 
 . Are seeking reasonable long term growth and current income
   
 . Are willing to accept the risks of investing in the stock market     
 
                                       10
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
                                      Growth and Income Fund, continued
Total return
--------------------------------------------------------------------------------
          
This bar chart indicates the risks of investing in the fund by showing the per-
formance of the fund's Class 1 shares for each of the past 10 calendar years.
Class A and B shares would have different performance due to their different
expenses.     
 
Past performance does not necessarily indicate how the fund will perform in the
future.
   
Quarterly returns: Highest: 19.51% in 4th quarter 1998; Lowest: (20.82)% in 4th
quarter 1997     
   
The performance information in the chart does not reflect sales charges, which
would reduce your return.     
       

              [THE FOLLOWING DATA WAS REPRESENTED BY A BAR CHART]


          Calendar years ended       Percentage Total Returns 
             December 31               for Class 1 shares      
             -----------               ------------------

                 89                           27.23%
                 90                           -3.10%
                 91                           31.30%
                 92                            7.33%
                 93                            9.40%
                 94                           -3.17%
                 95                           36.57%
                 96                           17.93%
                 97                           24.47%
                 98                           19.32%

<TABLE> 
<CAPTION>     
 
Comparative performance
--------------------------------------------------------------------------------------
This table in-         Average annual total returns for                              
dicates the            periods ended December 31, 1998                               
risks of                  ------------------------------------------------------------
investing in           <S>      <C>            <C>    <C>     <C>      <C>           
the fund by            Class    Inception Date 1 Year 5 Years 10 Years Since Inception
comparing the             ------------------------------------------------------------
average annual         1              08/08/86  9.17%  16.21%   14.95%          12.19%
total return of           ------------------------------------------------------------
each class for         A              08/18/96 12.48%     n/a      n/a          17.42%
the periods               ------------------------------------------------------------
shown to that          B              08/18/96 13.41%     n/a      n/a          17.87%
of the Standard           ------------------------------------------------------------
& Poor's 500           S&P 500                                                       
Index, an un-          Index               n/a 28.74%  24.08%   19.20%         29.87%*
managed index             ------------------------------------------------------------
of common      
stocks.                *The index comparison begins on 8/31/86. 
This table as-                                                  
sumes the impo-
sition of the
maximum sales
charge applica-
ble to the
class, the re-
demption of
shares at the
end of the pe-
riod, and the
reinvestment of
distributions
and dividends.
</TABLE>      

<TABLE>     
<CAPTION> 

Fees and expenses
---------------------------------------------------------------------------------------
This table sets        Shareholder fees (paid directly from                           
forth the fees         your investment)                         Class 1 Class A Class B
and expenses              -------------------------------------------------------------
you will pay if        <S>                                      <C>     <C>     <C>   
you invest in          Maximum sales charge on purchases (as a                        
shares of the           % of offering price)                     8.50%   5.00%    None
fund.                     -------------------------------------------------------------
                       Maximum deferred sales charge on                               
                       redemptions                                                    
                       (as a % of the lower of net asset value                        
                       at purchase or redemption)                 None   None*   5.00%
                          -------------------------------------------------------------
                       Annual fund operating expenses                                 
                       (paid from fund assets; shown as a % of                        
                       net assets)                                                    
                          -------------------------------------------------------------
                       Management fee                            0.65%   0.65%   0.65%
                          -------------------------------------------------------------
                       Distribution and service (12b-1) fee      0.00%   0.25%   1.00%
                          -------------------------------------------------------------
                       Other expenses                            0.18%   0.17%   0.16%
                          -------------------------------------------------------------
                       Total annual fund operating expenses      0.83%   1.07%   1.81%
                          -------------------------------------------------------------
                
                       * You may buy Class A shares in amounts of $500,000 or more
                         at net asset value (without an initial charge)but if you 
                         redeem those shares within 12 months of purchase you will
                         pay a deferred sales charge of 1.00%.                     
</TABLE>      

<TABLE>     
<CAPTION> 
 
Example
------------------------------------------------------------------------------------    
This example           Number of years you own                                     
helps you com-         your shares               1 Year* 3 Years* 5 Years* 10 Years*
pare the costs            ----------------------------------------------------------
of investing in        <S>                       <C>     <C>      <C>      <C>     
the fund with          Class 1 (with or without                                    
those of other          redemption)                 $928    $1092    $1271     $1788
mutual funds.             ----------------------------------------------------------
Your actual            Class A (with or without                                    
costs may be            redemption)                 $604    $ 823    $1061     $1740
higher or low-            ----------------------------------------------------------
er.                    Class B (assuming                                           
                        redemption at end of                                       
                        period)                     $684    $ 869    $1080     $1928
                          ----------------------------------------------------------
                       Class B (assuming no                                        
                        redemption)                 $184    $ 569    $ 980     $1928
                          ----------------------------------------------------------

                       * The example assumes:                                  
                       . You invest $10,000 for the period shown               
                       . You reinvest all distributions and dividends without a
                         sales charge                                          
                       . The fund's operating expenses remain the same         
                       . Your investment has a 5% return each year             
                       . Conversion of Class B shares to Class A shares after 8
                         years 
</TABLE>      

 
 The Concert Investment Series Prospectus
 
                                       11
<PAGE>
 
Government Fund
Investment objective
 
The fund seeks high current return consistent with preservation of capital.
 
Key investments
 
The fund invests primarily in government debt issued or guaranteed by the U.S.
government, its agencies or instrumentalities. These securities include U.S.
Treasury securities, mortgage-related and asset-backed securities. Some govern-
ment guaranteed mortgage-related securities are backed by the full faith and
credit of the U.S. Treasury, some are supported by the right of the issuer to
borrow from the U.S. government and some are backed only by the credit of the
issuer itself.
 
In order to hedge against changes in interest rates, the fund also may purchase
or sell options on U.S. government securities and enter into interest rate
futures contracts and options on these contracts.
 
How the manager selects the fund's investments
 
The manager focuses on identifying undervalued sectors and securities. Specifi-
cally, the manager:
 
 . Determines sector and maturity weightings based on intermediate and long-term
  assessments of the economic environment and relative value factors based on
  interest rate outlook
 
 . Uses research to uncover inefficient sectors of the government and mortgage
  markets and adjusts portfolio positions to take advantage of new information
 
 . Measures the potential impact of supply/demand imbalances, yield curve shifts
  and changing prepayment patterns to identify individual securities that bal-
  ance potential return and risk
 
Principal risks of investing in the fund
 
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if any of the following occurs:
 
 . Interest rates increase, causing the prices of fixed income securities to de-
  cline and reducing the value of the fund's portfolio
 
 . Prepayment risk (or call risk). As interest rates decline, the issuers of se-
  curities held by the fund may prepay principal earlier than scheduled, forc-
  ing the fund to reinvest in lower yielding securities
 
 . Extension risk. As interest rates increase, slower than expected principal
  payments may extend the average life of fixed income securities, locking in
  below-market interest rates and reducing the value of these securities
 
 . The manager's judgment about interest rates or the attractiveness, value or
  income potential of a particular security proves incorrect
   
 . Changes in interest rates or the value of securities cause the value of op-
  tions or futures contracts held by the fund to decline, resulting in dispro-
  portionate losses to the fund's portfolio     
 
Who may want to invest in the fund
 
The fund may be an appropriate investment if you:
 
 . Are seeking income consistent with preservation of capital
 
 . Are willing to accept the interest rate risks and market risks of investing
  in government bonds and mortgage-related securities
 
                                       12
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
                                             Government Fund, continued
Total return
--------------------------------------------------------------------------------
          
This bar chart indicates the risks of investing in the fund by showing the per-
formance of the fund's Class 1 shares for each of the past 10 calendar years.
Class A and B shares would have different performance due to their different
expenses.     
 
Past performance does not necessarily indicate how the fund will perform in the
future.
   
Quarterly returns: Highest: 8.81% in 2nd quarter 1989; Lowest: (3.94)% in 1st
quarter 1994.     
   
The performance information in the chart does not reflect sales charges, which
would reduce your return.     
 
              [THE FOLLOWING DATA WAS REPRESENTED BY A BAR CHART]

          Calendar years ended      Percentage Total REturns    
             December 31              for Class 1 shares  
             -----------              ------------------
                89                           14.32% 
                90                            8.09% 
                91                           15.44% 
                92                            6.79%
                93                            8.18%
                94                           -4.54%
                95                           16.97%
                96                            2.09%
                97                            9.68%
                98                            6.26%

<TABLE>   
<CAPTION>

Comparative performance
--------------------------------------------------------------------------------------
                   Average annual total returns for periods
This table in-     ended December 31, 1998
dicates the           ----------------------------------------------------------------
risks of in-       <S>         <C>            <C>     <C>     <C>      <C>
vesting in the     Class       Inception Date  1 Year 5 Years 10 Years Since Inception
fund by compar-       ----------------------------------------------------------------
ing the average    1                 04/14/87 (0.92)%   4.39%    7.40%           6.91%
annual total          ----------------------------------------------------------------
return of each     A                 08/08/95   0.94%     n/a      n/a           4.93%
class for the         ----------------------------------------------------------------
periods shown      B                 08/08/95   1.18%     n/a      n/a           4.98%
to that of the        ----------------------------------------------------------------
Lehman Brothers    Lehman
Mutual Fund        Brothers
General U.S.       Mutual
Government In-     Fund
dex, an unman-     General
aged index of      U.S.
U.S. government    Government
securities.        Index                  n/a   9.85%   7.18%    9.17%          8.76%*
                      ----------------------------------------------------------------
This table as-   
sumes the impo-       
sition of the      * The index comparison begins on 4/30/87. 
maximum sales    
charge applica-  
ble to the       
class, the re-   
demption of      
shares at the    
end of the pe-   
riod, and the    
reinvestment of  
distributions    
and dividends.   
</TABLE>      

<TABLE>   
<CAPTION>
 
Fees and expenses
--------------------------------------------------------------------------------
 
This table sets    Shareholder fees (paid directly from
forth the fees     your investment)                         Class 1 Class A Class B
and expenses          -------------------------------------------------------------
you will pay if    <S>                                      <C>     <C>     <C>
you invest in      Maximum sales charge on purchases (as a
shares of the      % of offering price)                     6.75%   4.50%    None
fund.                 -------------------------------------------------------------
                   Maximum deferred sales charge on
                   redemptions
                   (as a % of the lower of net asset value
                   at purchase or redemption)                 None   None*   4.50%
                      -------------------------------------------------------------
                   Annual fund operating expenses
                   (paid from fund assets; shown as a % of
                   net assets)
                      -------------------------------------------------------------
                   Management fee                            0.60%   0.60%   0.60%
                      -------------------------------------------------------------
                   Distribution and service (12b-1) fee      0.00%   0.25%   1.00%
                      -------------------------------------------------------------
                   Other expenses                            0.28%   0.27%   0.27%
                      -------------------------------------------------------------
                   Total annual fund operating expenses      0.88%   1.12%   1.87%
                      -------------------------------------------------------------

                  * You may buy Class A shares in amounts of $500,000 or more
                    at net asset value (without an initial charge)but if you
                    redeem those shares within 12 months of purchase you will
                    pay a deferred sales charge of 1.00%.
</TABLE>     
<TABLE>   
<CAPTION>

Example
--------------------------------------------------------------------------------
This example       Number of years you own
helps you com-     your shares               1 Year* 3 Years* 5 Years* 10 Years*
pare the costs        ----------------------------------------------------------
of investing in    <S>                       <C>     <C>      <C>      <C>
the fund with      Class 1 (with or without
those of other      redemption)                 $759     $937   $1,130    $1,686
mutual funds.         ----------------------------------------------------------
Your actual        Class A (with or without
costs may be        redemption)                 $559     $790   $1,039    $1,752
higher or low-        ----------------------------------------------------------
er.                Class B (assuming
                    redemption at end of
                    period)                     $640     $888   $1,111    $1,992
                      ----------------------------------------------------------
                   Class B (assuming no
                    redemption)                 $190     $588   $1,011    $1,992
                      ----------------------------------------------------------
</TABLE>     
                  * The example assumes:
                  . You invest $10,000 for the period shown
                  . You reinvest all distributions and dividends without a
                    sales charge
                  . The fund's operating expenses remain the same
                  . Your investment has a 5% return each year
                     
                  . Conversion of Class B shares to Class A shares after 8
                    years     
 
 The Concert Investment Series Prospectus
 
                                       13
<PAGE>
 
Municipal Bond Fund
Investment objective
 
The fund seeks as high a level of current interest income exempt from federal
income tax as is consistent with the preservation of capital.
 
Key investments
   
The fund invests in a diversified portfolio consisting principally of tax ex-
empt municipal bonds, which are obligations issued by or on behalf of states,
territories or possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities. Tax exempt
means that the bonds pay interest that is excluded from gross income for fed-
eral income tax purposes.     
   
The fund invests principally in municipal bonds rated at the time of purchase
within the three highest grades by nationally recognized bond rating services,
or, if unrated, of equivalent quality. The fund may also invest up to 25% in
lower rated municipal bonds that have speculative characteristics.     
 
How the manager selects the fund's investments
 
The manager selects securities primarily by identifying undervalued sectors and
individual securities, while also selecting securities that it believes will
benefit from changes in relative interest rates. In selecting individual secu-
rities, the manager:
 
 . Uses fundamental credit analysis to estimate the relative value and attrac-
  tiveness of various securities and sectors and to exploit inefficiencies in
  the municipal bond market
 
 . Actively trades among various sectors, such as insured, general obligation,
  revenue and housing, based on their apparent relative values
 
 . Identifies individual securities with the most potential for added value,
  such as those involving unusual situations, new issuers, the potential for
  credit upgrades, unique structural characteristics or innovative features
 
 . Considers a security's maturity in light of the outlook for the issuer and
  its sector
 
Principal risks of investing in the fund
 
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if any of the following occurs:
 
 . Interest rates rise, causing the value of the fund's portfolio generally to
  decline
 
 . Municipal bonds fall out of favor with investors
 
 . Unfavorable legislation affects the tax-exempt status of municipal bonds
 
 . The manager's judgment about the attractiveness, value or income potential of
  a particular bond proves to be incorrect
 
 . The issuer of a security owned by the fund defaults on its obligation to pay
  principal and/or interest or has its credit rating downgraded. This risk is
  higher for below investment grade bonds, which are considered speculative be-
  cause they have a higher risk of issuer default, are subject to greater price
  volatility and may be illiquid
   
It is possible that some of the fund's income and gains may be subject to
federal taxation. The fund may realize taxable gains on the sale of its
securities. In addition, distributions of the fund's income and gains will be
subject to state taxation.     
 
Who may want to invest in the fund
 
The fund may be an appropriate investment if you:
 
 . Are in a high tax bracket and seeking income that is exempt from federal tax-
  ation
 
 . Currently have exposure to equity securities and taxable fixed income securi-
  ties and wish to broaden your investment portfolio
   
 . Are willing to accept the risks of investing in municipal bonds, including
  interest rate risk and credit risk     
 
                                       14
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
                                         Municipal Bond Fund, continued
Total return
--------------------------------------------------------------------------------
          
This bar chart indicates the risks of investing in the fund by showing the per-
formance of the fund's Class 1 shares for each of the past 10 calendar years.
Class A and B shares would have different performance due to their different
expenses.     
 
Past performance does not necessarily indicate how the fund will perform in the
future.
   
Quarterly returns: Highest: 5.95% in 1st quarter 1995; Lowest: (4.04)% in 1st
quarter 1994     
   
The performance information in the chart does not reflect sales charges, which
would reduce your return.     
              [THE FOLLOWING DATA WAS REPRESENTED BY A BAR CHART]

           Calendar years ended      Percentage Total Return 
              December 31               for Class 1 shares
              -----------               ------------------
                  89                          8.50%
                  90                          5.77%
                  91                         11.29%
                  92                          8.51%
                  93                         11.17%
                  94                         -4.27%
                  95                         16.58%
                  96                          3.99%
                  97                          8.97%
                  98                          5.40%
<TABLE>   
<CAPTION>

Comparative performance
--------------------------------------------------------------------------------
This table in-    Average annual total returns for                                
dicates risks     periods ended December 31, 1998                                 
of investing in      --------------------------------------------------------------
the fund com-     <S>        <C>            <C>    <C>     <C>      <C>           
paring the av-    Class      Inception Date 1 Year 5 Years 10 Years Since Inception
erage annual         --------------------------------------------------------------
total return of   1                07/13/88  0.40%   4.89%    6.94%           7.12%
each class for       --------------------------------------------------------------
the periods       A                08/18/96  0.42%     n/a      n/a           4.73%
shown to that        --------------------------------------------------------------
of the Lehman     B                08/18/96  0.36%     n/a      n/a           4.79%
Brothers Munic-      --------------------------------------------------------------
ipal Bond In-     Lehman                                                          
dex, an unman-    Brothers                                                        
aged index of     Municipal                                                       
municipal         Bond                                                            
bonds.            Index                 n/a  5.84%   6.10%    8.15%          8.20%*
                     --------------------------------------------------------------
This table as-
sumes the impo-   * The index comparison begins on 7/31/88. 
sition of the
maximum sales
charge applica-
ble to the
class, the re-
demption of
shares at the
end of the pe-
riod, and the
reinvestment of
distributions
and dividends.
</TABLE>      
                  
                 
<TABLE>   
<CAPTION>

 
Fees and expenses
--------------------------------------------------------------------------------
This table sets   Shareholder fees (paid directly from
forth the fees    your investment)                         Class 1 Class A Class B
and expenses         -------------------------------------------------------------
you will pay if   <S>                                      <C>     <C>     <C>
you invest in     Maximum sales charge on purchases (as a
shares of the      % of offering price)                     4.75%   4.50%    None
fund.                -------------------------------------------------------------
                  Maximum deferred sales charge on
                  redemptions
                  (as a % of the lower of net asset value
                  at purchase or redemption)                 None   None*   4.50%
                     -------------------------------------------------------------
                  Annual fund operating expenses
                  (paid from fund assets; shown as a % of
                  net assets)
                     -------------------------------------------------------------
                  Management fee                            0.60%   0.60%   0.60%
                     -------------------------------------------------------------
                  Distribution and service (12b-1) fee      0.00%   0.25%   1.00%
                     -------------------------------------------------------------
                  Other expenses                            0.41%   0.38%   0.35%
                     -------------------------------------------------------------
                  Total annual fund operating expenses      1.01%   1.23%   1.95%
                     -------------------------------------------------------------
</TABLE>    
                  * You may buy Class A shares in amounts of $500,000 or more
                    at net asset value (without an initial charge)but if you
                    redeem those shares within 12 months of purchase you will
                    pay a deferred sales charge of 1.00%.
 
<TABLE>   
<CAPTION>

Example
--------------------------------------------------------------------------------
This example      Number of years you
helps you com-    own your shares        1 Year* 3 Years* 5 Years* 10 Years*
pare the costs       -------------------------------------------------------
of investing in   <S>                    <C>     <C>      <C>      <C>
the fund with     Class 1                   $573     $781   $1,006    $1,653
those of other       -------------------------------------------------------
mutual funds.     Class A                   $570     $823   $1,095    $1,872
Your actual          -------------------------------------------------------
costs may be      Class B (Assuming
higher or low-     redemption at end of
er.                period)                  $648     $912   $1,152    $2,078
                     -------------------------------------------------------
                  Class B (Assuming no
                   redemption)              $198     $612   $1,052    $2,078
                     -------------------------------------------------------
</TABLE>    
                  * The example assumes:
                  . You invest $10,000 for the period shown
                  . You reinvest all distributions and dividends without a
                    sales charge
                  . The fund's operating expenses remain the same
                  . Your investment has a 5% return each year
                     
                  . Conversion of Class B shares to Class A shares after 8
                    years     
 
 The Concert Investment Series Prospectus
 
                                       15
<PAGE>
 
   
More on the Funds' Investments     
   
Equity securities     
 
Equity securities include exchange traded and over-the-counter common and pre-
ferred stocks, debt securities convertible into equity securities, and warrants
and rights relating to equity securities.
   
Securities of foreign issuers     
all funds except Government Fund and Municipal Bond Fund
   
International Equity Fund invests at least 65% of its assets in equity securi-
ties of foreign issuers, including those in emerging market countries. Emerging
Growth Fund, Growth Fund and Growth and Income Fund may invest up to 20% of
their assets, and Mid Cap Fund up to 25% of its assets, in foreign securities,
including those of issuers in emerging market countries.     
 
Investments in securities of foreign entities and securities denominated in
foreign currencies involve special risks. These include possible political and
economic instability and the possible imposition of exchange controls or other
restrictions on investments. Since each fund may invest in securities denomi-
nated or quoted in currencies other than the U.S. dollar, changes in foreign
currency rates relative to the U.S. dollar will affect the U.S. dollar value of
the fund's assets. Emerging market investments offer the potential for signifi-
cant gains but also involve greater risks than investing in more developed
countries. Political or economic stability, lack of market liquidity and gov-
ernment actions such as currency controls or seizure of private business or
property may be more likely in emerging markets.
   
Derivative transactions     
All Funds
 
The funds may, but need not, use derivative contracts, such as futures and op-
tions on securities, securities indices or currencies; options on these
futures; forward currency contracts; and interest rate or currency swaps for
any of the following purposes:
   
 . To hedge against the economic impact of adverse changes in the market value
  of portfolio securities because of changes in stock market prices, currency
  exchange rates or interest rates     
 
 . As a substitute for buying or selling securities
 
 . To enhance a fund's return
   
A derivative contract will obligate or entitle a fund to deliver or receive an
asset or cash payment based on the change in value of one or more securities,
currencies or indices. Even a small investment in derivative contracts can have
a big impact on a fund's stock market, currency and interest rate exposure.
Therefore, using derivatives can disproportionately increase losses and reduce
opportunities for gains when stock prices, currency rates or interest rates are
changing. A fund may not fully benefit from or may lose money on derivatives if
changes in their value do not correspond accurately to changes in the value of
the fund's holdings. The other parties to certain derivative contracts present
the same types of default risk as issuers of fixed income securities. Deriva-
tives can also make a fund less liquid and harder to value, especially in de-
clining markets.     
   
Temporary defensive investments     
All Funds
 
Each of the funds may depart from its principal investment strategies in re-
sponse to adverse market, economic or political conditions by taking temporary
defensive positions in all types of money market and short-term debt securi-
ties. If the fund takes a temporary defensive position, it may be unable to
achieve its investment objective.
   
Special restrictions     
   
All Funds Except International Equity Fund and Mid Cap Fund     
   
Each fund, except International Equity Fund and Mid Cap Fund, will not purchase
any securities issued by a company primarily engaged in the manufacture of al-
cohol or tobacco.     
 
Goals/Policies
All Funds
 
Each fund's goal and investment policies generally may be changed by the trust-
ees without shareholder approval.
 
                                       16
 
 The Concert Investment Series Prospectus
<PAGE>
 
Management
   
Smith Barney Mutual Funds, which includes the Concert Investment Series, offers
a distinct family of fund choices tailored to help meet the varying needs of
large and small investors. The manager and Salomon Smith Barney are
subsidiaries of Citigroup Inc. Citigroup businesses provide a broad range of
financial services--asset management, banking and consumer finance, credit and
charge cards, insurance, investments, investment banking and trading--and use
diverse channels to make them available to consumer and corporate customers
around the world.     
   
The portfolio managers     
   
The portfolio managers are primarily responsible for the day-to-day operation
of the funds indicated below. The table also shows the business experience of
each portfolio manager.     
 
<TABLE>   
<CAPTION>
                      Portfolio
 Fund                 Manager(s)      Since  Past 5 Years' Business Experience
----------------------------------------------------------------------------------------
 <C>                  <C>             <C>    <S>
 Emerging Growth      Sandip Bhagat   1997   investment officer of the manager and pres-
                                             ident of
                                             Travelers Investment Management Company, an
                                             affiliate of the manager
----------------------------------------------------------------------------------------
 International Equity Jeffrey Russell 1997   investment officer of the manager and man-
                                             aging director of Salomon Smith Barney
                      James Conheady  1997   investment officer of the manager and man-
                                             aging director of Salomon Smith Barney
----------------------------------------------------------------------------------------
 Mid Cap and Growth   Larry Weissman  1997*  investment officer of the manager and man-
                                             aging director of Salomon Smith Barney
                                             since October, 1997; portfolio manager of
                                             Neuberger & Berman, LLC, 1995-97; portfolio
                                             manager of College Retirement Equities Fund
                                             prior thereto
----------------------------------------------------------------------------------------
 Growth and Income    R. Jay Gerken   1997   investment officer of the manager and man-
                                             aging director of Salomon Smith Barney
----------------------------------------------------------------------------------------
 Government           James E. Conroy 1997   investment officer of the manager and man-
                                             aging director of Salomon Smith Barney
----------------------------------------------------------------------------------------
 Municipal Bond       Joseph P. Deane 1997   investment officer of the manager and man-
                                             aging director of Salomon Smith Barney
----------------------------------------------------------------------------------------
</TABLE>    
   
*Mr. Weissman's responsibilities for the Mid Cap Fund will begin with the fil-
ing of this prospectus.     
   
Management fees     
   
Management fees paid during the fiscal year ended october 31, 1998     
(as % of average daily net assets)
 
<TABLE>   
<CAPTION>
   Emerging Growth    International   Mid Cap   Growth     Growth and   Government   Municipal
              Fund      Equity Fund      Fund     Fund    Income Fund         Fund        Fund
----------------------------------------------------------------------------------------------
   <S>               <C>           <C>     <C>    <C>         <C>        <C>
              0.65%          1.00%       N/A      0.65%      0.65%          0.60%        0.60%
----------------------------------------------------------------------------------------------
</TABLE>    
Distributor
   
CFBDS, Inc. serves as the funds' distributor. PFS Investments sells shares of
the funds to members of the public.     
   
Distribution plans     
 
The funds each have adopted Rule 12b-1 distribution plans for their Class A and
B shares. Under each plan, the fund pays distribution and service fees. These
fees are an ongoing expense and over time, may cost you more than other types
of sales charges.
   
Year 2000 issue     
   
Information technology experts are concerned about computer systems' ability to
process date-related information on and after January 1, 2000. This situation,
commonly known as the "Year 2000" issue, could have an adverse impact on the
funds. Individual companies (or governmental issuers) that issue securities
held by one or more of the funds may also be adversely affected by the cost of
addressing their year 2000 systems problems, which could be substantial.The
manager and distributor are addressing the Year 2000 issue for their systems.
Each fund has been informed by its other service providers that they are taking
similar measures. Although the funds do not expect the Year 2000 issue to ad-
versely affect them, the funds cannot guarantee that the efforts of each fund
(which are limited to requesting and receiving reports from its service provid-
ers) or the efforts of its service providers to correct the problem will be
successful.     
 
                                       17
 
 The Concert Investment Series Prospectus
<PAGE>
 
   
Choosing a Share Class to Buy     
   
Share classes     
--------------------------------------------------------------------------------
 
You can choose between Class A shares and Class B shares. If you, or your
spouse or minor children, already own Class 1 shares of a fund, you may also be
eligible to purchase additional Class 1 shares. The classes have different
sales charges and expenses, allowing you to choose the class that best meets
your needs. When choosing which class of shares to buy, you should consider:
 .How much you plan to invest    .The expenses paid by each class
 .How long you expect to own     .Whether you qualify for any reduction or
 the shares                      waiver of sales charges                   
                                
<TABLE>     
<CAPTION> 

Investment minimums 
------------------------------------------------------------------------------------------
 
Minimum initial                                  Initial Investment Additional Investments
and additional                                      Classes A and B            All Classes
investment                ----------------------------------------------------------------
amounts vary           <S>                       <C>                <C>                   
depending on the       General                               $1,000                    $50
class of shares           ----------------------------------------------------------------
you buy and the        Individual Retirement                                              
nature of your          Accounts, Self Employed                                           
investment              Retirement Plans,                                                 
account.                Uniform Gift to Minor                                             
                        Accounts                             $  250                    $50
                          ----------------------------------------------------------------
                       Qualified Retirement                                               
                        Plans                                $   25                    $25
                          ----------------------------------------------------------------
                       Systematic Investment                                              
                        Plans                                $   25                    $25
                          ---------------------------------------------------------------- 
</TABLE>      

                       Qualified Retirement Plans are qualified under Section   
                       403(b)(7) or Section 401(a) of the Internal Revenue Code,
                       including 401(k) plans
                  
<TABLE>     
<CAPTION> 

Comparing classes 
------------------------------------------------------------------------------------------

Your PFS Investments Registered Representative can help you decide which class
meets your goals. Your PFS Investments Registered Representative may receive
different compensation depending upon which class you choose.

<S>               <C>             <C>                <C> 
 Key Features      Class A           Class B            Class 1
                   .Initial sales    . No initial       . Only avail-
                   charge              sales charge       able to eli-
                                                          gible Class 1
                   . You may qual-   . Deferred           shareholders
                     ify for re-       sales charge                     
                     duction or        declines over    .Higher initial 
                     waiver of         time             sales charge    
                     initial sales                                     
                     charge over     . Convert to       .Lowest annual
                     time              Class A          expenses       
                                       shares after
                                       eight years 

                   . Lower annual    . Highest an-
                     expenses than     nual expenses
                     Class B
                     shares 

 Initial Sales     Up to 5.00%,      None               Up to 8.50%,  
  Charge           reduced for                          reduced for   
                   large pur-                           large purchases
                   chases. No                                          
                   charge for pur-                                     
                   chases of      
                   $500,000 or    
                   more, or for   
                   certain invest-
                   ors 

 Deferred Sales    None, except      Up to 5%           None 
  Charge           for purchases     charged when  
                   of $500,000 or    you redeem              
                   more -- 1% if     shares. The    
                   you redeem        charge is re-  
                   within 1 year     duced over time
                   of purchase       and there is no
                                     deferred sales 
                                     charge after 6 
                                     years          
                                                    
                                                    
 Annual 12b-1 Fees 0.25% of aver-    1% of average      None
                   age daily net     daily net as-
                   assets            sets

 Exchangeable      Class A shares    Class B shares     Class 1 shares
 Into*             of Concert and    of Concert and     of Concert
                   certain Smith     certain Smith      funds that of-
                   Barney mutual     Barney mutual      fer Class 1
                   funds             funds              shares and
                                                        Class A shares
                                                        of other Con-
                                                        cert and cer-
                                                        tain Smith
                                                        Barney mutual
                                                        funds
</TABLE>      

*Ask your PFS Investments Registered Representative about funds available for
exchange.
 
                                       18
 
 The Concert Investment Series Prospectus
<PAGE>
 
Class A Sales Charge
   
Class A sales charge     
 
You buy Class A shares at the offering price, which is the net asset value plus
a sales charge. You pay a lower sales charge as the size of your investment in-
creases to certain levels called breakpoints. You do not pay a sales charge on
the fund's distributions or dividends that you reinvest in additional Class A
shares.
   
To learn more about the accumulation and combination privileges, letters of in-
tent, waivers for certain investors and other options to reduce your sales
charge, ask your PFS Investments Registered Representative or consult the
Statement of Additional Information (SAI).     
 
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                   For Emerging Growth Fund,
                              International Equity Fund, Mid Cap
                               Fund, Growth Fund and Growth and                             For Municipal Bond Fund and
                                          Income Fund                                             Government Fund
---------------------------------------------------------------------------------------------------------------------------
                                                              Sales Charge as             Sales Charge as  Sales Charge as
                              Sales Charge as %               % of Net Amount               % of Offering  % of Net Amount
Amount of Investment          of Offering Price                      Invested                       Price         Invested
---------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                           <C>                           <C>              <C>
Less than $25,000                                     5.00%                         5.26%            4.50%            4.71%
---------------------------------------------------------------------------------------------------------------------------
$25,000 but less than
 $50,000                                              4.00                          4.17             4.00             4.17
---------------------------------------------------------------------------------------------------------------------------
$50,000 but less than
 $100,000                                             3.50                          3.63             3.50             3.63
---------------------------------------------------------------------------------------------------------------------------
$100,000 but less than
 $250,000                                             3.00                          3.09             2.50             2.56
---------------------------------------------------------------------------------------------------------------------------
$250,000 but less than
 $500,000                                             2.00                          2.04             1.50             1.52
---------------------------------------------------------------------------------------------------------------------------
$500,000 or more*                                      -0-                           -0-              -0-              -0-
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*You do not pay an initial sales charge when you buy $500,000 or more of Class
A shares. However, if you redeem these Class A shares within one year of pur-
chase, you will pay a deferred sales charge of 1%.
   
Qualifying for reduced Class A sales charges     
 
There are several ways you can combine multiple purchases of Class A shares of
Concert funds and certain other Smith Barney funds to take advantage of the
breakpoints in the sales charge schedule.
   
 . Accumulation privilege--lets you add the current value of Class A shares of
  Concert funds and certain other Smith Barney funds already owned by you or
  members of your immediate family (and for which you paid a sales charge) to
  the amount of your next purchase of Class A shares for purposes of calculat-
  ing the sales charge. Certain trustees and fiduciaries may be entitled to
  combine accounts in determining their sales charge.     
 
 . Combination privilege--lets you combine current value of Class A shares owned
  by your immediate family (your spouse and minor children) or accounts with
  the same social security number with the amount of your next purchase of
  Class A shares for purposes of calculating the initial sales charge. Certain
  trustees and fiduciaries may be entitled to combine accounts in determining
  their sales charge.
   
 . Letter of intent--lets you purchase Class A shares of one or more Concert
  funds and certain other Smith Barney funds over a 13-month period and pay the
  same sales charge, if any, as if all shares had been purchased at once. You
  may include purchases on which you paid a sales charge made within 90 days
  before you sign the letter.     
   
Waivers for certain Class A investors     
 
Class A initial sales charges are waived for certain types of investors, in-
cluding:
 
 . Employees of members of the NASD
 
 . 403(b) or 401(k) retirement plans, if certain conditions are met
 
 . Investors who purchased through a PFS Investments Registered Representative
  with proceeds from a prior mutual fund redemption, if certain conditions are
  met
 
 . Investors who redeemed Class A shares of Concert funds or certain other Smith
  Barney funds in the past 60 days, if your PFS Investments Registered Repre-
  sentative is notified
 
 . Participants in the PFS Primerica Corporation Savings and Retirement Plan
 
 
                                       19
 
 The Concert Investment Series Prospectus
<PAGE>
 
Class B Sales Charge
   
Class B deferred sales charge     
 
You buy Class B shares at net asset value without paying an initial sales
charge. However, if you redeem your Class B shares within six years of pur-
chase, you will pay a deferred sales charge.
 
The deferred sales charge decreases as the number of years since your purchase
increases.
   
If you want to learn more about additional deferred sales charges and waivers
of deferred sales charges, contact your PFS Investments Registered Representa-
tive or consult the SAI.     
 
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
                                        Year After Purchase
---------------------------------------------------------------------------
Deferred Sales Charge for:     1st   2nd   3rd   4th   5th  6th through 8th
---------------------------------------------------------------------------
<S>                           <C>   <C>   <C>   <C>   <C>   <C>
Government Fund and
 Municipal Fund               4.50% 4.00% 3.00% 2.00% 1.00%       -0-
---------------------------------------------------------------------------
All other funds               5.00% 4.00% 3.00% 2.00% 1.00%       -0-
---------------------------------------------------------------------------
</TABLE>    
   
Calculation of deferred sales charge     
 
The deferred sales charge is based on the net asset value at the time of pur-
chase or redemption, whichever is less, and therefore you do not pay a sales
charge on amounts representing appreciation. In addition, you do not pay a de-
ferred sales charge on shares exchanged for shares of another Concert or eligi-
ble Smith Barney mutual fund, shares representing reinvested distributions and
dividends or shares no longer subject to the deferred sales charge.
 
Shares are redeemed in this order:
 
 . Shares that represent appreciation
 
 . Shares representing reinvested distributions and dividends
 
 . Shares that are not subject to the deferred sales charge
 
 . Class B shares held longest
 
Deferred sales charges are not imposed at the time you exchange shares for
shares of another fund.
   
Deferred sales charge waivers     
 
The deferred sales charge for each share class will generally be waived:
 
 . To make payments through certain systematic withdrawal plans
 
 . To make certain distributions from a retirement plan
 
 . For involuntary redemptions of small account balances
 
 . For 12 months following the death or disability of a shareholder
   
Class B conversion     
 
After 8 years, Class B shares automatically convert into Class A shares. This
helps you because Class A shares have lower annual expenses. Your Class B
shares will convert to Class A shares as follows:
 
--------------------------------------------------------------------------------
<TABLE>   
<CAPTION>
Shares
Issued at
Initial
Purchase
-------------------------
<S>           <C> <C> <C>
 .Eight years after the
date of purchase
<CAPTION>
Shares
Issued on
Reinvestment
of
Distribution
and
Dividends
-------------------------
<S>           <C> <C> <C>
 .In same proportion that
 the number of Class B
 shares converting is to
 total Class B shares
 you own
<CAPTION>
Shares
Issued upon
Exchange
from Another
Fund
-------------------------
<S>           <C> <C> <C>
 .On the date the shares
 originally acquired
 would have converted
 into Class A shares
-------------------------
</TABLE>    
 
                                       20
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
Class 1 Sales Charge
   
Class 1 sales charge     
 
Class 1 shares are offered to eligible Class 1 shareholders at the next deter-
mined net asset value plus a sales charge. You do not pay a sales charge on a
fund's distributions or dividends that you reinvest in additional Class 1
shares.
 
You pay a lower sales charge as the size of your investment increases to cer-
tain levels called breakpoints. As described in these tables, the Class 1
breakpoints vary by fund.
          
Emerging Growth, International Equity, Mid Cap, Growth and Growth and Income
Funds     
<TABLE>   
-------------------------------------------------------------------------------
<CAPTION>
                                       sales charge as          sales charge as
Amount of investment               % of offering price % of net amount invested
-------------------------------------------------------------------------------
<S>                                <C>                 <C>
Less than $10,000                                8.50%                    9.29%
-------------------------------------------------------------------------------
$10,000 but less than
 $25,000                                         7.75%                    8.40%
-------------------------------------------------------------------------------
$25,000 but less than
 $50,000                                         6.00%                    6.38%
-------------------------------------------------------------------------------
$50,000 but less than
 $100,000                                        4.50%                    4.71%
-------------------------------------------------------------------------------
$100,000 but less than
 $250,000                                        3.50%                    3.63%
-------------------------------------------------------------------------------
$250,000 but less than
 $400,000                                        2.50%                    2.56%
-------------------------------------------------------------------------------
$400,000 but less than
 $600,000                                        2.00%                    2.04%
-------------------------------------------------------------------------------
$600,000 but less than $5,000,000                1.00%                    1.01%
-------------------------------------------------------------------------------
$5,000,000 or more                               0.25%                    0.25%
</TABLE>    
--------------------------------------------------------------------------------
   
Government Fund     
<TABLE>   
---------------------------------------------------------------------------------
<CAPTION>
                                         sales charge as          sales charge as
Amount of investment                 % of offering price % of net amount invested
---------------------------------------------------------------------------------
<S>                                  <C>                 <C>
Less than $25,000                                  6.75%                    7.24%
---------------------------------------------------------------------------------
$25,000 but less than
 $50,000                                           5.75%                    6.10%
---------------------------------------------------------------------------------
$50,000 but less than
 $100,000                                          4.25%                    4.44%
---------------------------------------------------------------------------------
$100,000 but less than
 $250,000                                          3.50%                    3.63%
---------------------------------------------------------------------------------
$250,000 but less than
 $500,000                                          2.50%                    2.56%
---------------------------------------------------------------------------------
$500,000 but less than $1,000,000                  2.00%                    2.04%
---------------------------------------------------------------------------------
$1,000,000 but less than $2,500,000                1.00%                    1.01%
---------------------------------------------------------------------------------
$2,500,000 but less than $5,000,000                0.50%                    0.50%
---------------------------------------------------------------------------------
$5,000,000 or more                                 0.25%                    0.25%
</TABLE>    
--------------------------------------------------------------------------------
   
Municipal Bond Fund     
<TABLE>   
---------------------------------------------------------------------------------
<CAPTION>
                                         sales charge as          sales charge as
Amount of investment                 % of offering price % of net amount invested
---------------------------------------------------------------------------------
<S>                                  <C>                 <C>
Less than $100,000                                 4.75%                    4.99%
---------------------------------------------------------------------------------
$100,000 but less than
 $250,000                                          3.75%                    3.90%
---------------------------------------------------------------------------------
$250,000 but less than
 $500,000                                          3.00%                    3.09%
---------------------------------------------------------------------------------
$500,000 but less than $1,000,000                  2.00%                    2.04%
---------------------------------------------------------------------------------
$1,000,000 but less than $2,500,000                1.00%                    1.01%
---------------------------------------------------------------------------------
$2,500,000 but less than $5,000,000                0.50%                    0.50%
---------------------------------------------------------------------------------
$5,000,000 or more                                 0.25%                    0.25%
---------------------------------------------------------------------------------
</TABLE>    
 
                                       21
 
 The Concert Investment Series Prospectus
<PAGE>
 
Buying Shares and Exchanging Shares
   
Buying shares by mail     
 
 . Initial purchases of shares of each fund must be made through a PFS Invest-
  ments Registered Representative by completing the appropriate application.
  The completed application should be forwarded to PFS Shareholder Services.
   
 . Subsequent investments may be sent by mail directly to PFS Shareholder Serv-
  ices, or, if you elect telephone purchases on your account application you
  may call PFS Shareholder Services and request a purchase through a transfer
  from your bank account. Telephone purchases can be made between 9:00 a.m. and
  6:00 p.m. eastern time on any day the New York Stock Exchange is open. Pur-
  chase orders received after the close of regular trading on the Exchange are
  priced at the net asset value next determined. The minimum telephone invest-
  ment is $250 and the maximum is $10,000. You will be charged a fee if you
  have insufficient funds to complete the investment.     
 
 . The address and telephone number of PFS Shareholder Services is: 3100 Breck-
  inridge Blvd., Bldg. 200 Duluth, Georgia 30099-0062 (800) 544-5445
 
 . You may also reach PFS Shareholder Services by calling (800) 544-7278 for
  Spanish speaking representatives or (800) 824-1721 for the TDD Line for the
  Hearing Impaired.
 
 . Checks drawn on foreign banks must be payable in U.S. dollars and have the
  routing number of the U.S. bank encoded on the check.
          
Buying shares by wire     
 
Initial purchases of shares for $10,000 may be made by wire order from your
bank account. Contact PFS Shareholder Services for details. In addition, once
an account is open, you may make additional wire orders through your PFS In-
vestments Representative.
   
Systematic investment plan     
 
You may authorize PFS to automatically transfer funds on a monthly basis from a
regular bank account or other financial institution to buy shares of a fund.
 
 . Amounts transferred should be at least $25 monthly.
 
 . If you do not have sufficient funds in your bank account on a transfer date,
  PFS Shareholder Services may charge you a fee.
 
For more information, contact your PFS Investments Registered Representative or
consult the SAI.
   
Exchange privilege     
 
You should contact your PFS Investments Registered Representative to exchange
into other eligible Concert and certain Smith Barney mutual funds. Be sure to
read the prospectus of the Concert or Smith Barney fund you are exchanging in-
to. An exchange is a taxable transaction.
   
 . You may exchange shares only for shares of the same class of another eligible
  Concert or Smith Barney mutual fund. Some funds may not be offered in your
  state of residence. Not all Smith Barney funds offer all classes.     
 
 . You must meet the minimum investment amount for each fund.
 
 . If you hold share certificates, the transfer agent must receive the certifi-
  cates endorsed for transfer or with signed stock powers before the exchange
  is effective.
 
 . Your fund may suspend or terminate your exchange privilege if you engage in
  an excessive pattern of exchanges.
 
 . Your shares will not be subject to an initial sales charge at the time of the
  exchange. Your deferred sales charge (if any) will continue to be measured
  from the date of your original purchase. If the fund that you exchange into
  has a higher deferred sales charge, you will be subject to that charge. If
  you exchange again to a fund with a lower charge, the sales charge will not
  be reduced.
 
 . You may exchange shares by telephone if you elect telephone exchanges on your
  account application. Telephone exchanges are subject to the same limitations
  as telephone redemptions.
   
To learn more about the exchange privileges and the Concert and Smith Barney
mutual funds that you may be eligible to exchange into, contact your PFS In-
vestments Registered Representative or consult the SAI.     
 
                                       22
 
 The Concert Investment Series Prospectus
<PAGE>
 
Redeeming Shares
   
Redemptions by mail     
 
Generally, a properly completed Redemption Form with any required signature
guarantee is all that is required for a redemption. In some cases, however,
other documents may be necessary.
       
You may redeem some or all of your shares by sending a Redemption Form or other
written request in proper form to PFS Shareholder Services, 3100 Breckinridge
Blvd., Bldg. 200, Duluth, Georgia 30099-0062. You may also reach PFS Share-
holder Services by calling (800) 544-5445 or (800) 544-7278 for Spanish speak-
ing representatives or (800) 824-1721 for the TDD Line for the Hearing Im-
paired. The written request for redemption must be in good order. This means
that you have provided the following information. Your request will not be
processed without this information.
 
 . Name of the fund
 
 . Account number
 
 . Dollar amount or number of shares to redeem
 
 . Signature of each owner exactly as account is registered
 
 . Other documentation required by PFS Shareholder Services
 
To be in good order, your request must include a signature guarantee if:
 
 . The proceeds of the redemption exceed $50,000
 
 . The proceeds are not paid to the record owner(s) at the record address
 
 . The shareholder(s) has had an address change in the past 45 days
 
 . The shareholder(s) is a corporation, sole proprietor, partnership, trust or
  fiduciary
 
You can obtain a signature guarantee from most banks, dealers, brokers, credit
unions and federal savings and loans, but not from a notary public.
   
In all cases, your redemption price is the net asset value next determined af-
ter your request is received in good order. Redemption proceeds normally will
be sent within three days. However, if you recently purchased your shares by
check, your redemption proceeds will not be sent to you until your original
check clears, which may take up to 15 days. Your redemption proceeds can be
sent by check to your address of record or by wire transfer to a bank account
designated on your application. You will be charged a $25 service fee for wire
transfers and a $2.50 service fee for transfers made directly to your bank by
the Automated Clearinghouse (ACH). Any request that your redemption proceeds be
sent to a destination other than your bank account or address of record must be
in writing and must include signature guarantees.     
   
Redemptions by fax     
   
You may redeem shares by fax as long as a signature guarantee or other documen-
tary evidence is not required. Redemption requests should be properly signed by
all owners of the account and faxed to PFS Shareholder Services at (800) 554-
2374. If fax redemptions are not available for any reason, you may use the
Fund's regular redemption procedure described above.     
   
Redemptions by telephone     
   
You may redeem shares by telephone if you elect the telephone redemption option
on your account application. This is available only for redemptions of $50,000
or less, and the proceeds must be mailed to your address of record. In addi-
tion, you must be able to provide proper identification information. You may
not redeem by telephone if your address has changed within the past 45 days or
if your shares are in certificate form. Telephone redemption requests may be
made by calling PFS Shareholder Services at (800) 544-5445 between 9:00 a.m.
and 6:00 p.m. eastern time on any day the New York Stock Exchange is open. Re-
quests received after the close of regular trading on the Exchange are priced
at the net asset value next computed. If telephone redemptions are not avail-
able for any reason, you may use the Fund's regular redemption procedure de-
scribed above.     
   
Automatic cash withdrawal plan     
 
You can arrange for the automatic redemption of a portion of your shares on a
monthly or quarterly basis. To qualify you must own shares of the fund with a
value of at least $10,000 ($5,000 for retirement accounts) and each automatic
redemption must be at least $50. If your shares are subject to a deferred sales
charge, the sales charge will be waived if your automatic payments are equal to
or less the 1% per month of the value of your shares subject to a deferred
sales charge. The following conditions apply:
 
 . Shares may not be represented by certificates
 
 . All dividends and distributions must be reinvested
 
 . You can establish a withdrawal plan for a retirement account only if you are
  eligible to receive distributions from the account
 
                                       23
 
 The Concert Investment Series Prospectus
<PAGE>
 
   
Other Things to Know about Share Transactions     
   
Small account balances     
 
If your account falls below $500 due to redemption of fund shares, the fund may
ask you to bring your account up to the minimum requirement. If your account is
still below $500 after 60 days, the fund may close your account and send you
the redemption proceeds.
   
Share certificates     
 
Upon written request, a share certificate will be issued if the request has
been signed by all registered owners.
   
Share price     
   
You may buy, exchange or redeem fund shares at the net asset value, adjusted
for any applicable sales charge, next determined after receipt of your request
in good order. Each fund's net asset value is the value of its assets minus its
liabilities. Net asset value is calculated separately for each class of shares.
Each fund calculates its net asset value every day the New York Stock Exchange
is open. The Exchange is closed on certain holidays listed in the SAI. This
calculation is done when regular trading closes on the Exchange (normally 4:00
p.m., Eastern time).     
 
The funds generally value their securities based on market prices or quota-
tions. The funds' currency conversions are done when the London stock exchange
closes, which is 12 noon Eastern time. When market prices are not available, or
when the manager believes they are unreliable or that the value of a security
has been materially affected by events occurring after a foreign exchange
closes, the funds may price those securities at fair value. Fair value is de-
termined in accordance with procedures approved by the funds' board. A fund
that uses fair value to price securities may value those securities higher or
lower than another fund that uses market quotations to price the same securi-
ties.
 
International markets may be open on days when U.S. markets are closed and the
value of foreign securities owned by a fund could change on days when you can-
not buy or redeem shares.
 
In order to buy, redeem or exchange shares at that day's price, you must place
your order with PFS before the New York Stock Exchange closes. If the New York
Stock Exchange closes early, you must place your order prior to the actual
closing time. Otherwise, you will receive the next business day's price.
 
Salomon Smith Barney or members of the funds' selling group must transmit all
orders to buy, exchange or redeem shares to the funds' agent before the agent's
close of business.
   
Important addresses     
 
Manager:      Mutual Management Corp.
              388 Greenwich Street, MF2
              New York, New York 10013
 
Shareholder Services:
              PFS Shareholder Services
              3100 Breckinridge Blvd., Bldg. 200
              Duluth, Georgia 30099-0062
              (800) 544-5445
 
                                       24
 
 The Concert Investment Series Prospectus
<PAGE>
 
   
Dividends, Distributions and Taxes     
   
Dividends and distributions     
 
Annual distributions of income and capital gain normally take place at the end
of the year in which the income or gain is realized or the beginning of the
next year.
 
The funds normally pay dividends and distribute capital gains, if any, as fol-
lows:
 
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                 Income               Capital         Distributions
                               Dividend                  Gain                Mostly
Fund                      Distributions         Distributions                  From
-----------------------------------------------------------------------------------
<S>                       <C>                   <C>                   <C>
Emerging Growth                Annually              Annually                  Gain
-----------------------------------------------------------------------------------
International Equity           Annually              Annually                  Gain
-----------------------------------------------------------------------------------
Mid Cap                        Annually              Annually                  Gain
-----------------------------------------------------------------------------------
Growth                         Annually              Annually                  Gain
-----------------------------------------------------------------------------------
Growth and Income             Quarterly              Annually                  Both
-----------------------------------------------------------------------------------
Government                      Monthly              Annually                Income
-----------------------------------------------------------------------------------
Municipal Bond                  Monthly              Annually                Income
-----------------------------------------------------------------------------------
</TABLE>
 
The funds may pay additional distributions and dividends at other times if nec-
essary for a fund to avoid a federal tax. Capital gains distributions and divi-
dends are reinvested in additional fund shares of the same class that you hold.
You do not pay a sales charge on reinvested distributions or dividends. Alter-
natively, you can instruct your PFS Investments Registered Representative or
PFS to have your distributions and/or dividends paid in cash. You can change
your choice at any time to be effective as of the next distribution or divi-
dend, except that any change given to the transfer agent less than five days
before the payment date will not be effective until the next distribution or
dividend is made.
 
Taxes
 
In general, redeeming shares, exchanging shares and receiving distributions
(whether in cash or additional shares) are all taxable events.
 
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Transaction        Federal Income Tax Status
-------------------------------------------------
<S>                <C>
Redemption or      Usually capital gain or loss;
 exchange          long-term only if shares
 of shares         owned more than one year
-------------------------------------------------
Long-term capital  Long-term capital gain
 gain
 distributions
-------------------------------------------------
Short-term         Ordinary income
 capital gain
 distributions
-------------------------------------------------
Dividends          Ordinary income (for all funds
                   except Municipal Bond
                   Fund)*
-------------------------------------------------
</TABLE>
* Municipal Bond Fund intends to distribute the interest it earns on tax-exempt
municipal bonds as "exempt-interest" dividends, which are excludable from gross
income for federal income tax purposes but may be subject to state and local
income tax. Its distributions from other sources, if any, would be taxable as
described above.
 
 
Long-term capital gain distributions are taxable to you as long-term capital
gain regardless of how long you have owned your shares. You may want to avoid
buying shares when a fund is about to declare a long-term capital gain distri-
bution or a taxable dividend, because it will be taxable to you even though it
may actually be a return of a portion of your investment.
 
After the end of each year, the funds will provide you with information about
the distributions and dividends that you received and any redemptions of shares
during the previous year. If you do not provide a fund with your correct tax-
payer identification number and any required certifications, you may be subject
to back-up withholding of 31% of your distributions, dividends (other than ex-
empt-interest dividends), and redemption proceeds. Because each shareholder's
circumstances are different and special tax rules may apply, you should consult
with your tax adviser about your investment in a fund and your receipt of divi-
dends, distributions or redemption proceeds.
 
                                       25
 
 The Concert Investment Series Prospectus
<PAGE>
 
Financial Highlights

<TABLE>     
<CAPTION> 
The financial           For a Share of Each Class of Beneficial
highlights ta-          Interest Outstanding Throughout Each
bles are in-            Year: 
tended to help          
you understand          Emerging Growth Fund                                                                                   
the performance            -----------------------------------------------------------------------------------------------------
of each class           Class 1 Shares                                                      August 8, 1996                     
for the past                                                                                 (Commencement                     
five years (or                                          Year Ended        Year Ended   of Distribution) to                     
since inception                                   October 31, 1998* October 31, 1997      October 31, 1996                     
if less than               -----------------------------------------------------------------------------------------------------
five years).            <S>                       <C>               <C>              <C>                                       
Certain infor-          Net Asset Value, Begin-                                                                                
mation reflects          ning of Period                    $ 22.15            $18.59              $17.89                       
financial re-              -----------------------------------------------------------------------------------------------------
sults for a             Income (loss) from oper-                                                                               
single share.            ations                                                                                                
Total returns            Net investment loss                (0.12)            (0.08)              (0.02)                       
represent the              -----------------------------------------------------------------------------------------------------
rate that a              Net realized and                                                                                      
shareholder               unrealized gain                   (1.54)              3.64                0.72                       
would have                 -----------------------------------------------------------------------------------------------------
earned (or              Total from investment                                                                                  
lost) on a fund          operations                         (1.66)              3.56                0.70                       
share assuming             -----------------------------------------------------------------------------------------------------
reinvestment of         Less Distributions From:                                                                               
all dividends            Net investment income                 --                --                  --                        
and distribu-            Net realized gain                   (0.21)              --                  --                        
tions. The in-             -----------------------------------------------------------------------------------------------------
formation in            Total Distributions                  (0.21)              --                  --                        
the following              --------------------------------------------------------------------------------------------------- 
tables was au-          Net Asset Value, End of                                                                                
dited by Ernst           Period                             $20.28            $22.15              $18.59                       
& Young LLP,               -----------------------------------------------------------------------------------------------------
independent au-         Total Return(1)                    (7.52)%            19.15%            3.91%(2)                       
ditors, whose              -----------------------------------------------------------------------------------------------------
report, along           Net Assets, End of Pe-                                                                                 
with the fund's          riod (millions)                        $7                $6                  $1                       
financial                  -----------------------------------------------------------------------------------------------------
statements are          Ratio of expenses to                                                                                   
included in the          average net assets                  1.26%             1.39%              1.74%+                       
annual report              -----------------------------------------------------------------------------------------------------
(available upon         Ratio of net investment                                                                                
request). No             loss to average net                                                                                   
information is           assets                             (0.60)            (0.63)             (1.09)+                       
presented for              -----------------------------------------------------------------------------------------------------
Mid Cap Fund            Portfolio Turnover                     80%              100%                 80%                       
because it had             -----------------------------------------------------------------------------------------------------
not commenced                                                                                                                  
operations dur-            (1) Total returns do not reflect any applicable sales loads                                         
ing the periods                or deferred sales charges.                                                                      
covered by                 (2) Not annualized.
these tables.               +  Annualized.                                           
                            *  Effective December 31, 1997 SSBC Fund Management Inc., 
                               formerly known as Mutual Management Corp., replaced Van                                         
                               Kampen American Capital Asset Management as the Fund                                            
                               Manager. 
</TABLE>      
<TABLE>   
<CAPTION>
               Class A Shares                                                      February 21, 1995
                                          Year Ended   Year Ended  Year Ended       (Commencement of
                                         October 31,  October 31, October 31, Investment Operations)
                                                1998*        1997        1996 to October 31, 1995(1)
                  ----------------------------------------------------------------------------------
               <S>                       <C>          <C>         <C>         <C>
               Net Asset Value,
                Beginning of Period           $22.08       $18.57      $15.12                 $11.81
                  ----------------------------------------------------------------------------------
               Income (loss) from
                operations
                Net investment loss           (0.17)       (0.15)      (0.18)                 (0.24)
                Net realized and
                 unrealized gain              (1.55)         3.66        3.63                   3.55
                  ----------------------------------------------------------------------------------
               Total from investment
                operations                    (1.72)         3.51        3.45                   3.31
                  ----------------------------------------------------------------------------------
               Less Distributions From:
                Net investment income            --           --          --                     --
                Net realized gain              (0.21)         --          --                     --
                  ----------------------------------------------------------------------------------
               Total Distributions             (0.21)         --          --                     --
                  ----------------------------------------------------------------------------------
               Net Asset Value, End of
                Period                        $20.15       $22.08      $18.57                 $15.12
                  ----------------------------------------------------------------------------------
               Total Return(2)               (7.81)%       18.90%      22.82%              28.11%(3)
                  ----------------------------------------------------------------------------------
               Net Assets, End of
                Period (millions)               $108         $101         $52                    $16
                  ----------------------------------------------------------------------------------
               Ratio of expenses to
                average net assets*            1.43%        1.69%       2.21%                 2.75%+
                  ----------------------------------------------------------------------------------
               Ratio of net investment
                loss to average net
                assets*                       (0.80)       (0.92)      (1.52)               (1.65)%+
                  ----------------------------------------------------------------------------------
               Portfolio Turnover                80%         100%         80%                 83%(4)
                  ----------------------------------------------------------------------------------
               * If certain expenses
                 had not been waived or
                 reimbursed by the
                 Fund's former manager,
                 total return would
                 have been lower and
                 the ratios would have
                 been as follows:
                  ----------------------------------------------------------------------------------
                Ratio of expenses to
                 average net assets              N/A          N/A         N/A                 3.37%+
                  ----------------------------------------------------------------------------------
                Ratio of net investment
                 loss to average net
                 assets                          N/A          N/A         N/A               (2.27%)+
                  ----------------------------------------------------------------------------------
</TABLE>    
(1) Per share amounts calculated using the monthly average share method.
(2) Total returns do not reflect any applicable sales loads, or deferred sales
    charges.
(3) Total return from March 17, 1995 (date the Fund's investment strategy was
    implemented) through October 31, 1995 without annualization.
(4) Not annualized.
   
 +  Annualized.     
N/A=Not Applicable
   
 *  Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
    Mutual Management Corp., replaced Van Kampen American Capital Asset Manage-
    ment as the Fund Manager.     
 
                                        The Concert Investment Series Prospectus

                                       26
<PAGE>
 
                                      
                                   Financial Highlights, continued     
Emerging Growth Fund
--------------------------------------------------------------------------------
 
<TABLE>   
<CAPTION>
Class B Shares                                                                                           February 21, 1995
                                                                                                             (Commencement
                                                                                                             of Investment
                                                         Year Ended        Year Ended       Year Ended      Operations) to
                                                October 31, 1998(5)  October 31, 1997 October 31, 1996 October 31, 1995(1)
--------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                  <C>              <C>              <C>
Net Asset Value, Beginning of Period                         $21.63            $18.34           $15.04              $11.81
--------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
 Net investment loss                                         (0.30)            (0.27)           (0.27)              (0.35)
 Net realized and unrealized gain                            (1.52)              3.56             3.57                3.58
--------------------------------------------------------------------------------------------------------------------------
Total from investment operations                             (1.82)              3.29             3.30                3.23
--------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
 Net investment income                                          --                --               --                  --
 Net realized gain                                            (0.21)              --               --                  --
--------------------------------------------------------------------------------------------------------------------------
Total Distributions                                           (0.21)              --               --                  --
--------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period                               $19.60            $21.63           $18.34              $15.04
--------------------------------------------------------------------------------------------------------------------------
Total Return(2)                                             (8.45)%            17.94%           21.94%           27.43%(3)
--------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions)                            $91               $80              $39                 $11
--------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets*                      2.18%             2.44%            2.96%              3.49%+
--------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss to average net
 assets*                                                     (1.55)            (1.67)           (2.27)             (2.45)+
--------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover                                              80%              100%              80%              83%(4)
--------------------------------------------------------------------------------------------------------------------------
* If certain expenses had not been waived or
  reimbursed by the Fund's former manager,
  total return would have been lower and the
  ratios would have been as follows:
--------------------------------------------------------------------------------------------------------------------------
 Ratio of expenses to average net assets                        N/A               N/A              N/A               4.11%
--------------------------------------------------------------------------------------------------------------------------
 Ratio of net investment loss to
  average net assets                                            N/A               N/A              N/A             (3.07%)
--------------------------------------------------------------------------------------------------------------------------
</TABLE>    
 
(1) Per share amounts calculated using the monthly average share method.
(2) Total returns do not reflect any applicable sales load or deferred sales
    charges.
(3) Total return from March 17, 1995 (date the Fund's Investment strategy was
    implemented) through October 31, 1995 without annualization.
(4) Not annualized.
   
(5) Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
    Mutual Management Corp., replaced Van Kampen American Capital Asset
    Management as the Fund Manager.     
   
 +      
    
 Annualized.     
N/A=Not Applicable
 
                                       27
    
 The Concert Investment Series Prospectus     
<PAGE>
 
 
 
 
International Equity Fund
--------------------------------------------------------------------------------
 
<TABLE>   
<CAPTION>
Class 1 Shares                                                  August 8, 1996
                                                                 (Commencement
                                       Year Ended  Year Ended of Distribution)
                                      October 31, October 31,   to October 31,
                                          1998(4)        1997          1996(1)
------------------------------------------------------------------------------
<S>                                   <C>         <C>         <C>
Net Asset Value, Beginning of Period       $18.16      $16.52         $  16.00
------------------------------------------------------------------------------
Income (loss) from operations
 Net investment loss                       (0.21)      (0.17)           (0.03)
 Net realized and unrealized gain            1.11        1.81              .55
------------------------------------------------------------------------------
Total from investment operations             0.90        1.64              .52
------------------------------------------------------------------------------
Net Asset Value, End of Period             $19.06      $18.16           $16.52
------------------------------------------------------------------------------
Total Return(2)                             4.96%       9.99%         3.25%(3)
------------------------------------------------------------------------------
Net Assets, End of Period (millions)           $2          $2             $0.2
------------------------------------------------------------------------------
Ratio of expenses to average net
 assets*                                    1.79%       2.26%           2.50%+
------------------------------------------------------------------------------
Ratio of net investment loss to
 average net assets*                       (0.99)      (1.24)         (1.31)%+
------------------------------------------------------------------------------
Portfolio Turnover                            63%         57%           78%(3)
------------------------------------------------------------------------------
* If certain expenses had not been
  waived or reimbursed by the Fund's
  former manager, total return would
  have been lower and the ratios
  would have been as follows:
------------------------------------------------------------------------------
 Ratio of expenses to average net
  assets                                      N/A         N/A           3.87%+
------------------------------------------------------------------------------
 Ratio of net investment loss to
  average net assets                          N/A         N/A          (2.62)+
------------------------------------------------------------------------------
</TABLE>    
(1) Per share amounts calculated using the monthly average share method.
(2) Total returns do not reflect any applicable sales load or deferred sales
    charges.
(3) Not Annualized.
   
(4) Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
    Mutual Management Corp., replaced Van Kampen American Capital Asset
    Management as the Fund Manager.     
N/A=Not Applicable
   
 +      
    
 Annualized.     
 
<TABLE>   
<CAPTION>
Class A Shares                                                  February 21, 1995
                                                                    (Commencement
                           Year Ended  Year Ended  Year Ended       of Investment
                          October 31, October 31, October 31,      Operations) to
                              1998(5)        1997        1996 October 31, 1995(1)
---------------------------------------------------------------------------------
<S>                       <C>         <C>         <C>         <C>
Net Asset Value,
 Beginning of Period           $18.14      $16.54      $13.86              $11.81
---------------------------------------------------------------------------------
Income (loss) from
 operations
 Net investment loss           (0.27)      (0.26)      (0.19)              (0.14)
 Net realized and
  unrealized gain                1.07        1.86        2.87                2.19
---------------------------------------------------------------------------------
Total from investment
 operations                      0.80        1.60        2.68                2.05
---------------------------------------------------------------------------------
Net Asset Value, End of
 Period                        $18.94      $18.14      $16.54              $13.86
---------------------------------------------------------------------------------
Total Return(2)                 4.41%       9.74%      19.34%           16.28%(4)
---------------------------------------------------------------------------------
Net Assets, End of
 Period (millions)                $20         $17         $10                  $7
---------------------------------------------------------------------------------
Ratio of expenses to
 average net assets*            2.25%       2.56%       2.75%              3.64%+
---------------------------------------------------------------------------------
Ratio of net investment
 loss to average net
 assets*                       (1.46)      (1.59)      (1.56)             (1.40)+
---------------------------------------------------------------------------------
Portfolio Turnover                63%         57%         78%              17%(3)
---------------------------------------------------------------------------------
* If certain expenses
  had not been waived or
  reimbursed by the
  Fund's former manager,
  Total Return would
  have been lower and
  the ratios would have
  been as follows:
---------------------------------------------------------------------------------
 Ratio of expenses to
  average net assets              N/A         N/A       4.12%              5.97%+
---------------------------------------------------------------------------------
 Ratio of net investment
  loss to average net
  assets                          N/A         N/A      (2.92)             (3.73)+
---------------------------------------------------------------------------------
</TABLE>    
(1) Per share amounts calculated using the monthly average share method.
(2) Total returns do not reflect any applicable sales load or deferred sales
    charges.
(3) Not annualized.
(4) Total return from March 17, 1995 (date the Fund's Investment strategy was
    implemented) through October 31, 1995 without annualization.
   
(5) Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
    Mutual Management Corp., replaced Van Kampen American Capital Asset
    Management as the Fund Manager.     
N/A=Not Applicable
   
 +      
    
 Annualized.     
 
 The Concert Investment Series Prospectus
 
                                       28
<PAGE>
 
 
                                        Financial Highlights, continued
 
International Equity Fund, continued
--------------------------------------------------------------------------------
 
<TABLE>   
<CAPTION>
Class B Shares                                                  February 21, 1995
                                                                    (Commencement
                           Year Ended  Year Ended  Year Ended       of Investment
                          October 31, October 31, October 31,      Operations) to
                              1998(5)        1997        1996 October 31, 1995(1)
---------------------------------------------------------------------------------
<S>                       <C>         <C>         <C>         <C>
Net Asset Value,
 Beginning of Period           $17.81      $16.36      $13.79              $11.81
---------------------------------------------------------------------------------
Income (loss) from
 operations
 Net investment loss           (0.39)      (0.32)      (0.26)              (0.21)
 Net realized and
  unrealized gain                1.02        1.77        2.83                2.19
---------------------------------------------------------------------------------
Total from investment
 operations                      0.63        1.45        2.57                1.98
---------------------------------------------------------------------------------
Net Asset Value, End of
 Period                        $18.44      $17.81      $16.36              $13.79
---------------------------------------------------------------------------------
Total Return(2)                 3.54%       8.93%      18.64%            15.69(4)
---------------------------------------------------------------------------------
Net Assets, End of
 Period (millions)                $18         $13          $8                  $2
---------------------------------------------------------------------------------
Ratio of expenses to
 average net assets*            3.11%       3.30%       3.50%              4.33%+
---------------------------------------------------------------------------------
Ratio of net investment
 loss to average net
 assets*                      (2.32)%     (2.34)%     (2.31)%            (2.80)%+
---------------------------------------------------------------------------------
Portfolio Turnover                63%         57%         78%              17%(3)
---------------------------------------------------------------------------------
* If certain expenses
  had not been waived or
  reimbursed by the
  fund's former manager,
  Total Return would
  have been lower and
  the ratios would have
  been as follows:
---------------------------------------------------------------------------------
 Ratio of expenses to
  average net assets              N/A         N/A       4.87%              6.67%+
---------------------------------------------------------------------------------
 Ratio of net investment
  loss to average net
  assets                          N/A         N/A     (3.67)%            (5.13)%+
---------------------------------------------------------------------------------
</TABLE>    
 
(1) Per share amounts calculated using the monthly average share method.
(2) Total returns do not reflect any applicable sales load or deferred sales
    charges.
(3) Not annualized.
(4) Total return from March 17, 1995 (date the fund's investment strategy was
    implemented) through October 31, 1995 without annualization.
   
(5) Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
    Mutual Management Corp., replaced Van Kampen American Capital Asset
    Management as the fund Manager.     
N/A=Not Applicable
   
 +      
    
 Annualized.     
 
                                       29
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
 
Growth Fund
--------------------------------------------------------------------------------
 
<TABLE>   
<CAPTION>
Class 1 Shares                                   Year Ended October 31
---------------------------------------------------------------------------------
                                            1998*   1997   1996   1995   1994
---------------------------------------------------------------------------------
<S>                                        <C>    <C>    <C>    <C>    <C>    <C>
Net Asset Value, Beginning of Year         $20.94 $17.98 $17.46 $15.31 $16.26
---------------------------------------------------------------------------------
Income (loss) from operations
 Net investment income                       0.13   0.17    .19   0.16   0.13
 Net realized and unrealized gain            2.10   4.33   2.91   3.18   0.21
---------------------------------------------------------------------------------
Total from investment operations             2.23   4.50   3.10   3.34   0.34
---------------------------------------------------------------------------------
Less:
 Distributions from net investment income  (0.17) (0.18) (0.18) (0.16) (0.11)
 Distributions from and in excess of net
  realized gain                            (3.41) (1.36) (2.40) (1.03) (1.18)
---------------------------------------------------------------------------------
Total distributions                        (3.58) (1.54) (2.58) (1.19) (1.29)
---------------------------------------------------------------------------------
Net Asset Value, End of Year               $19.59 $20.94 $17.98 $17.46 $15.31
---------------------------------------------------------------------------------
Total Return(2)                            12.54% 26.93% 19.94% 24.01%  2.04%
---------------------------------------------------------------------------------
Net Assets, End of Year (millions)         $3,657 $3,547 $3,005 $2,612 $2,170
---------------------------------------------------------------------------------
Ratio of expenses to average net assets     0.78%  0.88%  0.93%  1.00%  1.09%
Ratio of net investment income to average
 net assets                                  0.63   0.86   1.08   1.04   0.89
---------------------------------------------------------------------------------
Portfolio Turnover                           113%   165%   202%   230%   164%
---------------------------------------------------------------------------------
</TABLE>    
   
 * Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
   Mutual Management Corp., replaced Van Kampen American Capital Asset
   Management as the fund Manager.     
 
<TABLE>   
<CAPTION>
                                   Class A Shares                      Class B Shares
                         ----------------------------------- -----------------------------------
                                                      Period                              Period
                          Year Ended  Year Ended       Ended  Year Ended  Year Ended       Ended
                         October 31, October 31, October 31, October 31, October 31, October 31,
                               1998*        1997     1996(1)       1998*        1997     1996(1)
------------------------------------------------------------------------------------------------
<S>                      <C>         <C>         <C>         <C>         <C>         <C>
Net Asset Value,
 Beginning of Period          $20.89      $17.96      $16.63      $20.75      $17.93      $16.63
------------------------------------------------------------------------------------------------
Income (loss) from
 operations
 Net investment income
  (loss)                        0.05        0.15        0.02      (0.11)        0.01      (0.01)
 Net realized and
  unrealized gain               2.13        4.30        1.31        2.14        4.28        1.31
------------------------------------------------------------------------------------------------
Total from investment
 operations                     2.18        4.45        1.33        2.03        4.29        1.30
------------------------------------------------------------------------------------------------
Less:
 Distributions from net
  investment income           (0.12)      (0.16)          --          --      (0.11)          --
 Distributions from net
  realized gain               (3.41)      (1.36)          --      (3.41)      (1.36)          --
------------------------------------------------------------------------------------------------
Total distributions           (3.53)      (1.52)          --      (3.41)      (1.47)          --
------------------------------------------------------------------------------------------------
Net Asset Value, End of
 Period                       $19.54      $20.89      $17.96      $19.37      $20.75      $17.93
------------------------------------------------------------------------------------------------
Total Return(2)               12.27%      26.65%    8.00%(3)      11.43%      25.66%    7.82%(3)
------------------------------------------------------------------------------------------------
Net Assets, End of
 Period (millions)              $180        $109         $49        $182        $126         $74
------------------------------------------------------------------------------------------------
Ratio of expenses to
 average net assets            1.02%       1.13%       1.17%       1.75%       1.88%       1.93%
Ratio of net investment
 income (loss) to
 average net assets             0.38        0.57        0.46      (0.35)      (0.16)      (0.29)
------------------------------------------------------------------------------------------------
Portfolio Turnover              113%        165%     202%(3)        113%        165%     202%(3)
------------------------------------------------------------------------------------------------
</TABLE>    
   
(1) Class A and Class B shares commenced distribution on August 18, 1996.     
(2) Total Returns do not reflect any applicable sales load or deferred sales
    charges.
(3) Not annualized.
   
 * Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
   Mutual Management Corp., replaced Van Kampen American Capital Asset
   Management as the fund Manager.     
 
                                       30
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
                                        Financial Highlights, continued
 
Growth And Income Fund
--------------------------------------------------------------------------------
 
<TABLE>   
<CAPTION>
Class 1 Shares                                   Year Ended October 31
-----------------------------------------------------------------------------
                                            1998*   1997   1996   1995   1994
-----------------------------------------------------------------------------
<S>                                        <C>    <C>    <C>    <C>    <C>
Net Asset Value, Beginning of Year         $20.10 $18.11 $16.95 $15.77 $17.13
-----------------------------------------------------------------------------
Income (loss) from operations
 Net investment income                       0.18   0.24   0.31   0.36   0.29
 Net realized and unrealized gain/loss       1.70   4.23   2.94   2.72 (0.21)
-----------------------------------------------------------------------------
Total from investment operations             1.88   4.47   3.25   3.08   0.08
-----------------------------------------------------------------------------
Less:
 Distributions from net investment income  (0.20) (0.30) (0.34) (0.30) (0.28)
 Distributions from and in excess of net
  realized gain                            (3.25) (2.18) (1.75) (1.60) (1.16)
-----------------------------------------------------------------------------
Total distributions                        (3.45) (2.48) (2.09) (1.90) (1.44)
-----------------------------------------------------------------------------
Net Asset Value, End of Year               $18.53 $20.10 $18.11 $16.95 $15.77
-----------------------------------------------------------------------------
Total Return(1)                            10.90% 27.35% 20.58% 22.45%  0.51%
-----------------------------------------------------------------------------
Net Assets, End of Year (millions)         $1,079 $1,097   $943   $828   $712
-----------------------------------------------------------------------------
Ratio of expenses to average net assets     0.83%  0.88%  0.91%  0.96%  1.02%
-----------------------------------------------------------------------------
Ratio of net investment income to average
 net assets                                 0.90%  1.25%  1.78%  2.27%  1.84%
-----------------------------------------------------------------------------
Portfolio Turnover                            34%    93%   121%   117%    88%
-----------------------------------------------------------------------------
</TABLE>    
   
 * Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
   Mutual Management Corp., replaced Van Kampen American Capital Asset
   Management as the Fund Manager.     
 
<TABLE>   
<CAPTION>
                                   Class A Shares                      Class B Shares
                         ----------------------------------- -----------------------------------
                                                      Period                              Period
                          Year Ended  Year Ended       Ended  Year Ended  Year Ended       Ended
                         October 31, October 31, October 31, October 31, October 31, October 31,
                               1998*        1997     1996(2)       1998*        1997     1996(2)
------------------------------------------------------------------------------------------------
<S>                      <C>         <C>         <C>         <C>         <C>         <C>
Net Asset Value,
 Beginning of Period          $20.10      $18.11      $17.19      $20.07      $18.09      $17.19
------------------------------------------------------------------------------------------------
Income (loss) from
 operations
 Net investment income        (0.02)        0.20        0.07      (0.01)        0.06        0.04
 Net realized and
  unrealized gain               1.85        4.22        0.91        1.71        4.22        0.90
------------------------------------------------------------------------------------------------
Total from investment
 operations                     1.83        4.42        0.98        1.70        4.28        0.94
------------------------------------------------------------------------------------------------
Less:
 Distributions from net
  investment income           (0.15)      (0.25)      (0.06)      (0.04)      (0.12)      (0.04)
 Distributions from net
  realized gain               (3.25)      (2.18)         -0-      (3.25)      (2.18)         -0-
------------------------------------------------------------------------------------------------
Total distributions           (3.40)      (2.43)      (0.06)      (3.29)      (2.30)      (0.04)
------------------------------------------------------------------------------------------------
Net Asset Value, End of
 Period                       $18.53      $20.10      $18.11      $18.48      $20.07      $18.09
------------------------------------------------------------------------------------------------
Total Return(1)               10.63%      27.04%    5.72%(3)       9.85%      26.08%    5.49%(3)
------------------------------------------------------------------------------------------------
Net Assets, End of
 Period (millions)              $124         $80         $33        $137         $99         $52
------------------------------------------------------------------------------------------------
Ratio of expenses to
 average net assets            1.07%       1.12%      1.16%+       1.81%       1.88%      1.91%+
------------------------------------------------------------------------------------------------
Ratio of net investment
 income to average net
 assets                        0.63%       0.96%      1.78%+     (0.09)%       0.22%       1.05%
------------------------------------------------------------------------------------------------
Portfolio Turnover               34%         93%        121%         34%         93%        121%
------------------------------------------------------------------------------------------------
</TABLE>    
 
(1) Total returns do not reflect any applicable sales load or deferred sales
    charges.
(2) Class A and Class B shares commenced distribution on August 18, 1996.
(3) Not annualized.
   
 + Annualized     
   
 * Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
   Mutual Management Corp., replaced Van Kampen American Capital Asset
   Management as the Fund Manager.     
 
                                       31
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
 
Government Fund
--------------------------------------------------------------------------------
 
<TABLE>   
<CAPTION>
Class 1 Shares                                    Year Ended October 31
------------------------------------------------------------------------------
                                            1998*   1997   1996   1995    1994
------------------------------------------------------------------------------
<S>                                        <C>    <C>    <C>    <C>    <C>
Net Asset Value, Beginning of Year         $10.58 $10.40 $10.67  $9.99  $11.80
------------------------------------------------------------------------------
Income (loss) from operations:
 Net investment income                       0.65   0.69   0.70   0.70    0.69
 Net realized and unrealized gain/loss       0.10   0.17 (0.25)   0.68  (1.36)
------------------------------------------------------------------------------
Total from investment operations             0.75   0.86   0.45   1.38  (0.67)
------------------------------------------------------------------------------
Less:
 Distributions from and in excess of net
  investment income                        (0.67) (0.68) (0.72) (0.70)  (0.69)
 Distributions from and in excess of net
  realized gain                                --     --     --     --  (0.45)
------------------------------------------------------------------------------
Total distributions                        (0.67) (0.68) (0.72) (0.70)  (1.14)
------------------------------------------------------------------------------
Net Asset Value, End of Year               $10.66 $10.58 $10.40 $10.67   $9.99
------------------------------------------------------------------------------
Total Return(1)                             7.29%  8.56%  4.58% 14.27% (5.45%)
------------------------------------------------------------------------------
Net Assets, at End of Year (millions)        $209   $241   $287   $329    $335
------------------------------------------------------------------------------
Ratio of expenses to average net assets     0.88%  0.90%  0.84%  0.83%   0.89%
------------------------------------------------------------------------------
Ratio of net investment income to average
 net assets                                 6.11%  6.69%  6.79%  6.84%   7.06%
------------------------------------------------------------------------------
Portfolio Turnover                           141%   104%   276%   214%    256%
------------------------------------------------------------------------------
</TABLE>    
   
* Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
  Mutual Management Corp., replaced Van Kampen American Capital Asset
  Management as the Fund Manager.     
 
<TABLE>   
<CAPTION>
                                     Class A Shares                       Class B Shares
                          ------------------------------------ ------------------------------------
                           Year Ended  Year Ended Period Ended  Year Ended  Year Ended Period Ended
                          October 31, October 31,  October 31, October 31, October 31,  October 31,
                                1998*        1997      1996(2)       1998*        1997      1996(2)
---------------------------------------------------------------------------------------------------
<S>                       <C>         <C>         <C>          <C>         <C>         <C>
Net Asset Value,
 Beginning of Period           $10.58      $10.41       $10.32      $10.58      $10.41       $10.32
---------------------------------------------------------------------------------------------------
Income (loss) from
 operations:
 Net investment income           0.62        0.66         0.15        0.54        0.59         0.14
 Net realized and
  unrealized gain                0.10        0.17         0.09        0.10        0.17         0.09
---------------------------------------------------------------------------------------------------
Total from investment
 operations                      0.72        0.83         0.24        0.64        0.76         0.23
---------------------------------------------------------------------------------------------------
Less distributions from
 and income in excess of
 net investment                (0.64)      (0.66)       (0.15)      (0.56)      (0.59)       (0.14)
---------------------------------------------------------------------------------------------------
Net Asset Value, End of
 Period                        $10.66      $10.58       $10.41      $10.66      $10.58       $10.41
---------------------------------------------------------------------------------------------------
Total Return(1)                 7.00%       8.35%     2.36%(3)       6.20%       7.55%     2.18%(3)
---------------------------------------------------------------------------------------------------
Net Assets, End of
 Period (millions)                $17         $14          $11         $14         $12          $14
---------------------------------------------------------------------------------------------------
Ratio of expenses to
 average net assets             1.12%       1.15%        1.09%       1.87%       1.90%        1.84%
---------------------------------------------------------------------------------------------------
Ratio of net investment
 income to average net
 assets                         5.78%       6.44%       6.50%+       5.04%       5.69%       5.74%+
---------------------------------------------------------------------------------------------------
Portfolio Turnover               141%        104%      276%(3)        141%        104%      276%(3)
---------------------------------------------------------------------------------------------------
</TABLE>    
 
(1) Total Returns do not reflect any applicable sales load or deferred sales
    charges.
   
(2) Class A and Class B shares commenced distribution on August 8, 1996.     
(3) Not annualized.
   
+ Annualized     
   
* Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
  Mutual Management Corp., replaced Van Kampen American Capital Asset
  Management as the Fund Manager.     
 
                                       32
 
 The Concert Investment Series Prospectus
<PAGE>
 
 
                                        Financial Highlights, continued
 
Municipal Bond Fund
--------------------------------------------------------------------------------
 
<TABLE>   
<CAPTION>
Class 1 Shares                                    Year Ended October 31
------------------------------------------------------------------------------
                                            1998*   1997   1996   1995    1994
------------------------------------------------------------------------------
<S>                                        <C>    <C>    <C>    <C>    <C>
Net Asset Value, Beginning of Period       $14.21 $13.83 $13.77 $12.89  $14.07
------------------------------------------------------------------------------
Income (loss) from operations:
 Net investment income                       0.68   0.69   0.70   0.74    0.71
 Net realized and unrealized gain (loss)     0.31   0.39   0.11   0.87  (1.18)
------------------------------------------------------------------------------
Total from investment operations             0.99   1.08   0.81   1.61  (0.47)
------------------------------------------------------------------------------
Less:
 Distributions from net investment income  (0.66) (0.66) (0.71) (0.73)  (0.71)
 Distributions from and in excess of net
  realized gain                            (0.13) (0.04) (0.04)     --      --
------------------------------------------------------------------------------
Total distributions                        (0.79) (0.70) (0.75) (0.73)  (0.71)
------------------------------------------------------------------------------
Net Asset Value, End of Period             $14.41 $14.21 $13.83 $13.77  $12.89
------------------------------------------------------------------------------
Total Return(1)                             7.20%  8.04%  6.09% 12.72% (3.38%)
------------------------------------------------------------------------------
Net Assets, End of Period (millions)          $94   $104   $119   $119    $112
------------------------------------------------------------------------------
Ratio of expenses to average net assets     1.01%  0.98%  1.05%  0.96%   0.99%
------------------------------------------------------------------------------
Ratio of net investment income to average
 net assets                                 4.77%  4.93%  5.13%  5.58%   5.27%
------------------------------------------------------------------------------
Portfolio Turnover                            28%    50%    80%    49%      4%
------------------------------------------------------------------------------
</TABLE>    
   
* Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
  Mutual Management Corp., replaced Van Kampen American Capital Asset
  Management as the Fund.     
 
<TABLE>   
<CAPTION>
                                    Class A Shares                       Class B Shares
                         ------------------------------------ ------------------------------------
                          Year Ended  Year Ended Period Ended  Year Ended  Year Ended Period Ended
                         October 31, October 31,  October 31, October 31, October 31,  October 31,
                               1998*        1997      1996(3)       1998*        1997      1996(3)
--------------------------------------------------------------------------------------------------
<S>                      <C>         <C>         <C>          <C>         <C>         <C>
Net Asset Value,
 Beginning of Period          $14.21      $13.83       $13.78      $14.20      $13.82       $13.78
--------------------------------------------------------------------------------------------------
Income (loss) from
 operations:
 Net investment income          0.62        0.65         0.11        0.51        0.54         0.09
 Net realized and
  unrealized gain               0.34        0.40         0.04        0.33        0.40         0.04
--------------------------------------------------------------------------------------------------
Total from investment
 operations                     0.96        1.05         0.15        0.84        0.94         0.13
--------------------------------------------------------------------------------------------------
Less:
 Distributions from net
  investments income          (0.63)      (0.63)       (0.10)      (0.52)      (0.52)       (0.09)
 Distributions from net
  realized gains              (0.13)      (0.04)           --      (0.13)      (0.04)           --
--------------------------------------------------------------------------------------------------
Total distributions           (0.76)      (0.67)       (0.10)      (0.65)      (0.56)       (0.09)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of
 Period                       $14.41      $14.21       $13.83      $14.39      $14.20       $13.82
--------------------------------------------------------------------------------------------------
Total Return(1)                6.93%       7.77%     1.12%(2)       6.10%       6.98%     0.93%(2)
--------------------------------------------------------------------------------------------------
Net Assets, End of
 Period (millions)               $16          $9           $2          $6          $3           $1
--------------------------------------------------------------------------------------------------
Ratio of expenses to
 average net assets            1.23%       1.19%       1.30%+       1.95%       1.94%       2.05%+
--------------------------------------------------------------------------------------------------
Ratio of net investment
 income to average net
 assets                        4.44%       4.79%       4.82%+       3.67%       4.04%       4.06%+
--------------------------------------------------------------------------------------------------
Portfolio Turnover               28%         50%          80%         28%         50%       80%(2)
--------------------------------------------------------------------------------------------------
</TABLE>    
 
(1) Total returns do not reflect any applicable sales load or deferred sales
    charges.
(2) Not annualized.
(3) Class A and Class B shares commenced distribution on August 18, 1996.
   
+ Annualized.     
   
* Effective December 31, 1997 SSBC Fund Management Inc., formerly known as
  Mutual Management Corp., replaced Van Kampen American Capital Asset
  Management as the Fund.     
 
                                       33
 
 The Concert Investment Series Prospectus
<PAGE>
 
The Concert Investment Series
 
Emerging Growth Fund                 Growth and Income Fund
 
International Equity Fund            Government Fund
 
Mid Cap Fund                         Municipal Bond Fund
 
Growth Fund
 
--------------------------------------------------------------------------------
Additional Information about the
Funds
 
Shareholder Reports.
Annual and semiannual reports to
shareholders provide additional
information about the funds' in-
vestments. These reports discuss
the market conditions and invest-
ment strategies that signifi-
cantly affected each fund's per-
formance during its last fiscal
year.
 
Statement of Additional Information.
The combined statement of addi-
tional information provides more
detailed information about each
fund. It is incorporated by ref-
erence into this combined pro-
spectus.
 
How to Obtain Additional
Information.
 
 . You may obtain shareholder re-
  ports and the statement of ad-
  ditional information without
  charge, by contacting PFS
  Shareholder Services, by call-
  ing 1-800-544-5445 or writing
  the funds at 3100 Breckinridge
  Blvd., Bldg. 200, Duluth, Geor-
  gia 30099-0062
   
 . You may review the funds'
  shareholder reports, prospectus
  and statement of additional in-
  formation at the Securities and
  Exchange Commission's Public
  Reference Room in Washington,
  D.C. Information about the pub-
  lic reference room may be ob-
  tained by calling 1-800-SEC-
  0330. You may obtain copies of
  these materials upon payment of
  a duplicating fee, by writing
  to the Public Reference Section
  of the Commission, Washington,
  D.C. 20549-60019. You can get
  the same reports and informa-
  tion free from the Commission's
  Internet web site--
  http://www.sec.gov     
 
If someone provides you with information about the funds that is not in this
prospectus, you should not rely upon that information. Neither the funds nor
the distributor is offering to sell shares of the funds to any person to whom
the funds may not lawfully sell their shares.
   
(Investment Company Act file no. 811-05018)     
 
[PFS 00000 2/99]
       

Part B

STATEMENT OF ADDITIONAL INFORMATION

CONCERT INVESTMENT SERIES
388 Greenwich Street
New York, NY 10013

February 28, 1999


Concert Investment Series (the "Trust") is a diversified, open-end 
management investment company with seven separate Funds which are 
discussed herein: the Emerging Growth Fund, the International Equity 
Fund, the Mid Cap Fund, the Growth Fund, the Growth and Income Fund, the 
Government Fund and the Municipal Bond Fund (collectively, the "Funds").  
Each Fund is in effect a separate fund issuing its own shares.

This Statement of Additional Information is not a Prospectus but 
contains information in addition to and more detailed than that set 
forth in the Prospectus bearing the same date and should be read in 
conjunction with the Prospectus. A Prospectus may be obtained without 
charge by writing PFS Shareholder Services (the "Sub-Transfer Agent") at 
3100 Breckinridge Boulevard, Bldg. 200, Duluth, Georgia 30199-0001.  
Please call Customer Service at (800) 544-5445 for information about the 
Funds.

TABLE OF CONTENTS

P
a
g
e

General Information									
			  2
Goals and Investment Policies								
		 	  2
Risk Factors										
			20
Investment Restrictions									
			26
Trustees and Officers									
			30
Investment Advisory Agreements							
				32
Distributor											
		34
Portfolio Turnover									
			34
Distribution Plans									
			35
Portfolio Transactions and Brokerage						
				37
Determination of Net Asset Value							
				40
Dividends, Distributions and Federal Taxes					
					50
Other Information										
		57
Appendix A - Ratings of Municipal Bonds, Notes and Commercial Paper	
					58



GENERAL INFORMATION

SSBC Fund Management, Inc., formerly Mutual Management Corp. (the 
"manager"), was incorporated on March 12, 1968 and renders investment 
management advice to investment companies with aggregate assets under 
management in excess of $115 billion as of November 30, 1998.  The 
manager is an affiliate of Salomon Smith Barney Inc.  The manager and 
Salomon Smith Barney are subsidiaries of Citigroup Inc., a financial 
services company that uses diverse channels to offer a broad range of 
financial services to consumer and corporate customers around the world.  
Among these businesses are Citibank, Commercial Credit, Primerica 
Financial Services, Salomon Smith Barney, SSBC Asset Management, 
Travelers Life & Annuity, and Travelers Property Casualty.

CFBDS, Inc. (the "Distributor") is the distributor of the funds' shares.  
PFS Investments, Inc. ("PFS Investments"), a selling agent of the fund,  
is an indirect wholly-owned subsidiary of Citigroup. PFS Shareholder 
Services, the Sub-Transfer Agent is a subsidiary of PFS Services, Inc., 
an affiliate of Primerica Financial Services, Inc. ("Primerica 
Financial"). 

As of November 30, 1998, no person was known to own beneficially or of 
record as much as five percent of the outstanding shares of any Fund of 
the Trust.

PFS Investments acts as custodian for certain employee benefit plans and 
individual retirement accounts.

GOALS AND INVESTMENT POLICIES

The following disclosures supplement disclosures set forth in the 
Prospectus and do not, standing alone, present a complete and accurate 
explanation of the matters disclosed. Readers must refer also to the 
Prospectus for a complete presentation of the matters disclosed below.

The differences in goals and investment policies among the Funds can be 
expected to affect the return of each Fund and the degree of market and 
financial risk to which each Fund is subject. The goal and investment 
policies, the percentage limitations, and the kinds of securities in 
which each Fund may invest are generally not fundamental policies and 
may be changed by the Trustees.  Although each Fund has a different goal 
which it pursues through separate investment policies described below, 
each Fund, except the International Equity Fund and the Mid Cap  Fund, 
will not purchase any securities issued by any company primarily engaged 
in the manufacture of alcohol or tobacco. 

Each of the Funds may depart from its principal investment strategies in 
response to adverse market, economic or political conditions by taking 
temporary defensive positions in all types of money market and short-
term debt securities.  If a Fund takes a temporary defensive position, 
it may be unable to achieve its investment objective.

Emerging Growth Fund

Emerging Growth Fund seeks capital appreciation by investing in a 
portfolio of securities consisting principally of common stocks of small 
and medium sized companies considered by the manager to be emerging 
growth companies. Any ordinary income received from portfolio securities 
is entirely incidental. There can, of course, be no assurance that the 
objective of capital appreciation will be realized; therefore, full 
consideration should be given to the risks inherent in the investment 
techniques that the manager may use to achieve such objective. 
	
Under normal conditions, the Fund invests at least 65% of its total 
assets in common stocks of small and medium sized companies, both 
domestic and foreign, in the early stages of their life cycle that the 
manager believes have the potential to become major enterprises. 
Investments in such companies may offer greater opportunities for growth 
of capital than larger, more established companies, but also may involve 
certain special risks. Emerging growth companies often have limited 
product lines, markets, or financial resources, and they may be 
dependent upon one or a few key people for management. The securities of 
such companies may be subject to more abrupt or erratic market movements 
than securities of larger, more established companies or the market 
averages in general. While the Fund will invest primarily in common 
stocks, to a limited extent, it may invest in other securities such as 
preferred stocks, convertible securities and warrants. 
	
The Fund may also invest in special situations involving new management, 
special products and techniques, unusual developments, mergers or 
liquidations. Investments in unseasoned companies and special situations 
often involve much greater risks than are inherent in ordinary 
investments, because securities of such companies may be more likely to 
experience unexpected fluctuations in price. 

The Fund may hold a portion of its assets in high grade short-term debt 
securities and high grade corporate or government bonds in order to 
provide liquidity.  Short-term investments may include repurchase 
agreements with banks or broker-dealers. The Fund may invest up to 20% 
of its total assets in securities of foreign issuers.

International Equity Fund

International Equity Fund seeks total return on its assets from growth 
of capital and income. The Fund seeks to achieve its goal by investing 
at least 65% of its assets in a diversified portfolio of equity 
securities of established non-United States issuers. 
	
In seeking to achieve its goal, the Fund presently expects to invest at 
least 65% and substantially all of its assets in common stocks of 
established non-United States companies which in the opinion of the 
manager have potential for growth of capital. However, there is no 
requirement that the Fund invest exclusively in common stocks or other 
equity securities and, if deemed advisable, the Fund may invest up to 
35% of its assets in bonds, notes and other debt securities (including 
securities issued in the Eurocurrency markets or obligations of the 
United States or foreign governments and their political subdivisions). 
When the manager believes that the return on debt securities will equal 
or exceed the return on common stocks, the Fund may, in seeking its goal 
of total return, substantially increase its holdings (up to a maximum of 
35% of its assets) in such debt securities. In determining whether the 
Fund will be invested for capital appreciation or for income or any 
combination of both, the manager regularly analyzes a broad range of 
international equity and fixed income markets in order to assess the 
degree of risk and level of return that can be expected from each 
market. 

The Fund generally invests its assets broadly among countries and 
normally has represented in the portfolio business activities in not 
less than three different foreign countries. The Fund normally invests 
at least 65% of its assets in companies organized or governments located 
in any area of the world other than the United States, such as the Far 
East (e.g., Japan, Hong Kong, Singapore, Malaysia), Western Europe 
(e.g., United Kingdom, Germany, The Netherlands, France, Italy, 
Switzerland), Eastern Europe (e.g., Hungary, Poland, The Czech Republic 
and the countries of the former Soviet Union), Central and South America 
(e.g., Mexico, Chile and Venezuela), Australia, Canada and such other 
areas and countries as the manager may determine from time to time. 
Allocation of the Fund's investments will depend upon the relative 
attractiveness of the international markets and particular issuers. 
Concentration of the Fund's assets in one or a few countries or 
currencies will subject the Fund to greater risks than if the Fund's 
assets were not geographically concentrated. 
	
It is expected that portfolio securities will ordinarily be traded on a 
stock exchange or other market in the country in which the issuer is 
principally based, but may also be traded on markets in other countries 
including, in many cases, the United States securities exchanges and 
over-the-counter markets. 

To the extent that the Fund's assets are not otherwise invested as 
described above, the assets may be held in cash, in any currency, or 
invested in United States as well as foreign high quality money market 
instruments and equivalents.

Mid Cap Fund

Mid Cap  Fund seeks long-term growth of capital.  The Fund attempts to 
achieve its investment objective by investing, under normal market 
conditions, substantially all of its assets in equity securities and at 
least 65% of its total assets in equity securities of medium-sized 
companies. Medium sized companies are those whose market capitalization 
is within the market capitalization range of companies in the S&P MidCap 
Index at the time of the Fund's investment.  The size of the companies 
in the Index changes with market conditions and the composition of the 
Index.  As of January 29, 1999 the largest market capitalization of a 
company in the Index was $11.4 billion and the smallest market 
capitalization was $0.24 billion.  Companies whose capitalization falls 
outside this range after purchase continue to be considered medium-sized 
companies for purposes of the 65% policy.  Investing in medium-
capitalization stocks may involve greater risk than investing in large 
capitalization stocks since they can be subject to more abrupt or 
erratic movements. However, they tend to involve less risk than stocks 
of small capitalization companies.  The Fund may invest up to 35% of its 
assets in equity securities of companies with market capitalizations 
less than $1 billion or more than $12 billion.  See "Risk Factors--Small 
Capitalization Companies." 
	
The Fund will normally invest in all types of equity securities, 
including common stocks, preferred stocks, securities that are 
convertible into common or preferred stocks, such as warrants and 
convertible bonds, and depository receipts for those securities. The 
Fund may maintain a portion of its assets, which will usually not exceed 
10%, in U.S. Government securities, money market obligations, and in 
cash to provide for payment of the Fund's expenses and to meet 
redemption requests. It is the policy of the Fund to be as fully 
invested in equity securities as practicable at all times. 

Consistent with its investment objective and policies described above, 
the Fund may invest up to 25% of its total assets in foreign securities, 
including both direct investments and investments made through 
depository receipts. The Fund may also invest in real estate investment 
trusts; purchase or sell securities on a when-issued or delayed-delivery 
basis; enter into forward commitments to purchase securities; lend 
portfolio securities; purchase and sell put and call options; and enter 
into interest rate futures contracts, stock index futures contracts and 
related options. 

Growth Fund

Growth Fund seeks capital appreciation through investments in common 
stocks and options on common stocks. Any income realized on its 
investments will be purely incidental to its goal of capital 
appreciation. 

The Fund also may hold a portion of its assets in high grade short-term 
debt securities and high grade corporate or government bonds in order to 
provide liquidity. The amount of assets the Fund may hold for liquidity 
purposes is based on market conditions and the need to meet redemption 
requests.  A description of the ratings of commercial paper and bonds is 
contained in the Appendix.  Short-term investments may include 
repurchase agreements with banks or broker-dealers.

Certain policies of the Fund, such as purchasing and selling options on 
stocks, purchasing options on stock indices and purchasing stock index 
futures contracts and options thereon involve inherently greater 
investment risk and could result in more volatile price fluctuations.  
The Fund may also invest up to 20% of its total assets in securities of 
foreign issuers and in investment companies.  Since the Fund may take 
substantial risks in seeking its goal of capital appreciation, it is not 
suitable for investors unable or unwilling to assume such risks. 

Growth and Income Fund

Growth and Income Fund seeks reasonable growth and income through 
investments in equity securities that provide dividend or interest 
income, including common and preferred stocks and securities convertible 
into common and preferred stocks. 

Convertible securities rank senior to common stocks in a corporation's 
capital structure. They are consequently of higher quality and entail 
less risk than the corporation's common stock, although the extent to 
which such risk is reduced depends in large measure upon the degree to 
which the convertible security sells above its value as fixed income 
security. The Fund may purchase convertible securities rated Ba or lower 
by Moody's Investors Service, Inc. ("Moody's") or BB or lower by 
Standard & Poor's Ratings Group ("S&P") or in non-rated securities 
considered by the manager to be of comparable quality. Although the Fund 
selects these securities primarily on the basis of their equity 
characteristics, investors should be aware that debt securities rated in 
these categories are considered high risk securities; the rating 
agencies consider them speculative, and payment of interest and 
principal is not considered well assured. To the extent that such 
convertible securities are acquired by the Fund, there is a greater risk 
as to the timely payment of the principal of, and timely payment of 
interest or dividends on, such securities than in the case of higher 
rated convertible securities. 

Although the portfolio turnover rate will not be considered a limiting 
factor, the Fund does not intend to engage in trading directed at 
realizing short-term profits. Nevertheless, changes in the portfolio 
will be made promptly when determined to be advisable by reason of 
developments not foreseen at the time of the investment decision, and 
usually without reference to the length of time the security has been 
held.

The Fund may hold a portion of its assets in high grade short-term debt 
securities and high grade corporate or government bonds in order to 
provide liquidity. The amount of assets the Fund may hold for liquidity 
purposes is based on market conditions and the need to meet redemption 
requests.  Short-term investments may include repurchase agreements with 
banks or broker-dealers.  The Fund may also invest up to 20% of its 
total assets in securities of foreign issuers and in investment 
companies.  The Fund may engage in portfolio management strategies and 
techniques involving options, futures contracts and options on futures.

Government Fund

Government Fund seeks high current return consistent with preservation 
of capital.  The Fund intends to invest at least 80% of its assets in 
debt securities issued or guaranteed by the U.S. Government, its 
agencies or instrumentalities.  Securities issued or guaranteed by the 
U.S. Government, its agencies or instrumentalities include: (1) U.S. 
Treasury obligations, which differ in their interest rates, maturities 
and times of issuance: U.S. Treasury bills (maturity of one year or 
less), U.S. Treasury notes (maturity of one to ten years), and U.S. 
Treasury bonds (generally maturities of greater than ten years), 
including the principal components or the interest components issued by 
the U.S. Government under the Separate Trading of Registered Interest 
and Principal of Securities program (i.e. ''STRIPS''), all of which are 
backed by the full faith and credit of the United States; and (2) 
obligations issued or guaranteed by U.S. Government agencies or 
instrumentalities, including government guaranteed mortgage-related 
securities, some of which are backed by the full faith and credit of the 
U.S. Treasury, some of which are supported by the right of the issuer to 
borrow from the U.S. Government and some of which are backed only by the 
credit of the issuer itself. 

The Fund may enter into repurchase agreements with domestic banks or 
broker-dealers deemed creditworthy by the manager solely for purposes of 
investing the Fund's cash reserves or when the Fund is in a temporary 
defensive posture.  The Fund may write covered or fully collateralized 
call options on U.S. Government securities and enter into closing or 
offsetting purchase transactions with respect to certain of such 
options.  The Fund may also write secured put options and enter into 
closing or offsetting purchase transactions with respect to such 
options.  The Fund may write both listed and over-the-counter options 
as.

The Fund seeks to obtain a high current return from the following 
sources:

? interest paid on the Fund's portfolio securities;
? premiums earned upon the expiration of options written;
? net profits from closing transactions; and
? net gains from the sale of portfolio securities on the exercise 
of options or otherwise.


The Fund is not designed for investors seeking long-term capital 
appreciation.  Moreover, varying economic and market conditions may 
affect the value of and yields on U.S. Government securities.  
Accordingly, there is no assurance that the Fund's investment objective 
will be achieved.

The Fund may engage in transactions involving obligations issued or 
guaranteed by U.S. Government agencies and instrumentalities which are 
supported by any of the following: (a) the full faith and credit of the 
U.S. Government (such as Government National Mortgage Association 
(''GNMA'') Certificates), (b) the right of the issuer to borrow an 
amount limited to a specific line of credit from the U.S. Government, 
(c) discretionary authority of the U.S. Government agency or 
instrumentality, or (d) the credit of the instrumentality. Agencies and 
instrumentalities include, but are not limited to: Federal Land Banks, 
Farmers Home Administration, Central Bank for Cooperatives, Federal 
Intermediate Credit Banks, Federal Home Loan Banks and Federal National 
Mortgage Association (''FNMA'').

While the Fund has no policy limiting the maturities of the debt 
securities in which it may invest, the manager seeks to moderate market 
risk by generally maintaining a portfolio duration within a range of 
approximately four to six years. Duration is a measure of the expected 
life of a debt security that was developed as a more precise alternative 
to the concept of ''term to maturity.'' Duration incorporates a debt 
security's yield, coupon interest payments, final maturity and call 
features into one measure.  Traditionally, a debt security's ''term to 
maturity'' has been used as a proxy for the sensitivity of the 
security's price to changes in interest rates (which is the ''interest 
rate risk'' or ''price volatility'' of the security). However, ''term to 
maturity'' measures only the time until a debt security provides its 
final payment taking no account of the pattern of the security's 
payments of interest or principal prior to maturity. Duration measures 
the length of the time interval between the present and the time when 
the interest and principal payments are scheduled to be received (or in 
the case of a callable bond, expected to be received), weighing them by 
the present value of the cash to be received at each future point in 
time. In general, the lower the coupon rate of interest or the longer 
the maturity, or the lower the yield-to-maturity of a debt security, the 
longer its duration; conversely, the higher the coupon rate of interest, 
the shorter the maturity or the higher the yield-to-maturity of a debt 
security, the shorter its duration. 

With respect to some securities, there may be some situations where even 
the standard duration calculation does not properly reflect the interest 
rate exposure of a security. In these and other similar situations, the 
manager will use more sophisticated analytical techniques that 
incorporate the economic life of a security into the determination of 
its interest rate exposure. The duration is likely to vary from time to 
time as the manager pursues its strategy of striving to maintain an 
active balance between seeking to maximize income and endeavoring to 
maintain the value of the Fund's capital. Thus, the objective of 
providing high current return consistent with preservation of capital to 
shareholders is tempered by seeking to avoid undue market risk and thus 
provide reasonable total return as well as high distributed return. 
There is, of course, no assurance that the manager will be successful in 
achieving such results for the Fund. 

The Fund generally purchases debt securities at a premium over the 
principal or face value in order to obtain higher current income. The 
amount of any premium declines during the term of the security to zero 
at maturity. Such decline generally is reflected in the market price of 
the security and thus in the Fund's net asset value. Any such decline is 
realized for accounting purposes as a capital loss at maturity or upon 
resale. Prior to maturity or resale, such decline in value could be 
offset, in whole or part, or increased by changes in the value of the 
security due to changes in interest rate levels. 

The principal reason for selling call or put options is to obtain, 
through the receipt of premiums, a greater return than would be realized 
on the underlying securities alone. By selling options, the Fund reduces 
its potential for capital appreciation on debt securities if interest 
rates decline. Thus, if market prices of debt securities increase, the 
Fund would receive a lower total return from its optioned positions than 
it would have received if the options had not been sold. The purpose of 
selling options is intended to improve the Fund's total return and not 
to ''enhance'' monthly distributions. During periods when the Fund has 
capital loss carryforwards, any capital gains generated from such 
transactions will be retained in the Fund.  The purchase and sale of 
options may result in a high portfolio turnover rate.

Municipal Bond Fund

Municipal Bond Fund seeks as high a level of current interest income 
exempt from federal income tax as is consistent with the preservation of 
capital.

The Fund seeks to achieve its objective by investing in a diversified 
portfolio of obligations issued by or on behalf of states, territories 
or possessions of the United States and the District of Columbia and 
their political subdivisions, agencies and instrumentalities, the 
interest from which, in the opinion of bond counsel for the issuer, is 
exempt from federal income tax (''Municipal Bonds''). It is a 
fundamental policy of the Fund under normal conditions to invest at 
least 80% of its assets in Municipal Bonds which are considered tax-
exempt. The Fund does not independently evaluate the tax-exempt status 
of the Municipal Bonds in which it invests. The Fund invests principally 
in Municipal Bonds rated at the time of purchase within the three 
highest grades assigned by Moody's, S&P or another nationally recognized 
statistical rating organization ("NRSRO"). Ratings at the time of 
purchase determine which securities may be acquired, and a subsequent 
reduction in rating does not require the Fund to dispose of a security. 
At least 75% of the Fund's total assets will be invested in Municipal 
Bonds rated within the highest three categories by an NRSRO, i.e., rated 
''A'' or higher. The Fund may invest up to 25% of its total assets in 
Municipal Bonds rated in the fourth highest category by an NRSRO (e.g. 
those rated ''Baa'' by Moody's or ''BBB'' by S&P) or any non-rated 
Municipal Bonds having characteristics similar to Municipal Bonds so 
rated. Municipal Bonds rated in the fourth highest category are still 
considered "investment grade," but may have speculative characteristics 
so that changes in economic conditions or other circumstances are more 
likely to lead to a weakened capacity to make principal and interest 
payments than in the case of higher grade Municipal Bonds. The market 
prices of Municipal Bonds generally fluctuate with changes in interest 
rates so that the value of investments in such securities can be 
expected to decrease as interest rates rise and increase as interest 
rates fall. Because investment in lower rated securities involves 
greater investment risks, achievement of the Fund's goal may be more 
dependent on the manager's credit analysis than would be the case if the 
Fund invested only in higher rated securities. Non-rated Municipal Bonds 
are not necessarily of lower quality than rated Municipal Bonds, but the 
market for rated Municipal Bonds is often broader. The Fund may seek to 
hedge against changes in interest rates through transactions in listed 
futures contracts related to U.S. Government securities, Municipal Bonds 
or to an index of Municipal Bonds, and options on such contracts.

"Municipal Bonds" include debt obligations issued to obtain funds for 
various public purposes, including construction of a wide range of 
public facilities, refunding of outstanding obligations and obtaining 
funds for general operating expenses and loans to other public 
institutions and facilities.  In addition, certain types of industrial 
development obligations are issued by or on behalf of public authorities 
to finance various privately-operated facilities. Such obligations are 
included within the term Municipal Bonds if the interest paid thereon is 
exempt from federal income tax.  Municipal Bonds also include short-term 
tax-exempt municipal obligations such as tax anticipation notes, bond 
anticipation notes, revenue anticipation notes, and variable rate demand 
notes.

The two principal classifications of Municipal Bonds are "general 
obligations" and "revenue" or "special obligations." General obligations 
are secured by the issuer's pledge of full faith, credit, and taxing 
power for the payment of principal and interest.  Revenue or special 
obligations are payable only from the revenues derived from a particular 
facility or class of facilities or, in some cases, from the proceeds of 
a special excise tax or from other specific revenue sources such as the 
user of the facility being financed.  Industrial development bonds, 
including pollution control bonds, are revenue bonds and do not 
constitute the pledge of the credit or taxing power of the issuer of 
such bonds.  The payment of the principal and interest on such 
industrial revenue bonds depends solely on the ability of the user of 
the facilities financed by the bonds to meet its financial obligations 
and the pledge, if any, of real and personal property so financed as 
security for such payment.  The Fund's portfolio may also include "moral 
obligation" bonds which are normally issued by special purpose public 
authorities.  If an issuer of moral obligation bonds is unable to meet 
its obligations, the repayment of such bonds becomes a moral commitment 
but not a legal obligation of the state or municipality which is the 
issuer of the bonds.

On a temporary basis, due to market conditions, the Fund may invest in 
Municipal Notes. These securities include demand notes and short-term 
municipal obligations (such as tax anticipation notes, revenue 
anticipation notes, construction loan notes and short-term discount 
notes) and tax-exempt commercial paper, provided that such obligations 
have the requisite ratings, as described above. Demand notes are 
obligations which normally have a stated maturity in excess of one year, 
but permit any holder to demand payment of principal plus accrued 
interest upon a specified number of days' notice.  Frequently, such 
obligations are secured by letters of credit or other credit support 
arrangement provided by banks.  The issuer of such notes normally has a 
corresponding right, after a given period, to prepay at its discretion 
the outstanding principal of the note plus accrued interest upon a 
specified number of days' notice to the noteholders.  The interest rate 
on a demand note may be based on a known lending rate, such as a bank's 
prime rate, and may be adjusted when such rate changes, or the interest 
rate on a demand note may be a market rate that is adjusted at specified 
intervals.  Participation interests in variable rate demand notes will 
be purchased only if, in the opinion of counsel, interest income on such 
interest will be tax-exempt when distributed as dividends to 
shareholders.

Yields on Municipal Bonds are dependent on a variety of factors, 
including the general condition of the municipal bond market, the size 
of a particular offering, the maturity of the obligation, and the rating 
of the issue.  The ability of the Fund to achieve its investment 
objective is dependent on the continuing ability of the issuers of the 
Municipal Bonds in which the Fund invests to meet their obligations for 
the payment of interest and principal when due. Furthermore, the rights 
of holders of Municipal Bonds and the obligations of the issuers of such 
Municipal Bonds may be subject to applicable bankruptcy, insolvency and 
similar laws and court decisions affecting the rights of creditors 
generally, and such laws, if any, which may be enacted by Congress or 
state legislatures imposing a moratorium on the payment of principal and 
interest or imposing other constraints or conditions on the payments of 
interest and principal on Municipal Bonds.

The Fund may invest up to 10% of its net assets in illiquid securities. 
These securities may include Municipal Bonds issued in limited offerings 
under which the Fund represents that it is purchasing for investment 
purposes only ("restricted securities"), repurchase agreements maturing 
in more than seven days, and other securities subject to legal or 
contractual restrictions on resale. Municipal Bonds that are restricted 
securities generally may be resold only in a privately negotiated 
transaction or to one or more other institutional investors. Restricted 
securities generally must be sold at a discount from the market price of 
unrestricted securities of the same issuer. Investments in restricted 
securities are not readily marketable without some time delay. Such 
limitations could result in the Fund's inability to realize a favorable 
price upon disposition, and in some cases might make disposition of such 
securities at the time desired by the Fund impossible. The 10% 
limitation applies at the time the purchase commitment is made.

Variations in the quality and maturity of the Fund's portfolio 
investments can be expected to affect the Fund's yield and the degree of 
market and financial risk to which the Fund is subject. Generally, 
Municipal Bonds with longer maturities tend to produce higher yields and 
are subject to greater market fluctuations as a result of changes in 
interest rates than Municipal Bonds with shorter maturities and lower 
yields. The market value of Municipal Bonds generally rises when 
interest rates decline and falls when interest rates rise. It is also 
generally the case that lower rated Municipal Bonds provide a higher 
yield than higher rated Municipal Bonds of similar maturity, but are 
subject to greater risk. The Fund is not limited as to the maturities of 
the Municipal Bonds in which it invests. Such securities may have 
remaining maturities of up to 30 years or more.

The Fund considers investments in Municipal Bonds not to be subject to 
any concentration policy and may invest a relatively high percentage of 
its assets in Municipal Bonds issued by entities having similar 
characteristics. The issuers may be located in the same geographic area 
or may pay their interest obligations from revenue of similar projects 
such as hospitals, utility systems and housing finance agencies. This 
may make the Fund's investments more susceptible to similar economic, 
political or regulatory occurrences. As the similarity in issuers 
increases, the potential for fluctuation in the Fund's per share net 
asset value also increases. The Fund may invest more than 25% of its 
total assets in industrial development revenue bonds, but it does not 
intend to invest more than 25% of its assets in industrial development 
revenue bonds issued for companies in the same industry or state. 
Sizeable investments in such obligations could involve an increased risk 
to the Fund should any of such issuers of any such related projects or 
facilities experience financial difficulties. 
	
From time to time, proposals have been introduced before Congress for 
the purpose of restricting or eliminating the federal income tax 
exemption for interest on Municipal Bonds. It may be expected that 
similar proposals may be introduced in the future. If any such proposals 
were to be enacted, the ability of the Fund to pay ''exempt-interest'' 
dividends may be adversely affected and the Fund would re-evaluate its 
investment objective and policies and consider changes in its structure. 
	
Interest on certain ''private-activity bonds'' issued after August 7, 
1986, is an item of tax preference subject to the alternative minimum 
tax on individuals and corporations. The Fund will not purchase any 
private activity bonds subject to the alternative minimum tax. 

The taxable securities in which the Municipal Bond Fund may invest as 
temporary investments include U.S. Government securities, domestic bank 
certificates of deposit and repurchase agreements.  The Fund may not 
invest in a certificate of deposit issued by a commercial bank unless 
the bank is organized and operating in the United States and has total 
assets of at least $500 million and is a member of the Federal Deposit 
Insurance Corporation.







INVESTMENT PRACTICES

This section contains a discussion of various of the Funds' investment 
practices.  The Funds may engage in these and any other practices not 
prohibited by their investment restrictions.  For further information 
regarding the risks associated with these practices, see "Risk Factors" 
below.

EQUITY SECURITIES

Common Stocks (All Funds except Government Fund and Municipal Bond 
Fund).  Each Fund may purchase common stocks.  Common stocks are shares 
of a corporation or other entity that entitle the holder to a pro rata 
share of the profits of the corporation, if any, without preference over 
any other shareholder or class of shareholders, including holders of the 
entity's preferred stock and other senior equity.  Common stock usually 
carries with it the right to vote and frequently an exclusive right to 
do so.

Preferred Stocks and Convertible Securities (All Funds except Government 
Fund and Municipal Bond Fund).  Each Fund may invest in convertible debt 
and preferred stocks.  Convertible debt securities and preferred stock 
entitle the holder to acquire the issuer's stock by exchange or purchase 
for a predetermined rate.  Convertible securities are subject both to 
the credit and interest rate risks associated with fixed income 
securities and to the stock market risk associated with equity 
securities.

Warrants (All Funds except Government Fund and Municipal Bond Fund).  
Each Fund may purchase warrants.  Warrants acquired by a Fund entitle it 
to buy common stock from the issuer at a specified price and time.  
Warrants are subject to the same market risks as stocks, but may be more 
volatile in price.  A Fund's investment in warrants will not entitle it 
to receive dividends or exercise voting rights and will become worthless 
if the warrants cannot be profitably exercised before the expiration 
dates.

REITs (All Fund except Government Fund and Municipal Bond Fund).  Each 
Fund may invest in shares of real estate investment trusts (REITs), 
which are pooled investment vehicles that invest in real estate or real 
estate loans or interests.  Investing in REITs involves risks similar to 
those associated with investing in equity securities of small 
capitalization companies.  REITs are dependent upon management skills, 
are not diversified, and are subject to risks of project financing, 
default by borrowers, self-liquidation, and the possibility of failing 
to qualify for the exemption from taxation on distributed amounts under 
the Internal Revenue Code of 1986, as amended (the "Code").

Illiquid and Restricted Securities (All Funds except Government Fund and 
Municipal Bond Fund).  The Emerging Growth Fund and the International 
Equity Fund may each invest up to 15% of their net assets , the Mid Cap 
Fund may invest up to 10% of its net assets, and the Growth Fund, the 
Growth and Income Fund, the Government Fund and the Municipal Bond Fund 
may each invest up to 5% of their net assets in restricted securities 
and other illiquid assets. As used herein, restricted securities are 
those that have been sold in the United States without registration 
under the Securities Act of 1933 and are thus subject to restrictions on 
resale. Excluded from the limitation, however, are any restricted 
securities which are eligible for resale pursuant to Rule 144A under the 
Securities Act of 1933 and which have been determined to be liquid by 
the Trustees or by the manager pursuant to board-approved guidelines. 
The determination of liquidity is based on the volume of reported 
trading in the institutional secondary market for each security. This 
investment practice could have the effect of increasing the level of 
illiquidity in each Fund to the extent that qualified institutional 
buyers become for a time uninterested in purchasing these restricted 
securities. These difficulties and delays could result in a Fund's 
inability to realize a favorable price upon disposition of restricted 
securities, and in some cases might make disposition of such securities 
at the time desired by the Fund impossible. Since market quotations are 
not readily available for restricted securities, such securities will be 
valued by a method that the Trustees believe accurately reflects fair 
value. 

Notwithstanding the foregoing, the Emerging Growth Fund and the 
International Equity Fund will not invest more than 10% of each Fund's 
net assets in restricted securities; restricted securities eligible for 
resale pursuant to Rule 144A are not included within this limitation. In 
the event that the Fund's shares cease to be qualified under the laws of 
such states or if such regulations are amended or otherwise cease to be 
operative, the Funds would not be subject to this 10% restriction.

Securities of Foreign Issuers (All Funds except Government Fund and 
Municipal Fund). The International Equity Fund invests at least 65% of 
its total assets in the equity securities of foreign issuers and the 
Emerging Growth Fund, the Growth Fund and the Growth and Income Fund may 
invest up to 20% of the value of their total assets and the Mid Cap Fund 
may invest up to 25% of the value of its total assets in securities of 
foreign governments and companies of developed and emerging markets 
countries. 

Each Fund may also purchase foreign securities in the form of American 
Depositary Receipts (''ADRs'') and European Depositary Receipts 
(''EDRs'') or other securities representing underlying shares of foreign 
companies. ADRs are publicly traded on exchanges or over-the-counter in 
the United States and are issued through ''sponsored'' or 
''unsponsored'' arrangements. In a sponsored ADR arrangement, the 
foreign issuer assumes the obligation to pay some or all of the 
depositary's transaction fees, whereas under an unsponsored arrangement, 
the foreign issuer assumes no obligation and the depositary's 
transaction fees are paid by the ADR holders. In addition, less 
information is available in the United States about an unsponsored ADR 
than about a sponsored ADR, and the financial information about a 
company may not be as reliable for an unsponsored ADR as it is for a 
sponsored ADR. Each Fund may invest in ADRs through both sponsored and 
unsponsored arrangements.

The Emerging Growth Fund, the International Equity Fund, the Mid Cap 
Fund, the Growth Fund and the Growth and Income Fund may invest in the 
securities of developing countries, commonly known as "emerging markets" 
countries. See "Risk Factors Securities of Developing /Emerging Market 
Countries".  See "Risk Factors - Securities of Developing/Emerging 
Market Countries".
	
FIXED INCOME SECURITIES

Corporate Debt Obligations (All Funds).  Each Fund may invest in 
corporate debt obligations and zero coupon securities issued by 
financial institutions and corporations.  Corporate debt obligations are 
subject to the risk of an issuer's inability to meet principal and 
interest payments on the obligations and may also be subject to price 
volatility due to such factors as market interest rates, market 
perception of the creditworthiness of the issuer and general market 
liquidity.  Zero coupon securities are securities sold at a discount to 
par value and on which interest payments are not made during the life of 
the security.  

U.S. Government Securities (All Funds).   The U.S. Government securities 
in which the Funds may invest include: bills, certificates of 
indebtedness, and notes and bonds issued by the U.S. Treasury or by 
agencies or instrumentalities of the U.S. Government. Some U.S. 
Government securities, such as U.S. Treasury bills and bonds, are 
supported by the full faith and credit of the U.S. Treasury; others are 
supported by the right of the issuer to borrow from the U.S. Treasury; 
others are supported by the discretionary authority of the U.S. 
Government to purchase the agency's obligations; still others are 
supported only by the credit of the instrumentality.

Mortgage Related Securities (Government Fund).  The Government Fund may 
invest in mortgage-related securities, including those representing an 
undivided ownership interest in a pool of mortgage loans, e.g., GNMA, 
FNMA, FHLMC Certificates.  Mortgage loans made by banks, savings and 
loan institutions, and other lenders are often assembled into pools, 
which are issued or guaranteed by an agency or instrumentality of the 
U.S. Government, though not necessarily by the U.S. Government itself. 
Interests in such pools are collectively referred to as ''mortgage-
related securities.'' 

Mortgage-related securities are characterized by monthly payments to the 
holder, reflecting the monthly payments made by the borrowers who 
received the underlying mortgage loans. The payments to the 
securityholders (such as the Fund), like the payments on the underlying 
loans, represent both principal and interest. Although the underlying 
mortgage loans are for specified periods of time, such as 20 or 30 
years, the borrowers can, and typically do, pay them off sooner. Thus, 
the securityholders frequently receive prepayments of principal, in 
addition to the principal which is part of the regular monthly payment. 
A borrower is more likely to prepay a mortgage which bears a relatively 
high rate of interest. This means that in times of declining interest 
rates, some of the Fund's higher yielding securities might be converted 
to cash, and the Fund will be forced to accept lower interest rates when 
that cash is used to purchase additional securities. The increased 
likelihood of prepayment when interest rates decline also limits market 
price appreciation of mortgage-related securities. If the Fund buys 
mortgage-related securities at a premium, mortgage foreclosures or 
mortgage prepayments may result in a loss to the Fund of up to the 
amount of the premium paid since only timely payment of principal and 
interest is guaranteed. 

The Government National Mortgage Association ("GNMA") is a wholly owned 
corporate instrumentality of the United States within the U.S. 
Department of Housing and Urban Development.  GNMA's principal programs 
involve its guarantees of privately issued securities backed by pools of 
mortgages.  Certificates of the Government National Mortgage Association 
("GNMA Certificates") are mortgage-backed securities, which evidence an 
undivided interest in a pool of mortgage loans.  GNMA Certificates 
differ from bonds in that principal is paid back monthly by the borrower 
over the term of the loan rather than returned in a lump sum at 
maturity.  GNMA Certificates that the Fund purchases are the "modified 
pass-through" type. "Modified pass-through" GNMA Certificates entitle 
the holder to receive a share of all interest and principal payments 
paid and owned on the mortgage pool net of fees paid to the "issuer" and 
GNMA, regardless of whether or not the mortgagor actually makes the 
payment.  The National Housing Act authorizes GNMA to guarantee the 
timely payment of principal and interest on securities backed by a pool 
of mortgages insured by the Federal Housing Administration ("FHA") or 
the Farmers' Home Administration ("FMHA"), or guaranteed by the Veterans 
Administration ("VA").  Once a pool of such mortgages is assembled and 
approved by GNMA, the GNMA guarantee is backed by the full faith and 
credit of the U.S. Government.  GNMA is also empowered to borrow without 
limitation from the U.S. Treasury if necessary to make any payments 
required under its guarantee.

The average life of a GNMA Certificate is likely to be substantially 
less than the original maturity of the mortgage pools underlying the 
securities. Prepayments of principal by mortgagors and mortgage 
foreclosures will usually result in the return of the greater part of 
principal investment long before maturity of the mortgages in the pool.  
The Fund normally will not distribute principal payments (whether 
regular or prepaid) to its shareholders.  Rather, it will invest such 
payments in additional mortgage-related securities of the types 
described above or other U.S. Government securities.  Interest received 
by the Fund will, however, be distributed to shareholders.  Foreclosures 
impose no risk to principal investment because of the GNMA guarantee.

As prepayment rates of the individual mortgage pools vary widely, it is 
not possible to predict accurately the average life of a particular 
issue of GNMA Certificates.   However, statistics published by the FHA 
indicate that the average life of single-family dwelling mortgages with 
25-to 30-year maturities, the type of mortgages backing the vast 
majority of GNMA Certificates, is approximately 12 years.  Therefore, it 
is customary to treat GNMA Certificates as 30-year mortgage-backed 
securities which prepay fully in the twelfth year.

The coupon rate of interest of GNMA Certificates is lower than the 
interest rate paid on the VA-guaranteed or FHA-insured mortgages 
underlying the GNMA Certificates, but only by the amount of the fees 
paid to GNMA and the GNMA Certificate issuer.  For the most common type 
of mortgage pool, containing single-family dwelling mortgages, GNMA 
receives an annual fee of 0.06 of one percent of the outstanding 
principal for providing its guarantee, and the GNMA Certificate issuer 
is paid an annual servicing fee of 0.44 of one percent for assembling 
the mortgage pool and for passing through monthly payments of interest 
and principal to Certificate holders.  The coupon rate by itself, 
however, does not indicate the yield which will be earned on the GNMA 
Certificates for the following reasons:

	1.  Certificates are usually issued at a premium or discount, rather 
than at par.

	2.  After issuance, Certificates usually trade in the secondary market 
at a premium or discount.

	3.  Interest is paid monthly rather than semi-annually as is the case 
for traditional bonds. Monthly compounding has the effect of raising the 
effective yield earned on GNMA Certificates.

	4.  The actual yield of each GNMA Certificate is influenced by the 
prepayment experience of the mortgage pool underlying the Certificate.  
If mortgagors prepay their mortgages, the principal returned to 
Certificate holders may be reinvested at higher or lower rates.

In quoting yields for GNMA Certificates, the customary practice is to 
assume that the Certificates will have a 12 year life.  Compared on this 
basis, GNMA Certificates have historically yielded roughly  1/4 of 1.00% 
more than high grade corporate bonds and  1/2 of 1.00% more than 
U.S. Government and U.S. Government agency bonds.  As the life of 
individual pools may vary widely, however, the actual yield earned on 
any issue of GNMA Certificates may differ significantly from the yield 
estimated on the assumption of a twelve-year life.

Since the inception of the GNMA mortgage-backed securities program in 
1970, the amount of GNMA Certificates outstanding has grown rapidly. The 
size of the market and the active participation in the secondary market 
by securities dealers and many types of investors make GNMA Certificates 
highly liquid instruments.  Quotes for GNMA Certificates are readily 
available from securities dealers and depend on, among other things, the 
level of market rates, the Certificate's coupon rate and the prepayment 
experience of the pool of mortgages backing each Certificate.

The Federal Home Loan Mortgage Corporation ("FHLMC") was created in 1970 
to promote development of a nationwide secondary market in conventional 
residential mortgages.  FHLMC issues two types of mortgage pass-through 
securities, mortgage participation certificates ("PCs") and guaranteed 
mortgage certificates ("GMCs").  PCs resemble GNMA Certificates in that 
each PC represents a pro rata share of all interest and principal 
payments made and owed on the underlying pool.  Like GNMA Certificates, 
PCs are assumed to be prepaid fully in their twelfth year.  FHLMC 
guarantees timely monthly payment of interest of PCs and the ultimate 
payment of principal.

GMCs also represent a pro rata interest in a pool of mortgages.  
However, these instruments pay interest semiannually and return 
principal once a year in guaranteed minimum payments.  The expected 
average life of these securities is approximately 10 years.

The Federal National Mortgage Association ("FNMA") was established in 
1938 to create a secondary market in mortgages insured by the FHA.  FNMA 
issues guarantee mortgage pass-through certificates ("FNMA 
Certificates").  FNMA Certificates resemble GNMA Certificates in that 
each Certificate represents a pro rata share of all interest and 
principal payments made and owed on the underlying pool.  FNMA 
guarantees timely payment of interest on FNMA Certificates and the full 
return of principal.  Like GNMA Certificates, FNMA Certificates are 
assumed to be prepaid fully in their twelfth year.

Risk of foreclosure of the underlying mortgages is greater with FHLMC 
and FNMA securities because, unlike GNMA securities, FHLMC and FNMA 
securities are not guaranteed by the full faith and credit of the U.S. 
Government.

Forward Commitments (Government Fund).   The Fund may purchase or sell 
U.S. Government securities on a ''when-issued'' or ''delayed delivery'' 
basis (''Forward Commitments''). These transactions occur when 
securities are purchased or sold by the Fund with payment and delivery 
taking place in the future, frequently a month or more after such 
transactions. The price is fixed on the date of the commitment, and the 
seller continues to accrue interest on the securities covered by the 
Forward Commitment until delivery and payment take place. At the time of 
settlement, the market value of the securities may be more or less than 
the purchase or sale price. 

A Forward Commitment sale is covered if the Fund owns or has the right 
to acquire the underlying securities subject to the Forward Commitment.  
A Forward Commitment sale is for cross-hedging purposes if it is not 
covered, but is designed to provide a hedge against a decline in value 
of a security which the Fund owns or has the right to acquire.  In 
either circumstance, the Fund maintains in a segregated account (which 
is marked to market daily) either the security covered by the Forward 
Commitment or appropriate securities as required by the Investment 
Company Act of 1940, as amended (the "1940 Act") (which may have 
maturities which are longer than the term of the Forward Commitment) 
with the Fund's custodian in an aggregate amount equal to the amount of 
its commitment as long as the obligation to sell continues.  By entering 
into a Forward Commitment sale transaction, the Fund forgoes or reduces 
the potential for both gain and loss in the security which is being 
hedged by the Forward Commitment sale.

The Fund may either settle a Forward Commitment by taking delivery of 
the securities or may either resell or repurchase a Forward Commitment 
on or before the settlement date in which event the Fund may reinvest 
the proceeds in another Forward Commitment. The Fund's use of Forward 
Commitments may increase its overall investment exposure and thus its 
potential for gain or loss. When engaging in Forward Commitments, the 
Fund relies on the other party to complete the transaction; should the 
other party fail to do so, the Fund might lose a purchase or sale 
opportunity that could be more advantageous than alternative 
opportunities at the time of the failure. 
	
The Fund maintains a segregated account (which is marked to market 
daily) of appropriate securities as required by the 1940 Act covered by 
the Forward Commitment with the Fund's custodian in an aggregate amount 
equal to the amount of its commitment as long as the obligation to 
purchase or sell continues.

Variable Rate Demand Notes (Municipal Fund).   The Fund may invest in 
variable rate demand notes (''VRDNs'') which are tax-exempt obligations 
which contain a floating or variable interest rate adjustment formula 
and which are subject to an unconditional right of demand to receive 
payment of the principal balance plus accrued interest either at any 
time or at specified intervals not exceeding one year and in either case 
upon no more than seven days' notice. The interest rates are adjustable 
at intervals ranging from daily (''floating rate'') to up to one year to 
some prevailing market rate for similar investments, such adjustment 
formula being calculated to maintain the market value of the VRDN at 
approximately the par value of the VRDN upon the adjustment date. The 
adjustments are typically based upon the prime rate of a bank or some 
other appropriate interest rate adjustment index.

The Fund may also invest in VRDNs in the form of participation interests 
(''Participating VRDNs'') in variable rate tax-exempt obligations held 
by a financial institution, typically a commercial bank 
(''institution''). Participating VRDNs provide the Fund with a specified 
undivided interest (up to 100%) in the underlying obligation and the 
right to demand payment of the unpaid principal balance plus accrued 
interest on the Participating VRDNs from the institution upon a 
specified number of days' notice, not to exceed seven days. The Fund has 
an undivided interest in the underlying obligation and thus participates 
on the same basis as the institution in such obligation except that the 
institution typically retains fees out of the interest paid on the 
obligation for servicing the obligation and issuing the repurchase 
commitment. 

Stand-by Commitments (Municipal Fund).   The Fund may acquire stand-by 
commitments with respect to Municipal Bonds held by it. Under a stand-by 
commitment, a bank or dealer from which Municipal Bonds are acquired 
agrees to purchase from the Fund, at the Fund's option, the Municipal 
Bonds at a specified price. Such commitments are sometimes called 
''liquidity puts.'' 
	
The amount payable to the Fund upon its exercise of a stand-by 
commitment is normally (i) the Fund's acquisition cost of the Municipal 
Bonds (excluding any accrued interest which the Fund paid on their 
acquisition), less any amortized market premium or plus any amortized 
market or original issue discount during the period the Fund owned the 
securities, plus (ii) all interest accrued on the securities since the 
last interest payment date during that period. Stand-by commitments 
generally can be acquired when the remaining maturity of the underlying 
Municipal Bonds is not greater than one year, and are exercisable by the 
Fund at any time before the maturity of such obligations. 
	
The Fund's right to exercise stand-by commitments is unconditional and 
unqualified. A stand-by commitment generally is not transferable by the 
Fund, although the Fund can sell the underlying Municipal Bonds to a 
third party at any time. 

The Fund expects that stand-by commitments will generally be available 
without the payment of any direct or indirect consideration. However, if 
necessary or advisable, the Fund may pay for a stand-by commitment 
either separately in cash or by paying a higher price for portfolio 
securities which are acquired subject to the commitment (thus reducing 
the yield to maturity otherwise available for the same securities). The 
total amount paid in either manner for outstanding stand-by commitments 
held in the Fund will not exceed one-half of one percent of the value of 
the Fund's total asses calculated immediately after each stand-by 
commitment is acquired. The Fund intends to enter into stand-by 
commitments only with banks and dealers which, in the manager's opinion, 
present minimal credit risks. 

The Fund would acquire stand-by commitments solely to facilitate 
portfolio liquidity and does not intend to exercise its rights 
thereunder for trading purposes. The acquisition of a stand-by 
commitment would not affect the valuation of the underlying Municipal 
Bonds which would continue to be valued in accordance with the method of 
valuation employed by the Fund. Stand-by commitments acquired by the 
Fund would be valued at zero in determining net asset value. Where the 
Fund paid any consideration directly or indirectly for a stand-by 
commitment, the cost would be reflected as unrealized depreciation for 
the period during which the commitment was held by the Fund. 

Delayed Delivery and When-Issued Securities (Municipal Fund).   
Municipal Bonds may at times be purchased or sold on a ''delayed 
delivery'' or a ''when issued'' basis. These transactions arise when 
securities are purchased or sold by the Fund with payment and delivery 
taking place in the future, often a month or more after the purchase. 
The payment obligation and the interest rate are each fixed at the time 
the Fund enters into the commitment. The Fund will only make commitments 
to purchase such securities with the intention of actually acquiring the 
securities, but the Fund may sell these securities prior to settlement 
date if it is deemed advisable. Purchasing Municipal Bonds on a when-
issued basis involves the risk that the yields available in the market 
when the delivery takes place may actually be higher than those obtained 
in the transaction itself; if yields so increase, the value of the when-
issued obligation will generally decrease. The Fund maintains a separate 
account at its custodian bank consisting of appropriate securities as 
required by the 1940 Act (valued on a daily basis) equal to all times to 
the amount of any when-issued commitment. 

Short-Term Investments (All Funds).  In certain circumstances the Funds 
may invest without limitation in all types of short-term money market 
instruments, including U.S. Government securities; certificates of 
deposit, time deposits and bankers' acceptances issued by domestic banks 
(including their branches located outside the United States and 
subsidiaries located in Canada), domestic branches of foreign banks, 
savings and loan associations and similar institutions; high grade 
commercial paper; and repurchase agreements. To the extent a Fund is 
investing in short-term investments as a temporary defensive posture, 
the applicable Fund's investment objective may not be achieved. 

Commercial Paper (All Funds).   Commercial paper consists of short-term 
(usually 1 to 270 days) unsecured promissory notes issued by 
corporations in order to finance their current operations.  A variable 
amount master demand note (which is a type of commercial paper) 
represents a direct borrowing arrangement involving periodically 
fluctuating rates of interest under a letter agreement between a 
commercial paper issuer and an institutional lender, such as one of the 
Funds pursuant to which the lender may determine to invest varying 
amounts.  Transfer of such notes is usually restricted by the issuer, 
and there is no secondary trading market for such notes.  Each Fund 
therefore, may not invest in a master demand note, if as a result more 
than 5% (15% in the case of the Emerging Growth Fund and the 
International Equity Fund) (10% in the case of the Mid Cap Fund) of the 
value of the Fund's total assets would be invested in such notes and 
other illiquid securities.

Commercial Bank Obligations (International Equity Fund).  For the 
purposes of the International Equity Fund's investment policies with 
respect to bank obligations, obligations of foreign branches of U.S. 
banks and of foreign banks may be general obligations of the parent bank 
in addition to the issuing bank, or may be limited by the terms of a 
specific obligation and by government regulation.  As with investment in 
foreign securities in general, investments in the obligations of foreign 
branches of U.S. banks and of foreign banks may subject the 
International Equity Fund to investment risks that are different in some 
respects from those of investments in obligations of domestic issuers.  
Although the Fund will typically acquire obligations issued and 
supported by the credit of U.S. or foreign banks having total assets at 
the time of purchase in excess of U.S. $1 billion (or the equivalent 
thereof), this U.S. $1 billion figure is not a fundamental investment 
policy or restriction of the International Equity Fund.  For calculation 
purposes with respect to the U.S. $1 billion figure, the assets of a 
bank will be deemed to include the assets of its U.S. and non-U.S. 
branches.

DERIVATIVE CONTRACTS

Options, Futures Contracts and Related Options (All Funds)

Selling Call and Put Options (Emerging Growth Fund, International Equity 
Fund, Mid Cap Fund, Growth Fund, Growth and Income Fund and Government 
Fund).   The principal reason for selling options is to obtain, through 
receipt of premiums, a greater current return than would be realized on 
the underlying securities alone.  A Fund's current return can be 
expected to fluctuate because premiums earned from writing options and 
dividend or interest income yields on portfolio securities vary as 
economic and market conditions change.  Writing options on portfolio 
securities also results in a higher portfolio turnover.  The purchaser 
of a call option pays a premium to the writer (i.e., the seller) for the 
right to buy the underlying security from the writer at a specified 
price during a certain period.  Emerging Growth Fund,  International 
Equity Fund, Growth Fund and Growth and Income Fund sell call options 
only on a covered basis.  Government Fund sells call options either on a 
covered basis, or for cross-hedging purposes.  A call option is covered 
if the Fund owns or has the right to acquire the underlying securities 
subject to the call option at all times during the option period.  Thus, 
Government Fund may sell options on U.S. Government securities or 
forward commitments of such securities.  An option is for cross-hedging 
purposes (relative to Government Fund only) to hedge against a security 
which the Fund owns or has the right to acquire.  In such circumstances, 
Government Fund maintains in a segregated account with the Fund's 
Custodian, cash or U.S. Government securities in an amount not less than 
the market value of the underlying security, marked to market daily, 
while the option is outstanding.  The purchaser of a put option pays a 
premium to the seller (i.e., the writer) for the right to sell the 
underlying security to the writer at a specified price during a certain 
period.  A Fund sells put options only on a secured basis, which means 
that, at all times during the option period, the Fund would maintain in 
a segregated account with its Custodian cash, cash equivalents or liquid 
securities in an amount of not less than the exercise price of the 
option, or will hold a put on the same underlying security at an equal 
or greater exercise price.  A Fund generally sells put options when the 
manager wishes to purchase the underlying security for the Fund's 
portfolio at a price lower than the current market price of the 
security.

In order to terminate its position as writer of a call or put option, a 
Fund may enter into a "closing purchase transaction," which is the 
purchase of a call (put) on the same underlying security and having the 
same exercise price and expiration date as the call (put) previously 
sold by the Fund.  The Fund will realize a gain (loss) if the premium 
plus commission paid in the closing purchase transaction is less 
(greater) than the premium it received on the sale of the option.  A 
Fund would also realize a gain if an option it has sold lapses 
unexercised.  A Fund may sell options that are listed on an exchange as 
well as options that are traded over-the-counter.  A Fund may close out 
its position as writer of an option only if a liquid secondary market 
exists for options of that series, but there is no assurance that such a 
market will exist, particularly in the case of over-the-counter options, 
since they can be closed out only with the other party to the 
transaction.  Alternatively, a Fund may purchase an offsetting option, 
which does not close out its position as a writer, but provides an asset 
of equal value to its obligation under the option sold.  If a Fund is 
not able to enter into a closing purchase transaction or to purchase an 
offsetting option with respect to an option it has sold, it will be 
required to maintain the securities subject to the call or the 
collateral securing the put until a closing purchase transaction can be 
entered into (or the option is exercised or expires), even though it 
might not be advantageous to do so.

By selling a call option, a Fund loses the potential for gain on the 
underlying security above the exercise price while the option is 
outstanding; by writing a put option a Fund might become obligated to 
purchase the underlying security at an exercise price that exceeds the 
then current market price.

Each of the United States exchanges has established limitations 
governing the maximum number of call or put options on the same 
underlying security (whether or not covered) that may be written by a 
single investor, whether acting alone or in concert with others, 
regardless of whether such options are written on one or more accounts 
or through one or more brokers.  An exchange may order the liquidation 
of positions found to be in violation of those limits, and it may impose 
other sanctions or restrictions.  These position limits may restrict the 
number of options the Fund may be able to write.

Purchasing Call and Put Options (Emerging Growth Fund, International 
Equity Fund, Mid Cap Fund, Growth Fund, Growth and Income Fund and 
Government Fund).   A Fund may purchase call options to protect (e.g., 
hedge) against anticipated increases in the prices of securities it 
wishes to acquire.  Alternatively, call options may be purchased for 
their leverage potential.  Since the premium paid for a call option is 
typically a small fraction of the price of the underlying security, a 
given amount of funds will purchase call options covering a much larger 
quantity of such security than could be purchased directly.  By 
purchasing call options, a Fund can benefit from any significant 
increase in the price of the underlying security to a greater extent 
than had it invested the same amount in the security directly.  However, 
because of the very high volatility of option premiums, a Fund could 
bear a significant risk of losing the entire premium if the price of the 
underlying security did not rise sufficiently, or if it did not do so 
before the option expired.  Conversely, put options may be purchased to 
protect (e.g., hedge) against anticipated declines in the market value 
of either specific portfolio securities or of a Fund's assets generally.  
Alternatively, put options may be purchased for capital appreciation in 
anticipation of a price decline in the underlying security and a 
corresponding increase in the value of the put option.  The purchase of 
put options for capital appreciation involves the same significant risk 
of loss as described above for call options.  In any case, the purchase 
of options for capital appreciation would increase the Fund's volatility 
by increasing the impact of changes in the market price of the 
underlying securities on the Fund's net asset value.  The Funds may 
purchase either listed or over-the-counter options.

Options on Stock Indexes (Emerging Growth Fund, International Equity 
Fund, Mid Cap Fund, Growth Fund and Growth and Income Fund).   Options 
on stock indices are similar to options on stock, but the delivery 
requirements are different.  Instead of giving the right to take or make 
delivery of stock at a specified price, an option on a stock index gives 
the holder the right to receive an amount of cash upon exercise of the 
option.  Receipt of this cash amount will depend upon the closing level 
of the stock index upon which the option is based being greater than (in 
the case of a call) or less than (in the case of a put) the exercise 
price of the option.  The amount of cash received will be the difference 
between the closing price of the index and the exercise price of the 
option, multiplied by a specified dollar multiple.  The writer of the 
option is obligated, in return for the premium received, to make 
delivery of this amount.  Some stock index options are based on a broad 
market index such as the Standard & Poor's 500 or the New York Stock 
Exchange Composite Index, or a narrower index such as the Standard & 
Poor's 100.  Indexes are also based on an industry or market segment 
such as the AMEX Oil and Gas Index or the Computer and Business 
Equipment Index.  Options are currently traded on The Chicago Board 
Options Exchange, the New York Stock Exchange, the American Stock 
Exchange and other exchanges.  Gain or loss to a Fund on transactions in 
stock index options will depend on price movements in the stock market 
generally (or in a particular industry or segment of the market) rather 
than price movements of individual securities.  As with stock options, 
the Fund may offset its position in stock index options prior to 
expiration by entering into a closing transaction on an Exchange, or it 
may let the option expire unexercised.

Foreign Currency Options ( International Equity Fund and Mid Cap Fund).   
The Fund may purchase put and call options on foreign currencies to 
reduce the risk of currency exchange fluctuation.  Premiums paid for 
such put and call options will be limited to no more than 5% of the 
Fund's net assets at any given time.  Options on foreign currencies 
operate similarly to options on securities, and are traded primarily in 
the over-the-counter market, although options on foreign currencies are 
traded on United States and foreign exchanges.  Exchange-traded options 
are expected to be purchased by the Fund from time to time and 
over-the-counter options may also be purchased, but only when the 
manager believes that a liquid secondary market exists for such options, 
although there can be no assurance that a liquid secondary market will 
exist for a particular option at any specific time.  Options on foreign 
currencies are affected by all of those factors which influence foreign 
exchange rates and investment generally. 

The value of a foreign currency option is dependent upon the value of 
the underlying foreign currency relative to the U.S. dollar.  As a 
result, the price of the option position may vary with changes in the 
value of either or both currencies and has no relationship to the 
investment merits of a foreign security.  Because foreign currency 
transactions occurring in the interbank market (conducted directly 
between currency traders, usually large commercial banks, and their 
customers) involve substantially larger amounts than those that may be 
involved in the use of foreign currency options, investors may be 
disadvantaged by having to deal in an odd lot market (generally 
consisting of transactions of less than $1 million) for the underlying 
foreign currencies at prices that are less favorable than for round 
lots.

There is no systematic reporting of last sale information for foreign 
currencies and there is no regulatory requirement that quotations 
available through dealers or other market sources be firm or revised on 
a timely basis.  Quotation information available is generally 
representative of very large transactions in the interbank market and 
thus may not reflect relatively smaller transactions (i.e., less than 
$1 million) where rates may be less favorable.  The interbank market in 
foreign currencies is a global, around-the-clock market.  To the extent 
that the U.S. options markets are closed while the markets for the 
underlying currencies remain open, significant price and rate movements 
may take place in the underlying markets that cannot be reflected in the 
options markets.

Futures Contracts (All Funds).   Each Fund may engage in transactions 
involving futures contracts and related options in accordance with rules 
and interpretations of the Commodity Futures Trading Commission ("CFTC") 
under which Funds are exempt from registration as a "commodity pool".

An interest rate futures contract is a bilateral agreement pursuant to 
which two parties agree to take or make delivery of a specific type of 
debt security at a specified future time and at a specified price.  
Although interest rate futures contracts call for delivery of specified 
securities, in most cases the contracts are closed out (by an offsetting 
purchase or sale) prior to actual delivery, with the difference between 
the contract price and the offsetting price paid in cash.

A municipal bond futures contract is an agreement pursuant to which two 
parties agree to take and make delivery of an amount of cash equal to a 
specified dollar amount times the differences between The Bond Buyer 
Municipal Bond Index value at the close of the last trading day of the 
contract and the price at which the futures contract is originally 
struck.

A stock index futures contract is a bilateral agreement pursuant to 
which two parties agree to take or make delivery of cash equal to a 
specified dollar amount times the difference between the stock index 
value at a specified time and the price at which the futures contract is 
originally struck.  A stock index fluctuates with changes in the market 
values of the stocks included.  No physical delivery of the underlying 
stocks in the index is made.

Currently, stock index futures contracts can be purchased with respect 
to the Standard & Poor's 500 Stock Index on the Chicago Mercantile 
Exchange ("CME"), the New York Stock Exchange Composite Index on the New 
York Futures Exchange and the Value Line Stock Index on the Kansas City 
Board of Trade.  Differences in the stocks included in the indexes may 
result in differences in correlation of the futures contracts with 
movements in the value of the securities being hedged.

Foreign stock index futures traded outside the United States include the 
Nikkei Index of 225 Japanese stocks traded on the Singapore 
International Monetary Exchange ("Nikkei Index"), Osaka Index of 
50 Japanese stocks traded on the Osaka Exchange, Financial Times Stock 
Exchange Index of the 100 largest stocks on the London Stock Exchange, 
the All Ordinaries Share Price Index of 307 stocks on the Sydney, 
Melbourne Exchanges, Hang Seng Index of 33 stocks on the Hong Kong Stock 
Exchange, Barclays Share Price Index of 40 stocks on the New Zealand 
Stock Exchange and Toronto Index of 35 stocks on the Toronto Stock 
Exchange.  Futures and futures options on the Nikkei Index are traded on 
the CME and United States commodity exchanges may develop futures and 
futures options on other indices of foreign securities.  Futures and 
options on United States devised index of foreign stocks are also being 
developed.  Investments in securities of foreign entities and securities 
denominated in foreign currencies involve risks not typically involved 
in domestic investment, including fluctuations in foreign exchange 
rates, future foreign political and economic developments, and the 
possible imposition of exchange controls or other foreign or United 
States governmental laws or restrictions applicable to such investments.

International Equity Fund may enter into futures contracts for 
non-hedging purposes, subject to applicable law.

In contrast to the purchase or sale of a security, no price is paid or 
received upon the purchase or sale of a futures contract.  Initially, a 
Fund is required to deposit with its Custodian in an account in the 
broker's name an amount of appropriate securities as required by the 
1940 Act equal to a percentage (which will normally range between 2% and 
10%) of the contract amount.  This amount is known as initial margin.  
The nature of initial margin in futures transactions is different from 
that of margin in securities transactions in that futures contract 
margin does not involve the borrowing of funds by the customer to 
finance the transaction.  Rather, the initial margin is in the nature of 
a performance bond or good faith deposit on the contract, which is 
returned to the Fund upon termination of the futures contract and 
satisfaction of its contractual obligations.  Subsequent payments to and 
from the broker, called variation margin, are made on a daily basis as 
the price of the underlying securities or index fluctuates, making the 
long and short positions in the futures contract more or less valuable, 
a process known as marking to market.

For example, when a Fund purchases a futures contract and the price of 
the underlying security or index rises, that position increases in 
value, and the Fund receives from the broker a variation margin payment 
equal to that increase in value.  Conversely, where the Fund purchases a 
futures contract and the value of the underlying security or index 
declines, the position is less valuable, and the Fund is required to 
make a variation margin payment to the broker.

At any time prior to expiration of the futures contract, the Fund may 
elect to terminate the position by taking an opposite position.  A final 
determination of variation margin is then made, additional cash is 
required to be paid by or released to the Fund, and the Fund realizes a 
loss or a gain.

When a Fund anticipates a significant market or market sector advance, 
the purchase of a futures contract affords a hedge against not 
participating in the advance at a time when the Fund is otherwise fully 
invested ("anticipatory hedge").  Such purchase of a futures contract 
serves as a temporary substitute for the purchase of individual 
securities, which may be purchased in an orderly fashion once the market 
has stabilized.  As individual securities are purchased, an equivalent 
amount of futures contracts could be terminated by offsetting sales.  A 
Fund may sell futures contracts in anticipation of or in a general 
market or market sector decline that may adversely affect the market 
value of the Fund's securities ("defensive hedge").  To the extent that 
the Fund's portfolio of securities changes in value in correlation with 
the underlying security or index, the sale of futures contracts 
substantially reduces the risk to the Fund of a market decline and, by 
so doing, provides an alternative to the liquidation of securities 
positions in the Fund with attendant transaction costs.

For example, if Government Fund holds long-term U.S. Government 
securities, and a rise in long-term interest rates is anticipated, it 
could, in lieu of selling its portfolio securities, sell futures 
contracts for similar long-term securities.  If interest rates increased 
and the value of the Fund's securities declined during the period the 
contracts were outstanding, the value of the Fund's futures contracts 
should increase, thereby protecting the Fund by preventing net asset 
value from declining as much as it otherwise would have.

In the event of the bankruptcy of a broker through which a Fund engages 
in transactions in listed options, futures or related options, the Fund 
could experience delays and/or losses in liquidating open positions 
purchased incur a loss of all or part of its margin deposits with the 
broker.  Similarly, in the event of the bankruptcy of the writer of an 
over-the-counter option purchased by Government Fund, the Fund could 
experience a loss of all or part of the value of the option.  
Transactions are entered into by a Fund only with brokers or financial 
institutions deemed creditworthy by the manager.

Persons who trade in futures contracts may be broadly classified as 
"hedgers" and "speculators." Hedgers, whose business activity involves 
investment or other commitment in securities or other obligations, use 
the futures market to offset unfavorable changes in value that may occur 
because of fluctuations in the value of the securities and obligations 
held or committed to be acquired by them or fluctuations in the value of 
the currency in which the securities or obligations are denominated.  
Debtors and other obligors may also hedge the interest cost of their 
obligations.  The speculator, like the hedger, generally expects neither 
to deliver nor to receive the financial instrument underlying the 
futures contract, but, unlike the hedger, hopes to profit from 
fluctuations in prevailing interest rates or currency exchange rates.

Each Fund's futures transactions will be entered into for traditional 
hedging purposes; that is, futures contracts will be sold to protect 
against a decline in the price of securities or currencies that the Fund 
owns, or futures contracts will be purchased to protect a Fund against 
an increase in the price of securities of currencies it has committed to 
purchase or expects to purchase.  International Equity Fund may also 
enter into futures transactions for non-hedging purposes, subject to 
applicable law.

A Fund pays commissions on futures contracts and options transactions.

Options on Futures Contracts (All Funds).   A Fund may also purchase and 
sell options on futures contracts which are traded on an Exchange.  An 
option on a futures contract gives the purchaser the right, in return 
for the premium paid, to assume a position in a futures contract (a long 
position if the option is a call and a short position if the option is a 
put), at a specified exercise price at any time during the option 
period.  As a seller of an option on a futures contract, a Fund is 
subject to initial margin and maintenance requirements similar to those 
applicable to futures contracts.  In addition, net option premiums 
received by a Fund are required to be included as initial margin 
deposits.  When an option on a futures contract is exercised, delivery 
of the futures position is accompanied by cash representing the 
difference between the current market price of the futures contract and 
the exercise price of the option.  A Fund may purchase put options on 
futures contracts in lieu of, and for the same purposes as, the sale of 
a futures contract.  The purchase of call options on futures contracts 
in intended to serve the same purpose as the actual purchase of the 
futures contract.

Forward Currency Contracts and Options on Currency (International Equity 
Fund and Mid Cap Fund).   A forward currency contract is an obligation 
to purchase or sell a currency against another currency at a future date 
and price as agreed upon by the parties.  The Fund may either accept or 
make delivery of the currency at the maturity of the forward contract 
or, prior to maturity, enter into a closing transaction involving the 
purchase or sale or an offsetting contract.  The Fund engages in forward 
currency transactions in anticipation of, or to protect itself against 
fluctuations in exchange rates.  The Fund might sell a particular 
foreign currency forward, for example, when it holds bonds denominated 
in that currency but anticipates, and seeks to be protected against, 
decline in the currency against the U.S. dollar.  Similarly, the Fund 
might sell the U.S. dollar forward when it holds bonds denominated in 
U.S. dollars but anticipates, and seeks to be protected against, a 
decline in the U.S. dollar relative to other currencies.  Further, the 
Fund might purchase a currency forward to "lock in" the price of 
securities denominated in that currency which it anticipates purchasing.

The matching of the increase in value of a forward contract and the 
decline in the U.S. dollar equivalent value of the foreign currency 
denominated asset, that is the subject of the hedge, generally will not 
be precise.  In addition, the Fund may not always be able to enter into 
foreign currency forward contracts at attractive prices and this will 
limit the Fund's ability to use such contract to hedge or cross-hedge 
its assets.  Also, with regard to the Fund's use of cross-hedges, there 
can be no assurance that historical correlations between the movement of 
certain foreign currencies relative to the U.S. dollar will continue.  
Thus, at any time poor correlation may exist between movements in the 
exchange rates of the foreign currencies underlying the Fund's 
cross-hedges and the movements in the exchange rates of foreign 
currencies in which the Fund's assets that are the subject of such 
cross-hedges are denominated.

Forward contracts are traded in an interbank market conducted directly 
between currency traders (usually large commercial banks) and their 
customers.  A forward contract generally has no deposit requirement and 
is consummated without payment of any commission.  The Fund, however, 
may enter into forward contracts with deposit requirements or 
commissions.

A put option on currency gives the Fund, as purchaser, the right (but 
not the obligation) to sell a specified amount of currency at the 
exercise price until the expiration of the option.  A call option gives 
the Fund, as purchaser, the right (but not the obligation) to purchase a 
specified amount of currency at the exercise price until its expiration.  
The Fund might purchase a currency put option, for example, to protect 
itself during the contract period against a decline in the value of a 
currency in which it holds or anticipates holding securities.  If the 
currency's value should decline, the loss in currency value should be 
offset, in whole or in part, by an increase in the value of the put.  If 
the value of the currency instead should rise, any gain to the Fund 
would be reduced by the premium it had paid for the put option.  A 
currency call option might be purchased, for example, in anticipation 
of, or to protect against, a rise in the value of a currency in which 
the Fund anticipates purchasing securities.

The Fund's ability to establish and close out positions in foreign 
currency options is subject to the existence of a liquid market.  There 
can be no assurance that a liquid market will exist for a particular 
option at any specific time.  In addition, options on foreign currencies 
are affected by all of those factors that influence foreign exchange 
rates and investment generally.

A position in an exchange-listed option may be closed out only on an 
exchange that provides a secondary market for identical options.  
Exchange markets for options on foreign currencies exist but are 
relatively new, and the ability to establish and close out positions on 
the exchanges is subject to maintenance of a liquid secondary market.  
Closing transactions may be effected with respect to options traded in 
the over-the-counter ("OTC") markets (currently the primary markets for 
options on foreign currencies) only by negotiating directly with the 
other party to the option contract or in a secondary market for the 
option if such market exists.  Although the Fund intends to purchase 
only those options for which there appears to be an active secondary 
market, there is no assurance that a liquid secondary market will exist 
for any particular option at any specific time.  In such event, it may 
not be possible to effect closing transactions with respect to certain 
options, with the result that the Fund would have to exercise those 
options which it has purchased in order to realize any profit.  The 
staff of the Securities and Exchange Commission ("SEC") has taken the 
position that, in general, purchased OTC options and the underlying 
securities used to cover written OTC options are illiquid securities.  
However, the Fund may treat as liquid the underlying securities used to 
cover written OTC options, provided it has arrangements with certain 
qualified dealers who agree that the Fund may repurchase any option it 
writes for a maximum price to be calculated by a predetermined formula.  
In these cases, the OTC option itself would only be considered illiquid 
to the extent that the maximum repurchase price under the formula 
exceeds the intrinsic value of the option.

Interest Rate Transactions (International Equity Fund).   Among the 
hedging transactions into which the Fund may enter are interest rate 
swaps and the purchase or sale of interest rate caps and floors.  The 
Fund expects to enter into these transactions primarily to preserve a 
return or spread on a particular investment or portion of its portfolio 
or to protect against any increase in the price of securities the Fund 
anticipates purchasing at a later date.  The Fund intends to use these 
transactions as a hedge and not as a speculative investment.  The Fund 
will not sell interest rate caps or floors that it does not own.  
Interest rate swaps involve the exchange by the Fund with another party 
of their respective commitments to pay or receive interest, e.g., an 
exchange of floating rate payments for fixed rate payments.  The 
purchase of an interest rate cap entitles the purchaser, to the extent 
that a specified index exceeds a predetermined interest rate, to receive 
payments of interest on a notional principal amount from the party 
selling such interest rate cap.  The purchase of an interest rate floor 
entitles the purchaser, to the extent that a specified index falls below 
a predetermined interest rate, to receive payments of interest on a 
notional principal amount from the party selling such interest rate 
floor.

The Fund may enter into interest rate swaps, caps and floors on either 
an asset-based or liability-based basis, depending on whether it is 
hedging its assets or its liabilities, and will usually enter into 
interest rate swaps on a net basis, i.e., the two payment streams are 
netted but, with the Fund receiving or paying, as the case may be, only 
the net amount of the two payments.  Inasmuch as these hedging 
transactions are entered into for good faith hedging purposes, the 
manager and the Fund believe such obligations do not constitute senior 
securities and, accordingly will not treat them as being subject to its 
borrowing restrictions.  The net amount of the excess, if any, of the 
Fund's obligations over its entitlements with respect to each interest 
rate swap will be accrued on a daily basis and an amount of cash or 
liquid securities having an aggregate net asset value at least equal to 
the accrued excess will be maintained in a segregated account by a 
custodian that satisfies the requirements of the 1940 Act.  The Fund 
will not enter into any interest rate swap, cap or floor transaction 
unless the unsecured senior debt or the claims-paying ability of the 
other party thereto is rated in the highest rating category of at least 
one nationally recognized rating organization at the time of entering 
into such transaction.  If there is a default by the other party to such 
a transaction, the Fund will 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 swap documentation.  As a result, the swap market has become 
relatively liquid.  Caps and floors are more recent innovations for 
which standardized documentation has not yet been developed and, 
accordingly, they are less liquid than swaps.

New options and futures contracts and various combinations thereof 
continue to be developed and the Fund may invest in any such options and 
contracts as may be developed to the extent consistent with its 
investment objective and regulatory requirements applicable to 
investment companies.

Use of Segregated and Other Special Accounts (All Funds).   Use of many 
hedging and other strategic transactions including currency and market 
index transactions by the Fund will require, among other things, that 
the Fund segregate cash, liquid securities or other assets with its 
Custodian, or a designated sub-custodian, to the extent the Fund's 
obligations are not otherwise "covered" through ownership of the 
underlying security, financial instrument or currency.  In general, 
either the full amount of any obligation by the Fund to pay or deliver 
securities or assets must be covered at all times by the securities, 
instruments or currency required to be delivered, or, subject to any 
regulatory restrictions, appropriate securities as required by the 1940 
Act at least equal to the current amount of the obligation must be 
segregated with the custodian or sub-custodian.  The segregated assets 
cannot be sold or transferred unless equivalent assets are substituted 
in their place or it is no longer necessary to segregate them.  A call 
option on securities written by the Fund, for example, will require the 
Fund to hold the securities subject to the call (or securities 
convertible into the needed securities without additional consideration) 
or to segregate liquid securities sufficient to purchase and deliver the 
securities if the call is exercised.  A call option sold by the Fund on 
an index will require the Fund to own portfolio securities that 
correlate with the index or to segregate liquid securities equal to the 
excess of the index value over the exercise price on a current basis.  A 
put option on securities written by the Fund will require the Fund to 
segregate liquid securities equal to the exercise price.  Except when 
the Fund enters into a forward contract in connection with the purchase 
or sale of a security denominated in a foreign currency or for other 
non-speculative purposes, which requires no segregation, a currency 
contract that obligates the Fund to buy or sell a foreign currency will 
generally require the Fund to hold an amount of that currency, liquid 
securities denominated in that currency equal to the Fund's obligations 
or to segregate liquid securities equal to the amount of the Fund's 
obligations.

OTC options entered into by the Fund, including those on securities, 
currency, financial instruments or indices, and OCC-issued and 
exchange-listed index options will generally provide for cash 
settlement, although the Fund will not be required to do so.  As a 
result, when the Fund sells these instruments it will segregate an 
amount of assets equal to its obligations under the options.  OCC-issued 
and exchange-listed options sold by the Fund other than those described 
above generally settle with physical delivery, and the Fund will 
segregate an amount of assets equal to the full value of the option.  
OTC options settling with physical delivery or with an election of 
either physical delivery or cash settlement will be treated the same as 
other options settling with physical delivery.

In the case of a futures contract or an option on a futures contract, 
the Fund must deposit initial margin and, in some instances, daily 
variation margin in addition to segregating assets sufficient to meet 
its obligations to purchase or provide securities or currencies, or to 
pay the amount owed at the expiration of an index-based futures 
contract.  These assets may consist of cash, cash equivalents, liquid 
securities or other acceptable assets.  The Fund will accrue the net 
amount of the excess, if any, of its obligations relating to swaps over 
its entitlements with respect to each swap on a daily basis and will 
segregate with its custodian, or designated sub-custodian, an amount of 
cash or liquid securities having an aggregate value equal to at least 
the accrued excess.  Caps, floors and collars require segregation of 
assets with a value equal to the Fund's net obligation, if any.

Hedging and other strategic transactions may be covered by means other 
than those described above when consistent with applicable regulatory 
policies.  The Fund may also enter into offsetting transactions so that 
its combined position, coupled with any segregated assets, equals its 
net outstanding obligation in related options and hedging and other 
strategic transactions.  The Fund could purchase a put option, for 
example, if the strike price of that option is the same or higher than 
the strike price of a put option sold by the Fund.  Moreover, instead of 
segregating assets if it holds a futures contract or forward contract, 
the Fund could purchase a put option on the same futures contract or 
forward contract with a strike price as high or higher than the price of 
the contract held.  Other hedging and other strategic transactions may 
also be offset in combinations.  If the offsetting transaction 
terminates at the time of or after the primary transaction, no 
segregation is required, but if it terminates prior to that time, assets 
equal to any remaining obligation would need to be segregated.

OTHER PRACTICES

Repurchase Agreements (All Funds).   Each Fund may enter into repurchase 
agreements with broker-dealers or domestic banks.  The Trustees will 
review on a continuing basis those institutions which enter into a 
repurchase agreement with the Fund.  A repurchase agreement is a 
short-term investment in which the purchaser (i.e., the Fund) acquires 
ownership of a debt security and the seller agrees to repurchase the 
obligation at a future time and set price, usually not more than seven 
days from the date of purchase, thereby determining the yield during the 
purchaser's holding period.  Repurchase agreements are collateralized by 
the underlying debt securities and may be considered to be loans under 
the 1940 Act.  The Fund will make payment for such securities only upon 
physical delivery or evidence of book entry transfer to the account of a 
custodian or bank acting as agent.  The seller under a repurchase 
agreement is required to maintain the value of the underlying securities 
marked to market daily at not less than the repurchase price.  The 
underlying securities (normally securities of the U.S. Government, or 
its agencies and instrumentalities), may have maturity dates exceeding 
one year.  The Fund does not bear the risk of a decline in value of the 
underlying security unless the seller defaults under its repurchase 
obligation.  In the event of a bankruptcy or other default of a seller 
of a repurchase agreement, the Fund could experience both delays in 
liquidating the underlying securities and loss including: (a) possible 
decline in the value of the underlying security during the period while 
the Fund seeks to enforce its rights thereto, (b) possible lack of 
access to income on the underlying security during this period, and 
(c) expenses of enforcing its rights.

For the purpose of investing in repurchase agreements, the manager may 
aggregate the cash that certain funds advised or subadvised by the 
manager or its affiliates would otherwise invest separately into a joint 
account. The cash in the joint account is then invested in repurchase 
agreements and the funds that contributed to the joint account share pro 
rata in the net revenue generated. The manager believes that the joint 
account produces efficiencies and economies of scale that may contribute 
to reduced transaction costs, higher returns, higher quality investments 
and greater diversity of investments for a Fund than would be available 
to a Fund investing separately. The manner in which the joint account is 
managed is subject to conditions set forth in an SEC exemptive order 
authorizing this practice, which conditions are designed to ensure the 
fair administration of the joint account and to protect the amounts in 
that account. 

Reverse Repurchase Agreements (International Equity Fund and Mid Cap 
Fund).  International Equity Fund and Mid Cap Fund may invest in reverse 
repurchase agreements.  International Equity Fund does not currently 
intend to commit more than 5% of its net assets to reverse repurchase 
agreements.  The Funds may enter into reverse repurchase agreements with 
broker/dealers and other financial institutions.  Such agreements 
involve the sale of portfolio securities with an agreement to repurchase 
the securities at an agreed-upon price, date and interest payment and 
are considered to be borrowings by the Fund and are subject to the 
borrowing limitations set forth under "Investment Restrictions." Since 
the proceeds of reverse repurchase agreements are invested, this would 
introduce the speculative factor known as "leverage." The securities 
purchased with the funds obtained from the agreement and securities 
collateralizing the agreement will have maturity dates no later than the 
repayment date.  Generally, the effect of such a transaction is that the 
Fund can recover all or most of the cash invested in the portfolio 
securities involved during the term of the reverse repurchase agreement, 
while in many cases it will be able to keep some of the interest income 
associated with those securities.  Such transactions are only 
advantageous if the Fund has an opportunity to earn a greater rate of 
interest on the cash derived from the transaction than the interest cost 
of obtaining that cash.  Opportunities to realize earnings from the use 
of the proceeds equal to or greater than the interest required to be 
paid may not always be available, and the Fund intends to use the 
reverse repurchase technique only when the manager believes it will be 
advantageous to the Fund.  The use of reverse repurchase agreements may 
exaggerate any interim increase or decrease in the value of the Fund's 
assets.  The Fund's custodian bank will maintain a separate account for 
the Fund with securities having a value equal to or greater than such 
commitments.

Short Sales Against the Box (Emerging Growth Fund, International Equity 
Fund, Mid Cap Fund, Growth Fund and Growth and Income Fund).   Each Fund 
may from time to time make short sales of securities it owns or has the 
right to acquire through conversion or exchange of other securities it 
owns. A short sale is ''against the box'' to the extent that the Fund 
contemporaneously owns or has the right to obtain at no added cost 
securities identical to those sold short. In a short sale, the Fund does 
not immediately deliver the securities sold and does not receive the 
proceeds from the sale. The Fund is said to have a short position in the 
securities sold until it delivers the securities sold, at which time it 
receives the proceeds of the sale. The Fund may not make short sales or 
maintain a short position if to do so would cause more than 25% of its 
total assets, taken at market value, to be held as collateral for such 
sales.

To secure its obligation to deliver the securities sold short, the Fund 
will deposit in escrow in a separate account with its custodian an equal 
amount of the securities sold short or securities convertible into or 
exchangeable for such securities. The Fund may close out a short 
position by purchasing and delivering an equal amount of the securities 
sold short, rather than by delivering securities already held by the 
Fund, because the Fund may want to continue to receive interest and 
dividend payments on securities in its portfolio that are convertible 
into the securities sold short. However, the Fund will not purchase and 
deliver new securities to satisfy its short order if such purchase and 
sale would cause the Fund to derive more than 30% of its gross income 
from the sale of securities held for less than three months. 
	
Leverage (International Equity Fund).   The Fund may borrow from banks, 
on a secured or unsecured basis, up to 25% of the value of its assets. 
If the Fund borrows and uses the proceeds to make additional 
investments, income and appreciation from such investments will improve 
its performance if they exceed the associated borrowing costs but impair 
its performance if they are less than such borrowing costs. This 
speculative factor is known as ''leverage.''  Leverage creates an 
opportunity for increased returns to shareholders of the Fund but, at 
the same time, creates special risk considerations. For example, 
leverage may exaggerate changes in the net asset value of the Fund's 
shares and in the Fund's yield. Although the principal or stated value 
of such borrowings will be fixed, the Fund's assets may change in value 
during the time the borrowing is outstanding. Leverage will create 
interest or dividend expenses for the Fund which can exceed the income 
from the assets retained. To the extent the income or other gain derived 
from securities purchased with borrowed funds exceed the interest or 
dividends the Fund will have to pay in respect thereof, the Fund's net 
income or other gain will be greater than if leverage had not been used. 
Conversely, if the income or other gain from the incremental assets is 
not sufficient to cover the cost of leverage, the net income or other 
gain of the Fund will be less than if leverage had not been used. If the 
amount of income from the incremental securities is insufficient to 
cover the cost of borrowing, securities might have to be liquidated to 
obtain required funds. Depending on market or other conditions, such 
liquidations could be disadvantageous to the Fund.

Loans of Portfolio Securities (All Funds).   Each of the Funds may lend 
portfolio securities to unaffiliated brokers, dealers and financial 
institutions provided that cash equal to 100% of the market value of the 
securities loaned is deposited by the borrower with the particular Fund 
and is marked to market daily.  While such securities are on loan, the 
borrower is required to pay the Fund any income accruing thereon.  
Furthermore, the Fund may invest the cash collateral in portfolio 
securities thereby increasing the return to the Fund as well as 
increasing the market risk to the Fund.  A Fund will not lend its 
portfolio securities if such loans are not permitted by the laws or 
regulations of any state in which its shares are qualified for sale.  
However, should the Fund believe that lending securities is in the best 
interests of the Fund's shareholders, it would consider withdrawing its 
shares from sale in any such state.

Loans would be made for short-term purposes and subject to termination 
by the Fund in the normal settlement time, currently five business days 
after notice, or by the borrower on one day's notice.  Borrowed 
securities must be returned when the loan is terminated.  Any gain or 
loss in the market price of the borrowed securities which occurs during 
the term of the loan inures to the Fund and its shareholders, but any 
gain can be realized only if the borrower does not default.  Each Fund 
may pay reasonable finders', administrative and custodial fees in 
connection with a loan.

RISK FACTORS

General.  Investors should realize that risk of loss is inherent in the 
ownership of any securities and that each Fund's net asset value will 
fluctuate, reflecting fluctuations in the market value of its portfolio 
positions.  

Fixed Income Securities.  Investments in fixed income securities may 
subject the Funds to risks, including the following:
Interest Rate Risk.  When interest rates decline, the market value 
of fixed income securities tends to increase.  Conversely, when interest 
rates increase, the market value of fixed income securities tends to 
decline.  The volatility of a security's market value will differ 
depending upon the security's duration, the issuer and the type of 
instrument.

Default Risk/Credit Risk.  Investments in fixed income securities 
are subject to the risk that the issuer of the security could default on 
its obligations, causing a Fund to sustain losses on such investments.  
A default could impact both interest and principal payments.

Call Risk and Extension Risk.  Fixed income securities may be 
subject to both call risk and extension risk.  Call risk exists when the 
issuer may exercise its right to pay principal on an obligation earlier 
than scheduled, which would cause cash flows to be returned earlier than 
expected.  This typically results when interest rates have declined and 
a Fund will suffer from having to reinvest in lower yielding securities.  
Extension risk exists when the issuer may exercise its right to pay 
principal on an obligation later than scheduled, which would cause cash 
flows to be returned later than expected.  This typically results when 
interest rates have increased, and a Fund will suffer from the inability 
to invest in higher yield securities.

Below Investment Grade Fixed Income Securities.  Securities which are 
rated BBB by S&P or Baa by Moody's are generally regarded as having 
adequate capacity to pay interest and repay principal, but may have some 
speculative characteristics.  Securities rated below Baa by Moody's or 
BBB by S&P may have speculative characteristics, including the 
possibility of default or bankruptcy of the issuers of such securities, 
market price volatility based upon interest rate sensitivity, 
questionable creditworthiness and relative liquidity of the secondary 
trading market.  Because high yield bonds have been found to be more 
sensitive to adverse economic changes or individual corporate 
developments and less sensitive to interest rate changes than higher-
rated investments, an economic downturn could disrupt the market for 
high yield bonds and adversely affect the value of outstanding bonds and 
the ability of issuers to repay principal and interest.  In addition, in 
a declining interest rate market, issuers of high yield bonds may 
exercise redemption or call provisions, which may force a Fund, to the 
extent it owns such securities, to replace those securities with lower 
yielding securities.  This could result in a decreased return.

Small Capitalization Companies.  Small companies may (i) be subject to 
more volatile market movements than securities of larger, more 
established companies; (ii) have limited product lines, markets or 
financial resources; and (iii) depend upon a limited or less experienced 
management group.  The securities of small companies may be traded only 
on the over-the-counter market or on a regional securities exchange and 
may not be traded daily or in the volume typical of trading on a 
national securities exchange.  Disposition by the Fund of small company 
securities in order to meet redemptions may require the Fund to sell 
these securities at a discount from market prices, over a longer period 
of time or during periods when disposition is not desirable.

Foreign Securities.   Investments in securities of foreign issuers 
involve certain risks not ordinarily associated with investments in 
securities of domestic issuers.  Such risks include fluctuations in 
foreign exchange rates, future political and economic developments, and 
the possible imposition of exchange controls or other foreign 
governmental laws or restrictions.  Since each Fund will invest heavily 
in securities denominated or quoted in currencies other than the U.S. 
dollar, changes in foreign currency exchange rates will, to the extent 
the Fund does not adequately hedge against such fluctuations, affect the 
value of securities in its portfolio and the unrealized appreciation or 
depreciation of investments so far as U.S. investors are concerned.  In 
addition, with respect to certain countries, there is the possibility of 
expropriation of assets, confiscatory taxation, political or social 
instability or diplomatic developments which could adversely affect 
investments in those countries. 

With respect to certain foreign countries, there is the possibility of 
expropriation of assets, confiscatory taxation, political or social 
instability or diplomatic developments which could affect investment in 
those countries. There may be less publicly available information about 
a foreign security than about a security issued by a U.S. company, and 
foreign entities may not be subject to accounting, auditing and 
financial reporting standards and requirements comparable to those of 
United States entities. In addition, certain foreign investments made by 
the Fund may be subject to foreign withholding taxes, which would reduce 
the Fund's total return on such investments and the amounts available 
for distributions by the Fund to its shareholders. See ''Dividends, 
Distributions and Taxes.'' Foreign financial markets, while growing in 
volume, have, for the most part, substantially less volume than United 
States markets, and securities of many foreign companies are less liquid 
and their prices more volatile than securities of comparable domestic 
companies. The foreign markets also have different clearance and 
settlement procedures, and in certain markets there have been times when 
settlements have been unable to keep pace with the volume of securities 
transactions making it difficult to conduct such transactions. Delays in 
settlement could result in temporary periods when assets of the Fund are 
not invested and no return is earned thereon. The inability of each Fund 
to make intended security purchases due to settlement problems could 
cause the Fund to miss attractive investment opportunities. Inability to 
dispose of portfolio securities due to settlement problems could result 
either in losses to the Fund due to subsequent declines in value of the 
portfolio security or, if the Fund has entered into a contract to sell 
the security, could result in possible liability to the purchaser. Costs 
associated with transactions in foreign securities, including custodial 
costs and foreign brokerage commissions, are generally higher than with 
transactions in United States securities. In addition, each Fund will 
incur cost in connection with conversions between various currencies. 
There is generally less government supervision and regulation of 
exchanges, financial institutions and issuers in foreign countries than 
there are in the United States. These risks may be intensified in the 
case of investments in developing or emerging markets. In many 
developing markets, there is less government supervision and regulation 
of business and industry practices, stock exchanges, brokers and listed 
companies than in the United States. The foreign securities markets of 
many of the countries in which the Fund may invest may also be smaller, 
less liquid, and subject to greater price volatility than those in the 
United States.  Finally, in the event of a default on any such foreign 
debt obligations, it may be more difficult for the Fund to obtain or to 
enforce a judgment against the issuers of such securities. 

Currency Risks.  The U.S. dollar value of securities denominated in a 
foreign currency will vary with changes in currency exchange rates, 
which can be volatile.  Accordingly, changes in the value of the 
currency in which a Fund's investments are denominated relative to the 
U.S. dollar will affect the Fund's net asset value.  Exchange rates are 
generally affected by the forces of supply and demand in the 
international currency markets, the relative merits of investing in 
different countries and the intervention or failure to intervene of U.S. 
or foreign governments and central banks.  However, currency exchange 
rates may fluctuate based on factors intrinsic to a country's economy.  
Some emerging market countries also may have managed currencies, which 
are not free floating against the U.S. dollar.  In addition, emerging 
markets are subject to the risk of restrictions upon the free conversion 
of their currencies into other currencies.  Any devaluations relative to 
the U.S. dollar in the currencies in which a Fund's securities are 
quoted would reduce the Fund's net asset value per share. 

Special Risks of Countries in the Asia Pacific Region.   Certain of the 
risks associated with international investments are heightened for 
investments in these countries. For example, some of the currencies of 
these countries have experienced devaluations relative to the U.S. 
dollar, and adjustments have been made periodically in certain of such 
currencies.  Certain countries, such as Indonesia, face serious exchange 
constraints.  Jurisdictional disputes also exist, for example, between 
South Korea and North Korea.  In addition, Hong Kong reverted to Chinese 
administration on July 1, 1997.  The long-term effects of this reversion 
are not known at this time. 

Securities of Developing/Emerging Markets Countries.   A developing or 
emerging markets country generally is considered to be a country that is 
in the initial stages of its industrialization cycle. Investing in the 
equity markets of developing countries involves exposure to economic 
structures that are generally less diverse and mature, and to political 
systems that can be expected to have less stability, than those of 
developed countries. Historical experience indicates that the markets of 
developing countries have been more volatile than the markets of the 
more mature economies of developed countries; however, such markets 
often have provided higher rates of return to investors. 

One or more of the risks discussed above could affect adversely the 
economy of a developing market or a Fund's investments in such a market.  
In Eastern Europe, for example, upon the accession to power of Communist 
regimes in the past, the governments of a number of Eastern European 
countries expropriated a large amount of property.  The claims of many 
property owners against those of governments may remain unsettled.  
There can be no assurance that any investments that a Fund might make in 
such emerging markets would not be expropriated, nationalized or 
otherwise confiscated at some time in the future.  In such an event, the 
Fund could lose its entire investment in the market involved.  Moreover, 
changes in the leadership or policies of such markets could halt the 
expansion or reverse the liberalization of foreign investment policies 
now occurring in certain of these markets and adversely affect existing 
investment opportunities.

Many of a Fund's investments in the securities of emerging markets may 
be unrated or rated below investment grade. Securities rated below 
investment grade (and comparable unrated securities) are the equivalent 
of high yield, high risk bonds, commonly known as "junk bonds." Such 
securities are regarded as predominantly speculative with respect to the 
issuer's capacity to pay interest and repay principal in accordance with 
the terms of the obligations and involve major risk exposure to adverse 
business, financial, economic, or political conditions.

Derivative Instruments.  In accordance with its investment policies, 
each Fund may invest in certain derivative instruments which are 
securities or contracts that provide for payments based on or "derived" 
from the performance of an underlying asset, index or other economic 
benchmark.  Essentially, a derivative instrument is a financial 
arrangement or a contract between two parties (and not a true security 
like a stock or a bond).  Transactions in derivative instruments can be, 
but are not necessarily, riskier than investments in conventional 
stocks, bonds and money market instruments.  A derivative instrument is 
more accurately viewed as a way of reallocating risk among different 
parties or substituting one type of risk for another.  Every investment 
by a Fund, including an investment in conventional securities, reflects 
an implicit prediction about future changes in the value of that 
investment.  Every Fund investment also involves a risk that the 
portfolio manager's expectations will be wrong.  Transactions in 
derivative instruments often enable a Fund to take investment positions 
that more precisely reflect the portfolio manager's expectations 
concerning the future performance of the various investments available 
to the Fund.  Derivative instruments can be a legitimate and often cost-
effective method of accomplishing the same investment goals as could be 
achieved through other investment in conventional securities.

Derivative contracts include options, futures contracts, forward 
contracts, forward commitment and when-issued securities transactions, 
forward foreign currency exchange contracts and interest rate, mortgage 
and currency swaps.  The following are the principal risks associated 
with derivative instruments:

Market risk:  The instrument will decline in value or that an 
alternative investment would have appreciated more, but this is no 
different from the risk of investing in conventional securities.

Leverage and associated price volatility:  Leverage causes 
increased volatility in the price and magnifies the impact of adverse 
market changes, but this risk may be consistent with the investment 
objective of even a conservative Fund in order to achieve an average 
portfolio volatility that is within the expected range for that type of 
Fund. 

Credit risk:  The issuer of the instrument may default on its 
obligation to pay interest and principal.

Liquidity and valuation risk:  Many derivative instruments are 
traded in institutional markets rather than on an exchange.  
Nevertheless, many derivative instruments are actively traded and can be 
priced with as much accuracy as conventional securities.  Derivative 
instruments that are custom designed to meet the specialized investment 
needs of a relatively narrow group of institutional investors such as 
the Funds are not readily marketable and are subject to a Fund's 
restrictions on illiquid investments.

Correlation risk:  There may be imperfect correlation between the 
price of the derivative and the underlying asset.  For example, there 
may be price disparities between the trading markets for the derivative 
contract and the underlying asset.
Each derivative instrument purchased for a Fund's portfolio is reviewed 
and analyzed by the Fund's portfolio manager to assess the risk and 
reward of each such instrument in relation the Fund's portfolio 
investment strategy.  The decision to invest in derivative instruments 
or conventional securities is made by measuring the respective 
instrument's ability to provide value to the Fund and its shareholders.

Special Risks of Using Futures Contracts.  The prices of Futures 
Contracts are volatile and are influenced by, among other things, actual 
and anticipated changes in interest rates, which in turn are affected by 
fiscal and monetary policies and national and international political 
and economic events. 

At best, the correlation between changes in prices of Futures Contracts 
and of the securities or currencies being hedged can be only 
approximate.  The degree of imperfection of correlation depends upon 
circumstances such as: variations in speculative market demand for 
Futures and for debt securities or currencies, including technical 
influences in Futures trading; and differences between the financial 
instruments being hedged and the instruments underlying the standard 
Futures Contracts available for trading, with respect to interest rate 
levels, maturities, and creditworthiness of issuers.  A decision of 
whether, when, and how to hedge involves skill and judgment, and even a 
well-conceived hedge may be unsuccessful to some degree because of 
unexpected market behavior or interest rate trends. 

Because of the low margin deposits required, Futures trading involves an 
extremely high degree of leverage.  As a result, a relatively small 
price movement in a Futures Contract may result in immediate and 
substantial loss, as well as gain, to the investor.  For example, if at 
the time of purchase, 10% of the value of the Futures Contract is 
deposited as margin, a subsequent 10% decrease in the value of the 
Futures Contract would result in a total loss of the margin deposit, 
before any deduction for the transaction costs, if the account were then 
closed out.  A 15% decrease would result in a loss equal to 150% of the 
original margin deposit, if the Futures Contract were closed out.  Thus, 
a purchase or sale of a Futures Contract may result in losses in excess 
of the amount invested in the Futures Contract.  A Fund, however, would 
presumably have sustained comparable losses if, instead of the Futures 
Contract, it had invested in the underlying financial instrument and 
sold it after the decline.  Where a Fund enters into Futures 
transactions for non-hedging purposes, it will be subject to greater 
risks and could sustain losses which are not offset by gains on other 
Fund assets. 
Furthermore, in the case of a Futures Contract purchase, in order to be 
certain that each Fund has sufficient assets to satisfy its obligations 
under a Futures Contract, the Fund segregates and commits to back the 
Futures Contract an amount of cash and liquid securities equal in value 
to the current value of the underlying instrument less the margin 
deposit. 

Most U.S. Futures exchanges limit the amount of fluctuation permitted in 
Futures Contract prices during a single trading day.  The daily limit 
establishes the maximum amount that the price of a Futures Contract may 
vary either up or down from the previous day's settlement price at the 
end of a trading session.  Once the daily limit has been reached in a 
particular type of Futures Contract, no trades may be made on that day 
at a price beyond that limit.  The daily limit governs only price 
movement during a particular trading day and therefore does not limit 
potential losses, because the limit may prevent the liquidation of 
unfavorable positions.  Futures Contract prices have occasionally moved 
to the daily limit for several consecutive trading days with little or 
no trading, thereby preventing prompt liquidation of Futures positions 
and subjecting some Futures traders to substantial losses. 

Economic and Monetary Union (EMU).  EMU occurred on January 1, 1999, 
when 11 European countries adopted a single currency - the euro.  For 
participating countries, EMU means sharing a single currency and single 
official interest rate and adhering to agreed upon limits on government 
borrowing.  Budgetary decisions remain in the hands of each 
participating country, but are subject to each country's commitment to 
avoid "excessive deficits" and other more specific budgetary criteria.  
A European Central Bank is responsible for setting the official interest 
rate to maintain price stability within the euro zone.  EMU is driven by 
the expectation of a number of economic benefits, including lower 
transaction costs, reduced exchange risk, greater competition, and a 
broadening and deepening of European financial markets.  However, there 
are a number of significant risks associated with EMU.  Monetary and 
economic union on this scale has never been attempted before.  There is 
a significant degree of uncertainty as to whether participating 
countries will remain committed to EMU in the face of changing economic 
conditions.  This uncertainty may increase the volatility of European 
markets and may adversely affect the prices of securities of European 
issuers in the Funds' portfolios.

Year 2000.   The investment management services provided to each Fund by 
the manager depend on the smooth functioning of its computer systems and 
those of its service providers. Many computer software systems in use 
today cannot recognize the year 2000, but revert to 1900 or some other 
date, due to the manner in which dates were encoded and calculated. That 
failure could have a negative impact on each Fund's operations, 
including the handling of securities trades, pricing and account 
services. The manager has advised each Fund that it has been reviewing 
all of its computer systems and actively working on necessary changes to 
its systems to prepare for the year 2000 and expect that its systems 
will be compliant before that date. In addition, the manager has been 
advised by each Fund's custodian, distributor, transfer agent sub-
transfer agent and accounting service agent that they are also in the 
process of modifying their systems with the same goal. There can, 
however, be no assurance that the manager or any other service provider 
will be successful, or that interaction with other non-complying 
computer systems will not impair Fund services at that time.  The 
foregoing is a year 2000 readiness disclosure.

Portfolio Turnover.   Each Fund may purchase or sell securities without 
regard to the length of time the security has been held and thus may 
experience a high rate of portfolio turnover. A 100% turnover rate would 
occur, for example, if all the securities in a portfolio were replaced 
in a period of one year. Under certain market conditions, the Growth 
Fund and the Government Fund may experience a high rate of portfolio 
turnover. This may occur, for example, if the Fund writes a substantial 
number of covered call options and the market prices of the underlying 
securities appreciate. The rate of portfolio turnover is not a limiting 
factor when the manager deems it desirable to purchase or sell 
securities or to engage in options transactions. The annual turnover 
rates of the Growth Fund, the Government Fund and the Municipal Bond 
Fund are not expected to exceed 400%; and the annual turnover rates of 
the Emerging Growth Fund, the International Equity Fund and the Growth 
and Income Fund are not expected to exceed 100%. High portfolio turnover 
involves correspondingly greater transaction costs, including any 
brokerage commissions, which are borne directly by the respective Fund 
and may increase the recognition of short-term, rather than long-term, 
capital gains if securities are held for one year or less and may be 
subject to applicable income taxes. See ''Dividends, Distributions and 
Taxes.''

INVESTMENT RESTRICTIONS

Each Fund has adopted the following restrictions which may not be 
changed with respect to any Fund without approval by the vote of a 
majority of such Fund's outstanding voting shares, which is defined by 
the 1940 Act as the lesser of (i) 67% or more of the voting securities 
present at a meeting, if the holders of more than 50% of the outstanding 
voting securities of the Fund are present or represented by proxy; or 
(ii) more than 50% of the Fund's outstanding voting securities.  The 
percentage limitations need only be met at the time the investment is 
made or after relevant action is taken.


The following restrictions apply to all Funds except for Mid Cap Fund:

A Fund shall not:

1.  Lend money except by the purchase of bonds or other debt obligations 
of types commonly offered publicly or privately and purchased by 
financial institutions, including investments in repurchase agreements.  
A Fund will not invest in repurchase agreements maturing in more than 
seven days (unless subject to a demand feature) if any such investment, 
together with any illiquid securities (including securities which are 
subject to legal or contractual restrictions on resale) held by the 
Fund, exceeds 10% of the market or other fair value of its total net 
assets (15% in the case of Emerging Growth Fund and International Equity 
Fund); provided, however, that with respect to Emerging Growth Fund, 
International Equity Fund, Growth Fund, Growth and Income Fund and 
Municipal Bond Fund, illiquid securities shall exclude shares of other 
open-end investment companies owned by the Fund but include the Fund's 
pro rata portion of the securities and other assets owned by any such 
company.  See "Repurchase Agreements";

	2.  Underwrite securities of other companies, except insofar as a Fund 
might be deemed to be an underwriter for purposes of the Securities Act 
of 1933 (the "1933 Act") in the resale of any securities owned by the 
Fund;

	3.  Lend its portfolio securities in excess of 10% (15% in the case of 
Emerging Growth Fund and International Equity Fund) of its total assets, 
both taken at market value, provided that any loans shall be in 
accordance with the guidelines established for such loans by the 
Trustees as described under "Loans of Portfolio Securities," including 
the maintenance of collateral from the borrower equal at all times to 
the current market value of the securities loaned;

	4.  With respect to 75% of its assets, invest more than 5% of its assets 
in the securities of any one issuer (except obligations of the 
U.S. Government, its agencies or instrumentalities and repurchase 
agreements secured thereby) or purchase more than 10% of the outstanding 
voting securities of any one issuer.  Neither limitation shall apply to 
the acquisition of shares of other open-end investment companies by 
Emerging Growth Fund, International Equity Fund, Growth Fund, Growth and 
Income Fund and Municipal Bond Fund, to the extent permitted by rule or 
order of the SEC exempting them from the limitations imposed by 
Section 12(d)(1) of the 1940 Act;

	5.  Invest more than 25% of the value of its total assets in securities 
of issuers in any particular industry; provided, however, that with 
respect to Emerging Growth Fund, International Equity Fund, Growth Fund, 
Growth and Income Fund and Municipal Bond Fund, this limitation shall 
exclude shares of other open-end investment companies owned by the Fund 
but include the Fund's pro rata portion of the securities and other 
assets owned by any such company.  (This does not restrict any of the 
Funds from investing in obligations of the U.S. Government and 
repurchase agreements secured thereby); and

	6.  With respect to all Funds other than Emerging Growth Fund and 
International Equity Fund, borrow in excess of 10% of the market or 
other fair value of its total assets, or pledge its assets to an extent 
greater than 5% of the market or other fair value of its total assets, 
provided that so long as any borrowing exceeds 5% of the value of the 
Fund's total assets, the Fund shall not purchase portfolio securities.  
Any such borrowings shall be from banks and shall be undertaken only as 
a temporary measure for extraordinary or emergency purposes.  With 
respect to Emerging Growth Fund, borrow money except temporarily from 
banks to facilitate payment of redemption requests and then only in 
amounts not exceeding 33 1/3% of its net assets, or pledge more than 10% 
of its net assets in connection with permissible borrowings or purchase 
additional securities when money borrowed exceeds 5% of its net assets.  
With respect to International Equity Fund, borrow money from banks on a 
secured or unsecured basis, in excess of 25% of the value of its total 
assets.  Deposits in escrow in connection with the writing of covered 
call or secured put options, or in connection with the purchase or sale 
of forward contracts, futures contracts, foreign currency futures and 
related options, are not deemed to be a pledge or other encumbrance.  
This restriction shall not prevent International Equity Fund from 
entering into reverse repurchase agreements, provided that reverse 
repurchase agreements and any transactions constituting borrowing by the 
Fund may not exceed 33 1/3% of the Fund's net assets. International 
Equity Fund may not mortgage or pledge its assets except to secure 
borrowings permitted under this restriction.

The following restrictions apply to Growth Fund, Growth and Income Fund, 
Government Fund and Municipal Bond Fund:

Each of these Funds shall not:

1.  Make any investment in real estate, commodities or commodities 
contracts, or warrants except that Growth Fund, Growth and Income Fund, 
Government Fund and Municipal Bond Fund may engage in transactions in 
futures and related options, Government Fund may purchase or sell 
securities which are secured by real estate, and Growth Fund may acquire 
warrants or other rights to subscribe to securities of companies issuing 
such warrants or rights, or of parents or subsidiaries of such 
companies, although Growth Fund may not invest more than 5% of its net 
assets in such securities valued at the lower of cost or market, nor 
more than 2% of its net assets in such securities (valued on such basis) 
which are not listed on the New York or American Stock Exchanges 
(warrants and rights represent options, usually for a specified period 
of time, to purchase a particular security at a specified price from the 
issuer).  Warrants or rights acquired in units or attached to other 
securities are not subject to the foregoing limitations;

	2.  Purchase securities on margin, except that a Fund may obtain such 
short-term credits as may be necessary for the clearance of purchases 
and sales of securities.  The deposit or payment by a Fund of an initial 
or variation margin in connection with futures contracts or related 
option transactions is not considered the purchase of a security on 
margin;

	3.  Invest in securities of any company if any officer or trustee of the 
Trust or of the manager owns more than 1/2 of 1% of the outstanding 
securities of such company, and such officers and trustees own more than 
5% of the outstanding securities of such issuer;

	4.  Invest in oil or other mineral leases, rights or royalty contracts 
or exploration or development programs, except that Growth Fund and 
Growth and Income Fund, may invest in the securities of companies which 
invest in or sponsor such programs;

	5.  Invest in companies for the purpose of acquiring control or 
management thereof;

	6.  Invest in the securities of other open-end investment companies, or 
invest in the securities of closed-end investment companies except 
through purchase in the open market in a transaction involving no 
commission or profit to a sponsor or dealer (other than the customary 
brokers commission) or as part of a merger, consolidation or other 
acquisition, except that Growth Fund, Growth and Income Fund and 
Municipal Bond Fund may acquire shares of other open-end investment 
companies to the extent permitted by rule or order of the SEC exempting 
them from the limitations imposed by Section 12(d)(1) of the 1940 Act;

	7.  Purchase a restricted security or a security for which market 
quotations are not readily available if as a result of such purchase 
more than 5% of the Fund's assets would be invested in such securities; 
provided, however, that with respect to Growth Fund, Growth and Income 
Fund and Municipal Bond Fund, this limitation shall exclude shares of 
other open-end investment companies owned by the Fund but include the 
Fund's pro rata portion of the securities and other assets owned by any 
such company.  Illiquid securities include securities subject to legal 
or contractual restrictions on resale, which include repurchase 
agreements which have a maturity of longer than seven days.  This policy 
does not apply to restricted securities eligible for resale pursuant to 
Rule 144A under the 1933 Act which the Trustees or the manager under 
Board approved guidelines may determine are liquid nor does it apply to 
other securities for which, notwithstanding legal or contractual 
restrictions on resale, a liquid market exists;

	8.  Invest more than 5% of its assets in companies having a record 
together with predecessors, of less than three years' continuous 
operation, except that Growth Fund, Growth and Income Fund and Municipal 
Bond Fund, may acquire shares of other open-end investment companies to 
the extent permitted by rule or order of the SEC exempting them from the 
limitations imposed by Section 12(d)(1) of the 1940 Act;

	9.  Engage in option writing for speculative purposes or purchase call 
or put options on securities if, as a result, more than 5% of its net 
assets of the Fund would be invested in premiums on such options; and

	10.  Purchase any security issued by any company deriving more than 25% 
of its gross revenues from the manufacture of alcohol or tobacco.

The Trust has adopted additional investment restrictions, with respect 
to the above referenced Funds, which may be changed by the Trustees 
without a vote of shareholders, as follows: 

The Trust shall not make short sales of securities unless at the time of 
sale a Fund owns or has the right to acquire at no additional cost 
securities identical to those sold short; provided that this prohibition 
does not apply to the writing of options or the sale of forward 
contracts, futures, foreign currency futures or related options.

Foreign Investments.   Growth Fund and Growth and Income Fund may not 
invest in the securities of a foreign issuer if, at the time of 
acquisition, more than 20% of the value of the Fund's total assets would 
be invested in such securities.

Futures Contracts and Options.   In addition, Growth Fund and Growth and 
Income Fund may not write, purchase or sell puts, calls or combinations 
thereof, except that each Fund may (a) write covered call options with 
respect to any part or all of its portfolio securities, write secured 
put options, or enter into closing purchase transactions with respect to 
such options, (b) purchase and sell put options to the extent that the 
premiums paid for all such options do not exceed 10% of its total assets 
and only if the Fund owns the securities covered by the put option at 
the time of purchase, and (c) engage in futures contracts and related 
options transactions as described herein.  Growth Fund and Growth and 
Income Fund may purchase put and call options which are purchased on an 
exchange in other markets, or currencies and, as developed from time to 
time, various futures contracts on market indices and other instruments.  
Purchasing options may increase investment flexibility and improve total 
return, but also risks loss of the option premium if an asset the Fund 
has the option to buy declines in value.

Government Fund may not write, purchase or sell puts, calls or 
combinations thereof, except that the Fund may (a) write covered or 
fully collateralized call options, write secured put options, and enter 
into closing or offsetting purchase transactions with respect to such 
options, (b) purchase and sell options to the extent that the premiums 
paid for all such options owned at any time do not exceed 10% of its 
total assets, and (c) engage in futures contracts and related options 
transactions as described herein.
Municipal Bond Fund may engage in futures contracts and related options 
as described herein.

The following restrictions apply to Emerging Growth Fund and 
International Equity Fund:

A Fund shall not:

1.  Make any investment in real estate, commodities or commodities 
contracts, except that each Fund may engage in transactions in forward 
commitments, futures contracts, foreign currency futures and related 
options and may purchase or sell securities which are secured by real 
estate or interests therein; or issued by companies; including real 
estate investment trusts, which invest in real estate or interests 
therein; and International Equity Fund may engage in currency 
transactions; and

	2.  Issue senior securities, as defined in the 1940 Act, except that 
this restriction shall not be deemed to prohibit a Fund from (i) making 
and collateralizing any permitted borrowings, (ii) making any permitted 
loans of its portfolio securities, or (iii) entering into repurchase 
agreements, utilizing options, futures contracts and foreign currency 
futures and options thereon, forward contracts, forward commitments and 
other investment strategies and instruments that would be considered 
"senior securities" but for the maintenance by the Fund of a segregated 
account with its custodian or some other form of "cover."

The Trust has adopted additional investment restrictions with respect to 
Emerging Growth Fund and International Equity Fund, which may be changed 
by the Trustees without a vote of shareholders.  These restrictions 
provide that a Fund shall not:

1.  Purchase securities on margin, except that a Fund may obtain such 
short-term credits as may be necessary for the clearance of purchases 
and sales of securities.  The deposit or payment by a Fund of an initial 
or variation margin in connection with forward contracts, futures 
contracts, foreign currency futures or related option transactions is 
not considered the purchase of a security on margin;

	2.  Invest in securities of any company if any officer or trustee of the 
Trust or of the manager owns more than  1/2 of 1% of the outstanding 
securities of such company, and such officers and trustees own more than 
5% of the outstanding securities of such issuer;

	3.  Invest in oil or other mineral leases, rights or royalty contracts 
or exploration or development programs, except that Emerging Growth Fund 
and International Equity Fund may invest in the securities of companies 
which invest in or sponsor such programs;

	4.  Invest in companies for the purpose of acquiring control or 
management thereof;

	5.  Invest in the securities of other open-end investment companies, or 
invest in the securities of closed-end investment companies except 
through purchase in the open market in a transaction involving no 
commission or profit to a sponsor or dealer (other than the customary 
brokers commission) or as part of a merger, consolidation or other 
acquisition, except that Emerging Growth Fund and International Equity 
Fund, may acquire shares of other open-end investment companies to the 
extent permitted by rule or order of the SEC exempting them from the 
limitations imposed by Section 12(d)(1) of the 1940 Act;

	6.  Purchase an illiquid security if, as a result of such purchase, more 
than 15% of the Fund's net assets would be invested in such securities; 
provided, however, that with respect to Emerging Growth Fund and 
International Equity Fund, this limitation shall exclude shares of other 
open-end investment companies owned by the Fund but include the Fund's 
pro rata portion of the securities and other assets owned by any such 
company.  Illiquid securities include securities subject to legal or 
contractual restrictions on resale, which include repurchase agreements 
which have a maturity of longer than seven days.  This policy does not 
apply to restricted securities eligible for resale pursuant to Rule 144A 
under the 1933 Act which the Trustees or the manager or Subadviser under 
Board-approved guidelines, may determine are liquid nor does it apply to 
other securities for which, notwithstanding legal or contractual 
restrictions on resale, a liquid market exists;

	7.  Invest more than 5% of its assets in companies having a record 
together with predecessors, of less than three years' continuous 
operation, except that Emerging Growth Fund and International Equity 
Fund, may acquire shares of other open-end investment companies to the 
extent permitted by rule or order of the SEC exempting them from the 
limitations imposed by Section 12(d)(1) of the 1940 Act;

	8.  Except for International Equity Fund, purchase any security issued 
by any company deriving more than 25% of its gross revenues from the 
manufacture of alcohol or tobacco;

	9.  Make short sales of securities, unless at the time of sale a Fund 
owns or has the right to acquire at no additional cost securities 
identical to those sold short; provided that this prohibition does not 
apply to the writing of options or the sale of forward contracts, 
futures, foreign currency futures or related options; and

	10.  Invest more than 5% of its net assets in warrants or rights valued 
at the lower of cost or market, nor more than 2% of its net assets in 
warrants or rights (valued on such basis) which are not listed on the 
New York or American Stock Exchanges.  Warrants or rights acquired in 
units or attached to other securities are not subject to the foregoing 
limitations.

Foreign Investments for Funds Other than the International Equity Fund.   
Emerging Growth Fund may not invest in the securities of a foreign 
issuer if, at the time of acquisition, more than 20% of the value of the 
Fund's total assets would be invested in such securities.

Futures Contracts and Options.   In addition, Emerging Growth Fund and 
International Equity Fund may purchase put and call options which are 
purchased on an exchange in other markets, or currencies and, as 
developed from time to time, various futures contracts on market indices 
and other instruments.  Purchasing options may increase investment 
flexibility and improve total return, but also risks loss of the option 
premium if an asset the Fund has the option to buy declines in value.

The following restrictions apply only to the Mid Cap Fund:

The Fund has adopted the following investment restrictions for the 
protection of shareholders. Restrictions 1 through 7 below cannot be 
changed without approval by the holders of a majority of the outstanding 
shares of the Fund, defined as the lesser of (a) 67% or more of the 
Fund's shares present at a meeting, if the holders of more than 50% of 
the outstanding shares are present in person or by proxy or (b) more 
than 50% of the Fund's outstanding shares. The remaining restrictions 
may be changed by the Fund's Board of Trustees at any time. In 
accordance with these restrictions,  the Fund will not: 

1.	Invest in a manner that would cause it to fail to be a 
"diversified company" under the 1940 Act and the rules, regulations and 
orders thereunder. 

2.	Issue "senior securities" as defined in the 1940 Act,  and the 
rules, regulations and orders thereunder,  except as permitted under the 
1940 Act and the rules, regulations and orders thereunder.

3.   	Invest more than 25% of its total assets in securities, the 
issuers of which conduct their principal business activities in the same 
industry. For purposes of this limitation, securities of the U.S. 
government (including its agencies and instumentalities) and securities 
of state or municipal governments and their political subdivisions are 
not considered to be issued by members of any industry.

      4.    Borrow money, except that (a)  the Fund may borrow from 
banks for temporary or emergency (not leveraging) purposes, including 
the meeting of redemption requests which might otherwise require the 
untimely disposition of securities, and (b)  the Fund may,  to the 
extent consistent with its investment policies,  enter into reverse 
repurchase agreements,  forward roll transactions and similar investment 
strategies and techniques.  To the extent that it engages in 
transactions described in (a) and (b),  the Fund will be limited so that 
no more than 33 1/3% of the value of its total assets (including the 
amount borrowed),  valued at the lesser of cost or market,  less 
liabilities (not including the amount borrowed) valued at the time the 
borrowing is made,  is derived from such transactions.

5.    Make loans.  This restriction does not apply to: (a) the 
purchase of debt obligations in which the Fund may invest consistent 
with its investment objective and policies;  (b) repurchase agreements; 
and  (c) loans of its portfolio securities,  to the fullest extent 
permitted under the 1940 Act.

6.   Engage in the business of underwriting securities issued by 
other persons, except to the extent that the Fund may technically be 
deemed to be an underwriter under the Securities Act of 1933, as 
amended,  in disposing of portfolio securities.

7.   Purchase or sell real estate, real estate mortgages, commodities 
or commodity contracts, but this restriction shall not prevent the Fund 
from: (a) investing in securities of issuers engaged in the real estate 
business or the business of investing in real estate (including 
interests in limited partnerships owning or otherwise engaging in the 
real estate business or the business of investing in real estate) and 
securities which are secured by real estate or interests therein; (b) 
holding or selling real estate received in connection with securities it 
holds or held; (c) trading in futures contracts and options on futures 
contracts (including options on currencies to the extent consistent with 
the Funds' investment objective and policies); or (d) investing in real 
estate investment trust securities.

8.   Purchase any securities on margin (except for such short-term 
credits as are necessary for the clearance of purchases and sales of 
portfolio securities) or sell any securities short (except "against the 
box"). For purposes of this restriction, the deposit or payment by the 
Fund of underlying securities and other assets in escrow and collateral 
agreements with respect to initial or maintenance margin in connection 
with futures contracts and related options and options on securities, 
indexes or similar items  is not considered to be the purchase of a 
security on margin.

 9.   	Invest in oil, gas or other mineral exploration or 
development programs. 

    10.   Purchase or otherwise acquire any security if, as a result, 
more than 15% of its net assets would be invested in securities that are 
illiquid.

11.  Invest for the purpose of exercising control of management.

If any percentage restriction described above is complied with at the 
time of an investment, a later increase or decrease in percentage 
resulting from a change in values or assets will not constitute a 
violation of such restriction.

TRUSTEES AND OFFICERS

The Trustees and executive officers and their principal occupations for 
the past five years are listed below. 

TRUSTEES

DONALD M. CARLTON, Trustee.  Radian International L.L.C., 8501 N. Mopac 
Blvd., Building No. 6, Austin, Texas 78759.  President and Chief 
Executive of Radian International L.L.C.  (chemical engineering).  
Director of National Instruments Corp. and Central and Southwest 
Corporation.  Formerly Director of The Hartford Steam Boiler Inspection 
and Insurance Company (insurance/engineering services); 61.

A. BENTON COCANOUGHER, Trustee.  Texas A & M University, 601 Blocker 
Bldg., College Station, Texas 77843-4113.  Dean of College of Business 
Administration and Graduate School of Business of Texas A & M 
University; Director of Randall's Food Markets, Inc.; Director of First 
American Bank; and Director of First American Savings Bank; 60.

STEPHEN RANDOLPH GROSS, Trustee.  2625 Cumberland Parkway, Suite 400, 
Atlanta, Georgia 30339.  Managing Partner of Gross, Collins & 
Cress, P.C. (accounting firm); Director of Charter Bank & Trust; 51.

HEATH B. McLENDON,* Trustee.  Managing Director of Salomon Smith Barney; 
President and Chairman of 59 investment companies associated with SSB; 
President and Director of the manager and Travelers Investment Adviser, 
Inc. ("TIA"); Chairman of Smith Barney Strategy Advisers Inc.; 65.

ALAN G. MERTEN, Trustee. George Mason University, 4400 University Drive, 
Fairfax, Virginia 22030-4444.  President of George Mason University.  
Director of Comshare, Inc.  (information technology), and Tompkins 
County Trust Company, Ithaca, New York; formerly The Anne and Elmer 
Lindseth Dean of Johnson Graduate School of Management of Cornell 
University; 57.

R. RICHARDSON PETTIT, Trustee.  Department of Finance, College of 
Business, University of Houston, 4800 Calhoun, Houston, Texas 
77204-6283.  Duncan Professor of Finance of the University of Houston; 
formerly Hanson Distinguished Professor of Business of the University of 
Washington; 56.

*	Such Trustees are "interested persons" of the Fund within the 
meaning of the 1940 Act.

OFFICERS

Heath B. McLendon, President (See description under "Trustees").
	
Lewis E. Daidone, Senior Vice President and Treasurer (Age 41).  
Managing Director of Salomon Smith Barney; Director and Senior Vice 
President of the manager and TIA.  Mr. Daidone serves as Senior Vice 
President and Treasurer of 42 Smith Barney Mutual Funds.  His address is 
388 Greenwich Street, New York, New York 10013.
	
Sandip A. Bhagat, Vice President and Investment Officer (Age 38).  
Managing Director of Salomon Smith Barney.  President of TIMCO; prior to 
1995, Senior Portfolio Manager for TIMCO.  His address is One Tower 
Square, Hartford, Connecticut 06183-2030.

James E. Conroy,  Vice President and Investment Officer (Age 47).  
Managing Director of Salomon Smith Barney; Mr. Conroy serves as 
Investment Officer of four Smith Barney Mutual Funds.   His address is 
388 Greenwich Street, New York, New York 10013.

Joseph P. Deane, Vice President and Investment Officer (Age 51).  
Managing Director of Salomon Smith Barney; Mr. Deane serves as 
Investment Officer of 8 Smith Barney Mutual Funds.   His address is 388 
Greenwich Street, New York, New York  10013.

R. Jay Gerken, Vice President and Investment Officer (Age 47).  Managing 
Director of Salomon Smith Barney; Mr. Gerken is Vice President and 
Investment Officer of two other Smith Barney Mutual Funds.  His address 
is 388 Greenwich Street, New York, New York 10013.

Jeffrey Russell, Vice President and Investment Officer (Age 41).  
Managing Director of Salomon Smith Barney; Mr. Russell is Vice President 
and Investment Officer of six other Smith Barney Mutual Funds.  His 
address is 388 Greenwich Street, New York, New York 10013.

Larry Weissman, Vice President and Investment Officer; (Age 37 ).   
Managing Director of Salomon Smith Barney; Prior to October 1997, 
Portfolio Manager of Newberger & Berman LLC; Prior to 1995, Portfolio 
Manager of College Retirement Equities Fund. His address is 388 
Greenwich Street, New York, New York 10013.

Christina T. Sydor, Secretary (Age 48).  Managing Director of Salomon 
Smith Barney; General Counsel and Secretary of the manager and TIA.   
Ms. Sydor also serves as Secretary of  42 Smith Barney Mutual Funds.  
Her address is 388 Greenwich Street, New York, New York 10013.

As of December 11, 1998, the Trustees and officers of the Trust as a 
group own less than one percent of the outstanding shares of each Fund 
of the Trust.  As of December 11, 1998,  to the knowledge of the Trust 
and its Trustees, no shareholder or "group" (as the term is used in 
Section 13(d) of the Securities Act of 1933) beneficially owned more 
than 5% of the outstanding shares of each Fund of the Trust.

Information regarding compensation paid by the Funds to the Trustees is 
set forth below.  The compensation shown for the Funds is for the 
calendar year ended December 31, 1998.  Mr. McLendon is not compensated 
for his service as Trustee, because of his affiliation with the manager.  
With the exception of Mr. McLendon, no Trustee serves on the Board of 
any other investment company in the Smith Barney Fund Complex.  During 
this period, the Mid Cap Fund had not commenced operations, therefore, 
the amounts shown reflect only the other funds, as set forth below.

Legend:

EM	= Emerging Growth Fund
INT	= International Equity Fund
G	= Growth Fund
G/I	= Growth and Income Fund
GVT	= Government Fund
MB	= Municipal Bond Fund



COMPENSATION TABLE









Name of Person

Aggregate Compensation
From Registrant (3)






EM         INT             G             
G/I          GVT        MB





Pension 
or 
Retire-
ment 
Benefit
s 
Accrued 
as Part 
of Fund 
Expense
s
(1)






Total 
Compensati
on Paid 
From Trust 
and Fund 
Complex 

Dr. Donald M. 
Carlton
$264
0
$478
$3695
4
$1258
4
$226
9
$107
4
-
$56,000
Dr. A. Benton 
Cocanougher
2640
478
36954
12584
2269
1074
-
56,000
Stephen Randolph 
Gross
2640
478
36954
12584
2269
1074
-
56,000
Heath B. McLendon*
-
-
-
-
-
-
-
-
Dr. Alan G. Merten
2472
443
33555
11491
2062
976
-
51,000
Dr. Steven 
Muller(2)
614
116
11957
3923
709
329
-
17649
Dr. R. Richardson 
Pettit
2640
478
36954
12584
2269
1074
-
56,000
Alan B. Shepard, 
Jr.(2)
2100
372
26093
9089
1592
754
-
40,000










*Designates an "Interested Person," as defined under the 1940 Act.

(1)	The Trustees instituted a retirement plan effective April 1, 1996.  
For the current Trustees who are not "interested persons" of the Trust, 
the retirement benefits payable, thereunder are payable for a ten year 
period following retirement, with the annual payment to be based upon 
the highest total annual compensation received in any of the three 
calendar years preceding retirement.  Trustees with more than five but 
less than ten years of service at retirement will receive a prorated 
benefit. Total retirement benefits accrued under the plan for the 1998 
calendar year were $14,481, $0, $932,542, $278,558, $88,194, and $0, for 
the Emerging Growth Fund, International Equity Fund, Growth Fund, Growth 
and Income Fund, Government Fund and Municipal Bond Fund, respectively.  
The amount of benefits to be paid upon retirement is therefore not 
currently determinable for any current Trustee.


(2)	Mr. Muller and Mr. Shepard are no longer Trustees of the Trust.

(4)	Retirement benefits accrued are $14,481, $0, $932,542, $278,558, 
$88,194, and $0, per Emerging Growth Fund, International Equity Fund, 
Growth Fund, Growth and Income Fund, Government Fund and Municipal Bond 
Fund, respectively, as part of each Fund's expenses.

Legal Counsel

Sullivan & Worcester LLP

INVESTMENT ADVISORY AGREEMENTS

Investment Manager.   Effective December 31, 1997, the manager replaced 
Van Kampen American Capital Asset Management, Inc. ("VKAC") as 
investment adviser to each Fund of the Trust. The manager provides 
investment advisory and management services to investment companies 
affiliated with Salomon Smith Barney and, prior to December 31, 1997 was 
the Sub-Advisor to International Equity Fund. 

The Trust and the manager are parties to a separate Investment Advisory 
Agreement for each Fund (each, an "Advisory Agreement" and together, the 
"Advisory Agreements").  An investment advisory agreement with the 
manager and the Trust, on behalf of each Fund had been approved by the 
Board of Trustees of the Trust at a meeting held on June 10, 1997 and by 
shareholders of each Fund at a meeting held on December 18, 1997.  Under 
the Advisory Agreements, the Trust retains the manager to manage the 
investment of its assets and to place orders for the purchase and sale 
of its portfolio securities.  The manager is responsible for obtaining 
and evaluating economic, statistical, and financial data and for 
formulating and implementing investment programs in furtherance of each 
Fund's investment objectives.  The manager also furnishes at no cost to 
the Trust (except as noted herein) the services of sufficient executive 
and clerical personnel for the Trust as are necessary to prepare 
registration statements, prospectuses, shareholder reports, and notices 
and proxy solicitation materials.  In addition, the manager furnishes at 
no cost to the Trust the services of a President of the Trust, one or 
more Vice Presidents as needed, and a Secretary.

Under the Advisory Agreements, the Trust bears the cost of its 
accounting services, which includes maintaining its financial books and 
records and calculating the daily net asset value of each Fund.  The 
costs of such accounting services include the salaries and overhead 
expenses of a Treasurer or other principal financial officer and the 
personnel operating under his direction.  The services are provided at 
cost which is allocated among all investment companies advised or 
subadvised by the manager.  The Trust also pays transfer agency fees, 
custodian fees, legal fees, the costs of reports to shareholders and all 
other ordinary expenses not specifically assumed by the manager.

The Trust retains the manager to manage the investment of its assets and 
to place orders for the purchase and sale of its portfolio securities.  
Under the relevant Advisory Agreement, the Trust pays the manager an 
annual fee for Emerging Growth Fund, Growth Fund and Growth and Income 
Fund calculated separately for each Fund, at the rate of 0.65% of the 
first $1 billion of the Fund's average daily net assets; 0.60% of the 
next $1 billion of the Fund's average daily net assets; 0.55% of the 
next $1 billion of the Fund's average daily net assets; 0.50% of the 
next $1 billion of the Fund's average daily net assets; and 0.45% of the 
Fund's average daily net assets in excess of $4 billion.  The Trust pays 
the manager an annual fee for Mid Cap Fund at the rate of 0.75% of the 
Fund's average daily net assets.  The Trust pays the manager an annual 
fee for International Equity Fund at the rate of 1.00% of the Fund's 
average daily net assets.  The Trust pays the manager an annual fee for 
Government Fund at the rate of 0.60% of the first $1 billion of the 
Fund's average daily net assets; 0.55% of the next $1 billion of the 
Fund's average daily net assets; 0.50% of the next $1 billion of the 
Fund's average daily net assets; 0.45% of the next $1 billion of the 
Fund's average daily net assets; 0.40% of the next $1 billion of the 
Fund's average daily net assets; and 0.35% of the Fund's average daily 
net assets in excess of $5 billion.  The Trust pays the manager an 
annual fee for Municipal Bond Fund at the rate of 0.60% of the first 
$1 billion of the Fund's average daily net assets; 0.55% of the next 
$1 billion of the Fund's average daily net assets; 0.50% of the next 
$1 billion of the Fund's average daily net assets; and 0.45% of the 
Fund's average daily net assets in excess of $3 billion.  The manager 
may, from time to time, agree to waive its investment advisory fees or 
any portion thereof or elect to reimburse a Fund for ordinary business 
expenses in excess of an agreed upon amount.

The average daily net assets of each Fund are determined by taking the 
average of all of the determinations of net asset value of such Fund for 
each business day during a given calendar month.  Such fee is payable 
for each calendar month as soon as practicable after the end of that 
month.

The following table shows expenses paid under the relevant investment 
advisory agreement during the periods ended October 31, 1998, 1997 and 
1996.  The Mid Cap Fund had not commenced operations during these 
periods.



Emerging 
Growth

Internatio
nal Equity

Growth

Growth & 
Income

Governmen
t

Municipa
l Bond

October 31, 1998






Accounting 
Services
-
-
-
-
-
-
Gross Advisory 
Fees
$1,354,479
$376,585
$23,343,
634
$8,627,1
08
$1,523,61
3
$687,628
Contractual 
Expense 
Reimbursement
N/A
N/A
N/A
N/A
N/A
N/A
Voluntary 
Expense 
Reimbursement
N/A
N/A
N/A
N/A
N/A
N/A







October 31, 1997






Accounting 
Services
$37,198
$21,601
$420,043
$161,748
$55,786
$39,999
Gross Advisory 
Fees
904,959
267,897
20,533,5
44
7,574,20
9
1,702,968
704,693
Contractual 
Expense 
Reimbursement
 - 
 - 
 - 
 - 
 - 
 - 
Voluntary 
Expense 
Reimbursement
 - 
 - 
 - 
 - 
 - 
 - 







October 31, 1996






Accounting 
Services
$79,620
$30,600
$406,931
$168,039
$93,056
$99,374
Gross Advisory 
Fees
376,436
130,149
17,148,5
60
6,017,20
4
1,883,666
728,210
Contractual 
Expense 
Reimbursement
 - 
130,149
 - 
 - 
 - 
 - 
Voluntary 
Expense 
Reimbursement
 - 
47,998
 - 
 - 
 - 
 - 

For the fiscal years ended October 31, 1997 and 1996 and for the period 
from November 1, 1997 to December 31, 1997, amounts paid by the Funds 
under the relevant investment advisory agreements were paid to Van 
Kampen American Capital Asset Management Inc. ("VKAC").  VKAC served as 
the Trust's investment adviser. 

The Advisory Agreements also provide that, in the event the ordinary 
business expenses of the Trust, calculated separately for each Fund, for 
any fiscal year should exceed the most restrictive expense limitation 
applicable in the states where the Trust's shares are qualified for 
sale, unless waived, the compensation due the manager will be reduced by 
the amount of such excess and that, if a reduction in and refund of the 
advisory fee is insufficient, the manager will pay the Trust monthly an 
amount sufficient to make up the deficiency, subject to readjustment 
during the year.  Ordinary business expenses do not include (1) interest 
and taxes, (2) brokerage commissions, (3) certain litigation and 
indemnification expenses as described in the Advisory Agreements and 
(4) payments made by a Fund pursuant to the Distribution Plans.  Each 
Fund's Advisory Agreement also provides that the manager shall not be 
liable to the Trust for any actions or omissions if it acted in good 
faith without negligence or misconduct.  The Advisory Agreements also 
provide that the manager shall not be liable to the Trust for any 
actions or omissions if it acted in good faith without negligence or 
misconduct.

Each Advisory Agreement has an initial term of two years and thereafter 
with respect to each Fund may be continued from year to year if 
specifically approved at least annually (a)(i) by the Trustees or 
(ii) by vote of a majority of the Fund's outstanding voting securities, 
and (b) by the affirmative vote of a majority of the Trustees who are 
not parties to the agreement or interested persons of any such party by 
votes cast in person at a meeting called for such purpose.  The Advisory 
Agreements provide that they shall terminate automatically if assigned 
and that they may be terminated without penalty by either party on 
60 days written notice.

Management's discussion and analysis and additional performance 
information regarding the Funds during the fiscal year ended October 31, 
1998 is included in the Annual Report dated October 31, 1998. A copy of 
the Annual Report may be obtained upon request and without charge from a 
PFS Investments Registered  Representative or by writing or calling the 
Trust at the address or phone number listed on page one.

DISTRIBUTOR

CFBDS, Inc., located at 21 Milk Street, Boston MA 02109-5408 (the 
"Distributor"), distributes shares of the Funds as their principal 
underwriter, and as such conducts a continuous offering pursuant to a 
"best efforts" arrangement requiring the Distributor to take and pay for 
only those securities sold to the public.  Prior to October 8, 1998, PFS 
Distributors, Inc. acted as Distributor.

The Distributor may be deemed to be an underwriter for purposes of the 
Securities Act of 1933. From time to time, the Distributor, or PFS 
Distributors, Inc. or its affiliates may also pay for certain non-cash 
sales incentives provided to PFS Investments Registered Representatives. 
Such incentives do not have any effect on the net amount invested. In 
addition to the reallowances from the applicable public offering price 
described above, PFS may, from time to time, pay or allow additional 
reallowances or promotional incentives, in the form of cash or other 
compensation to PFS Investments Registered Representatives that sell 
shares of each Fund.

The Distributor acts as the principal underwriter of the shares of the 
Trust pursuant to a written agreement for the Funds ("Underwriting 
Agreement").  The Distributor has entered into a selling agreement with 
PFS Distributors, Inc. on behalf of PFS Investments (collectively, 
"PFS") giving PFS the exclusive right to sell shares of each Fund of the 
Trust on behalf of the Distributor.  The Distributor's obligation is an 
agency or "best efforts" arrangement under which the Distributor is 
required to take and pay only for such shares of each Fund as may be 
sold to the public.  The Distributor is not obligated to sell any stated 
number of shares.  The Underwriting Agreement is renewable from year to 
year if approved (a) by the Trustees or by a vote of a majority of the 
Trust's outstanding voting securities, and (b) by the affirmative vote 
of a majority of Trustees who are not parties to the Agreement or 
interested persons of any party by votes cast in person at a meeting 
called for such purpose.  The Underwriting Agreement provides that it 
will terminate if assigned, and that it may be terminated without 
penalty by either party on 60 days' written notice.

The following table shows commissions paid, amounts retained by the 
Distributor and amounts received by PFS Investments during the periods 
ended October 31, 1998, 1997 and 1996.  Prior to October 8, 1998, PFS 
Distributors, Inc. acted as Distributor.


Emerging 
Growth

Interna-
tional 
Equity

Growth

Growth & 
Income

Govern-
ment

Municipa
l Bond

October 31, 1998






Total Underwriting 
Commissions
$3,282,9
07
$490,027
$17,475,
434
$6,769,9
89
$732,992
$810,575
Amount Retained By  
Distributor
187,397
    
21,062
    
2,349,25
5
    
656,152
   
67,974
    
79,312
Amount Received By PFS 
Investments
3,095,51
0
   
468,965
  
15,126,1
79
  
6,113,83
7
 665,018
  
731,263







October 31, 1997






Total Underwriting 
Commissions
$3,846,0
82
$608,726
$18,002,
508
$6,979,9
66
$808,858
$487,303
Amount Retained By 
Distributor
251,247
37,018
2,787,42
3
825,118
98,702
87,157
Amount Received By PFS 
Investments
3,594,83
5
571,708
15,215,0
88
6,154,84
8
710,156
400,146







October 31, 1996






Total Underwriting 
Commissions
$1,519,3
51
$235,791
$19,303,
603
$5,144,5
00
$950,019
$1,029,1
47
Amount Retained By  
Distributor
124,777
21,437
3,405,10
4
888,760
162,072
124,395
Amount Received By PFS 
Investments
1,394,57
4
214,354
15,898,4
99
4,255,74
0
1,173,86
7
904,752








The Distributor bears the cost of printing (but not typesetting) 
prospectuses used in connection with this offering and the cost and 
expense of supplemental sales literature, promotion and advertising.  
The Trust pays all expenses attributable to the registrations of its 
shares under federal and state blue sky laws, including registration and 
filing fees, the cost of preparation of the prospectuses, related legal 
and auditing expenses, and the cost of printing prospectuses for current 
shareholders.

PORTFOLIO TURNOVER

The portfolio turnover rate may vary greatly from year to year as well 
as within a year.  Each Fund's portfolio turnover rate for prior years 
is shown under the "Financial Highlights" in the Prospectus.

DISTRIBUTION PLANS

Rule 12b-1 adopted by the SEC under the 1940 Act permits an investment 
company to directly or indirectly pay expenses associated with the 
distribution of its shares (''distribution expenses'') and servicing its 
shareholders in accordance with a plan adopted by the investment 
company's board of directors and approved by its shareholders. Pursuant 
to such Rule, the Trustees of the Trust, and the shareholders of Class A 
and Class B of each Fund have adopted two Distribution Plans 
(hereinafter referred to as the ''Class A Plan'' and the ''Class B 
Plan'').  Each Distribution Plan is in compliance with the Rules of 
Conduct of the National Association of Securities Dealers, Inc. (''NASD 
Rules'') applicable to mutual fund sales charges. The NASD Rules limit 
the annual distribution costs and service fees that a mutual fund may 
impose on a class of shares. The NASD Rules also limit the aggregate 
amount which the Fund may pay for such distribution costs. Under the 
Class A Plan, a Fund pays 0.25% per annum of its average daily net 
assets attributable to such class of shares to PFS as a service fee. The 
service fee is intended to cover personal services provided to Class A 
shareholders of a Fund by representatives of PFS Investments and the 
maintenance of their accounts. 

Under the Class B Plan, Class B shares of each Fund are subject to a 
combined annual distribution fee and service fee at the rate of 1.00% of 
a Fund's aggregate average daily net assets attributable to such class 
of shares. Payments by each Fund to PFS under the Class B Plan are used 
to make service fee payments to PFS Investments of 0.25% per annum of 
average daily net assets. Each Fund pays PFS 0.75% of the aggregate 
average daily net assets of Class B shares, as compensation for 
providing sales and promotional activities and services. Such activities 
and services relate to the sale, promotion and marketing of the Class B 
shares. The expenditures under the Class B Plan may consist of sales 
commissions to PFS Investments for selling Class B shares, compensation, 
sales incentives and payments to sales and marketing personnel, and the 
payment of expenses incurred in its sales and promotional activities, 
including advertising expenditures related to the Class B shares of a 
Fund and the costs of preparing and distributing promotional materials 
with respect to such Class B shares. 

The Distributor receives the proceeds of the initial sales charge, if 
any, paid upon the purchase of Class A shares and pays said amount to  
PFS.  PFS receives the contingent deferred sales charge paid upon 
certain redemptions of Class B shares directily formt he Fund, and may 
use these proceeds for any of the distribution and service expenses 
described above. 

During the period they are in effect, the Class A Plan and the Class B 
Plan obligate each Fund to pay service fees and distribution fees to PFS 
as compensation for its service and distribution activities, not as 
reimbursement for specific expenses incurred. Thus, even if PFS's 
expenses exceed its service or distribution fees for any Fund, the Fund 
will not be obligated to pay more than those fees and, if PFS's expenses 
are less than such fees, it will retain its full fees and realize a 
profit. Each Fund will pay the service fees and distribution fees to PFS 
until either the applicable Plan is terminated or not renewed. In that 
event, PFS expenses in excess of service fees and distribution fees 
received or accrued through the termination date will be PFS's sole 
responsibility and not obligations of a Fund. In their annual 
consideration of the continuation of each Fund's Plans, the Trustees 
will review each Plan and the corresponding expenses for each class 
separately. 

Actual distribution expenditures incurred under the Class B Plan for any 
given year are expected to exceed the fees received pursuant to the 
Class B Plan and payments received pursuant to contingent deferred sales 
charges. Such excess will not be carried forward in future years. 

If the Class B Plan was terminated or not continued, the Fund would not 
be contractually obligated and has no liability to pay for any expenses 
not previously reimbursed by the Fund or recovered through contingent 
deferred sales charges.

In reporting amounts expended under the Plans to the Trustees, the 
Distributor will allocate expenses attributable to the sale of both 
Class A and Class B shares to each class based on the ratio of sales of 
Class A and Class B shares to the sales of both classes of shares.  The 
service fees paid by the Class A shares will not be used to subsidize 
the sale of Class B shares; similarly, the service fees, if any, and 
distribution fees paid by the Class B shares will not be used to 
subsidize the sale of Class A shares.

As required by Rule 12b-1 under the 1940 Act, each Plan and the forms of 
servicing agreements were approved by the Trustees, including a majority 
of the Trustees who are not interested persons (as defined in the 1940 
Act) of the Trust and who have no direct or indirect financial interest 
in the operation of any of the Plans or in any agreements related to 
each Plan ("Independent Trustees").  In approving each Plan in 
accordance with the requirements of Rule 12b-1, the Trustees determined 
that there is a reasonable likelihood that each Plan will benefit the 
Trust and its shareholders.

Each Plan requires that the Trustees be provided at least quarterly with 
a written report of the amounts expended pursuant to each Plan and the 
purposes for which such expenditures were made.  Unless sooner 
terminated in accordance with its terms, the Plans will continue in 
effect for a period of one year and thereafter will continue in effect 
so long as such continuance is specifically approved at least annually 
by the Trustees, including a majority of Independent Trustees.

Each Plan may be terminated by vote of a majority of the Independent 
Trustees, or by vote of a majority of the outstanding voting shares of 
the respective class.  Any change in any of the Plans that would 
materially increase the distribution or service expenses borne by the 
Trust requires shareholder approval, voting separately by class; 
otherwise, it may be amended by a majority of the Trustees, including a 
majority of the Independent Trustees, by vote cast in person at a 
meeting called for the purpose of voting upon such amendment.  So long 
as the Plan is in effect, the selection or nomination of the Independent 
Trustees is committed to the discretion of the Independent Trustees.

With respect to each Plan, the Trustees considered all compensation that 
the Distributor would receive under the Plan and the Underwriting 
Agreement, including service fees and, as applicable, initial sales 
charges, distribution fees and contingent deferred sales charges.  The 
Trustees also considered the benefits that would accrue to PFS under 
each Plan in that PFS would receive service fees and distribution fees 
and the manager would receive advisory fees which are calculated based 
upon a percentage of the average net assets of each Fund, which fees 
would increase if the Plans were successful and each Fund attained and 
maintained significant asset levels.

For the fiscal year ended October 31, 1998, the aggregate expenses for 
the Emerging Growth Fund under the Fund's Class A Plan were $277,226 or 
0.25%, respectively, of the Class A shares' average net assets.  For the 
fiscal year ended October 31, 1998, the Fund's aggregate expenses under 
the Class B Plan were $903,219 or 1.00% of the Class B shares' average 
net assets.  Such expenses included $226,993 for commissions and 
transaction fees and $674,800 for fees paid for servicing Class B 
shareholders and administering the Class B Plan.

For the fiscal year ended October 31, 1998, the aggregate expenses for 
the International Equity Fund under the Fund's Class A Plan were $47,690 
or 0.25%, respectively, of the Class A shares' average net assets.  For 
the fiscal year ended October 31, 1998, the Fund's aggregate expenses 
under the Class B Plan were $166,306 or 1.00% of the Class B shares' 
average net assets.  Such expenses included $41,290 for commissions and 
transaction fees and $123,371 for fees paid for servicing Class B 
shareholders and administering the Class B Plan.

For the fiscal year ended October 31, 1998, the aggregate expenses for 
the Growth Fund under the Class A Plan were $372,160 or 0.25%, 
respectively, of the Class A shares' average net assets.  For the fiscal 
year ended October  31, 1998, the Fund's aggregate expenses under the 
Class B Plan were $1,589,474 or 1.00% of the Class B shares' average net 
assets.  Such expenses included $390,858 for commissions and transaction 
fees and $1,164,573 for fees for servicing Class B shareholders and 
administering the Class B Plan.

For the fiscal year ended October 31, 1998, the aggregate expenses for 
the Growth and Income Fund under the Fund's Class A Plan were $262,767 
or 0.25%, respectively, of the Class A shares' average net assets.  For 
the fiscal year ended October 31, 1998, the Fund's aggregate expenses 
under the Class B Plan were $1,219,023 or 1.00% of the Class B shares' 
average net assets.  Such expenses included $300,735 for commissions and 
transaction fees and $896,931 for fees paid for servicing Class B 
shareholders and administering the Class B Plan.

For the fiscal year ended October 31, 1998, the aggregate expenses for 
the Government Fund under the Fund's Class A Plan were $38,540 or 0.25%, 
respectively, of the Class A shares' average net assets.  For the fiscal 
year ended October 31, 1998, the Fund's aggregate expenses under the 
Class B Plan were $134,001 or 1.00% of the Class B shares' average net 
assets.  Such expenses included $32,944 for commissions and transaction 
fees and $98,333 for fees paid for servicing Class B shareholders and 
administering the Class B Plan.

For the fiscal year ended October 31, 1998, the aggregate expenses for 
the Municipal Bond Fund under the Fund's Class A Plan were $30,259 or 
0.25%, respectively, of the Class A shares' average net assets.  For the 
fiscal year ended October 31, 1998, the Fund's aggregate expenses under 
the Class B Plan were $38,339 or 1.00% of the Class B shares' average 
net assets.  Such expenses included $9,074 for commissions and 
transaction fees and $27,221 for fees paid for servicing Class B 
shareholders and administering the Class B Plan.

The Mid Cap Fund did not begin operations in the fiscal year ended 
October 31, 1998, and, thus, had no expenses.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The manager is responsible for decisions to buy and sell securities for 
the Trust and for the placement of its portfolio business and the 
negotiation of any commissions paid on such transactions.  It is the 
policy of the manager to seek the best security price available with 
respect to each transaction.  In over-the-counter transactions, orders 
are placed directly with a principal market maker unless it is believed 
that a better price and execution can be obtained by using a broker.  
Except to the extent that the Trust may pay higher brokerage commissions 
for brokerage and research services (as described below) on a portion of 
its transactions executed on securities exchanges, the manager seeks the 
best security price at the most favorable commission rate.  From time to 
time, the Fund may place brokerage transactions with affiliated persons 
of the manager.  In selecting broker/dealers and in negotiating 
commissions, the manager considers the firm's reliability, the quality 
of its execution services on a continuing basis and its financial 
condition.  When more than one firm is believed to meet these criteria, 
preference may be given to firms that also provide research services to 
the Trust or the manager.

Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)") 
permits an investment adviser, under certain circumstances, to cause an 
account to pay a broker or dealer who supplies brokerage and research 
services a commission for effecting a securities transaction in excess 
of the amount of commission another broker or dealer would have charged 
for effecting the transaction.  Brokerage and research services include 
(a) furnishing advice as to the value of securities, the advisability of 
investing in, purchasing or selling securities, and the availability of 
securities or purchasers or sellers of securities, (b) furnishing 
analyses and reports concerning issuers, industries, securities, 
economic factors and trends, portfolio strategy, and the performance of 
accounts, (c) effecting securities transactions and performing functions 
incidental thereto (such as clearance, settlement and custody), and 
(d) furnishing other products or services that assist the manager or the 
Subadviser in fulfilling their investment-decision making 
responsibilities.

Pursuant to provisions of the relevant Advisory Agreement, the Trustees 
have authorized the manager to cause the Trust to incur brokerage 
commissions in an amount higher than the lowest available rate in return 
for research services provided to the manager.  The manager is of the 
opinion that the continued receipt of supplemental investment research 
services from dealers is essential to its provision of high quality 
portfolio management services to the Trust.  The manager undertakes that 
such higher commissions will not be paid by the Trust unless (a) the 
manager determines in good faith that the amount is reasonable in 
relation to the services in terms of the particular transaction or in 
terms of the manager's overall responsibilities with respect to the 
accounts as to which it exercises investment discretion, (b) such 
payment is made in compliance with the provisions of Section 28(e) and 
other applicable state and federal laws, and (c) in the opinion of the 
manager, the total commissions paid by the Trust are reasonable in 
relation to the expected benefits to the Trust over the long term.  The 
investment advisory fees paid by the Trust under the Advisory Agreements 
are not reduced as a result of the manager's receipt of research 
services.  During the fiscal year ended October 31, 1998, the Trust 
directed the payment of $519,062 in brokerage commissions to brokers 
because of research services provided.

Consistent with the Rules of Conduct of the National Association of 
Securities Dealers, Inc. and subject to seeking best execution and such 
other policies as the Trustees may determine, the manager may consider 
sales of shares of the Trust as a factor in the selection of firms to 
execute portfolio transactions for the Trust.

The manager places portfolio transactions for other advisory accounts 
including other investment companies.  Research services furnished by 
firms through which the Trust effects its securities transactions may be 
used by the manager in servicing all of its accounts; not all of such 
services may be used by the manager in connection with the Trust.  In 
the opinion of the manager, the benefits from research services to the 
Funds of the Trust and to the accounts managed by the manager cannot be 
measured separately.  Because the volume and nature of the trading 
activities of the accounts are not uniform, the amount of commissions in 
excess of the lowest available rate paid by each account for brokerage 
and research services will vary.  However, in the opinion of the 
manager, such costs to the Trust will not be disproportionate to the 
benefits received by the Trust on a continuing basis.  

The manager will seek to allocate portfolio transactions equitably 
whenever concurrent decisions are made to purchase or sell securities by 
the Trust and other accounts that the manager may establish in the 
future.  In some cases, this procedure could have an adverse effect on 
the price or the amount of securities available to the Trust.  In making 
such allocations among the Trust and other advisory accounts, the main 
factors considered by the manager is the respective investment 
objectives, the relative size of portfolio holdings of the same or 
comparable securities, the availability of cash for investment, the size 
of investment commitments generally held, and opinions of the persons 
responsible for recommending the investment.

The following table summarizes for each Fund (except Mid Cap Fund, which 
had not commenced operations during the relevant periods) the total 
brokerage commissions paid.

Fiscal 
Year 
Ended
10/31
Emerging 
Growth

Internationa
l Equity

Growth

Growth & 
Income

Governmen
t

Municipal 
Bond

1998
          
$348,867
$142,261
$8,191,23
7
$1,123,715
-
-
1997
$185,242
$115,016
$10,105,4
82
$2,428,087
$140,190
-
1996
$99,218
$94,895
$10,114,6
47
$2,273,725
$160,181
-

The Funds may from time to time place brokerage transactions with 
brokers that may be considered affiliated persons of the manager or the 
Distributor.  Such affiliated persons currently include Salomon Smith 
Barney Inc. ("Smith Barney") and Robinson Humphrey, Inc. ("Robinson 
Humphrey").  For the periods described above, as of October 31, 1996, 
Morgan Stanley Group Inc. ("Morgan Stanley") became an affiliate of VKAC 
and as of   May 31, 1997, Dean Witter Discover & Co. ("Dean Witter") 
also became an affiliate of VKAC.  Effective December 31, 1997, Morgan 
Stanley and  Dean Witter were no longer considered affiliated persons of 
the manager or the Distributor (or its predecessor).   The negotiated 
commission paid to an affiliated broker on any transaction would be 
comparable to that payable to a non-affiliated broker in a similar 
transaction.


The Funds paid the following commission to affiliated brokers during the 
periods shown:

				Salomon
				Robinson	Smith		
Fiscal 1998 Commissions		Humphrey	Barney		

Emerging Growth		$12,679		$29,294	
International Equity		      -0-		 9,442	
Growth		 34,230		363,234
Growth & Income		 3,300		 99,771
Government		-		-
Municipal Bond		-		-

						
Fiscal 1998 Percentage		

Emerging Growth		3.63%		8.40%
International Equity		N/A		6.60%
Growth		0.42%		4.43%
Growth & Income		0.29%		8.88%
Government		-		-			
Municipal Bond		-		-	

				
				

				Salomon
				Robinson	Smith		
		Humphrey	Barney		

Percentage of Transactions with
Affiliates to Total Transactions
				
Emerging Growth		3.81%		6.31%
International Equity		-		7.30%
Growth		0.52%		3.94%
Growth & Income		0.15%		9.12%
Government		-		-
Municipal Bond		-		-
 
												
		
						Salomon
				Robinson	Smith		Morgan		Dean
Fiscal 1997 Commissions		Humphrey	Barney		Stanley	
	Witter
				
Emerging Growth		-		-		-		-	
International Equity		-		-		$  9,368		-
Growth		$4,500		$327,320		20,688		$17,100
Growth & Income		-		90,639		375		-
Government		-		27,848		-		-
Municipal Bond		-		-		-		-
				
				
Fiscal 1997 Percentage				
			
Emerging Growth		-		-		-		-
International Equity		-		-		 8.14%		-
Growth		0.04%		3.24%		0.20%		0.17%
Growth & Income		-		3.73%		0.02%		-
Government		-		19.86%		-		-
Municipal Bond		-		-		-		-
				
Percentage of Transactions with 
Affiliates to Total Transactions
				
Emerging Growth		-		-		-		-
International Equity		-		-		1.43%		-
Growth		-		0.04%		-		0.28%	
Growth & Income		-		-		-		-
Government		-		2.34%		-		-
Municipal Bond		-		-		-		-
				
												
		
				

				Salomon
		Robinson	Smith		
Fiscal 1996 Commissions		Humphrey	Barney		
				
Emerging Growth		-		$1,835		
International Equity		-		-		
Growth		$7,200	 	240,982		
Growth & Income		 2,400		92,761		
Government		-		28,322		
Municipal Bond		-		-		


Fiscal 1996 Percentages

Emerging Growth		-		1.87%
International Equity		-		-
Growth		0.07%		2.38%
Growth & Income		0.10%	 	4.08%
Government		-		17.68%
Municipal Bond		-		-


Percentage of Transactions with
Affiliates to Total Transactions

Emerging Growth		-		-
International Equity		-		-
Growth		-	  	0.002%
Growth & Income		-		0.027%
Government		-		4.65%
Municipal Bond		-		5.35%

DETERMINATION OF NET ASSET VALUE

General

The assets belonging to the Class A, Class B and Class 1 shares of each 
Fund will be invested together in a single portfolio.  The net asset 
value of each class will be determined separately by subtracting the 
expenses and liabilities allocated to that class. The net asset value of 
the shares of each Fund is determined as of the close of the New York 
Stock Exchange (the "Exchange") (normally 4:00 p.m., New York time) on 
each business day on which the Exchange is open.

Emerging Growth Fund, International Equity Fund, Growth Fund, Mid Cap 
Fund and Growth and Income Fund 

The net asset value of each Fund is computed by (i) valuing securities 
listed or traded on a national securities exchange at the last reported 
sales price, or if there has been no sale that day at the last reported 
bid price, using prices as of the close of trading on the Exchange, 
(ii) valuing unlisted securities for which over-the-counter market 
quotations are readily available at the most recent bid price as 
supplied by the National Association of Securities Dealers Automated 
Quotations (NASDAQ) or by broker-dealers, and (iii) valuing any 
securities for which market quotations are not readily available, and 
any other assets at fair value as determined in good faith by the 
Trustees.  Options on stocks, options on stock indexes and stock index 
futures contracts and options thereon, which are traded on exchanges, 
are valued at their last sales or settlement price as of the close of 
such exchanges, or, if no sales are reported, at the mean between the 
last reported bid and asked prices.  Debt securities with a remaining 
maturity of 60 days or less are valued on an amortized cost basis which 
approximates market value.

Foreign securities trading may not take place on all days on which the 
Exchange is open.  Further, trading takes place in various foreign 
markets on days on which the Exchange is not open.  Accordingly, the 
determination of the net asset value of a Fund may not take place 
contemporaneously with the determination of the prices of investments 
held by such Fund.  Events affecting the values of investments that 
occur between the time their prices are determined and 4:00 p.m. Eastern 
time on each day that the Exchange is open will not be reflected in a 
Fund's net asset value unless the manager, under the supervision of the 
Trustees, determines that the particular event would materially affect 
net asset value.  As a result, a Fund's net asset value may be 
significantly affected by such trading on days when a shareholder has no 
access to the Funds.

Government Fund 

U.S. Government securities are traded in the over-the-counter market and 
are valued at the last available bid price.  Such valuations are based 
on quotations of one of more dealers that make markets in the securities 
as obtained from such dealers or from a pricing service.  Options and 
interest rate futures contracts and options thereon, which are traded on 
exchanges, are valued at their last sales or settlement price as of the 
close of such exchanges, or, if no sales are reported, at the mean 
between the last reported bid and asked prices.  Securities with a 
remaining maturity of 60 days or less are valued on an amortized cost 
basis which approximates market value.  Securities and assets for which 
market quotations are not readily available are valued at fair value as 
determined in good faith by or under the direction of the Trustees.  
Such valuations and procedures will be reviewed periodically by the 
Trustees.

Municipal Bond Fund 

Municipal Bonds owned by the Fund are valued by an independent pricing 
service ("Service").  When, in the judgment of the Service, quoted bid 
prices for investments are readily available and are representative of 
the bid side of the market, these investments are valued at such quoted 
bid prices (as obtained by the Service from dealers in such securities).  
Other investments are carried at fair value as determined by the 
Service, based on methods which include consideration of: yields or 
prices of municipal bonds of comparable quality, coupon, maturity and 
type; indications as to values from dealers; and general market 
conditions.  The Service may employ electronic data processing 
techniques and/or a matrix system to determine valuations.  Any assets 
which are not valued by the Service would be valued at fair value using 
methods determined in good faith by the Trustees.

Purchase of Shares 

Each Fund offers two Classes of shares to investors purchasing through 
PFS Investments Registered Representatives. Class A shares are sold to 
investors with an initial sales charge and Class B shares are sold 
without an initial sales charge but are subject to a contingent deferred 
sales charge ("CDSC") payable upon certain redemptions. As of May 20, 
1996, all of the previously outstanding shares of Growth Fund, Growth 
and Income Fund, Government Fund, and Municipal Fund were redesignated 
as Class 1 shares without any other changes, and Class A and Class B 
shares were authorized for issuance. As of May 20, 1996, Class 1 shares 
were authorized for issuance for the Emerging Growth Fund and 
International Equity Fund. Each Fund offers Class 1 shares only to 
Eligible Class 1 Purchasers. Each class of shares represents an interest 
in the same portfolio of investments of a Fund. See the Prospectus for a 
discussion of factors to consider in selecting which Class of shares to 
purchase. 

Initial purchases of shares of each Fund must be made through a PFS 
Investments Registered Representative by completing the appropriate 
application found in this Prospectus. The completed application should 
be forwarded to the Sub-Transfer Agent, 3100 Breckinridge Blvd., Bldg. 
200, Duluth, Georgia 30199-0062. Checks drawn on foreign banks must be 
payable in U.S. dollars and have the routing number of the U.S. bank 
encoded on the check. Subsequent investments may be sent directly to the 
Sub-Transfer Agent.  In processing applications and investments, the 
Transfer Agent acts as agent for the investor and for PFS Investments 
and also as agent for the Distributor, in accordance with the terms of 
the Prospectus.  If the Transfer Agent ceases to act as such, a 
successor company named by the Trust will act in the same capacity so 
long as the account remains open.

Investors in Class A and Class B shares may open an account by making an 
initial investment of at least $1,000 for each account in each Class 
(except for Systematic Investment Plan accounts), or $250 for an IRA or 
a Self-Employed Retirement Plan in a Fund. Subsequent investments of at 
least $50 may be made for each Class. For participants in retirement 
plans qualified under Section 403(b)(7) or Section 401(a) of the Code, 
the minimum initial investment requirement for Class A and Class B 
shares and the subsequent investment requirement for each Class in a 
Fund is $25. For each Fund's Systematic Investment Plan, the minimum 
initial investment requirement for Class A and Class B shares and the 
subsequent investment requirement for each Class is $25. There are no 
minimum investment requirements in Class A shares for employees of 
Citigroup and its subsidiaries, including Smith Barney, Directors or 
Trustees of any of the Smith Barney Mutual Funds, and their spouses and 
children. The Trust reserves the right to waive or change minimums, to 
decline any order to purchase its shares and to suspend the offering of 
shares from time to time. Shares purchased will be held in the 
shareholder's account by the Sub-Transfer Agent. Share certificates are 
issued only upon a shareholder's written request to the Sub-Transfer 
Agent. A shareholder who has insufficient funds to complete any 
purchase, will be charged a fee of $25 per returned purchase by PFS or 
the Sub-Transfer Agent. 
	
Purchase orders received by the Sub-Transfer Agent prior to the close of 
regular trading on the NYSE, on any day a Fund calculates its net asset 
value, are priced according to the net asset value determined on that 
day. 

Systematic Investment Plan.   Shareholders may make additions to their 
accounts at any time by purchasing shares through a service known as the 
Systematic Investment Plan. Under the Systematic Investment Plan, the 
Sub-Transfer Agent is authorized through preauthorized transfers of $25 
or more to charge the regular bank account or other financial 
institution indicated by the shareholder on a monthly basis to provide 
systematic additions to the shareholder's Fund account. A shareholder 
who has insufficient funds to complete the transfer will be charged a 
fee of up to $25 by PFS or the Sub-Transfer Agent. A shareholder who 
places a stop payment on a transfer or the transfer is returned because 
the account has been closed, will also be charged a fee of $25 by PFS or 
the Sub-Transfer Agent. 

Initial Sales Charge Alternative - Class A Shares.   The sales charges 
applicable to purchases of Class A shares of the Emerging Growth Fund, 
International Equity Fund, Mid Cap Fund, Growth Fund and Growth and 
Income Fund are as follows: 




               Sales 
Charge                 
 
Dealers'
Reallowance as % 
of
     Offering 
Price      
Amount of 
Investment

% of 
Offering 
Price
% of 
Amount 
Invested

Less than  $ 
25,000
5.00%
5.26%
4.50%
$ 25,000 -  
49,999
4.00   
4.17   
3.60   
50,000 -  
99,999
3.50   
3.63   
3.15   
100,000 - 
249,999
3.00   
3.09   
2.70   
250,000 - 
499,999
2.00   
2.04   
1.80   
500,000 and 
over
*   
*   
*   

The sales charges applicable to purchases of Class A shares of 
Government Fund and Municipal Fund are as follows: 
	



               Sales 
Charge                 
 
Dealers'
Reallowance as % 
of
     Offering 
Price         
Amount of 
Investment

% of 
Offering 
Price
% of 
Amount 
Invested

Less than  $ 
25,000
4.50%
4.71%
4.05%
$ 25,000 -  
49,999
4.00   
4.17   
3.60   
50,000 -  
99,999
3.50   
3.63   
3.15   
100,000 - 
249,999
2.50   
2.56   
2.25   
250,000 - 
499,999
1.50   
1.52   
1.35   
500,000 and 
over
*   
*   
*   

*	Purchases of Class A shares of $500,000 or more will be made at net 
asset value without any initial sales charge, but will be subject to a 
CDSC of 1.00% on redemptions made within 12 months of purchase. The CDSC 
on Class A shares is payable to PFS, which in turn, pays PFS Investments 
to compensate its Registered Representatives whose clients make 
purchases of $500,000 or more. The CDSC is waived in the same 
circumstances in which the CDSC applicable to Class B shares is waived. 
See ''Deferred Sales Charge Alternatives'' and ''Waivers of CDSC.'' 

Members of the selling group may receive up to 90% of the sales charge 
and may be deemed to be underwriters of the Fund as defined in the 
Securities Act of 1933, as amended.  The reduced sales charges shown 
above apply to the aggregate of purchases of Class A Shares of a Fund 
made at one time by ''any person'', which includes an individual and his 
or her immediate family, or a trustee or other fiduciary of a single 
trust estate or single fiduciary account.

Initial Sales Charge Waivers.   Purchases of Class A shares may be made 
at net asset value without a sales charge in the following 
circumstances: (a) sales of Class A shares to (i) Board members and 
employees of Citigroup and its subsidiaries and any of the Smith Barney 
Mutual Funds (including retired Board Members and employees); the 
immediate families of such persons (including the surviving spouse of a 
deceased Board Member or employee); and to a pension, profit-sharing or 
other benefit plan for such persons; and (ii) employees of members of 
the National Association of Securities Dealers, Inc., provided such 
sales are made upon the assurance of the purchaser that the purchase is 
made for investment purposes and that the securities will not be resold 
except through redemption or repurchase; (b) offers of Class A shares to 
any other investment company to effect the combination of such company 
with the Fund by merger, acquisition of assets or otherwise; (c) 
purchases by shareholders who have redeemed Class A shares in a Fund (or 
Class A shares of another fund of the Smith Barney Mutual Funds that are 
sold with a maximum sales charge equal to or greater than the maximum 
sales charge of the Fund) and who wish to reinvest their redemption 
proceeds in the Fund, provided the reinvestment is made within 60 
calendar days of the redemption; (d) purchases by accounts managed by 
registered investment advisory subsidiaries of Citigroup; (e) sales 
through PFS Investments Registered Representatives where the amounts 
invested represent the redemption proceeds from investment companies, on 
the condition that (i) the redemption has occurred no more than 60 days 
prior to the purchase of the shares, (ii) the shareholder paid an 
initial sales charge on such redeemed shares and (iii) the shares 
redeemed were not subject to a deferred sales charge; (f) direct 
rollovers by plan participants of distributions from a 401(k) plan 
enrolled in the Salomon Smith Barney401(k) Program (note: subsequent 
investments will be subject to the applicable sales charge; (g) 
purchases by separate accounts used to fund certain unregistered 
variable annuity contracts; and (h) purchases by investors participating 
in a Salomon Smith Barneyfee based arrangement. PFS Investments may pay 
its Registered Representatives an amount equal to 0.40% of the amount 
invested if the purchase represents redemption proceeds from an 
investment company distributed by an entity other than PFS Investments. 
In order to obtain such discounts, the purchaser must provide sufficient 
information at the time of purchase to permit verification that the 
purchase would qualify for the elimination of the sales charge. 

In addition, Class A shares of the Funds may be purchased at net asset 
value by the PFS Primerica Corporation Savings and Retirement Plan (the 
''Primerica Plan'') for its participants, subject to the provisions of 
the Employee Retirement Income Security Act of 1974, as amended 
(''ERISA''). Class A shares so purchased are purchased for investment 
purposes and may not be resold except by redemption or repurchase by or 
on behalf of the Primerica Plan. Class A shares are also offered at net 
asset value to accounts opened for shareholders by PFS Investments 
Registered Representatives where the amounts invested represent the 
redemption proceeds from investment companies distributed by an entity 
other than PFS, if such redemption has occurred no more than 60 days 
prior to the purchase of shares of the Trust, and the shareholder paid 
an initial sales charge and was not subject to a deferred sales charge 
on the redeemed account. Class A shares are offered at net asset value 
to such persons because of anticipated economies in sales efforts and 
sales related expenses. The Trust may terminate, or amend the terms of, 
offering shares of the Trust at net asset value to such persons at any 
time. PFS may pay PFS Investments Registered Representatives through 
whom purchases are made at net asset value an amount equal to 0.40% of 
the amount invested if the purchase represents redemption proceeds from 
an investment company distributed by an entity other than PFS. Contact 
the Sub-Transfer Agent at (800) 544-5445 for further information and 
appropriate forms.

Volume Discounts.   The ''Amount of Investment'' referred to in the 
sales charge table set forth above under ''Initial Sales Charge 
Alternative-Class A Shares'' includes the purchase of Class A shares in 
a Fund and of certain other Concert and Smith Barney mutual funds.  A 
person eligible for a volume discount includes: an individual; members 
of a family unit comprising a husband, wife and minor children; a 
trustee or other fiduciary purchasing for a single fiduciary account 
including pension, profit-sharing and other employee benefit trusts 
qualified under Section 401(a) of the Code; or multiple custodial 
accounts where more than one beneficiary is involved if purchases are 
made by salary reduction and/or payroll deduction for qualified and 
nonqualified accounts and transmitted by a common employer entity. 
Employer entity for payroll deduction accounts may include trade and 
craft associations and any other similar organizations.

Letter of Intent.   A Letter of Intent for amounts of $50,000 or more 
provides an opportunity for an investor to obtain a reduced sales charge 
by aggregating investments over a 13-month period, provided that the 
investor refers to such Letter when placing orders. For purposes of a 
Letter of Intent, the ''Amount of Investment'' as referred to in the 
preceding sales charge table includes purchases of all Class A shares of 
each Fund and other Smith Barney Mutual Funds offered with a sales 
charge over a 13-month period based on the total amount of intended 
purchases plus the value of all Class A shares previously purchased and 
still owned. An alternative is to compute the 13-month period starting 
up to 90 days before the date of execution of a Letter of Intent. Each 
investment made during the period receives the reduced sales charge 
applicable to the total amount of the investment goal. If the goal is 
not achieved within the period, the investor must pay the difference 
between the sales charges applicable to the purchases made and the 
charges previously paid, or an appropriate number of escrowed shares 
will be redeemed. Please contact a PFS Investments Registered 
Representative to obtain a Letter of Intent application.

A Letter of Intent applies to purchases of Class A and Class 1 shares of 
all Funds.  When an investor submits a Letter of Intent to attain an 
investment goal within a 13-month period, the Transfer Agent escrows 
shares totaling 5% of the dollar amount of the Letter of Intent in the 
name of the investor.  The Letter of Intent does not obligate the 
investor to purchase the indicated amount.  In the event the Letter of 
Intent goal is not achieved within the 13-month period, the investor is 
required to pay the difference between the sales charge otherwise 
applicable to the purchases made during this period and the sales charge 
actually paid.  Such payment may be made directly to the Distributor or, 
if not paid, the Distributor will liquidate sufficient escrow shares to 
obtain such difference.  If the goal is exceeded in an amount which 
qualifies for a lower sales charge, a price adjustment is made at the 
end of the 13-month period by refunding to the investor the amount of 
excess sales commissions, if any, paid during the 13-month period.

Deferred Sales Charge Alternatives.  CDSC Shares are sold at net asset 
value next determined without an initial sales charge so that the full 
amount of an investor's purchase payment may be immediately invested in 
a Fund. A CDSC, however, may be imposed on certain redemptions of these 
shares. ''CDSC Shares'' are: (i) Class B shares and (ii) Class A shares 
that were purchased without an initial sales charge but subject to a 
CDSC.  Any applicable CDSC will be assessed on an amount equal to the 
lesser of the original cost of the shares being redeemed or their net 
asset value at the time of redemption. CDSC Shares that are redeemed 
will not be subject to a CDSC to the extent that the value of such 
shares represents: (a) capital appreciation of Fund assets; (b) 
reinvestment of dividends or capital gain distributions; (c) with 
respect to Class B shares, shares redeemed more than five years after 
their purchase; or (d) with respect to Class A shares that are CDSC 
Shares, shares redeemed more than 12 months after their purchase.

Class A shares that are CDSC Shares are subject to a 1.00% CDSC if 
redeemed within 12 months of purchase. In circumstances in which the 
CDSC is imposed on Class B shares, the amount of the charge will depend 
on the number of years since the shareholder made the purchase payment 
from which the amount is being redeemed. Solely for purposes of 
determining the number of years since a purchase payment, all purchase 
payments made during a month will be aggregated and deemed to have been 
made on the last day of the preceding statement month. The following 
table sets forth the rates of the charge for redemptions of Class B 
shares by shareholders. 




Years Since 
Purchase
Payment Was 
Made
CDSC 
Applicable to 
Emerging Growth 
Fund, Mid Cap 
Fund,
International 
Equity Fund, 
Growth
Fund and Growth 
and Income Fund  



CDSC 
Applicable to 
Government
Fund and Municipal 
Fund
First
5.00%
4.50%
Second
4.00   
4.00   
Third
3.00   
3.00   
Fourth
2.00   
2.00   
Fifth
1.00   
1.00   
Sixth and 
thereafter
0.00   
0.00   

Class B shares will convert automatically to Class A shares eight years 
after the date on which they were purchased and thereafter will no 
longer be subject to any distribution fees. There will also be converted 
at that time such proportion of Class B Dividend Shares owned by the 
shareholder as the total number of his or her Class B shares converting 
at the time bears to the total number of outstanding Class B shares 
(other than Class B Dividend Shares) owned by the shareholder.

Class B shares of a Fund purchased prior to December 31, 1997 and 
subsequently redeemed will remain subject to the CDSC at the rates 
applicable at the time of purchase. 

In determining the applicability of any CDSC or the conversion feature 
described above, it will be assumed that a redemption is made first of 
shares representing capital appreciation, next of shares representing 
the reinvestment of dividends and capital gain distributions and finally 
of other shares held by the shareholder for the longest period of time. 
The length of time that CDSC Shares acquired through an exchange have 
been held will be calculated from the date that the shares exchanged 
were initially acquired in one of the other Smith Barney Mutual Funds, 
and Fund shares being redeemed will be considered to represent, as 
applicable, capital appreciation or dividend and capital gain 
distribution reinvestments in such other funds. For Federal income tax 
purposes, the amount of the CDSC will reduce the gain or increase the 
loss, as the case may be, on the amount realized on redemption. The 
amount of any CDSC will be paid to PFS. 

To provide an example, assume an investor purchased 100 Class B shares 
at $10 per share for a cost of $1,000. Subsequently, the investor 
acquired 5 additional shares through dividend reinvestment. During the 
fifteenth month after the purchase, the investor decided to redeem $500 
of his or her investment. Assuming at the time of the redemption the net 
asset value had appreciated to $12 per share, the value of the 
investor's shares would be $1,260 (105 shares at $12 per share). The 
CDSC would not be applied to the amount that represents appreciation 
($200) and the value of the reinvested dividend shares ($60). Therefore, 
$240 of the $500 redemption proceeds ($500 minus $260) would be charged 
at a rate of 4.00% (the applicable rate for Class B shares) for a total 
deferred sales charge of $9.60.



For the year ended October 31, 1998, CDSCs paid for Class B shares were 
approximately:

Fund			CDSC
Emerging Growth:		$445,331
Government:		$75,664
Growth:		$552,399
Growth and Income:		$458,157
International Equity:		$63,366
Municipal Bond:		$27,338

The Mid Cap Fund had not commenced operations during the relevant 
period.

Waiver of CDSC

The CDSC generally is waived on exchanges and on redemptions of Class A 
and Class B shares in the circumstances described below: 

  (a)  Redemption Upon Disability or Death

The Trust may waive the CDSC on redemptions following the death or 
disability of a Class A or Class B shareholder.  An individual will be 
considered disabled for this purpose if he or she meets the definition 
thereof in Section 72(m)(7) of the Code, which in pertinent part defines 
a person as disabled if such person "is unable to engage in any 
substantial gainful activity by reason of any medically determinable 
physical or mental impairment which can be expected to result in death 
or to be of long-continued and indefinite duration." While the Trust 
does not specifically adopt the balance of the Code's definition which 
pertains to furnishing the Secretary of Treasury with such proof as he 
or she may require, the Sub-Transfer Agent will require satisfactory 
proof of death or disability before it determines to waive the CDSC.

In cases of disability or death, the CDSC may be waived where the 
decedent or disabled person is either an individual shareholder or owns 
the shares as a joint tenant with right of survivorship or is the 
beneficial owner of a custodial or fiduciary account, and where the 
redemption is made within one year of the death or initial determination 
of disability.  This waiver of the CDSC applies to a total or partial 
redemption, but only to redemptions of shares held at the time of the 
death or initial determination of disability.

  (b)  Redemption in Connection with Certain Distributions from 
Retirement Plans

The Trust may waive the CDSC when a total or partial redemption is made 
in connection with certain distributions from Retirement Plans.  The 
charge may be waived upon the tax-free rollover or transfer of assets to 
another Retirement Plan invested in one or more of the Funds; in such 
event, as described below, the Fund will "tack" the period for which the 
original shares were held on to the holding period of the shares 
acquired in the transfer or rollover for purposes of determining what, 
if any, CDSC is applicable in the event that such acquired shares are 
redeemed following the transfer or rollover.  The charge also may be 
waived on any redemption which results from the return of an excess 
contribution pursuant to Section 408(d)(4) or (5) of the Code, the 
return of excess deferral amounts pursuant to Code Section 401(k)(8) or 
402(g)(2), or from the death or disability of the employee (see Code 
Section 72(m)(7) and 72(t)(2)(A)(ii)).  In addition, the charge may be 
waived on any minimum distribution required to be distributed in 
accordance with Code Section 401(a)(9).

The Trust does not intend to waive the CDSC for any distributions from 
IRAs or other Retirement Plans not specifically described above.

(c)  Redemption Pursuant to the Trust's Systematic Withdrawal Plan

A shareholder may elect to participate in a systematic withdrawal plan 
("Plan") with respect to the shareholder's investment in a Fund.  Under 
the Plan, a dollar amount of a participating shareholder's investment in 
the Fund will be redeemed systematically by the Fund on a periodic 
basis, and the proceeds mailed to the shareholder.  The amount to be 
redeemed and frequency of the systematic withdrawals will be specified 
by the shareholder upon his or her election to participate in the Plan.  
The CDSC may be waived on redemptions made under the Plan.

The amount of the shareholder's investment in a Fund at the time the 
election to participate in the Plan is made with respect to the Fund is 
hereinafter referred to as the "initial account balance." The amount to 
be systematically redeemed from such Fund without the imposition of a 
CDSC may not exceed a maximum of 12% annually of the shareholder's 
initial account balance.  The Trust reserves the right to change the 
terms and conditions of the Plan and the ability to offer the Plan.


  (d)  Involuntary Redemptions of Shares in Accounts that Do Not Have 
the Required Minimum Balance

The Trust reserves the right to redeem shareholder accounts with 
balances of less than a specified dollar amount as set forth in the 
Prospectus.  Prior to such redemptions, shareholders will be notified in 
writing and allowed a specified period of time to purchase additional 
shares to bring the account up to the required minimum balance.  Any 
involuntary redemption may only occur if the shareholder account is less 
than the amount specified in the Prospectus due to shareholder 
redemptions.  The Trust may waive the CDSC upon such involuntary 
redemption.

  (e)  Redemption by manager

The Trust may waive the CDSC when a total or partial redemption is made 
by the manager with respect to its investments in a Fund.

Class 1 Shares.   Class 1 shares are offered to Eligible Class 1 Share 
Purchasers at the next determined net asset value plus a sales charge, 
as set forth below. 
	
Emerging Growth Fund, International Equity Fund, Mid Cap Fund, Growth 
Fund and Growth and Income Fund 





Size of Investment



As % of 
Net Amount 
Invested  
 



As % of 
Offering 
Price   
Reallowed 
to PFS 
Investments 
(as a % of 
Offering 
Price)*   
Less than $10,000
9.29%
8.50%
7.00%
$     10,000 but less than  
$    25,000
8.40%
7.75%
6.25%
$     25,000 but less than  
$    50,000
6.38%
6.00%
5.00%
$     50,000 but less than  
$  100,000
4.71%
4.50%
3.75%
$   100,000 but less than 
$   250,000
3.63%
3.50%
3.00%
$   250,000 but less than 
$   400,000
2.56%
2.50%
2.00%
$   400,000 but less than 
$   600,000
2.04%
2.00%
1.60%
$   600,000 but less than 
$5,000,000
1.01%
1.00%
0.75%
$5,000,000 or more
0.25%
0.25%
0.20%

Government Fund 





Size of Investment



As % of 
Net Amount 
Invested  
 



As % of 
Offering 
Price   
Reallowed 
to PFS 
Investments 
(as a % of 
Offering 
Price)*   
Less than $25,000
7.24%
6.75%
6.00%
$     25,000 but less than 
$     50,000
6.10%
5.75%
5.00%
$     50,000 but less than 
$   100,000
4.44%
4.25%
3.50%
$   100,000 but less than 
$   250,000
3.63%
3.50%
2.75%
$   250,000 but less than 
$   500,000
2.56%
2.50%
2.00%
$   500,000 but less than 
$1,000,000
2.04%
2.00%
1.60%
$1,000,000 but less than 
$2,500,000
1.01%
1.00%
0.75%
$2,500,000 but less than 
$5,000,000
0.50%
0.50%
0.40%
$5,000,000 or more
0.25%
0.25%
0.20%



Municipal Bond Fund 





Size of Investment



As % of 
Net Amount 
Invested   



As % of 
Offering 
Price   
Reallowed 
to PFS 
Investments 
(as a % of 
Offering 
Price)*   
Less than $100,000
4.99%
4.75%
4.25%
$   100,000 but less than 
$   250,000
3.90%
3.75%
3.25%
$   250,000 but less than 
$   500,000
3.09%
3.00%
2.50%
$   500,000 but less than 
$1,000,000
2.04%
2.00%
1.60%
$1,000,000 but less than 
$2,500,000
1.01%
1.00%
0.75%
$2,500,000 but less than 
$5,000,000
0.50%
0.50%
0.40%
$5,000,000 or more
0.25%
0.25%
0.20%

*	Additionally, PFS will pay to PFS Investments a promotional fee 
calculated as a percentage of the sales charge reallowed to PFS 
Investments. The percentage used in the calculation is 3%.

The Distributor or PFS may be deemed to be an underwriter for purposes 
of the Securities Act of 1933. From time to time, PFS or its affiliates 
may also pay for certain non-cash sales incentives provided to PFS 
Investments Registered Representatives. Such incentives do not have any 
effect on the net amount invested. In addition to the reallowances from 
the applicable public offering price described above, PFS may, from time 
to time, pay or allow additional reallowances or promotional incentives, 
in the form of cash or other compensation to PFS Investments Registered 
Representatives that sell shares of the Trust. 

Class 1 shares of the Trust may be purchased at net asset value by the 
Primerica Plan for Eligible Class 1 Purchasers participating in the 
Primerica Plan, subject to the provisions of ERISA. Shares so purchased 
are purchased for investment purposes and may not be resold except by 
redemption or repurchase by or on behalf of the Primerica Plan. Class 1 
Shares are also offered at net asset value to accounts opened for 
shareholders by PFS Investments Registered Representatives where the 
amounts invested represent the redemption proceeds from investment 
companies distributed by an entity other than the Distributor, if such 
redemption has occurred no more than 60 days prior to the purchase of 
shares of the Trust and the shareholder paid an initial sales charge and 
was not subject to a deferred sales charge on the redeemed account. 
Shares are offered at net asset value to such persons because of 
anticipated economies in sales efforts and sales related expenses. The 
Trust may terminate, or amend the terms of, offering shares of the Trust 
at net asset value to such persons at any time. PFS may pay PFS 
Investment Registered Representatives through whom purchases are made at 
net asset value an amount equal to 0.40% of the amount invested if the 
purchase represents redemption proceeds from an investment company 
distributed by an entity other than the Distributor. Contact the Sub-
Transfer Agent at (800) 544-5445 for further information and appropriate 
forms. 

Investors purchasing Class 1 shares may under certain circumstances be 
entitled to reduced sales charges. The circumstances under which such 
investors may pay reduced sales charges are the same as those described 
above under ''Purchases of Shares-''Volume Discounts'' and ''Letter of 
Intent.'' 

Exchange Privilege

Shares of each class of a Fund may be exchanged at the net asset value 
next determined for shares of the same class in the following funds, to 
the extent shares are offered for sale in the shareholder's state of 
residence, except, however, for exchanges of Class 1 shares into a fund 
which does not offer Class 1 shares which, may be made for Class A 
shares of such fund. Exchanges are subject to minimum investment 
requirements and all shares are subject to the other requirements of the 
fund into which exchanges are made.
	
- Concert Peachtree Growth Fund 

- Concert Social Awareness Fund 

- Smith Barney Appreciation Fund Inc. 

- Smith Barney Concert Allocation Series Inc.-Balanced Portfolio 

- Smith Barney Concert Allocation Series Inc.-Conservative 
Portfolio 

- Smith Barney Concert Allocation Series Inc.- Growth Portfolio 

- Smith Barney Concert Allocation Series Inc.-High Growth Portfolio 

- Smith Barney Concert Allocation Series Inc.-Income Portfolio 

- Smith Barney Investment Grade Bond Fund 

- *Smith Barney Money Funds, Inc.-Cash Portfolio 

- **Smith Barney Exchange Reserve Fund

 *	Available for exchange with Class A shares of a Fund. 
**	Available for exchange with Class B shares of a Fund. 

Class A Exchanges.   Class A shareholders of each Fund who wish to 
exchange all or a portion of their shares for Class A shares in any of 
the funds identified above may do so without imposition of any charge. 
	
Class B Exchanges.   In the event a Class B shareholder wishes to 
exchange all or a portion of his or her shares into any of the funds 
imposing a higher CDSC than that imposed by a Fund, the exchanged Class 
B shares will be subject to the higher applicable CDSC. Upon an 
exchange, the new Class B shares will be deemed to have been purchased 
on the same date as the Class B shares of the Fund that have been 
exchanged.

Additional Information Regarding the Exchange Privilege.   Although the 
exchange privilege is an important benefit, excessive exchange 
transactions can be detrimental to a Fund's performance and its 
shareholders. The Trust may determine that a pattern of frequent 
exchanges is excessive and contrary to the best interests of each Fund's 
other shareholders. In this event, the Trust may, at its discretion, 
decide to limit additional purchases and/or exchanges by the 
shareholder. Upon such a determination by the Trust, the Trust will 
provide notice in writing or by telephone to the shareholder at least 15 
days prior to suspending the exchange privilege and during the 15 day 
period the shareholder will be required to (a) redeem his or her shares 
in the Fund or (b) remain invested in the Fund or exchange into any of 
the Smith Barney Mutual Funds ordinarily available, which position the 
shareholder would be expected to maintain for a significant period of 
time. All relevant factors will be considered in determining what 
constitutes an abusive pattern of exchanges.

By use of the exchange privilege, the investor authorizes the Transfer 
Agent to act on written exchange instructions from any person 
representing himself to be the investor or the agent of the investor and 
believed by the Transfer Agent to be genuine.  The Transfer Agent's 
records of such instructions are binding.

For purposes of determining the sales charge rate previously paid on 
Class A and Class 1 shares of a Fund, all sales charges paid on the 
exchanged security and on any security previously exchanged for such 
security or for any of its predecessors shall be included.  If the 
exchanged security was acquired through reinvestment, that security is 
deemed to have been sold with a sales charge rate equal to the rate 
previously paid on the security on which the dividend or distribution 
was paid.  If a shareholder exchanges less than all of his securities, 
the security upon which the highest sales charge rate was previously 
paid is deemed exchanged first.

Exchange requests received on a business day prior to the time shares of 
a Fund involved in the request are priced will be processed on the date 
of receipt.  "Processing" a request means that shares in a fund from 
which the shareholder is withdrawing an investment will be redeemed at 
the net asset value per share next determined on the date of receipt.  
Shares of the new fund into which the shareholder is investing will also 
normally be purchased at the net asset value per share, plus any 
applicable sales charge, next determined on the date of receipt.  
Exchange requests received on a business day after the time shares of 
the Funds involved in the request are priced will be processed on the 
next business day in the manner described above.

Redemption procedures discussed below are also applicable for exchanging 
shares, and exchanges will be made upon receipt of all supporting 
documents in proper form. If the account registration of the shares of 
the fund being acquired is identical to the registration of the shares 
of the fund exchanged, no signature guarantee is required. An exchange 
involves a redemption of shares, which is a taxable transaction. Before 
exchanging shares, investors should read the current prospectus 
describing the shares to be acquired. Each Fund reserves the right to 
modify or discontinue exchange privileges upon 60 days' prior notice to 
shareholders.



Redemption of Shares

Shareholders may redeem for cash some or all of their shares of a Fund 
at any time by sending a written request in proper form directly to the 
Sub-Transfer Agent, PFS Shareholder Services, at 3100 Breckinridge Blvd, 
Bldg. 200, Duluth, Georgia 30095-0062. If you should have any questions 
concerning how to redeem your account after reviewing the information 
below, please contact the Sub-Transfer Agent at (800) 544-5445, Spanish-
speaking representatives (800) 544-7278 or TDD Line for the Hearing 
Impaired (800) 824-1721. 

As described under ''Purchase of Shares,'' redemptions of Class B shares 
are subject to a CDSC. 

The request for redemption must be signed by all persons in whose names 
the shares are registered. Signatures must conform exactly to the 
account registration. If the proceeds of the redemption exceed $50,000, 
or if the proceeds are not paid to the record owner(s) at the record 
address, if the shareholder(s) has had an address change in the past 45 
days, or if the shareholder(s) is a corporation, sole proprietor, 
partnership, trust or fiduciary, signature(s) must be guaranteed by one 
of the following: a bank or trust company; a broker-dealer; a credit 
union; a national securities exchange, registered securities association 
or clearing agency; a savings and loan association; or a federal savings 
bank. 

Generally, a properly completed Redemption Form with any required 
signature guarantee is all that is required for a redemption. In some 
cases, however, other documents may be necessary. For example, in the 
case of shareholders holding certificates, the certificates for the 
shares being redeemed must accompany the redemption request. Additional 
documentary evidence of authority is also required by the Sub-Transfer 
Agent in the event redemption is requested by a corporation, 
partnership, trust, fiduciary, executor or administrator. Additionally, 
if a shareholder requests a redemption from a Retirement Plan account 
(IRA, SEP or 403(b)(7)), such request must state whether or not federal 
income tax is to be withheld from the proceeds of the redemption check. 

A shareholder may utilize the Sub-Transfer Agent's FAX to redeem the 
shareholder's account as long as a signature guarantee or other 
documentary evidence is not required. Redemption requests should be 
properly signed by all owners of the account and faxed to the Sub-
Transfer Agent at (800) 554-2374. Facsimile redemptions may not be 
available if the shareholder cannot reach the Sub-Transfer Agent by FAX, 
whether because all telephone lines are busy or for any other reason; in 
such case, a shareholder would have to use the Fund's regular redemption 
procedure described above. Facsimile redemptions received by the Sub-
Transfer Agent prior to 4:00 p.m. Eastern time on a regular business day 
will be processed at the net asset value per share determined that day. 

In all cases, the redemption price is the net asset value per share of 
the Fund next determined after the request for redemption is received in 
proper form by the Sub-Transfer Agent. Payment for shares redeemed will 
be made by check mailed within three days after acceptance by the Sub-
Transfer Agent of the request and any other necessary documents in 
proper order. Such payment may be postponed or the right of redemption 
suspended as provided by the rules of the SEC. If the shares to be 
redeemed have been recently purchased by check or draft, the Sub-
Transfer Agent may hold the payment of the proceeds until the purchase 
check or draft has cleared, usually a period of up to 15 days. A 
redemption of shares is a taxable transaction for the shareholder.

After following the above-stated redemption guidelines, a shareholder(s) 
may elect to have the redemption proceeds wire-transferred directly to 
the shareholder's bank account of record (defined as a currently 
established pre-authorized draft on the shareholder's account with no 
changes within the previous 45 days), as long as the bank account is 
registered in the same name(s) as the account with the Trust. If the 
proceeds are not to be wired to the bank account of record, or mailed to 
the registered owner(s), a signature guarantee will be required from all 
shareholder(s). A $25 service fee will be charged by the Sub-Transfer 
Agent to help defray the administrative expense of executing a wire 
redemption. Redemption proceeds will normally be wired to the designated 
bank account on the next business day following the redemption, and 
should ordinarily be credited to the shareholder's bank account by the 
shareholder's bank within 48 to 72 hours. 

Automatic Cash Withdrawal Plan.   Each Fund offers shareholders an 
automatic cash withdrawal plan, under which shareholders who own shares 
with a value of at least $10,000 may elect to receive cash payments of 
at least $50 monthly or quarterly. Retirement plan accounts are eligible 
for automatic cash withdrawal plans only where the shareholder is 
eligible to receive qualified distributions and has an account value of 
at least $5,000. The withdrawal plan will be carried over on exchanges 
between funds or Classes of a Fund. Any applicable CDSC will not be 
waived on amounts withdrawn by a shareholder that exceed 1.00% per month 
of the value of the shareholder's shares subject to the CDSC at the time 
the withdrawal plan commences. For further information regarding the 
automatic cash withdrawal plan, shareholders should contact the Sub-
Transfer Agent.  The Trust reserves the right to involuntarily liquidate 
any shareholder's account in a Fund if the aggregate net asset value of 
the shares held in that Fund account is less than $500. (If a 
shareholder has more than one account in a Fund, each account must 
satisfy the minimum account size.) The Trust, however, will not redeem 
shares based solely on market reductions in net asset value. Before the 
Trust exercises such right, shareholders will receive written notice and 
will be permitted 60 days to bring accounts up to the minimum to avoid 
involuntary liquidation.

DISTRIBUTIONS AND FEDERAL TAXES

Emerging Growth Fund, International Equity Fund, Mid Cap Fund and Growth 
Fund distribute dividends and capital gains annually; Growth and Income 
Fund declares and pays dividends quarterly.  Government Fund and 
Municipal Bond Fund declare and distribute dividends monthly 
substantially all of their net investment income to shareholders.   The 
per share dividends on Class B shares of each Fund will be lower than 
the per share dividends on Class A and Class 1 shares as a result of the 
distribution fees and incremental transfer agency fees, if any, 
applicable to the Class B shares.  Each Fund intends similarly to 
distribute to shareholders any taxable net realized capital gains.  
Taxable net realized capital gains are the excess, if any, of the Fund's 
total profits on the sale of securities and certain other transaction 
during the year over its total losses on such sales and transactions, 
including capital losses carried forward from prior years in accordance 
with the tax laws.  Such capital gains, if any, are distributed at least 
once a year.  All income dividends and capital gains distributions are 
reinvested in shares of a Fund at net asset value without sales charge 
on the record date, except that any shareholder may otherwise instruct 
the shareholder service agent in writing and receive cash.  Shareholders 
are informed as to the sources of distributions at the time of payment.

Each Fund intends to qualify as a "regulated investment company" under 
Subchapter M of the Code by complying with certain requirements 
regarding the sources and distribution of its income and the 
diversification of its assets. By so qualifying, a Fund will not be 
subject to federal income tax on amounts paid by it as dividends and 
distributions to shareholders in compliance with the Code's timing and 
other requirements. If any Fund were to fail to qualify as a regulated 
investment company under the Code, all of its income (without deduction 
for income dividends or capital gain distributions paid to shareholders) 
would be subject to tax at corporate rates. A Fund would be subject to a 
nondeductible, 4% federal excise tax if it fail to meet certain 
distribution requirements with respect to each calendar year, generally 
applicable to its ordinary (taxable) income for that year and the excess 
of its capital gains over its capital losses for the one-year period 
ended on October 31 of that year. The Funds intend generally to make 
distributions sufficient to avoid or minimize any liability for the 
excise tax. Each Fund expects to be treated as a separate entity for 
purposes of determining its federal tax treatment.

Municipal Bond Fund

The Code permits a regulated investment company whose assets consist 
primarily of tax-exempt Municipal Bonds to pass through to its 
investors, tax-exempt, net interest income as "exempt-interest 
dividends". In order for Municipal Bond Fund to be eligible to pay 
exempt-interest dividends during any taxable year, at the close of each 
fiscal quarter, at least 50% of the aggregate value of the Fund's assets 
must consist of obligations that pay interest exempt from taxation under 
Section 103(a) of the Code.  In addition, the Fund must distribute at 
least (i) 90% of the excess of its tax-exempt interest income over 
certain disallowed deductions, and (ii) 90% of its "investment company 
taxable net income" (i.e., its ordinary taxable income and the excess, 
if any, of its net short-term capital gain over any net long-term 
capital loss) recognized by the Fund during the taxable year.

Not later than 60 days after the close of its taxable year, Municipal 
Bond Fund will notify its shareholders of the portion of the dividends 
paid by the Fund to the shareholders for the taxable year which 
constitutes exempt-interest dividends. The aggregate amount of dividends 
so designated cannot exceed, however, the excess of the amount of 
interest exempt from tax under Section 103 of the Code received by the 
Fund during the year over any amounts disallowed as deductions under 
Sections 265 and 171(a)(2) of the Code.  Since the percentage of 
dividends which are "exempt-interest" dividends is determined on an 
average annual method for the fiscal year, the percentage of income 
designated as tax-exempts for any particular dividend may be 
substantially different from the percentage of the Fund's income that 
was tax-exempt during the period covered by the dividend. Shareholders 
are required to report their receipt of tax-exempt interest, including 
exempt-interest dividends, on their Federal income tax returns.

Although exempt-interest dividends generally may be treated by Municipal 
Bond Fund's shareholders as items of interest excluded from their gross 
income, each shareholder is advised to consult his or her tax adviser 
with respect to whether exempt-interest dividends retain this exclusion 
if the shareholder should be treated as a "substantial user" or a 
"related person" with respect to any of the tax-exempt obligations held 
by the Fund. 

Interest on indebtedness incurred by a shareholder to purchase or carry 
shares of Municipal Bond Fund is not deductible for federal income tax 
purposes to the extent it is treated as related to exempt-interest 
dividends paid as such shares. If a shareholder receives an 
exempt-interest dividend any capital loss on the sale or exchange of the 
shares with respect to which the dividend is received will be disallowed 
to the extent of the amount of such exempt-interest dividend if the 
shares are not held for more than six months.

Although Municipal Bond Fund does not intend to acquire bonds the 
interest on which is a specific item of tax preference for alternative 
minimum tax purposes, its exempt-interest dividends may nevertheless 
result in or increase a corporate shareholder's liability for the 
corporate alternative minimum tax, because tax-exempt interest, 
including exempt-interest dividends that are not items of tax 
preference, is taken into account in determining a corporation's 
potential liability for this tax.

The Code also requires a shareholder who receives exempt-interest 
dividends to, in some cases, treat as taxable income a portion of 
certain otherwise non-taxable social security or railroad retirement 
benefits.

Shareholders should also consider, in determining when to redeem any 
shares of Municipal Bond Fund, that the Fund declares and distributes 
its exempt-interest dividends monthly.  The net asset value of shares 
redeemed shortly before the end of a month will include tax-exempt 
interest accrued for that month but not yet declared as an exempt-
interest dividend.  The amount of the redemption proceeds attributable 
to this accrued tax-exempt interest will not be treated as tax-exempt 
interest, but instead will be part of the shareholder's redemption 
proceeds potentially subject to taxation.

If, during any taxable year, Municipal Bond Fund realizes net capital 
gain (the excess of net long-term capital gain over net short-term 
capital loss) from the sale or other disposition of Municipal Bonds or 
other assets, the Fund will have no tax liability with respect to such 
gains if they are distributed to shareholders.  Distributions designated 
as capital gain dividends are taxable to shareholders as long-term 
capital gains, regardless of how long a shareholder has held his or her 
shares.  Not later than 60 days after the close of the Fund's taxable 
year, the Fund will send to its shareholders a written notice 
designating the amount of any distributions made during the year which 
constitute capital gain.

While Municipal Bond Fund expects that a major portion of its investment 
income will constitute tax-exempt interest, a portion may consist of 
"investment company taxable income" and "net capital gain". For example, 
income or gains from certain taxable investments or transactions, 
including sales of securities, options and futures transactions, 
repurchase agreements, securities lending, the recognition of accrued 
market discount, and the disposition of rights to when-issued securities 
prior to issuance, are included in investment company taxable income or 
net capital gain.  Distributions of investment company taxable income 
are taxable as ordinary income, and distributions of net capital gain 
are taxable as long-term capital gains.

All Funds

Dividends from net investment income and any excess of net short-term 
capital gain over net long-term capital loss are taxable to shareholders 
as ordinary income.  A portion of dividends taxable as ordinary income 
paid by Emerging Growth Fund, International Equity Fund, Mid Cap Fund, 
Growth Fund and Growth and Income Fund may qualify for the 70% dividends 
received deduction for corporations. Qualifying dividends include only 
dividends attributable to dividends a Fund receives from U.S. domestic 
corporations with respect to stock for which the Fund satisfies 
applicable holding period requirements.

The portion of the dividends received from a Fund which qualifies for 
the dividends-received deduction for corporations will be reduced to the 
extent that the Fund holds dividend-paying stock for less than 46 days 
(91 days for certain preferred stock). The Fund's holding period 
requirement must be satisfied separately for each dividend during a 
prescribed period before and after the ex-dividend date and will not 
include any period during which the Fund has reduced its risk of loss 
from holding the stock by purchasing an option to sell, granting an 
option to buy, or entering into a short sale of substantially identical 
stock or securities, such as securities convertible into the stock. The 
holding period for stock may also be reduced if the Fund diminishes its 
risk of loss by holding one or more positions in substantially similar 
or related property. The dividends-received deduction will be allowed 
only with respect to dividends on Fund shares for which a corporate 
shareholder satisfies the same holding period rules applicable to the 
Fund.  

Receipt of dividends that qualify for the dividends-received reduction 
may increase a corporate shareholder's liability, if any, for the 
alternative minimum tax.  Such a shareholder should also consult its tax 
adviser regarding the possibility that its federal tax basis in its Fund 
shares may be reduced by the receipt of "extraordinary dividends" from 
the Fund and, to the extent such basis would be reduced below zero, 
current recognition of income would be required.

For federal income tax purposes, dividends declared by a Fund in 
October, November or December as of a record date in such a month and 
which are actually paid in January of the following year will be treated 
as if they were paid on December 31 of the year in which they are 
declared. These dividends will be taxable to shareholders as if actually 
received on December 31 rather than in the year in which shareholders 
actually receive the dividends.

A capital gain dividend (i.e., a dividend from the excess of a funds net 
long-term capital gain over its net short-term capital loss) received 
after the purchase of the shares of any of the Funds reduces the net 
asset value of the shares by the amount of the distribution and will 
nevertheless be subject to income taxes. The same is true of dividends 
treated as ordinary income, as described above.  Investors may therefore 
wish to avoid purchasing Fund shares shortly before an anticipated 
dividend (other than an exempt-interest dividend from Municipal Bond 
Fund) or capital gain dividend in order to avoid being taxed on a 
distribution that is economically a return of a portion of the purchase 
price. These capital gain dividends are taxable to shareholders as 
long-term capital gains, regardless of how long the shareholder has held 
Fund shares. Any loss on the sale of Fund shares held for six months or 
less is treated as a long-term capital loss to the extent of any capital 
gain dividend paid on such shares. All dividends and distributions are 
taxable to the shareholder in the same manner whether or not reinvested 
in shares.  Shareholders are notified annually by the Fund as to the 
federal tax status of dividends and distributions paid by the Fund.

If shares of a Fund purchased subject to a sales charge are sold or 
exchanged within 90 days of acquisition, and shares of the same or 
another mutual fund are acquired, to the extent the sales charge on the 
initial purchase is reduced or waived on the subsequent acquisition, the 
sales charge may not be used to determine the basis in the disposed 
shares for purposes of determining gain or loss. To the extent the sales 
charge is not allowed in determining gain or loss on the initial shares, 
it is capitalized in the basis of the subsequent shares. Additionally, 
any loss realized on a redemption or exchange of Fund shares may be 
disallowed under "wash sale" rules to the extent the shares disposed of 
are replaced with other shares of the same Fund within a period of 61 
days, beginning 30 days before and ending 30 days after such 
disposition, such as pursuant to reinvestment of dividends in Fund 
shares.

It should be noted that periodic withdrawals under the systematic 
withdrawal plan involve redemptions of shares, which may result in tax 
liability for the redeeming shareholder. Additionally, any redemption of 
shares is a potentially taxable transaction, even if a reinvestment 
privilege is later exercised.

Dividends to shareholders who are non-resident aliens may be subject to 
a United States withholding tax at a rate of up to 30% under existing 
provisions of the Code applicable to foreign individuals and entities 
unless a reduced rate of withholding or a withholding exemption is 
provided under applicable treaty laws.  Non-resident shareholders are 
urged to consult their own tax advisers concerning the applicability of 
the United States withholding tax.

Dividends and capital gains distributions may also be subject to state 
and local taxes.  Shareholders are urged to consult their attorneys or 
tax advisers regarding specific questions as to federal, state or local 
taxes.

Back-up Withholding.  Each Fund is required to withhold and remit to the 
United States Treasury 31% of (i) reportable taxable dividends and 
distributions and (ii) the proceeds of any redemptions of Fund shares 
with respect to any shareholder who is not exempt from withholding and 
who fails to furnish the Fund with a correct taxpayer identification 
number, who fails to report fully dividend or interest income or who 
fails to certify to the Trust that he has provided a correct taxpayer 
identification number and that he is not subject to withholding.  (An 
individual's taxpayer identification number is his or her social 
security number.) The 31% "Back-up withholding tax" is not an additional 
tax and may be credited against a taxpayer's regular federal income tax 
liability.

The Code includes special rules applicable to certain listed options 
(excluding equity options as defined in the Code), futures contracts, 
and options on futures contracts which a Fund may write, purchase or 
sell. Such options and contracts are generally classified as 
Section 1256 contracts under the Code.  The character of gain or loss 
resulting from the sale, disposition, closing out, expiration or other 
termination of Section 1256 contracts is generally treated as long-term 
capital gain or loss to the extent of 60 percent thereof and short-term 
capital gain or loss to the extent of 40 percent thereof ("60/40 gain or 
loss").  Such contracts, when held by the Fund at the end of a fiscal 
year, generally are required to be treated as sold at market value on 
the last day of such fiscal year for federal income tax purposes 
("marked-to-market").  Over-the-counter options, equity options, and 
certain other options or future comments are not classified as 
Section 1256 contracts and are not subject to the mark-to-market rule or 
to 60/40 gain or loss treatment.  Any gains or losses from transactions 
in over-the-counter options generally constitute short-term capital 
gains or losses.  If over-the-counter call options written, or 
over-the-counter put options purchased, by a Fund are exercised, the 
gain or loss realized on the sale of the underlying securities may be 
either short-term or long-term, depending on the holding period of the 
securities.  In determining the amount of gain or loss, the sales 
proceeds are reduced by the premium paid for over-the-counter puts or 
increased by the premium received for over-the-counter calls.

Certain of a transactions in options, futures contracts, or options on 
futures contracts, particularly their hedging transactions, may 
constitute "straddles" which are defined in the Code as offsetting 
positions with respect to personal property.  A straddle in which at 
least one (but not all) of the positions are Section 1256 contracts is a 
"mixed straddle" under the Code if certain conditions are met.

The Code generally provides with respect to straddles (i) "loss 
deferral" rules which may postpone recognition for tax purposes of 
losses from certain closing purchase transactions or other dispositions 
of a position in the straddle to the extent of unrealized gains in the 
offsetting position, (ii) "wash sale" rules which may postpone 
recognition for tax purposes of losses where a position is sold and a 
new offsetting position is acquired within a prescribed period and 
(iii) "short sale" rules which may terminate the holding period of 
securities owned by the Fund when offsetting positions are established 
and which may convert certain losses from short-term to long-term.

The Code provides that certain elections may be made for mixed straddles 
that can alter the character of the capital gain or loss recognized upon 
disposition of positions which form part of a straddle.  Certain other 
elections are also provided in the Code.  No determination has been 
reached to make any of these elections.

The effect of the tax rules described above with respect to options and 
futures contracts may be to change the amount, timing and character of a 
Fund's income, gains and losses and therefore of its distributions to 
shareholders.

These rules also generally apply to options, futures and forward 
contracts relating to foreign currency, except that (1) options, futures 
and forward contracts on certain foreign currencies are not governed by 
Section 1256, (2) gains and losses on foreign currency forward contracts 
are generally treated as ordinary income and losses, and (3) gains and 
losses on a Fund's foreign currency options and futures contracts that 
are not governed by Section 1256, if any, are generally treated as 
ordinary income and loss.

Additionally, under the Code gains or losses attributable to 
fluctuations in exchange rates between the time a Fund accrues income or 
receivables or expenses or other liabilities denominated in a foreign 
currency and the time the Fund actually collects such income or pays 
such liabilities, are treated as ordinary income or ordinary loss.  
Similarly, gains or losses on the disposition of debt securities 
denominated in foreign currency, to the extent attributable to 
fluctuations in exchange rates between the acquisition and disposition 
dates, are treated as ordinary income or loss.

If a Fund purchases shares in certain foreign investment entities, 
referred to as "passive foreign investment companies," the Fund itself 
may be subject to U.S. federal income tax and an additional charge in 
the nature of interest on a portion of any "excess distribution" from 
such company or gain from the disposition of such shares, even if the 
distribution or gain is distributed by the Fund to its shareholders in a 
manner that satisfies the distribution requirements referred to above.  
If a Fund were able and elected to treat a passive foreign investment 
company as a "qualified electing fund," in lieu of the treatment 
described above, the Fund would be required each year to include in 
income, and distribute to shareholders in accordance with the 
distribution requirements described above, the Fund's pro rata share of 
the ordinary earnings and net capital gains of the company, whether or 
not actually received by the Fund.  A Fund generally should be able to 
make an alternative election to mark these investments to market 
annually, resulting in the recognition of ordinary income (rather than 
capital gain) or ordinary loss, subject to limitations on the ability to 
use any such loss.

A Fund may be required to treat amounts as taxable income or gain, 
subject to the distribution requirements referred to above, even though 
no corresponding amounts of cash are received concurrently, as a result 
of (1) mark to market, constructive sale or other rules applicable to 
passive foreign investment companies, partnerships or trusts in which 
the Fund invests or to certain options, futures, forward contracts, or 
"appreciated financial positions" or (2) the inability to obtain cash 
distributions or other amounts due to currency controls or restrictions 
on repatriation imposed by a foreign country with respect to the Fund's 
investments in issuers in such country or (3) tax rules applicable to 
debt obligations acquired with "original issue discount," including 
zero-coupon or deferred payment bonds and pay-in-kind debt obligations, 
or to market discount if an election is made with respect to such market 
discount.  A Fund may therefore be required to obtain cash to be used to 
satisfy these distribution requirements by selling portfolio securities 
at times that it might not otherwise be desirable to do so or borrowing 
the necessary cash, thereby incurring interest expenses.

Dividends or other income (including, in some cases, capital gains) 
received by a Fund from sources within foreign countries may be subject 
to withholding and other taxes imposed by such countries. Tax 
conventions between certain countries and the United States may reduce 
or eliminate such taxes in some cases.  If eligible, the International 
Equity Fund will determine whether to make an election to treat any 
qualified foreign income taxes paid by it as paid by its shareholders. 
In determining whether to make this election, the Fund will take into 
consideration such factors as the amount of foreign taxes paid and the 
administrative costs associated with making the election. If the 
election is made, shareholders of the Fund would be required to include 
their respective pro rata portions of such qualified foreign taxes in 
computing their taxable income and would then generally be entitled to 
credit such amounts against their United States federal income taxes 
due, if any, provided that certain holding period requirements are 
satisfied, or to include such amounts in their itemized deductions, if 
any.  For any year for which it makes such an election, the 
International Equity Fund will report to its shareholders (shortly after 
the close of its fiscal year) the amount per share of such foreign taxes 
that must be included in the shareholder's gross income and will be 
potentially available as a credit or deduction, subject to the 
limitations generally applicable under the Code.  The other Funds will 
not qualify to make this election, and consequently their shareholders 
will not report on their own tax returns their shares of the foreign 
taxes paid by these Funds.

Municipal Bond Fund may acquire an option to "put" specified portfolio 
securities to banks or municipal bond dealers from whom the securities 
are purchased.  See "Investment Practices - Stand-By Commitments."  The 
Fund has been advised by its legal counsel that it will be treated for 
federal income tax purposes as the owner of the Municipal Securities 
acquired subject to the put; and the interest on the Municipal 
Securities will be tax-exempt to the Fund.  Counsel has pointed out that 
although the Internal Revenue Service has issued a favorable published 
ruling on a similar but not identical situation, it could reach a 
different conclusion from that of counsel.  Counsel has also advised the 
Fund that the Internal Revenue Service presently will not ordinarily 
issue private letter rulings regarding the ownership of securities 
subject to stand-by commitments.

The foregoing is a general and abbreviated summary of the applicable 
provisions of the Code and Treasury Regulations presently in effect, and 
no attempt is made to describe special tax rules that may be applicable 
to certain categories of shareholders, such as tax-exempt or tax-
deferred entities or retirement plans, insurance companies, and 
financial institutions. For the complete provisions, reference should be 
made to the pertinent Code sections and the Treasury Regulations 
promulgated thereunder.  The Code and these Treasury Regulations are 
subject to change by legislative or administrative action either 
prospectively or retroactively.

OTHER INFORMATION

Performance Information

From time to time a Fund may include its total return, average annual 
total return, yield and current dividend return in advertisements and/or 
other types of sales literature. These figures are computed separately 
for Class 1, Class A and Class B shares of each Fund. These figures are 
based on historical earnings and are not intended to indicate future 
performance. Total return is computed for a specified period of time 
assuming deduction of the maximum sales charge, if any, from the initial 
amount invested and reinvestment of all income dividends and capital 
gain distributions on the reinvestment dates at prices calculated as 
stated in the Prospectus, then dividing the value of the investment at 
the end of the period so calculated by the initial amount invested and 
subtracting 100%. The standard average annual total return, as 
prescribed by the SEC is derived from this total return, which provides 
the ending redeemable value. Such standard total return information may 
also be accompanied with nonstandard total return information for 
differing periods computed in the same manner but without annualizing 
the total return or taking sales charges into account. The yield of a 
Fund's Class refers to the net investment income earned by investments 
in the Class over a 30-day period. This net investment income is then 
annualized, i.e., the amount of income earned by the investments during 
that 30-day period is assumed to be earned each 30-day period for twelve 
periods and is expressed as a percentage of the investments. The yield 
is calculated according to a formula prescribed by the SEC to facilitate 
comparison with yields quoted by other investment companies. Government 
Fund and Municipal Fund calculate current dividend return for each of 
its Classes by annualizing the most recent monthly distribution and 
dividing by the net asset value or the maximum public offering price 
(including sales charge) on the last day of the period for which current 
dividend return is presented. Each Class' current dividend return may 
vary from time to time depending on market conditions, the composition 
of the investment portfolio and its operating expenses. These factors 
and possible differences in the methods used in calculating current 
dividend return should be considered when comparing current return of a 
Class to yields published for other investment companies and other 
investment vehicles. Each Fund may also include comparative performance 
information in advertising or marketing its shares. Such performance 
information may include data from Lipper Analytical Services, Inc. and 
other financial publications. 

The average annual total return (computed in the manner described in the 
Prospectus) and yield for each Fund are shown in the table below (except 
Mid Cap Fund, which had not commenced operations during the relevant 
period).  These results are based on historical earnings and asset value 
fluctuations and are not intended to indicate future performance.  Such 
information should be considered in light of each Fund's investment 
objectives and policies as well as the risks incurred in each Fund's 
investment practices.

							Class 1		Class A	
	Class B
							Shares		Shares	
	Shares

Emerging Growth Fund

i)	total return for one year period ended		(7.52)%	
	(7.81)%		(8.45)%
	10/31/98						
iii) total return since inception
 	(based on inception date of 2/21/95)		--		15.88%
		15.02%
iii) total return since inception
	(based on inception date of 8/08/96)  		6.26%		--	
	--	

International Equity Fund

i)	total return for one year period ended
	10/31/98						4.96%		4.41%	
	3.54%
ii)	total return since inception
	(based on inception date of 2/21/95)		--		13.62%
		12.78%
iii)	total return since inception
	(based on inception date of 8/08/96)		8.16%		--	
	--

							Class 1		Class A	
	Class B
							Shares		Shares	
	Shares

Growth Fund

i)	total return for one year period ended
	10/31/98						12.54%		12.27%
		11.43
ii)	total return for five year period ended
	10/31/98						16.75%		--	
	--
iii)	Total return for the ten year period ended 
	10/31/98						15.62%		--	
	--
iv)	total return since inception
	(based on inception date of 4/14/87)		12.93%	
	--		--
v)	total return since inception
	(based on inception date of 8/18/96)		--		17.58	
	16.77%

Growth and Income Fund

i)	total return for one year period ended
	10/31/98						10.90%		10.63%
		9.85%
ii)	total return for five year period ended
	10/31/98						15.95%		--	
	--
iii) total return for ten year period ended
10/31/98						14.88%		--	
	--
iv)	total return since inception
	(based on inception date of 4/14/87)		12.23%	
	--		--
v)	total return since inception
	(based on inception date of 8/18/96)		--		16.92%
		16.07%

Government Fund

i)	total return for one year period ended
	10/31/98	  					7.29%		7.00%	
	6.20%
ii)	total return for five year period ended
	10/31/98	     					5.64%		--	
	--
iii) total return for ten year period ended
10/31/98						8.05%		--	
	--
iv)	total return since inception
	(based on inception date of 4/14/87)		7.60%		--	
	--
v)	total return since inception
	(based on inception date of 8/08/96)		--		6.15%	
	5.36%
vi)	yield	 					5.04%		4.91%		4.41% 
					
Municipal Bond Fund

i)	total return for one year period ended
	10/31/98						7.20%		6.93%	
	6.10%
ii)	total return for five year period ended
	10/31/98						6.00%		--	
	--
iii) total return for ten year period ended
10/31/98						7.49%		--	
	--
iv)	total return since inception
	(based on inception date of 7/13/88)		7.70%		--	
	--
v)	total return since inception
	(based on inception date of 8/18/96)		--		7.10%	
	6.28%
vi)	yield						3.58%		3.36%		2.77%	
		
vii)	tax equivalent yield				5.19%		4.87%	
	4.01%				
	
* The Fund's equivalent taxable 30-day yield for a Class is computed by 
dividing that portion of the Class' 30-day yield which is tax-exempt by 
one minus a stated income tax rate and adding the product to that 
portion, if any, of the Class' yield that is not tax-exempt.  The tax 
equivalent yield assumes the payment of Federal income taxes at a rate 
of  31%.


The yield for Class A and Class B shares is not fixed and will fluctuate 
in response to prevailing interest rates and the market value of 
portfolio securities, and as a function of the type of securities owned 
by the Fund, portfolio maturity and the Fund's expenses.

Yield and total return for the Government Fund and the Municipal Bond 
Fund are computed separately for each class of shares.

The Funds may illustrate in advertising materials the use of a Payroll 
Deduction Plan as a convenient way for business owners to help their 
employees set up either IRA or voluntary mutual fund accounts.  The 
Funds may illustrate in advertising materials retirement planning 
through employee contributions and/or salary reductions.  Such 
advertising material will illustrate that employees may have the 
opportunity to save for retirement and reduce taxes by electing to defer 
a portion of their salary into a special mutual fund IRA account.  The 
Funds may illustrate in advertising materials that Uniform Gift to 
Minors Act accounts may be used as a vehicle for saving for a child's 
financial future.  Such illustrations will include statements to the 
effect that upon reaching the age of majority, such custodial accounts 
become the child's property.

Shareholder Services

Uniform Gifts to Minors Act.  The Trust recognizes the importance to a 
child of establishing a savings and investment plan early in life for 
education and other purposes when the child becomes older.  The 
advantages of regular investment with interest or earnings compounding 
over a number of years are great.  In addition, taxes on these earnings 
are assessed against the income of the child rather than the donor, 
usually at a lower bracket.

Investors wishing to establish a UGMA account should call the Trust for 
an application.  Individuals desiring to open an account under UGMA are 
also advised to consult with a tax adviser before establishing the 
account.

Individual Retirement Account.  Any individual who has compensation or 
earned income from employment or self-employment and who is under age 
70 1/2 may establish an IRA.  The limitation on an individual's annual 
contribution to an IRA is the lesser of 100% of compensation or $2,000. 

The Small Business Job Protection Act of 1996 changed the eligibility 
requirements for participants in Individual Retirement Accounts 
("IRAs").  Under these new provisions, if you or your spouse have earned 
income, each of you may establish an IRA and make maximum annual 
contributions equal to the lesser of earned income or $2,000.  As a 
result of this legislation, married couples where one spouse is non-
working may now contribute a total of $4,000 annually to their IRAs.

The Taxpayer Relief Act of 1997 changed the requirements for determining 
whether or not you are eligible to make a deductible IRA contribution.  
Under the new rules effective beginning January 1, 1998, if you are 
considered an active participant in an employer-sponsored retirement 
plan, you may still be eligible for a full or partial deduction 
depending upon your combined adjusted gross income ("AGI").  For married 
couples filing jointly for 1998 a full deduction is permitted if your 
combined AGI is $50,000 or less ($30,000 for unmarried individuals); a 
partial deduction will be allowed when AGI is between $50,000-$60,000 
($30,000-$40,000 for an unmarried individual); and no deduction is 
available when AGI is above $60,000 ($40,000 for an unmarried 
individual).  However, if you are married and your spouse is covered by 
an employer-sponsored retirement plan, but you are not, you will be 
eligible for a full deduction if your combined AGI is $150,000 or less.  
A partial deduction is permitted if your combined AGI is between 
$150,000-160,000, and no deduction is permitted when AGI is above 
$160,000.

The rules applicable to so-called "Roth IRAs" differ from those 
described above.


In addition, any individual, regardless of age, may establish a rollover 
IRA to receive an eligible rollover distribution from an 
employer-sponsored plan.

Simplified Employee Pension Plan (SEP) and Salary Reduction Simplified 
Employee Pension Plan (SARSEP).  A SEP/SARSEP is a means for an employer 
to provide retirement contributions to IRAs for all employees, without 
the complicated reporting and record keeping involved in a qualified 
plan.  Employees covered by a SEP/SARSEP can use the same IRA to receive 
their own allowable IRA contribution.

Section 403(b)(7) Plan.  Employees of certain exempt organizations and 
schools can have a portion of their compensation set aside, and income 
taxes attributable to such portion deferred, in a Section 403(b)(7) 
plan.  Teachers, school administrators, ministers, employees of 
hospitals, libraries, community chests, funds, foundations, and many 
others may be eligible.  The employer must be an organization described 
in Section 501(c)(3) of the Internal Revenue Code and must be exempt 
from tax under Section 501(a) of the Code.  In addition, any employee of 
most public educational institutions is eligible if his employer is a 
state or a political subdivision of a state, or any agency or 
instrumentality of either.  The employee is not taxed on the amount set 
aside or the earnings thereon until the funds are withdrawn, normally at 
retirement.

Transfer Agent

First Data Investor Services Group, Inc. is located at Exchange Place, 
Boston, Massachusetts 02109.  The Trust has engaged the services of PFS 
Shareholder Services as the Sub-Transfer Agent.  The Sub-Transfer Agent 
is located at 3100 Breckinridge Blvd., Bldg 200, Duluth, Georgia 30095-
0062.

Custody of Assets

Securities owned by the Trust and all cash, including proceeds from the 
sale of shares of the Trust and of securities in the Trust's investment 
portfolio, are held by PNC Bank, National Association, located at 17th 
and Chestnut Streets, Philadelphia, PA  19103, as Custodian for each 
Fund other than International Equity Fund.  Chase Manhattan Bank, 
located at Chase Metrotech Center, Brooklyn, NY  11245 serves as 
Custodian for International Equity Fund.

Shareholder Reports

Semi-annual statements are furnished to shareholders, and annually such 
statements are audited by the independent accountants.  Also available 
at the shareholder's request, is an Account Transcript identifying every 
financial transaction in an account since it was opened. To defray 
administrative expenses involved with providing multiple years worth of 
information, there is a $15 charge for each Account Transcript 
requested. 

Additional copies of tax forms are available at the shareholder's 
request. A $10 fee for each tax form will be assessed. 

Additional information regarding the Sub-Transfer Agent's services may 
be obtained by contacting the Client Services Department at (800) 544-
5445. 

Independent Auditors

Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, the 
independent auditors for the Trust, perform annual examinations of the 
Trust's financial statements.

Shareholder and Trustee Responsibility

Under the laws of certain states, including Massachusetts where the 
Trust was organized, shareholders of a Massachusetts business trust may, 
under certain circumstances, be held personally liable as partners for 
the obligations of the Trust.  However, the risk of a shareholder 
incurring any financial loss on account of shareholder liability is 
limited to circumstances in which the Trust itself would be unable to 
meet its obligations.  The Declaration of Trust contains an express 
disclaimer of shareholder liability for acts or obligations of the Trust 
and provides that notice of the disclaimer may be given in each 
agreement, obligation, or instrument which is entered into or executed 
by the Trust or Trustees.  The Declaration of Trust provides for 
indemnification out of Trust property to any shareholder held personally 
liable for the obligations of the Trust and also provides for the Trust 
to reimburse such shareholder for all legal and other expenses 
reasonably incurred in connection with any such claim or liability.

Under the Declaration of Trust, the Trustees and Officers are not liable 
for actions or failure to act; however, they are not protected from 
liability by reason of their willful misfeasance, bad faith, gross 
negligence or reckless disregard of the duties involved in the conduct 
of their office.  The Trust will provide indemnification to its Trustees 
and Officers as authorized by its By-Laws and by the 1940 Act and the 
rules and regulations thereunder.

About the Trust

The Trust was organized on January 29, 1987 under the laws of The 
Commonwealth of Massachusetts and is a business entity commonly known as 
a ''Massachusetts business trust.'' It is a diversified, open-end 
management investment company authorized to issue an unlimited number of 
Class A, Class B and Class 1 shares of beneficial interest of $.01 par 
value, in the Funds. Shares issued are fully paid, non-assessable and 
have no preemptive or conversion rights. In the event of liquidation of 
any Fund, shareholders of such Fund are entitled to share pro rata in 
the net assets of the Fund available for distribution to shareholders. 
	
Shareholders are entitled to one vote for each full share held and to 
fractional votes for fractional shares held in the election of Trustees 
(to the extent hereafter provided) and on other matters submitted to the 
vote of shareholders. Each class of shares represents interest in the 
assets of each Fund and has identical voting, dividend, liquidation and 
other rights on the same terms and conditions, except that the 
distribution fees and service fees and any incremental transfer agency 
fees related to each class of shares of each Fund are borne solely by 
that class, and each class of shares of each Fund has exclusive voting 
rights with respect to provisions of the Plan which pertains to that 
class of each Fund. All shares have equal voting rights, except that 
only shares of the respective Fund are entitled to vote on matters 
concerning only that Fund. There will normally be no meetings of 
shareholders for the purpose of electing Trustees unless and until such 
time as less than a majority of the Trustees holding office have been 
elected by shareholders, at which time the Trustees then in office will 
call a shareholders' meeting for the election of Trustees. Shareholders 
may, in accordance with the Declaration of Trust, cause a meeting of 
shareholders to be held for the purpose of voting on the removal of 
Trustees. Except as set forth above, the Trustees shall continue to hold 
office and appoint successor Trustees. 

FINANCIAL STATEMENTS

The Trust's Annual Report for the fiscal year ended October 31, 1998 is 
incorporated herein by reference in its entirety.




APPENDIX A

RATINGS OF MUNICIPAL BONDS, NOTES AND COMMERCIAL PAPER


Moody's Investors Service, Inc.

Aaa - Bonds that 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 edged." 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 that 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 that make the long term 
risks appear somewhat larger than in "Aaa" securities. 

A - Bonds that 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 that suggest a susceptibility to 
impairment sometime in the future.

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

Ba - Bonds which are rated Ba are judged to have speculative elements; 
their future 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.

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

Ca - Bonds which are rated Ca represent obligations which are 
speculative in a high degree. Such issues are often in default or have 
other marked shortcomings.

C - Bonds which are rated C are the lowest class of bonds and issues so 
rated can be regarded as having extremely poor prospects of ever 
attaining any real investment standing.

Note: The modifier 1 indicates that the security ranks in the higher end 
of its generic rating category; the modifier 2 indicates a mid-range 
ranking; and the modifier 3 indicates that the issue ranks in the lower 
end of its generic rating category.

Standard & Poor's

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

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

Provisional Ratings: The letter "p" indicates that the rating is 
provisional. A provisional rating assumes the successful completion of 
the project being financed by the debt being rated and indicates that 
payment of debt service requirements is largely or entirely dependent 
upon the successful and timely completion of the project. This rating, 
however, while addressing credit quality subsequent to completion of the 
project, makes no comment on the likelihood of, or the risk of default 
upon failure of, such completion. The investor should exercise judgment 
with respect to such likelihood and risk.

L - The letter "L" indicates that the rating pertains to the principal 
amount of those bonds where the underlying deposit collateral is fully 
insured by the Federal Savings & Loan Insurance Corp. or the Federal 
Deposit Insurance Corp. 

+ -	Continuance of the rating is contingent upon S&P's receipt of 
closing documentation confirming investments and cash flow.

* -	Continuance of the rating is contingent upon S&P's receipt of an 
executed copy of the escrow agreement. 

NR - Indicates no rating has been requested, that there is insufficient 
information on which to base a rating, or that S&P does not rate a 
particular type of obligation as a matter of policy. 

Fitch IBCA, Inc. 

AAA - Bonds rated AAA by Fitch have the lowest expectation of credit 
risk. The obligor has an exceptionally strong capacity for timely 
payment of financial commitments which is highly unlikely to be 
adversely affected by foreseeable events. 

AA - Bonds rated AA by Fitch have a very low expectation of credit risk. 
They indicate very strong capacity for timely payment of financial 
commitment. This capacity is not significantly vulnerable to foreseeable 
events. 

A - Bonds rated A by Fitch are considered to have a low expectation of 
credit risk. The capacity for timely payment of financial commitments is 
considered to be strong, but may be more vulnerable to changes in 
economic conditions and circumstances than bonds with higher ratings.

BBB - Bonds rated BBB by Fitch currently have a low expectation of 
credit risk. The capacity for timely payment of financial commitments is 
considered to be adequate. Adverse changes in economic conditions and 
circumstances, however, are more likely to impair this capacity. This is 
the lowest investment grade category assigned by Fitch.

BB - Bonds rated BB by Fitch carry the possibility of credit risk 
developing, particularly as the result of adverse economic change over 
time. Business or financial alternatives may, however, be available to 
allow financial commitments to be met. Securities rated in this category 
are not considered by Fitch to be investment grade.

B - Bonds rated B by Fitch carry significant credit risk, however, a 
limited margin of safety remains. Although financial commitments are 
currently being met, capacity for continued payment depends upon a 
sustained, favorable business and economic environment.

CCC, CC, C - Default on bonds rated CCC, CC, and C by Fitch is a real 
possibility. The capacity to meet financial commitments depends solely 
on a sustained, favorable business and economic environment. Default of 
some kind on bonds rated CC appears probable, a C rating indicates 
imminent default.

Plus and minus signs are used by Fitch to indicate the relative position 
of a credit within a rating category. Plus and minus signs however, are 
not used in the AAA category.

COMMERCIAL PAPER RATINGS

Moody's Investors Service, Inc.

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

Issuers rated "Prime-2" (or related supporting institutions) have 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 & Poor's

A-1 - This designation indicates that the degree of safety regarding 
timely payment is either overwhelming or very strong. Those issuers 
determined to possess overwhelming safety characteristics will be 
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.

Fitch IBCA, Inc.

Fitch's short-term ratings apply to debt obligations that are payable on 
demand or have original maturities of generally up to three years, 
including commercial paper, certificates of deposit, medium-term notes, 
and municipal and investment notes.

The short-term rating places greater emphasis than a long-term rating on 
the existence of liquidity necessary to meet financial commitment in a 
timely manner.

Fitch's short-term ratings are as follows:

F1+ - Issues assigned this rating are regarded as having the strongest 
capacity for timely payments of financial commitments. The "+" denotes 
an exceptionally strong credit feature.

F1 - Issues assigned this rating are regarded as having the strongest 
capacity for timely payment of financial commitments.

F2 - Issues assigned this rating have a satisfactory capacity for timely 
payment of financial commitments, but the margin of safety is not as 
great as in the case of the higher ratings.

F3 - The capacity for the timely payment of financial commitments is 
adequate; however, near-term adverse changes could result in a reduction 
to non investment grade.

Duff & Phelps Inc.

Duff 1+ - Indicates the highest certainty of timely payment: short-term 
liquidity is clearly outstanding, and safety is just below risk-free 
United States Treasury short-term obligations.

Duff 1 - Indicates a high certainty of timely payment.

Duff 2 - Indicates a good certainty of timely payment: liquidity factors 
and company fundamentals are sound. The Thomson BankWatch ("TBW")

TBW-1 - Indicates a very high degree of likelihood that principal and 
interest will be paid on a timely basis.

TBW-2 - While the degree of safety regarding timely repayment of 
principal and interest is strong, the relative degree of safety is not 
as high as for issues rated TBW-1.



92


96




   
Part C. Other Information
    
Item 23.  Exhibits.

		(a)(1)		Agreement and Declaration of 
Trust dated 
January 29, 1987. (Incorporated herein by 
reference to Form N-1A of Registrant's 
Post-Effective Amendment No. 18, filed on 
February 28, 1997.)

		 (2)		Certificate of Designation of Common 
Sense 
Money Market Fund dated September 30, 1987. 
(Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 18, filed on February 28, 
1997.)

		 (3)		Certificate of Designation Common 
Sense 
Municipal Bond Fund dated April 4, 1988. 
(Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 18, filed on February 28, 
1997.)

		 (4)		Certificate of Resolution dated 
January 8, 
1992. (Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 18, filed on February 28, 
1997.)

		 (5)		Certificate of Amendment dated January 
20, 
1994. (Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 18, filed on February 28, 
1997.)

		 (6)		Certificate of Designation of Common 
Sense II 
Aggressive Opportunity Fund dated January 27, 
1994. (Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 18, filed on February 28, 
1997.)

		 (7)		Certificate of Designation of Common 
Sense II 
Government Fund dated January 27, 1994. 
(Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 18, filed on February 28, 
1997.)

		 (8)		Certificate of Designation of Common 
Sense II 
Growth Fund dated January 27, 1994. 
(Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 18, filed on February 28, 
1997.)

		 (9)		Certificate of Designation of Common 
Sense II 
Growth and Income Fund dated January 27, 
1994. (Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 18, filed on February 28, 
1997.)

		 (10)		Certificate of Amendment of the 
Agreement and 
Declaration of Trust dated May 10, 1996. 
(Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 18, filed on February 28, 
1997.)


		 (11)		Amended and Restated Certificate of 
Designation of Common Sense II Emerging 
Growth Fund dated May 10, 1996. (Incorporated 
herein by reference to Form N-1A of 
Registrant's Post-Effective Amendment No. 18, 
filed on February 28, 1997.)

		 (12)		Amended and Restated Certificate of 
Designation of Common Sense II International 
Equity Fund dated May 10, 1996. (Incorporated 
herein by reference to Form N-1A of 
Registrant's Post-Effective Amendment No. 18, 
filed on February 28, 1997.)

		 (13)		Amended and Restated Certificate of 
Designation of Common Sense Money Market Fund 
dated May 10, 1996. (Incorporated herein by 
reference to Form N-1A of Registrant's 
Post-Effective Amendment No. 18, filed on 
February 28, 1997.)

		 (14)		Amended and Restated Certificate of 
Designation of Common Sense Municipal Bond 
Fund dated May 10, 1996. (Incorporated herein 
by reference to Form N-1A of Registrant's 
Post-Effective Amendment No. 18, filed on 
February 28, 1997.)

		 (15)		Certificate of Amendment Amending the 
Amended 
and Restated Certificate of Designation of 
Common Sense Emerging Growth Fund dated 
July 2, 1996. (Incorporated herein by 
reference to Form N-1A of Registrant's 
Post-Effective Amendment No. 18, filed on 
February 28, 1997.)

		 (16)		Certificate of Amendment Amending the 
Amended 
and Restated Certificate of Designation of 
Common Sense International Equity Fund dated 
July 2, 1996. (Incorporated herein by 
reference to Form N-1A of Registrant's 
Post-Effective Amendment No. 18, filed on 
February 28, 1997.)

(17)		Certificate of Amendment of the 
Agreement and Declaration of Trust dated December 30, 1997 
incorporated by reference to Registrant's Amendment No. 21, 
filed on December 15, 1998.
   
(18)	Form of Certificate of Designation of Mid 
Cap Fund dated February 17, 1999 is filed herewith.
    

		 (b)		Bylaws as amended July 10, 1996. 
(Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 18, filed on February 28, 
1997.)

		 (c)(1)		Specimen copy of certificate for 
Share of Beneficial Interest in Common Sense Trust for Class A 
shares. 
(Incorporated herein by reference to Form 
N-1A of Registrant's Post-Effective Amendment 
No. 17, filed on March 21, 1996.)

		 (2)		Specimen copy of certificate for Share 
of Beneficial Interest 
in Common Sense Trust for Class B shares. 
(Incorporated herein by reference to Form 
N-1A of Registrant's Post-Effective Amendment 
No. 17, filed on March 21, 1996.)

		 (3)		Specimen copy of certificate for Share 
of Beneficial Interest 
in Common Sense Trust for Class 1 shares. 
(Incorporated herein by reference to Form 
N-1A of Registrant's Post-Effective Amendment 
No. 17, filed on March 21, 1996.)

	 	(d)		Form of Investment Advisory Agreement 
for  Concert Investment Series (Incorporated herein by 
reference 
to Form N-1A of Registrant's Post-Effective 
Amendment No. 20, filed on February 27, 1998).

		 (e)(1)		Distribution Agreement with 
CFBDS, Inc. is incorporated by reference to Registrant's 
Amendment No. 21, filed on December 15, 1998.
   
		 (2)		Form of Dealer Agreement is filed 
herewith.

		 (f)		Retirement Plan for Directors is filed 
herewith.
    
		 (g)		Form of Custodian Agreements 
(Incorporated herein by reference to Form N-1A of Registrant's 
Post-Effective 
Amendment No. 20, filed on February 27, 1998).

		 (h)(1)	Form of Transfer Agency Agreement 
(Incorporated herein by reference to Form N-1A of Registrant's 
Post-Effective 
Amendment No. 20, filed on February 27, 1998).

		 (h)(2) 		Form of Sub-Transfer Agency 
Agreement (Incorporated herein by reference to Form N-1A of 
Registrant's Post-Effective Amendment No. 20, filed on 
February 27, 1998).
	
		(i)		Previously filed.
   
(j)		Consent of Independent Auditors is 
filed 
herewith.
    
(k)		Not applicable.

		(l)(1)		Investment Letter for Common 
Sense Funds. 
(Incorporated by reference to Exhibit 13 
filed with Pre-Effective Amendment No. 2, 
filed March 31, 1987.)

		(l)(2)		Investment Letter for Common 
Sense II Funds dated May 2, 1994. (Incorporated herein by 
reference to Exhibit 13.2 filed with 
Post-Effective Amendment No. 12, filed 
October 28, 1994.)

		(l)(3)		Investment Letter for Common 
Sense II 
Emerging Growth Fund and Common Sense II 
International Equity Fund (Incorporated 
herein by reference to Exhibit 13.3 filed 
with Post-Effective Amendment No. 15, filed 
August 11, 1995).
   
		(m)(1)		Form of Amended and Restated 
Class A Distribution Plan filed herewith.

		(m)(2)		Form of Amended and Restated 
Class B Distribution Plan filed herewith.

		(m)(3)		Form of Amended and Restated 
Servicing Agreement for Class A shares filed herewith. 

		(m)(4)		Form of Amended and Restated 
Servicing Agreement for Class B shares filed herewith.
    
(n) 		Financial Data Schedule is filed 
herewith.
   
		(o)		Rule 18f-3 Plan. (Incorporated herein 
by 
reference to Form N-1A of Registrant's 
Post-Effective Amendment No. 18, filed on 
February 28, 1997.)
    
		
Item 24.  Persons Controlled by or under Common Control with 
Registrant.

	None

Item 25.  Indemnification.

	Item 25 is incorporated herein by reference to Form N-1A 
of 
Registrants Registration No. 33-11716, Post Effective 
Amendment 
No. 11, filed on March 2, 1994.

Item 26.  Business and Other Connections of Investment Adviser

Investment Adviser - SSBC Funds Management Inc., formerly 
Mutual Management Corp. ("MMC), and also formerly known as 
Smith Barney Mutual Funds Management Inc.)

MMC,  through its predecessors, has been in the investment
counseling  business  since 1934  and  was  incorporated  in
December 1968 under the laws of the State of Delaware. MMC
is  a  wholly owned subsidiary of Salomon Smith Barney 
Holdings Inc., which in turn  is a wholly owned subsidiary 
of  Citigroup Inc. MMC is registered as an 
investment adviser under the  Investment Advisers Act of 1940  
(the  "Advisers Act").

The  list  required  by  this Item 26  of  the  officer  and
directors of MMC together with information as to any other
business,   profession,  vocation   or   employment   of   a
substantial nature engaged in by such officer and  directors
during  the  past  two  fiscal  years,  is  incorporated  by
reference  to Schedules A and D of FORM ADV filed  by  MMC
pursuant to the Advisers Act (SEC File No. 801-8314).

Item 27.  Principal Underwriters.

	    CFBDS, Inc., ("CFBDS") the Registrant's 
Distributor, is also the distributor for the following Smith 
Barney funds: Concert Investment Series, Consulting Group 
Capital Markets Funds, Greenwich Street Series Fund, Smith 
Barney Adjustable Rate Government Income Fund, Smith Barney 
Aggressive Growth Fund Inc., Smith Barney Appreciation Fund 
Inc., Smith Barney Arizona Municipals Fund Inc., Smith Barney 
California Municipals Fund Inc., Smith Barney Concert 
Allocation Series Inc., Smith Barney Equity Funds, Smith 
Barney Fundamental Value Fund Inc., Smith Barney Funds, Inc., 
Smith Barney Income Funds, Smith Barney Institutional Cash 
Management Fund, Inc., Smith Barney Investment Funds Inc., 
Smith Barney Investment Trust, Smith Barney Managed 
Governments Fund Inc., Smith Barney Managed Municipals Fund 
Inc., Smith Barney Massachusetts Municipals Fund, Smith Barney 
Money Funds, Inc., Smith Barney Muni Funds, Smith Barney 
Municipal Money Market Fund, Inc., Smith Barney New Jersey 
Municipals Fund Inc., Smith Barney Oregon Municipals Fund 
Inc., Smith Barney Principal Return Fund, Smith Barney Small 
Cap Blend Fund, Inc., Smith Barney Telecommunications Trust, 
Smith Barney Variable Account Funds, Smith Barney World Funds, 
Inc., Travelers Series Fund Inc., and various series of unit 
investment trusts.

CFBDS also serves as the distributor for the following funds: 
The Travelers Fund UL for Variable Annuities, The Travelers 
Fund VA for Variable Annuities, The Travelers Fund BD for 
Variable Annuities, The Travelers Fund BD II for Variable 
Annuities, The Travelers Fund BD III for Variable Annuities, 
The Travelers Fund BD IV for Variable Annuities, The Travelers 
Fund ABD for Variable Annuities, The Travelers Fund ABD II for 
Variable Annuities, The Travelers Separate Account PF for 
Variable Annuities, The Travelers Separate Account PF II for 
Variable Annuities, The Travelers Separate Account QP for 
Variable Annuities, The Travelers Separate Account TM for 
Variable Annuities, The Travelers Separate Account TM II for 
Variable Annuities, The Travelers Separate Account Five for 
Variable Annuities, The Travelers Separate Account Six for 
Variable Annuities, The Travelers Separate Account Seven for 
Variable Annuities, The Travelers Separate Account Eight for 
Variable Annuities, The Travelers Fund UL for Variable 
Annuities, The Travelers Fund UL II for Variable Annuities, 
The Travelers Variable Life Insurance Separate Account One, 
The Travelers Variable Life Insurance Separate Account Two, 
The Travelers Variable Life Insurance Separate Account Three, 
The Travelers Variable Life Insurance Separate Account Four, 
The Travelers Separate Account MGA, The Travelers Separate 
Account MGA II, The Travelers Growth and Income Stock Account 
for Variable Annuities, The Travelers Quality Bond Account for 
Variable Annuities, The Travelers Money Market Account for 
Variable Annuities, The Travelers Timed Growth and Income 
Stock Account for Variable Annuities, The Travelers Timed 
Short-Term Bond Account for Variable Annuities, The Travelers 
Timed Aggressive Stock Account for Variable Annuities, The 
Travelers Timed Bond Account for Variable Annuities. 

In addition, CFBDS, the Registrant's Distributor, is also the 
distributor for CitiFunds Multi-State Tax Free Trust, 
CitiFunds Premium Trust, CitiFunds Institutional Trust, 
CitiFunds Tax Free Reserves, CitiFunds Trust I, CitiFunds 
Trust II, CitiFunds Trust III, CitiFunds International Trust, 
CitiFunds Fixed Income Trust, CitiSelect VIP Folio 200, 
CitiSelect VIP Folio 300, CitiSelect VIP Folio 400, CitiSelect 
VIP Folio 500, CitiFunds Small Cap Growth VIP Portfolio.  
CFBDS is also the placement agent for Large Cap Value 
Portfolio, Small Cap Value Portfolio, International Portfolio, 
Foreign Bond Portfolio, Intermediate Income Portfolio, Short-
Term Portfolio, Growth & Income Portfolio, U.S. Fixed Income 
Portfolio, Large Cap Growth Portfolio, Small Cap Growth 
Portfolio, International Equity Portfolio, Balanced Portfolio, 
Government Income Portfolio, Tax Free Reserves Portfolio, Cash 
Reserves Portfolio and U.S. Treasury Reserves Portfolio. 

In addition, CFBDS is also the distributor for the following 
Salomon Brothers funds: Salomon Brothers Opportunity Fund 
Inc., Salomon Brothers Investors Fund Inc., Salomon Brothers 
Capital Fund Inc., Salomon Brothers Series Funds Inc., Salomon 
Brothers Institutional Series Funds Inc., Salomon Brothers 
Variable Series Funds Inc.

In addition, CFBDS is also the distributor for the Centurion 
Funds, Inc.

(b)	The information required by this Item 27 with respect to 
each director and officer of CFBDS is incorporated by 
reference to Schedule A of Form BD filed by CFBDS pursuant to 
the Securities and Exchange Act of 1934 (File No. 8-32417).

(c)	Not applicable.
    
Item 28.  Location of Books and Records.

	All accounts, books and other documents required by 
Section 31(a) of the Investment Company Act of 1940 and the 
Rules 
thereunder to be maintained (i) by Registrant will be 
maintained at 
its offices, located at 388 Greenwich Street, 22nd Floor, New 
York, NY 10013, PFS Shareholder Services, 
3100 Breckinridge Blvd., Bldg. 200, Duluth, Georgia 30199-
0062, or at 
PNC Bank,National Association, 17th and Chestnut Streets, 
Philadelphia, Pennsylvania 19103 or Chase Manhattan Bank, 
Chase 
Metrotech Center, Brooklyn, New York 11245; (ii) by MMC as the 
Adviser, will be maintained at its offices, located at 388 
Greenwich Street, 22nd Floor, New York, NY 10013; and (iii) by 
the Distributor, the principal underwriter, will be maintained 
at its 
offices located at CFBDS Inc, 21 Milk Street, Boston, MA 
02109-5408.

Item 29.  Management Services.

	There are no management related services contracts not 
discussed in Part A or Part B.

Item 30.  Undertakings.

	None. 


SIGNATURES
   
 	Pursuant to the requirements of the Securities Act of 
1933, as 
amended, and the Investment Company Act of 1940, as amended, 
the Registrant, CONCERT INVESTMENT SERIES, certifies that it 
meets all requirements for effectiveness of this registration 
statement under Rule 485(b) under the Securities Act and has 
duly caused this Post-Effective Amendment No. 22 to its 
Registration Statement on Form N-1A to be signed on its behalf 
by the undersigned, thereunto duly authorized, in the City of 
New York, on the 26th day of February, 1999. 
     
						CONCERT INVESTMENT SERIES

						By	/s/ HEATH B. 
MCLENDON
							Heath B. McLendon
							Chairman of the 
Board and
							Chief Executive 
Officer

	Pursuant to the requirements of the Securities Act of 
1933, as 
amended, this Amendment to the Registration Statement and the 
above 
Power of Attorney has been signed below by the following 
persons in 
the capacities and as of the dates indicated.

Signature:			Title:			Date:
   
/s/Heath B. McLendon	Chairman of the Board	February 26, 
1999
Heath B. McLendon		(Chief Executive 
Officer)

/s/ Lewis E. Daidone	Senior Vice President	February 26, 
1999
Lewis E. Daidone		and Treasurer (Chief
Financial and 
Accounting Officer)

/s/ Donald M. Carlton*		Trustee		February 26, 
1999
Donald M. Carlton		

/s/ A. Benton Cocanougher*	Trustee		February 26, 
1999
A. Benton Cocanougher

/s/ Stephen R. Gross*		Trustee		February 26, 
1999
Stephen R. Gross

/s/ Alan G. Merten*		Trustee		February 26, 
1998
Alan G. Merten

/s/ R. Richardson Pettit*	Trustee		February 26, 
1998
R. Richardson Pettit
    
*Signed by Heath B. McLendon, their duly authorized attorney-
in-fact, pursuant to power of attorney dated February 27, 
1998.
 





EXHIBIT INDEX
   
(a)(18)	Form of Certificate of Designation	

(e)(2)	Form of Dealer Agreement

(f) Retirement Plan for Directors

(j) Consent of Independent Auditors

(m)(1)	Form of Amended and Restated Class A Distribution 
Plan

(m)(2)	Form of Amended and Restated Class B Distribution 
Plan

(m)(3)	Form of Amended and Restated Servicing Agreement 
for Class A shares

(m)(4)	Form of Amended and Restated Servicing Agreement 
for Class B shares

(n) Financial Data Schedule