As filed with the Securities and Exchange Commission on December 15, 
1998

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. 21 

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 

Amendment No. 21

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:

[ ]	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)
[X]	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.

Title of Securities Being Registered:  Shares of Beneficial 
Interest, 
par value $0.01 per share.


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 

 
                                                                  
                                                                                
                                        
                                        
                                      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>
 
                         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' investments.  These reports discuss the
market conditions and investment strategies that significantly affected each
fund's performance during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION.  The combined statement of additional
information provides more detailed information about each fund.  It is
incorporated by reference into this combined prospectus.

HOW TO OBTAIN ADDITIONAL INFORMATION.

 .    You may obtain shareholder reports and the statement of additional
     information without charge, by contacting PFS Shareholder Services, by
     calling 1-800-544-5445 or writing the funds at 3100 Breckinridge Blvd.,
     Bldg. 200, Duluth, Georgia 30099-0062

 .    You may review the funds' shareholder reports, prospectus and statement of
     additional information at the Securities and Exchange Commission's Public
     Reference Room in Washington, D.C.  The Commission charges a fee for this
     service.  Information about the public reference room may be obtained by
     calling 1-800-SEC-0330.  You can get the same reports and information 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-_______)

[PFS 00000 2/99]
<PAGE>
 
--------------------------------------------------------------------------------
                                   CONTENTS
--------------------------------------------------------------------------------
 
       Fund goals, strategies and risks:
            Emerging Growth Fund......................  4
            International Equity Fund.................  6
            Mid Cap Fund..............................  8
            Growth Fund............................... 10
            Growth and Income Fund.................... 12
            Government Fund........................... 14
            Municipal Bond Fund....................... 14

       More on the funds' investments................. 18

       Management..................................... 19

       Choosing a class of shares to buy.............. 20

       Sales charges:
            Class A sales charge...................... 21
            Class B sales charge...................... 22
            Class 1 sales charge...................... 23

       Buying and exchanging shares................... 24

       Redeeming shares............................... 25

       Other things to know about share transactions.. 26

       Dividends, distributions and
         taxes........................................ 27

       Financial highlights........................... 28

                        Concert Investment Series -- 2
<PAGE>
 
--------------------------------------------------------------------------------
                       THINGS YOU SHOULD KNOW BEFORE INVESTING
--------------------------------------------------------------------------------

                               ABOUT THE MANAGER

  The funds' investment manager is Mutual Management Corp., an affiliate of
  Salomon Smith Barney Inc.  The manager selects the funds' investments and
  oversees their operations.  The manager and Salomon Smith Barney are
  subsidiaries of Citigroup Inc.  Citigroup businesses produce 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.  Among these businesses are Citibank, Commercial
  Credit, Primerica Financial Services, Salomon Smith Barney, SSBC Asset
  Management, Travelers Life & Annuity, and Travelers Property Casualty.

  Smith Barney Mutual Funds, which includes The Concert Investment Series,
  offers a distinctive family of fund choices tailored to help meet the varying
  needs of large and small investors.  Currently, Smith Barney Mutual Funds
  offers more than 60 individual funds with assets of more than $xx billion.



                            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.

                        Concert Investment Series -- 3
<PAGE>
 
--------------------------------------------------------------------------------
EMERGING GROWTH FUND
--------------------------------------------------------------------------------
 
INVESTMENT
 OBJECTIVE        The fund seeks capital appreciation.
 
================================================================================

                  The fund invests in common stocks of small and medium sized 
KEY               companies considered by the manager to be "emerging growth" 
INVESTMENTS       companies. These are primarily domestic companies, in the
                  early stages of their life cycles, characterized by relatively
                  high earnings growth. The manager selects investments 
              				primarily from
                  among companies that have market capitalizations in the lowest
                  25% of all publicly traded U.S. companies.
 
================================================================================
 
HOW THE MANAGER   The manager emphasizes individual security selection while
SELECTS THE       spreading investments among many industries and sectors. The
FUND'S            manager uses quantitative analysis to identify individual
INVESTMENTS       companies that it believes offer exceptionally high prospects
                  for growth. The manager purchases these companies' stocks when
                  it believes 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 appreciation; any ordinary income is incidental. In
                  selecting individual companies 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   Investors could lose money on their investment in the fund, or
OF INVESTING      the fund may not perform as well as other investments, if any
IN THE FUND       of the following occurs:
                
                  .  Stock prices decline generally
                  .  Small capitalization companies fall out of favor with
                     investors
                  .  Emerging growth company stock prices decline further and
                     more abruptly than those of larger, more established
                     companies in response to negative stock market movements
                  .  The manager's judgment about the attractiveness, value or
                     potential appreciation 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
 
================================================================================
 
WHO MAY WANT TO   The fund may be an appropriate investment if you:
INVEST IN THE
FUND              .  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 the stock market and the
                     special risks of investing in emerging growth companies
                     with limited track records

                        Concert Investment Series -- 4
<PAGE>
 
--------------------------------------------------------------------------------
                                                            EMERGING GROWTH FUND
--------------------------------------------------------------------------------


Past performance does not necessarily indicate how the fund will perform in the
future.
                                      
QUARTERLY RETURNS: Highest: xx% in ___ quarter 199X; Lowest: xx% in ___ quarter
199X
                                      
The performance information in the chart does not reflect sales charges, which
would reduce your return.
                                      

TOTAL RETURN                      

The bar chart indicates the risks of investing in the fund by showing the
performance 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.


                       % TOTAL RETURN:  CLASS A SHARES  

                                  [BAR CHART]

                          Calendar years 
                        ended December 31 
                              1996              22.82
                              1997              18.9


================================================================================
 
This table assumes the imposition of the maximum sales charge applicable to the
class, the redemption of shares at the end of the period, and the reinvestment
of distributions and dividends.

COMPARATIVE PERFORMANCE                   
                              
This table indicates the risks of investing in the fund by comparing the average
annual total return of each class for the periods shown to that of the _____
Index, an unmanaged index of [small and medium company] stocks.

--------------------------------------------------------------------------------
    AVERAGE ANNUAL TOTAL RETURNS  (CALENDAR YEARS ENDED DECEMBER 31, 1998) 
--------------------------------------------------------------------------------

      Class            Inception Date         1 Year      Since Inception       

        1                08/08/96                       

        A                02/21/95                       

        B                02/21/95                       

   _____ Index             n/a                          
 
================================================================================

FEES AND EXPENSES
 
This table sets forth the fees and expenses you will pay if you invest in shares
of the fund.
<TABLE> 
<CAPTION> 
---------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES (paid directly from your investment)                                   Class 1          Class A        Class B
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>              <C>            <C> 
        Maximum sales charge on purchases (as a % of offering price)                     8.50%            5.00%          None

        Maximum deferred sales charge on redemptions (as a % of the lower of             None             None*          5.00%
        net asset value at purchase or redemption)

ANNUAL FUND OPERATING EXPENSES (paid by the fund as a % of fund net assets)

        Management fee                                                                   0.65%            0.65%          0.65%

        Distribution and service (12b-1) fee                                             0.00%            0.25%          1.00%

        Other expenses                                                                   -----            -----          ----

        Total annual fund operating expenses                                             =====            =====          ====
</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%.
 
================================================================================

EXAMPLE
 
This example helps you compare the costs of investing in the fund with other
mutual funds. Your actual costs may be higher or lower.
 
<TABLE> 
<CAPTION> 

NUMBER OF YEARS YOU OWN YOUR SHARES                                      1 YEAR*         3 YEARS*        5 YEARS*        10 YEARS*
<S>                                                                     <C>             <C>             <C>             <C> 
Class 1                                                                  $               $               $               $

Class A                                                                  $               $               $               $

Class B (Assuming redemption at end of period)                           $               $               $               $

Class B (Assuming no redemption)                                         $               $               $               $
</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

                        Concert Investment Series -- 5
<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
manager seeks to reduce volatility compared to investing in a single region.
Unlike 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 investment, 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 and types of
        issuers may vary. In allocating assets among countries and regions, the
        manager evaluates:

        .  Economic stability and favorable prospects for economic growth
        .  Low or decelerating inflation, creating a favorable environment for
           securities markets
        .  Stable governments with policies that encourage economic growth,
           equity investment 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 stock prices decline
        .  Adverse governmental action or political, economic or market
           instability affects 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
           appreciation of a particular stock proves to be incorrect

        In some foreign countries, there is also less information available
        about foreign 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 is scheduled for 1999. There are significant political
        and economic risks associated with EMU, which may increase the
        volatility of the fund's European.
 
================================================================================

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
           international markets
        .  Currently have exposure to U.S. stock markets and wish to diversify
           your investment portfolio by adding non-U.S. stocks that may not move
           in tandem with U.S. stocks
        .  Are willing to accept the risks of the stock market and the special
           risks of investing in foreign securities, including emerging market
           securities


                        Concert Investment Series -- 6
<PAGE>
 
--------------------------------------------------------------------------------
                                                       INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------

Past performance does not necessarily indicate how the fund will perform in the
future.

QUARTERLY RETURNS: Highest: xx% in ___ quarter 199X; Lowest: xx% in ___ 
quarter 199X

The performance information in the chart does not reflect sales charges, which
would reduce your return.

Total return

The bar chart indicates the risks of investing in the fund by showing the
performance 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.

                        %TOTAL RETURN:  CLASS A SHARES

                                 [BAR CHART] 


                       Calendar years 
                      ended Decemer 31
                           1996              16.54
                           1997              18.14 
                           1998                    

================================================================================

This table assumes the imposition of the maximum sales charge applicable to the
class, the redemption of shares at the end of the Comparative performance
period, and the reinvestment of distributions and dividends.

COMPARATIVE PERFORMANCE
 
This table indicates the risks of investing in the fund by comparing the average
annual total return of each class for the periods shown to that of the _____
Index, an unmanaged index of [international] stocks.

--------------------------------------------------------------------------------
                                                    AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------

     Class             Inception Date        1 Year      Since Inception
       1                  08/08/96
       A                  02/21/95
       B                  02/21/95
     _____ Index            n/a

================================================================================

FEES AND EXPENSES

This table sets forth the fees and expenses you will pay if you invest in shares
of the fund.

<TABLE> 
<CAPTION> 
-----------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES (paid directly from your investment)                                   Class 1          Class A          Class B
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>              <C>              <C> 
        Maximum sales charge on purchases (as a % of offering price)                     8.50%            5.00%            None

        Maximum deferred sales charge on redemptions (as a % of the lower of             None             None*            5.00%
        net asset value at purchase or redemption)

ANNUAL FUND OPERATING EXPENSES (paid by the fund as a % of fund net assets)

        Management fee                                                                   1.00%            1.00%            1.00%

        Distribution and service (12b-1) fee                                             0.00%            0.25%            1.00%

        Other expenses                                                                   ----             ----             ----

        Total annual fund operating expenses                                             ====             ====             ====
</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%.
 
================================================================================
EXAMPLE                   
                          
This example helps you compare the costs of investing in the fund with other
mutual funds. Your actual costs may be higher or lower.
 
<TABLE> 
<CAPTION> 
--------------------------------------------------------------------------------------------------------------------------------
NUMBER OF YEARS YOU OWN YOUR SHARES                                    1 YEAR*       3 YEARS*         5 YEARS*        10 YEARS*
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>           <C>              <C>             <C> 
Class 1                                                                $             $                $               $

Class A                                                                $             $                $               $

Class B (Assuming redemption at end of period)                         $             $                $               $

Class B (Assuming no redemption)                                       $             $                $               $
</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

                        Concert Investment Series -- 7
<PAGE>
 
-------------------------------------------------------------------------------
MID CAP FUND
-------------------------------------------------------------------------------
 
INVESTMENT       The fund seeks long-term growth of capital.
 OBJECTIVE

================================================================================
 
KEY              The fund invests primarily in equity securities of medium 
INVESTMENTS      sized companies with market capitalizations of between $1
                 billion and $12 billion at the time of investment. Equity
                 securities include exchange traded and over-the-counter common
                 stocks, preferred stocks, debt securities convertible into
                 equity 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 than $1 billion or larger than $5 billion (i.e., 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          The manager focuses on medium capitalization companies that
MANAGER          exhibit either attractive growth characteristics or attractive
SELECTS          value characteristics. The manager selects individual "growth"
THE              stocks for investment in two ways: by identifying those
FUND'S           companies which exhibit the most favorable growth prospects and
INVESTMENTS      by identifying those companies which have favorable valuations
                 relative to their growth characteristics. This strategy is
                 commonly known as "growth at a reasonable 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 relative growth compared with companies in the same
                    industry or sector
                 .  Value characteristics, including low price/earnings ratios
                    and other statistics 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 potential and also uses quantitative analysis to
                 determine whether these stocks are relatively undervalued or
                 overvalued compared to stocks with similar fundamental
                 characteristics. The manager's quantitative valuations
                 determine whether and when the fund will purchase and sell
                 stocks that it identifies through fundamental research.
 
================================================================================

PRINCIPAL RISKS  Investors could lose money on their investment in the fund, or
OF INVESTING IN  the fund may not perform as well as other investments, because
THE FUND         of the following:
                 
                 . U.S. stock markets go down, or perform poorly relative to
                   other types of investments
                 . 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 investment 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 generally 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.


                        Concert Investment Series -- 8
<PAGE>
 
--------------------------------------------------------------------------------
                                                                    MID CAP FUND
--------------------------------------------------------------------------------

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 the stock market

================================================================================
 
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.
 
================================================================================
 
FEES AND EXPENSES 

This table sets forth the fees and expenses you will pay if you invest in shares
of the fund.

<TABLE> 
<CAPTION> 
----------------------------------------------------------------------------
-------------------------------------------------
SHAREHOLDER FEES (paid directly from your investment)                          
                CLASS 1		CLASS A               CLASS B
----------------------------------------------------------------------------
-------------------------------------------------

<S>                                                                        
                   <C>                   <C> 
        Maximum sales charge on purchases (as a % of offering price)           
                 8.50%			5.00%                None

        Maximum deferred sales charge on redemptions (as a % of the         
                    None			None*                5.00%
        lower of net asset value at purchase or redemption)

Annual fund operating expenses (paid by the fund as a % of fund net assets)

        Management fee                                                      
                    0.95%			0.75%                0.75%

        Distribution and service (12b-1) fee                                
                    0.00%			0.25%                1.00%

        Other expenses/1/                                                   
                    ----                 ----

        Total annual fund operating expenses                                
                    ====                 ====
</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%.
 
/1/ Other expenses and total annual operating expenses are based on estimated
amounts.

================================================================================

EXAMPLE
 
This example helps you compare the costs of investing in the fund with other
mutual funds. Your actual costs may be higher or lower.

<TABLE> 
<CAPTION> 
---------------------------------------------------------------------------------------------------- 
NUMBER OF YEARS YOU OWN YOUR SHARES                                    1 YEAR*             3 YEARS*
----------------------------------------------------------------------------------------------------
<S>                                                                    <C>                 <C> 
Class 1										     $
$

Class A                                                                $                   $

Class B (Assuming redemption at end of period)                         $                   $

Class B (Assuming no redemption)                                       $                   $
</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


                        Concert Investment Series -- 9
<PAGE>
 
--------------------------------------------------------------------------------
GROWTH FUND
--------------------------------------------------------------------------------
 
INVESTMENT
OBJECTIVE               The fund seeks capital appreciation.
 
================================================================================
 
KEY                     The fund invests principally in U.S. common stocks, 
INVESTMENTS             typically of established companies with large market
                        capitalizations. The fund may also invest in other
                        equity securities, including options on U.S. common
                        stocks.

================================================================================
            
HOW THE                 The manager uses a "bottom-up" strategy, primarily
MANAGER                 focusing on individual security selection, with less
SELECTS THE             emphasis on industry and sector allocation. The manager
FUND'S                  selects investments for their capital appreciation; any
INVESTMENTS             ordinary income is incidental. In selecting individual
                        companies for investment, the manager looks for:
 
                        .  Growth characteristsics, including high historic
                           growth rates and high relative growth compared with
                           companies in the same industry or sector
                        .  Value characteristics, including low price/earnings
                           ratios and other statistics 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 potential, and then uses quantitative
                        analysis to determine whether these stocks are
                        relatively undervalued or overvalued compared to stocks
                        with similar fundamental 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         Investors could lose money on their investment in the
OF INVESTING IN         fund, or the fund may not perform as well as other
THE FUND                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 appreciation 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 increases transaction costs, which
                        could detract from the fund's performance.
                         
================================================================================

WHO MAY WANT            The fund may be an appropriate investment if you:
TO INVEST IN THE
FUND                    .  Are an aggressive investor seeking to participate in
                           the long term growth potential of the stock market
                        .  Are willing to accept the risks of investing in
                           common stocks


                        Concert Investment Series -- 10
<PAGE>
 
--------------------------------------------------------------------------------
                                                                     GROWTH FUND
--------------------------------------------------------------------------------

TOTAL RETURN              
                          
The bar chart indicates the risks of investing in the fund by showing the
performance 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: xx% in ___ quarter 199X; Lowest: xx% in ___ quarter
199X

The performance information in the chart does not reflect sales charges, which
would reduce your return.


                       % TOTAL RETURN:  CLASS 1 SHARES 

                                 [BAR CHART] 

                          Calendar years
                        ended December 31
                              1989                22.9
                              1990                -8.73
                              1991                39.8
                              1992                 9.83
                              1993                14.27
                              1994                 2.04
                              1995                24.01
                              1996                19.94
                              1997                20.94
                              1998
================================================================================

COMPARATIVE PERFORMANCE 

This table indicates the risks of investing in the fund by comparing the average
annual total return of each class for the periods shown to that of the _____
Index, an unmanaged index of common stocks.
 
This table assumes the imposition of the maximum sales charge applicable to the
class, the redemption of shares at the end of the period, and the reinvestment
of distributions and dividends.

-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------


Class           Inception Date    1 Year    5 Years    10 Years  Since Inception
1                  XX/XX/87                   n/a         n/a
A                  08/18/96                   n/a         n/a
B                  08/18/96                   n/a         n/a
_____ Index           n/a

================================================================================

FEES AND EXPENSES

This table sets forth the fees and expenses you will pay if you invest in shares
of the fund.
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES (paid direct from your investment)                              Class 1       Class A       Class B 
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>            <C>           <C> 
        Maximum sales charge on purchases (as a % of offering price)              8.50%         5.00%         None

        Maximum deferred sales charge on redemptions (as a % of the lower of
        None None* 5.00% of net asset value at purchase or redemption)              

ANNUAL FUND OPERATING EXPENSES (paid by the fund as a % of fund net assets)

        Management fee                                                            0.60%         0.60%          0.60%

        Distribution and  service (12b-1)                                         0.00%         0.25%          1.00%

        Other expenses                                                            ----          ----           ----

        Total annual fund operating  expenses                                     ====          ====           ====
</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%.
 
===============================================================================

EXAMPLE
 
This example helps you compare the costs of investing in the fund with other
mutual funds. Your actual costs may be higher or lower.

<TABLE> 
<CAPTION> 
--------------------------------------------------------------------------------------------------------------------------
NUMBER OF YEARS  YOU OWN YOUR  SHARES                 1 YEAR*           3 YEARS*           5 YEARS*           10 YEARS*
--------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>               <C>               <C>                 <C> 
Class 1                                                $                 $                  $                  $

Class A                                                $                 $                  $                  $

Class B (Assuming redemption at end of period)         $                 $                  $                  $

Class B (Assuming no redemption)                       $                 $                  $                  $ 
</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


                        Concert Investment Series -- 11
<PAGE>
 
--------------------------------------------------------------------------------
GROWTH AND INCOME FUND
--------------------------------------------------------------------------------
 
INVESTMENT 
OBJECTIVE               The fund seeks reasonable growth and income.
 
================================================================================
 
KEY                     The fund invests in a portfolio consisting principally
INVESTMENTS             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 capitalizations. The fund
                        also may purchase below investment grade bonds (commonly
                        known as "junk bonds").

================================================================================
                         
HOW THE                 The manager emphasizes individual security selection
MANAGER                 while spreading the fund's investments among industries
SELECTS THE             and sectors. The manager uses a two-step selection
FUND'S                  process commonly known as "growth at a reasonable
INVESTMENTS             price."
 
                        First, the manager uses fundamental qualitative research
                        to find stocks with strong 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
 
                        Then the manager uses quantitative analysis to determine
                        whether these stocks are relatively undervalued or
                        overvalued. Quantitative factors include:

                        .  Growth characteristics, including high historic
                           growth rates and high relative growth compared with
                           companies in the same industry or sector
                        .  Value characteristics, including low price/earnings
                           ratios and other statistics indicating that a
                           security is undervalued

                        These valuations then influence the timing of the fund's
                        purchases and sales of stocks.

================================================================================
 
PRINCIPAL RISKS         Investors could lose money on their investment in the
OF INVESTING IN         fund, or the fund may not perform as well as other
THE FUND                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 bonds.
                           These bonds are considered speculative because they
                           have a higher risk of issuer default, are subject 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 increases transaction costs, which
                        could detract from the fund's performance.
 
================================================================================
 
WHO MAY WANT            The fund may be an appropriate investment if you:
TO INVEST IN THE 
FUND                    
                        .  Are seeking reasonable long term growth and current
                           income
                        .  Are willing to accept the risks of the stock market


                        Concert Investment Series -- 12
<PAGE>
 
--------------------------------------------------------------------------------
                                                        GROWTH AND INCOME FUND
--------------------------------------------------------------------------------
TOTAL RETURN 

The bar chart indicates the risks of investing in the fund by showing the
performance 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: xx% in ___ quarter 199X; Lowest: xx% in ___ quarter
199X

The performance information in the chart does not reflect sales charges, which
would reduce your return.

                        % TOTAL RETURN:  CLASS 1 SHARES

                             [CHART APPEARS HERE]

                          Calender years
                        ended December 31
                              1989              22.38
                              1990              -5.84 
                              1991              31.68
                              1992              10.85
                              1993              14.13
                              1994               0.51
                              1995              22.45
                              1996              20.58
                              1997              27.35
                              1998
================================================================================

COMPARATIVE PERFORMANCE

This table indicates the risks of investing in the fund by comparing the average
annual total return of each class for the periods shown to that of the _____
Index, an unmanaged index of [preferred] stocks.
 
This table assumes the imposition of the maximum sales charge applicable to the
class, the redemption of shares at the end of the Comparative performance
period, and the reinvestment of distributions and dividends.

------------------------------------------------------------------------------- 
AVERAGE ANNUAL TOTAL RETURNS (CALENDAR YEARS ENDED DECEMBER 31, 1998)
------------------------------------------------------------------------------- 

Class        Inception Date  1 Year   5 Years    10 Years   Since Inception
  1              08/08/96               n/a         n/a
  A              02/21/95               n/a         n/a
  B              02/21/95               n/a         n/a
_____ Index      n/a
 
================================================================================

FEES AND EXPENSES
 
This table sets forth the fees and expenses you will pay if you invest in shares
of the fund.


<TABLE> 
<CAPTION> 
---------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES (paid directly from your investment)                           Class 1           Class A           Class B
---------------------------------------------------------------------------------------------------------------------------
       <S>                                                                     <C>               <C>              <C>  
        Maximum sales charge on purchases (as a % of offering price)            8.50%             5.00%            None
 
        Maximum deferred sales charge on redemptions (as a % of the lower       None              None*            5.00%
        of net asset value at purchase or redemption)

ANNUAL FUND OPERATING EXPENSES (paid by the fund as a % of fund net assets)

        Management fee                                                          0.65%             0.65%              0.65%

        Distribution and service (12b-1) fee                                    0.00%             0.25%              1.00%
 
        Other expenses                                                          ----              ----               ----

        Total annual fund operating expenses                                    ====              ====               ====
</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%.

=============================================================================== 
EXAMPLE 

This example helps you compare the costs of investing in the fund with other
mutual funds. Your actual costs may be higher or lower.

<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------
NUMBER OF YEARS YOU OWN YOUR SHARES             1 YEAR*           3 YEARS*           5 YEARS*           10 YEARS*
------------------------------------------------------------------------------------------------------------------
<S>                                             <C>               <C>                <C>                <C>  
Class 1                                             $                 $                  $                  $

Class A                                             $                 $                  $                  $

Class B (Assuming redemption at  end of period)     $                 $                  $                  $

Class B (Assuming  no redemption)                   $                 $                  $                  $

</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


                        Concert Investment Series -- 13
<PAGE>
 
--------------------------------------------------------------------------------
GOVERNMENT FUND
--------------------------------------------------------------------------------
 
INVESTMENT 
OBJECTIVE               The fund seeks high current return consistent with
                        preservation of capital.


===============================================================================
              
KEY                     The fund invests primarily in government debt issued or
INVESTMENTS             guaranteed by the U.S. government, its agencies or
                        instrumentalities. These securities include U.S.
                        Treasury securities, mortgage-related and asset-backed
                        securities. Some government 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                 The manager focuses on identifying undervalued sectors
MANAGER                 and securities. Specifically, the manager:
SELECTS THE 
FUND'S                  .  Determines sector and maturity weightings based on
INVESTMENTS                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 balance potential return and risk
 
===============================================================================

                 
PRINCIPAL RISKS         Investors could lose money on their investment in the
OF INVESTING IN         fund, or the fund may not perform as well as other
THE FUND                investments, if any of the following occurs:
 
                        .  Interest rates increase, causing the prices of fixed
                           income securities to decline and reducing the value
                           of the fund's portfolio
                        .  Prepayment risk (or call risk). As interest rates
                           decline, the issuers of securities held by the fund
                           may prepay principal earlier than scheduled, forcing
                           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
 
===============================================================================


WHO MAY WANT            The fund may be an appropriate investment if you:
TO INVEST IN THE 
FUND                    .  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

                        Concert Investment Series -- 14
<PAGE>
 
--------------------------------------------------------------------------------
                                                                 GOVERNMENT FUND
--------------------------------------------------------------------------------
TOTAL RETURN
         
The bar chart indicates the risks of investing in the fund by showing the
performance 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: xx% in ___ quarter 199X; Lowest: xx% in ___ quarter
199X

The performance information in the chart does not reflect sales charges, which
would reduce your return.

                        % TOTAL RETURN: CLASS 1 SHARES
 
                                  [BAR CHART]

                          Calendar years
                          ended December 31
                                1989            12.87
                                1990             4.94
                                1991            15.16
                                1992             9.32
                                1993            10.55
                                1994            -5.45
                                1995            14.27
                                1996             4.58
                                1997             8.56
                                1998
================================================================================

COMPARATIVE PERFORMANCE

This table indicates the risks of investing in the fund by comparing the average
annual total return of each class for the periods shown to that of the _____
Index, an unmanaged index of [government bonds].


This table assumes the imposition of the maximum sales charge applicable to the
class, the redemption of shares at the end of the Comparative performance
period, and the reinvestment of distributions and dividends.

--------------------------------------------------------------------------------
                         AVERAGE ANNUAL TOTAL RETURNS 
--------------------------------------------------------------------------------

Class          Inception Date   1 Year   5 Years     10 Years   Since Inception

  1              XX/XX/87

  A              08/08/95                  n/a         n/a

  B              08/08/95                  n/a         n/a

_____ Index        n/a
 
================================================================================
 
FEES AND EXPENSES
 
This table sets forth the fees and expenses you will pay if you invest in shares
of the fund.

<TABLE> 
<CAPTION> 
-----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES (paid directly from your investment)                           Class 1           Class A            Class B
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>              <C>                 <C> 
        Maximum sales charge on purchases (as a % of offering  price)           6.75%            4.50%               None

        Maximum deferred sales charge on redemptions (as  a % of the lower of   None             None*               4.50%
        of net asset value at purchase or redemption)

ANNUAL FUND OPERATING EXPENSES (paid by the fund as a % of fund net assets)

        Management fee                                                          0.60%             0.60%               0.60%

        Distribution and service (12b-1) fee                                    0.00%             0.25%               1.00%

        Other expenses                                                          ----              ----                ----

        Total annual fund operating expenses                                    ====              ====                ====
</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%.
===============================================================================
EXAMPLE

This example helps you compare the costs of investing in the fund with other
mutual funds. Your actual costs may be higher or lower.


<TABLE> 
<CAPTION> 
---------------------------------------------------------------------------------------------------------------------- 
NUMBER OF YEARS YOU OWN YOUR SHARES             1 YEAR*           3 YEARS*           5 YEARS*           10 YEARS*
---------------------------------------------------------------------------------------------------------------------- 
<S>                                             <C>               <C>                <C>                <C>  
Class 1                                         $                 $                  $                  $

Class A                                         $                 $                  $                  $

Class B (Assuming redemption at end of period)  $                 $                  $                  $

Class B (Assuming no redemption)                $                 $                  $                  $

</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

                        Concert Investment Series -- 15
<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.

================================================================================
 
                        The fund invests in a diversified portfolio consisting
KEY                     a principally of tax exempt municipal bonds, which are
INVESTMENTS             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 federal 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's other
                        investments may include lower rated municipal bonds that
                        have speculative characteristics.
 
================================================================================

 
HOW THE                 The manager selects securities primarily by identifying
MANAGER                 undervalued sectors and individual securities, while
SELECTS THE             also selecting securities that it believes will benefit
FUND'S                  from changes in relative interest rates. In selecting
INVESTMENTS             individual securities, the manager:
 
                        .  Uses fundamental credit analysis to estimate the
                           relative value and attractiveness 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         Investors could lose money on their investment in the 
THE FUND                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 because 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, and some of
                        the fund's income may be subject to the federal
                        alternative minimum tax. In addition, distributions of
                        the fund's income and gains will be subject to state
                        taxation.
                         
================================================================================


WHO MAY WANT            The fund may be an appropriate investment if you:
TO INVEST IN THE 
FUND                    .  Are in a high tax bracket and seeking income that is
                           exempt from federal taxation
                        .  Currently have exposure to equity securities and
                           taxable fixed income securities and wish to broaden
                           your investment portfolio
                        .  Are willing to accept the risks of municipal bonds,
                           including interest rate risk and credit risk



                        Concert Investment Series -- 16
<PAGE>
 
-------------------------------------------------------------------------------
                                                             MUNICIPAL BOND FUND
-------------------------------------------------------------------------------
TOTAL RETURN  

The bar chart indicates the risks of investing in the fund by showing the
performance 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: xx% in ___ quarter 199X; Lowest: xx% in ___ quarter
199X

The performance information in the chart does not reflect sales charges, which
would reduce your return.



                        % TOTAL RETURN:  CLASS 1 SHARES
 
                                 [BAR CHART] 

                     Calendar years 
                    ended December 31
                          1989                  7.31
                          1990                  4.77
                          1991                 11.79
                          1992                  7.57
                          1993                 13.84
                          1994                 -3.38
                          1995                 12.72
                          1996                  6.09
                          1997                  8.04
                          1998
================================================================================
COMPARATIVE PERFORMANCE 

This table indicates risks of investing in the fund comparing the the average
annual total return of each class for the periods shown to that of the _____
Index, an unmanaged index of municipal bonds.

This table assumes the imposition of the maximum sales charge applicable to the
class, the redemption of shares at the end of the period, and the reinvestment
of distributions and dividends.

------------------------------------------------------------------------------- 
                         AVERAGE ANNUAL TOTAL RETURNS 
------------------------------------------------------------------------------- 


Class           Inception Date  1 Year  5 Years     10 Years   Since Inception
 1                 XX/XX/87
 A                 08/18/96                n/a         n/a
 B                 08/18/96                n/a         n/a
_____ Index          n/a
 
=============================================================================== 
FEES AND EXPENSES
 
This table sets forth the fees and expenses you will pay if you invest in shares
of the fund.

<TABLE> 
<CAPTION> 
----------------------------------------------------------------------------------------------------------------------------- 
SHAREHOLDER FEES (paid directly from your investment)                           Class 1           Class A         Class B
----------------------------------------------------------------------------------------------------------------------------- 
<S>                                                                             <C>               <C>             <C> 
        Maximum sales charge on purchases (as a % of offering price)             4.75%             4.50%           None

        Maximum deferred sales charge on redemptions (as a % of the lower of     None              None*           4.50%
        of net asset value at purchase or redemption)

ANNUAL FUND OPERATING EXPENSES (paid by the fund as a % of fund net assets)

        Management fee                                                          0.60%             0.60%            0.60%

        Distribution and service (12b-1) fee                                    0.00%             0.25%            1.00%

        Other expenses                                                          ----              ----             ----

        Total annual fund operating expenses                                    ====              ====             ====
</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%.

=============================================================================== 

EXAMPLE
 
This example helps you compare the costs of investing in the fund with other
mutual funds. Your actual costs may be higher or lower.

<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------- 
NUMBER OF YEARS YOU OWN YOUR SHARES                     1 YEAR*           3 YEARS*           5 YEARS*    10 YEARS*
------------------------------------------------------------------------------------------------------------------------------- 

<S>                                                     <C>               <C>                <C>         <C> 
Class 1                                                  $                 $                  $           $

Class A                                                  $                 $                  $           $

Class B (Assuming redemption at end of period)           $                 $                  $           $

Class B (Assuming no redemption)                         $                 $                  $           $
</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


                        Concert Investment Series -- 17
<PAGE>
 
--------------------------------------------------------------------------------
MORE ON THE FUNDS' INVESTMENTS
--------------------------------------------------------------------------------

EQUITY            Equity securities include exchange traded and over-the-counter
SECURITIES        common and preferred stocks, debt securities convertible into
                  equity securities, and warrants and rights relating to equity
                  securities.
 
================================================================================
 
SECURITIES OF     International Equity Fund invests at least 65% of its assets
FOREIGN           in equity securities of foreign issuers, including those in
ISSUERS           emerging market countries. Emerging Growth Fund, Growth Fund
all funds except  and Growth and Income Fund may invest up to 20% of their
Government        assets, and Mid Cap Fund up to 50% of its assets, in foreign
Fund and          securities, including those in issuers of emerging market
Municipal Bond    countries.
Fund             
                  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
                  denominated 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
                  significant gains but also involve greater risks than
                  investing in more developed countries. Political or economic
                  stability, lack of market liquidity and government actions
                  such as currency controls or seizure of private business or
                  property may be more likely in emerging markets.
 
================================================================================


DERIVATIVE        The funds may, but need not, use derivative contracts, such as
TRANSACTIONS      futures and options on securities, securities indices or
all funds         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 due to 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 that is 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. Derivatives can also make a fund less
                  liquid and harder to value, especially in declining markets.
 
================================================================================

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

 
SPECIAL           Each fund, except International Equity Fund, will not purchase
RESTRICTIONS      any securities issued by a company primarily engaged in the
all funds except  manufacture of alchohol or tobacco.
International     
Equity            

================================================================================

 
GOALS/POLICIES    Each fund's goal and investment policies generally may be 
all funds         changed by the trustees without shareholder approval.



                        Concert Investment Series -- 18
<PAGE>
 
--------------------------------------------------------------------------------
                                                                      MANAGEMENT
--------------------------------------------------------------------------------

THE PORTFOLIO MANAGERS    
                          
The portfolio managers are primarily responsible for the day-to-day operation of
the funds indicated beside their names and business experience.


<TABLE>
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------------
FUND                                      PORTFOLIO MANAGER     SINCE            PAST 5 YEARS' BUSINESS EXPERIENCE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                   <C>              <C>                    
Emerging Growth                           Sandip Bhagat         19xx             investment officer of the manager and president of
                                                                                 Travelers Investment Management Company, an 
                                                                                 affiliate of the manager

International Equity                      Jeffrey Russell       19xx             managing director of Salomon Smith Barney
 
                                          James Conheady        19xx             managing director of Salomon Smith Barney
                                          

Mid Cap                                   Larry Weissman        19xx             investment officer of the manager and managing 
and                                                                              director of Salomon Smith Barney since October, 
Growth                                                                           1997; portfolio manager of Neuberger & Berman, 
                                                                                 LLC, 1995-97; portfolio manager of College 
                                                                                 Retirement Equities Fund prior thereto 
 
Growth and Income                         R. Jay Gerken         19xx             investment officer of the manager and managing 
                                                                                 director of Salomon Smith Barney

Government                                James E. Conroy       19xx             investment officer of the manager and managing 
                                                                                 director of Salomon Smith Barney

Municipal Bond                            Joseph P. Deane       19xx             investment officer of the manager and managing 
                                                                                 director of Salomon Smith Barney

====================================================================================================================================
</TABLE> 

<TABLE> 
<CAPTION> 

MANAGEMENT FEES 

                        MANAGEMENT FEES PAID DURING THE FISCAL YEAR ENDED OCTOBER 31, 1998
                                        (as % of average daily net assets)
====================================================================================================================================
International        Emerging Growth                             Growth      Growth and         Government      Municipal 
 Equity Fund             Fund                Mid Cap Fund         Fund      Income Fund           Fund            Fund
-------------        ---------------         ------------        -----      ------------        ----------      ---------
<S>                  <C>                   <C>                  <C>        <C>                 <C>             <C> 
x.xx%                    x.xx%                   x.xx%           x.xx%         x.xx%              x.xx%            x.xx%

====================================================================================================================================
</TABLE> 

DISTRIBUTOR

CFBDS, Inc. serves as the funds' distributor. PFS Distributors, Inc. 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, Year 2000 issue 2000.
This situation, commonly known as the "Year 2000" issue, could have an adverse
impact on the funds. The manager and distributor are addressing the 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 adversely affect them, the funds cannot guarantee that the efforts of
each fund or its service providers to correct the problem will be successful.

                         Concert Investment Series -- 19
<PAGE>
 
------------------------------------------------------------------------------- 
CHOOSING A SHARE CLASS TO BUY
------------------------------------------------------------------------------- 

SHARE           You can choose between Class A shares and Class B shares. If
CLASSES         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
                .  How long you expect to own the shares
                .  The expenses paid by each class
                .  Whether you qualify for any reduction or waiver of sales
                   charges
                    
================================================================================
 
INVESTMENT      Minimum initial and additional investment amounts vary depending
MINIMUMS        on the class of shares you buy and the nature of your investment
                account.

--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                                INITIAL INVESTMENT                  ADDITIONAL INVESTMENTS
                                                                  Classes A and B                       All Classes
------------------------------------------------------------------------------------------------------------------------------- 
<S>                                                             <C>                             <C>
General                                                              $1,000                                $50
                                                                                                   
Individual Retirement Accounts, Self Employed Retirement                                                   
Plans, Uniform Gift to Minor Accounts                                $  250                                $50
                                                                                                           
Qualified Retirement Plans                                           $   25                                $25
                                                                                                           
Monthly Systematic Investment Plans                                  $   25                                $25
                                                                                                              
Pre-authorized Check Plan                                            $   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

================================================================================
COMPARING       Your PFS Investments Registered Representative can help you 
CLASSES         decide which class meets your goals.  Your PFS Investments 
                Registered Representative may receive different compensation 
                depending upon which class you choose. 
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------------
                                    CLASS A                                        CLASS B                              CLASS 1
<S>                     <C>                                             <C>                                    <C> 
KEY FEATURES           . Initial sales charge                       . No initial sales charge          . Only available to eligible
                       . You may qualify for reduction or           . Deferred sales charge declines     Class 1 shareholders
                         waiver of initial sales charge               over time                        . Higher initial sales charge
                       . Lower annual expenses than                 . Convert to Class A shares        . Lowest annual expenses
                         Class A shares                               after eight years
                                                                    . Highest annual expenses

INITIAL SALES CHARGE   Up to 5.00%, reduced or waived for large     None                               Up to 8.50%, reduced for 
                       purchases and certain investors.  No charge                                     large purchases
                       for purchases of $500,000 or more            
                                                                   
DEFERRED SALES CHARGE  None, except for purchases of $500,000 or     Up to 5% charged when you         None
                       more --  1% if you redeem within 1 year of    redeem shares. The charge 
                       purchase                                      is reduced over time and 
                                                                     there is no deferred sales 
                                                                     charge after 6 years
                                                                   
ANNUAL 12B-1 FEES      0.25% of average daily net assets             1% of average daily net assets    None
                                                                   
EXCHANGEABLE INTO*     Class A shares of Concert and certain Smith   Class B shares of Concert and     Class 1 shares of Concert 
                       Barney mutual funds                           certain Smith Barney mutual       funds that offer Class 1 
                                                                     funds                             shares and Class A shares of
                                                                                                       other Concert and certain
                                                                                                       Smith Barney mutual funds
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

*Ask your PFS Investments Registered Representative about funds available for
exchange.

                        Concert Investment Series -- 20
<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
increases 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
intent, waivers for certain investors and other options to reduce your sales
charge, ask your PFS Investments Registered Representative or consult the 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
Amount of investment                     % of offering         % of net amount        of offering          % of net amount
                                             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
purchase, 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 calculating 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 the fund, other 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, including:
 
 .   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
    Representative is notified
 .   Participants in the PFS Primerica Corporation Savings and Retirement Plan


                        Concert Investment Series -- 21
<PAGE>
 
--------------------------------------------------------------------------------
CLASS B SALES CHARGE
--------------------------------------------------------------------------------

CLASS B DEFERRED   You buy Class B shares at net asset value without paying an 
 SALES CHARGE      initial sales charge. However, if you redeem your Class B
                   shares within six years of purchase, 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 -Representative
or consult the SAI.                  
                  
<TABLE> 
<CAPTION>                   
                   --------------------------------------------------------------------------------------------------- 
                                                                            YEAR AFTER PURCHASE                        
                   DEFERRED SALES CHARGE FOR:           1ST        2ND        3RD       4TH      5TH     6TH AND OVER  
                   <S>                                  <C>        <C>        <C>       <C>      <C>     <C>           
                   Government and Municipal Funds      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
                   purchase 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 deferred sales
                   charge on shares shares exchanged for shares of another
                   Concert or eligible 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          SHARES ISSUED ON REINVESTMENT    SHARES ISSUED UPON EXCHANGE
                   PURCHASE                          OF DISTRIBUTIONS AND DIVIDENDS   FROM ANOTHER FUND
                   ----------------------------------------------------------------------------------------------
<S>                <C>                               <C>                              <C> 
                   Eight years after the date of     In same proportion that the      On the date the shares
                   purchase                          number of Class B shares         originally acquired would have
                                                     converting is to total Class     converted into Class A shares
                                                     B shares you own
</TABLE>


                        Concert Investment Series -- 22
<PAGE>
 
--------------------------------------------------------------------------------
                                                            CLASS 1 SALES CHARGE
--------------------------------------------------------------------------------

CLASS 1 SALES CHARGE         
                                 
Class 1 shares are offered to eligible Class 1 shareholders at the next
determined 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 certain
levels called breakpoints. As described in these tables, the Class 1 breakpoints
vary by fund.

<TABLE>                                                                         
<CAPTION>                                                                       
--------------------------------------------------------------------------------
EMERGING GROWTH, INTERNATIONAL EQUITY, GROWTH AND GROWTH AND INCOME FUNDS       
--------------------------------------------------------------------------------
                                                                                
                                   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>

<TABLE> 
<CAPTION> 
--------------------------------------------------------------------------------
GOVERNMENT FUND
--------------------------------------------------------------------------------
                                                                                
                                   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>

<TABLE> 
<CAPTION> 
--------------------------------------------------------------------------------
MUNICIPAL BOND FUND
--------------------------------------------------------------------------------
                                                                                
                                   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>


                        Concert Investment Series -- 23
<PAGE>
 
--------------------------------------------------------------------------------
BUYING SHARES AND EXCHANGING SHARES
--------------------------------------------------------------------------------

BUYING SHARES     .  Initial purchases of shares of each fund must be made 
 BY MAIL          through a PFS Investments 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 Services, 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 exchange is open. The
                  minimum telephone investment 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 Breckinridge 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.
 
You may make subsequent purchases by mail or, if you elect, by telephone

================================================================================

BUYING SHARES     Initial purchases of shares for $10,000 may be made by wire 
 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
                  Investments Representative.
 
================================================================================
SYSTEMATIC        You may authorize PFS to automatically transfer funds on a 
 INVESTMENT PLAN  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          You should contact your PFS Investments Registered 
 PRIVILEGE        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 into. 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. 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 certificates 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
Investments Registered Representative or consult the SAI


                        Concert Investment Series -- 24
<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.                           
                           
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

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 Shareholder
Services by calling (800) 544-5445 or (800) 544-7278 for Spanish speaking
representatives or (800) 824-1721 for the TDD Line for the Hearing Impaired 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 after
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. 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.

================================================================================

REDEMPTIONS BY FAX
 
You may redeem shares by fax as long as a signature guarantee or other
documentary Redemptions by evidence is not required. Redemption requests should
be properly signed by all fax 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 addition,
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 exchange is open. If telephone redemptions are
not available for any reason, you may use the Fund's regular redemption
procedure described 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


                        Concert Investment Series -- 25
<PAGE>
 
--------------------------------------------------------------------------------
OTHER THINGS TO KNOW ABOUT SHARE TRANSACTIONS
--------------------------------------------------------------------------------

SMALL ACCOUNT     If your account falls below $500 due to redemption of fund 
 BALANCES         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             Upon written request, a share certificate will be issued if 
 CERTIFICATES     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. 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 quotations. 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 determined 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 securities.
 
                  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 cannot 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         Manager:                   Shareholder Services:
 ADDRESSES                                   
                  Mutual Management Corp.    PFS Shareholder Services
                  388 Greenwich Street, MF2  3100 Breckinridge Blvd., Bldg. 200
                  New York, New York 10013   Duluth, Georgia 30099-0062
                                             (800) 544-5445

                        Concert Investment Series -- 26
<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 
follows:  

<TABLE> 
<CAPTION> 
-----------------------------------------------------------------------------------------------
FUND                               INCOME DIVIDEND        CAPITAL GAIN        DISTRIBUTIONS
                                    DISTRIBUTIONS         DISTRIBUTIONS        MOSTLY 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
necessary for a fund to avoid a federal tax. Capital gains distributions and
dividends 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.
Alternatively, 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 dividend,
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 exchange of shares                                   Usually capital gain or loss; long-term only if shares owned
                                                                   more than one year

Long-term capital gain distributions                               Long-term capital gain

Short-term capital gain distributions                              Ordinary income

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
distribution 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
taxpayer identification number and any required certifications, you may be
subject to back-up withholding of 31% of your distributions, dividends (other
than exempt-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 dividends, distributions or redemption proceeds.


                        Concert Investment Series -- 27
<PAGE>
 
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------

  The financial highlights tables are intended to help you understand the
performance of each class for the past five years (or since inception if less
than five years). Certain information reflects financial results for a single
share. Total returns represent the rate that a shareholder would have earned (or
lost) on a fund share assuming reinvestment of all dividends and distributions.
The information in the following tables was audited by Ernst & Young LLP,
independent auditors, whose report, along with the fund's financial statement
are included in the annual report (available upon request).

FOR A SHARE OF EACH CLASS OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR:

  Emerging Growth Fund
<TABLE>  
<CAPTION> 
                                                                                              AUGUST 8, 1996
                                                                                               (COMMENCEMENT
                                                        YEAR ENDED        YEAR ENDED        OF DISTRIBUTION) TO
CLASS 1 SHARES                                       OCTOBER 31, 1998  OCTOBER 31, 1997      OCTOBER 31, 1996
-------------------------------------------------------------------------------------------------------------
<S>                                                  <C>               <C>                <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                         $18.59                $17.89
-------------------------------------------------------------------------------------------------------------
Net investment loss                                                           (0.08)                (0.02)
Net realized and unrealized gain                                               3.64                  0.72
-------------------------------------------------------------------------------------------------------------
Total from investment operations                                               3.56                  0.70
-------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                                               $22.15                $18.59
-------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1)                                                               19.15%                 3.91%(2)
-------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (MILLIONS)                                       $    6                $    1
-------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets                                        1.39%                 1.74%
Ratio of net investment loss to average net assets                            (0.63)                (1.09)
-------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER                                                              100%                   80%
-------------------------------------------------------------------------------------------------------------
</TABLE>

   (1)  Total returns do not reflect any applicable sales loads or deferred
        sales charges.
   (2)  Not annualized.

<TABLE>
<CAPTION>
CLASS A SHARES                                          YEAR ENDED      YEAR ENDED       YEAR ENDED          FEBRUARY 21, 1995
                                                        October 31,     October 31,      October 31,    (Commencement of Investment
                                                           1998            1997             1996         Operations) to October 31,
                                                                                                                  1995(1)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>              <C>            <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                      $18.57           $15.12                  $11.81
-----------------------------------------------------------------------------------------------------------------------------------
Net investment loss                                                        (0.15)           (0.18)                  (0.24)
Net realized and unrealized gain                                            3.66             3.63                    3.55
-----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations                                            3.51             3.45                    3.31
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                                            $22.08           $18.57                  $15.12
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(2)                                                            18.90%           22.82%                  28.11%(3)
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (MILLIONS)                                    $101             $52                     $16
-----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets*                                    1.69%            2.21%                   2.75%
Ratio of net investment loss to average net                                                          
  assets*                                                                  (0.92)           (1.52)                  (1.65)%
-----------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER                                                        100%              80%                  83%(4)
*  If certain expenses had not been waived or                                                        
   reimbursed by VKAC, total return would have                                                       
   been lower and the ratios would have been as                                                      
   follows:                                                                                          
           Ratio of expenses to average net assets                                                   
           Ratio of net investment loss to average                                                   
             net assets                                                    N/A              N/A                      3.37%
                                                                           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.
N/A=Not Applicable


                        Concert Investment Series -- 28
<PAGE>
 
--------------------------------------------------------------------------------
                                                FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------

EMERGING GROWTH FUND
<TABLE>
<CAPTION>
                                                                                                          FEBRUARY 21, 1995
                                                                                                            (COMMENCEMENT
                                                                                                            OF INVESTMENT
                                                   YEAR ENDED        YEAR ENDED         YEAR ENDED         OPERATIONS) TO
CLASS B SHARES                                  OCTOBER 31, 1998  OCTOBER 31, 1997   OCTOBER 31, 1996    OCTOBER 31, 1995(1)
============================================================================================================================= 
<S>                                             <C>               <C>                <C>                <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                   $18.34             $15.04               $11.81
-----------------------------------------------------------------------------------------------------------------------------
Net investment loss                                                     (0.27)             (0.27)              (0.35)
Net realized and unrealized gain                                         3.56               3.57                3.58
-----------------------------------------------------------------------------------------------------------------------------
Total from investment operations                                         3.29               3.30                3.23
-----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                                         $21.63             $18.34              $15.04
-----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(2)                                                         17.94%             21.94%              27.43%(3)
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (MILLIONS)                                 $80                $39                 $11
-----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets*                                 2.44%              2.96%               3.49%
Ratio of net investment loss to average       
  net assets*                                 
                                                                        (1.67)             (2.27)              (2.45)
-----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER                                                     100%                80%                 83%(4)
*  If certain expenses had not been waived or 
 reimbursed by VKAC, total return would have  
 been lower and the ratios would have been as 
 follows:                                     
      Ratio of expenses to average net assets 
      Ratio of net investment loss to average 
        net assets                                                      N/A                 N/A                 4.11%
                                                                        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.
N/A=Not Applicable


                        Concert Investment Series -- 29
<PAGE>
 
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------

Growth Fund

<TABLE>
<CAPTION>
                                                                            YEAR ENDED OCTOBER 31
                                                              -----------------------------------------------          
CLASS 1 SHARES                                                    1998       1997     1996     1995     1994
=============================================================================================================
<S>                                                           <C>           <C>      <C>      <C>      <C>
NET ASSET VALUE, BEGINNING OF YEAR                                          $17.98   $17.46   $15.31   $16.26
-------------------------------------------------------------------------------------------------------------
Net investment income                                                         0.17      .19     0.16     0.13
Net realized and unrealized gain                                              4.33     2.91     3.18     0.21
-------------------------------------------------------------------------------------------------------------
Total from investment operations                                              4.50     3.10     3.34     0.34
-------------------------------------------------------------------------------------------------------------
LESS:
Distributions from net investment income                                     (0.18)   (0.18)   (0.16)   (0.11)
Distributions from and in excess of net realized gain
                                                                             (1.36)   (2.40)   (1.03)   (1.18)
-------------------------------------------------------------------------------------------------------------
Total distributions                                                          (1.54)   (2.58)   (1.19)   (1.29)
-------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR                                                $20.94   $17.98   $17.46   $15.31
-------------------------------------------------------------------------------------------------------------
TOTAL RETURN(2)                                                              26.93%   19.94%   24.01%    2.04%
-------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF YEAR (MILLIONS)                                        $3,547   $3,005   $2,612   $2,170
-------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets                                       0.88%    0.93%    1.00%    1.09%
Ratio of net investment income to average net assets                          0.86     1.08     1.04     0.89
-------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER                                                             165%     202%     230%     164%
-------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                            CLASS A SHARES                               CLASS B SHARES
                                ----------------------------------------     ---------------------------------------
                                   YEAR         YEAR           PERIOD          YEAR          YEAR           PERIOD
                                   ENDED        ENDED          ENDED           ENDED         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                  $17.96         $16.63                         $17.93        $16.63
 PERIOD
--------------------------------------------------------------------------------------------------------------------
Net investment income (loss)                     0.15            .02                            .01         (0.01)
 
Net realized and unrealized                      
 gain                                            4.30           1.31                           4.28          1.31 
--------------------------------------------------------------------------------------------------------------------
Total from investment                            
 operations                                      4.45           1.33                           4.29          1.30 
--------------------------------------------------------------------------------------------------------------------
LESS:
Distributions from net                           
 investment                                     (0.16)           -0-                          (0.11)          -0- 
  income                                         
Distributions from net
 realized gain                                  (1.36)           -0-                          (1.36)          -0- 
--------------------------------------------------------------------------------------------------------------------
Total distributions                             (1.52)           -0-                          (1.47)          -0-
--------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                 $20.89         $17.96                         $20.75        $17.93
--------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(2)                                 26.65%          8.00%(3)                      25.66%         7.82%(3)
--------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD                   $109            $49                           $126           $74
 (MILLIONS)
--------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average                     1.13%          1.17%                          1.88%         1.93%
 net assets
Ratio of net investment                          
 income (loss) to     
 average net assets                              0.57           0.46                          (0.16)        (0.29) 
--------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER                                165%           202%(3)                        165%          202%(3)
====================================================================================================================
</TABLE>

(1)  Class A and Class B shares commenced distribution on August 8, 1996.
(2)  Total Returns do not reflect any applicable sales load or deferred sales
     charges.
(3)  Not annualized.


                        Concert Investment Series -- 30
<PAGE>
 
--------------------------------------------------------------------------------
                                                FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------

GROWTH AND INCOME FUND

<TABLE>
<CAPTION>
                                                                          YEAR ENDED OCTOBER 31
                                                               ------------------------------------------
CLASS 1 SHARES                                                 1998      1997     1996     1995     1994
=========================================================================================================
<S>                                                         <C>         <C>      <C>      <C>      <C>
NET ASSET VALUE, BEGINNING OF YEAR                                      $18.11   $16.95   $15.77   $17.13
---------------------------------------------------------------------------------------------------------
Net investment income                                                     0.24     0.31     0.36     0.29
Net realized and unrealized gain/loss                                     4.23     2.94     2.72    (0.21)
---------------------------------------------------------------------------------------------------------
Total from investment operations                                          4.47     3.25     3.08     0.08
---------------------------------------------------------------------------------------------------------
LESS:                                                       
Distributions from net investment income                                 (0.30)   (0.34)   (0.30)   (0.28)
Distributions from and in excess of net realized gain                    (2.18)   (1.75)   (1.60)   (1.16)
---------------------------------------------------------------------------------------------------------
Total distributions                                                      (2.48)   (2.09)   (1.90)   (1.44)
---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR                                            $20.10   $18.11   $16.95   $15.77
---------------------------------------------------------------------------------------------------------
TOTAL RETURN(1)                                                          27.35%   20.58%   22.45%    0.51%
---------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF YEAR (MILLIONS)                                    $1,097   $  943   $  828   $  712
---------------------------------------------------------------------------------------------------------
  Ratio of expenses to average net assets                                 0.88%    0.91%    0.96%    1.02%
  Ratio of net investment income to average net assets                    1.25     1.78     2.27     1.84
---------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER                                                          93%     121%     117%      88%
=========================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                          CLASS A SHARES                            CLASS B SHARES
                                 ----------------------------------   -------------------------------------------
                                   YEAR        YEAR       PERIOD                       YEAR     
                                   ENDED       ENDED      ENDED       YEAR ENDED       ENDED         PERIOD ENDED 
                                  OCTOBER     OCTOBER   OCTOBER 31,   OCTOBER 31,    OCTOBER 31,      OCTOBER 31,
                                 31, 1998    31, 1997     1996(2)        1998          1997            1996(2)  
----------------------------------------------------------------------------------------------------------------- 
<S>                              <C>        <C>          <C>              <C>         <C>          <C>
NET ASSET VALUE, BEGINNING OF                                                                               
 PERIOD                                       $18.11      $17.19                      $18.09         $17.19 
----------------------------------------------------------------------------------------------------------------- 
Net investment income                           0.20        0.07                        0.06           0.04
Net realized and unrealized                                                                                 
 gain                                           4.22        0.91                        4.22           0.90 
----------------------------------------------------------------------------------------------------------------- 
Total from investment                                                                                       
 operations                                     4.42        0.98                        4.28           0.94 
----------------------------------------------------------------------------------------------------------------- 
LESS:
Distributions from net                                                                                       
 investment income                             (0.25)      (0.06)                      (0.12)         (0.04) 
Distributions from net
 realized gain                                 (2.18)        -0-                       (2.18)           -0- 
----------------------------------------------------------------------------------------------------------------- 
Total distributions                            (2.43)      (0.06)                      (2.30)         (0.04)
----------------------------------------------------------------------------------------------------------------- 
NET ASSET VALUE, END OF PERIOD                $20.10      $18.11                      $20.07         $18.09
----------------------------------------------------------------------------------------------------------------- 
TOTAL RETURN(1)                                27.04%       5.72%(3)                   26.08%          5.49%(3)
----------------------------------------------------------------------------------------------------------------- 
NET ASSETS AT END OF PERIOD                                                                              
 (MILLIONS)                                   $80         $33                         $99            $52 
----------------------------------------------------------------------------------------------------------------- 
Ratio of expenses to average                    1.12%       1.16%                       1.88%          1.91%
 net assets                                     0.96        1.78                        0.22           1.05
Ratio of net investment income
 to average net assets
----------------------------------------------------------------------------------------------------------------- 
PORTFOLIO TURNOVER                                93%     121%                         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.


                        Concert Investment Series -- 31
<PAGE>
 
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------

INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
                                                                                      AUGUST 8, 1996
                                                                                      (COMMENCEMENT
                                              YEAR ENDED            YEAR ENDED     OF DISTRIBUTION) TO
CLASS 1 SHARES                             OCTOBER 31, 1998      OCTOBER 31, 1997  OCTOBER 31, 1996 (1)
=========================================================================================================
<S>                                        <C>                 <C>                <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                   $16.52                $16.00
--------------------------------------------------------------------------------------------------------- 
Net investment loss                                                     (0.17)                (0.03)
Net realized and unrealized gain                                         1.81                   .55
--------------------------------------------------------------------------------------------------------- 
Total from investment operations                                         1.64                   .52
--------------------------------------------------------------------------------------------------------- 
NET ASSET VALUE, END OF PERIOD                                         $18.16                $16.52
--------------------------------------------------------------------------------------------------------- 
TOTAL RETURN(2)                                                          9.99%                 3.25%(3)
--------------------------------------------------------------------------------------------------------- 
NET ASSETS AT END OF PERIOD (MILLIONS)                                 $    2                $  0.2
--------------------------------------------------------------------------------------------------------- 
Ratio of expenses to average net assets*                                 2.26%                 2.50%
Ratio of net investment loss to average                       
  net assets*                                                           (1.24)                (1.31)
--------------------------------------------------------------------------------------------------------- 
PORTFOLIO TURNOVER                                                         57%                   78%(3)
--------------------------------------------------------------------------------------------------------- 
*  If certain expenses had not been waived                    
   or reimbursed by VKAC, total return woul                   
   have been lower and the ratios would hav                   
   been as follows:                                           
    Ratio of expenses to average net                          
     assets                                                               N/A                  3.87%
    Ratio of net investment loss to average                   
     net assets                                                           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.
N/A=Not Applicable

<TABLE>
<CAPTION>
                                                                                                          FEBRUARY 21, 1995
                                                                                                            (COMMENCEMENT
                                                                                                            OF INVESTMENT
                                                   YEAR ENDED        YEAR ENDED         YEAR ENDED         OPERATIONS) TO
                                                   OCTOBER 31,       OCTOBER 31,        OCTOBER 31,          OCTOBER 31, 
CLASS A SHARES                                        1998              1997               1996                1995(1)
-------------------------------------------------------------------------------------------------------------------------- 
<S>                                                <C>               <C>                <C>               <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                  $16.54             $13.86               $11.81
-------------------------------------------------------------------------------------------------------------------------- 
Net investment loss                                                    (0.26)             (0.19)               (0.14)
Net realized and unrealized gain                                        1.86               2.87                 2.19
-------------------------------------------------------------------------------------------------------------------------- 
Total from investment operations                                        1.60               2.68                 2.05
-------------------------------------------------------------------------------------------------------------------------- 
NET ASSET VALUE, END OF PERIOD                                        $18.14             $16.54               $13.86
-------------------------------------------------------------------------------------------------------------------------- 
TOTAL RETURN(2)                                                         9.74%             19.34%               16.28%(4)
-------------------------------------------------------------------------------------------------------------------------- 
NET ASSETS AT END OF PERIOD (MILLIONS)                                $17                $10                  $7
-------------------------------------------------------------------------------------------------------------------------- 
Ratio of expenses to average net assets*                                2.56%              2.75%                3.64%
Ratio of net investment loss to average                                                               
  net assets*                                                          (1.59)             (1.56)               (1.40)
-------------------------------------------------------------------------------------------------------------------------- 
PORTFOLIO TURNOVER                                                        57%                78%                  17%(3)
-------------------------------------------------------------------------------------------------------------------------- 
*  If certain expenses had not been waived or                                                         
   reimbursed by VKAC, Total Return would have                                                        
   been lower and the ratios would have been                                                          
   as follows:                                                                                        
     Ratio of expenses to average net assets                               N/A               4.12%                5.97%
     Ratio of net investment loss to                                                                  
      average net assets                                                   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.
N/A=Not Applicable


                        Concert Investment Series -- 32
<PAGE>
 
--------------------------------------------------------------------------------
                                                FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------

INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
                                                                                                               FEBRUARY 21, 1995
                                                                                                                (COMMENCEMENT
                                                          YEAR ENDED       YEAR ENDED        YEAR ENDED          OF INVESTMENT
                                                          OCTOBER 31,      OCTOBER 31,       OCTOBER 31,         OPERATIONS) TO
CLASS B SHARES                                               1998             1997              1996          OCTOBER 31, 1995(1)
---------------------------------------------------------------------------------------------------------------------------------- 
<S>                                                      <C>                   <C>                <C>                <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                          $16.36             $13.79              $11.81
---------------------------------------------------------------------------------------------------------------------------------- 
Net investment loss                                                            (0.32)             (0.26)              (0.21)
Net realized and unrealized gain                                                1.77               2.83                2.19
---------------------------------------------------------------------------------------------------------------------------------- 
Total from investment operations                                                1.45               2.57                1.98
---------------------------------------------------------------------------------------------------------------------------------- 
NET ASSET VALUE, END OF PERIOD                                                $17.81             $16.36              $13.79
---------------------------------------------------------------------------------------------------------------------------------- 
TOTAL RETURN(2)                                                                 8.93%             18.64%              15.69(4)
---------------------------------------------------------------------------------------------------------------------------------- 
NET ASSETS AT END OF PERIOD (MILLIONS)                                        $13                $8                  $2
---------------------------------------------------------------------------------------------------------------------------------- 
Ratio of expenses to average net assets(*)                                      3.30%              3.50%               4.33%
Ratio of net investment loss to average net assets(*)                          (2.34)             (2.31)              (2.80)
---------------------------------------------------------------------------------------------------------------------------------- 
PORTFOLIO TURNOVER                                                                57%                78%                 17%(3)
---------------------------------------------------------------------------------------------------------------------------------- 
*If certain expenses had not been waived or reimbursed by VKAC, 
Total Return would have been lower and the ratios would have been as 
follows:
Ratio of expenses to average net assets
Ratio of net investment loss to average net assets                                N/A               4.87%               6.67%
                                                                                  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.
N/A=Not Applicable


                        Concert Investment Series -- 33
<PAGE>
 
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------

GOVERNMENT FUND
<TABLE>
<CAPTION>
                                                                                         YEAR ENDED OCTOBER 31
                                                                             -------------------------------------------
CLASS 1 SHARES                                                                1998      1997     1996     1995      1994
========================================================================================================================
<S>                                                                          <C>       <C>      <C>      <C>      <C>
NET ASSET VALUE, BEGINNING OF YEAR                                                     $10.40   $10.67   $ 9.99   $11.80
------------------------------------------------------------------------------------------------------------------------
Net investment income                                                                    0.69     0.70     0.70     0.69
Net realized and unrealized gain/loss                                                    0.17    (0.25)    0.68    (1.36)
------------------------------------------------------------------------------------------------------------------------
Total from investment operations                                                         0.86     0.45     1.38    (0.67)
------------------------------------------------------------------------------------------------------------------------
LESS:
Distributions from in and excess of net investment income                               (0.68)   (0.72)   (0.70)   (0.69)
Distributions from and in excess of net realized gain                                    ----     ----     ----    (0.45)
------------------------------------------------------------------------------------------------------------------------
Total distributions                                                                     (0.68)   (0.72)   (0.70)   (1.14)
------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR                                                           $10.58   $10.40   $10.67   $ 9.99
------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1)                                                                          8.56%    4.58%   14.27%   (5.45%)
------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF YEAR (MILLIONS)                                                   $  241   $  287   $  329   $  335
------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets                                                  0.90%    0.84%    0.83%    0.89%
Ratio of net investment income to average net assets                                     6.69     6.79     6.84     7.06
------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER                                                                        104%     276%     214%     256%
========================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                              CLASS A SHARES                            CLASS B SHARES
                                ----------------------------------------   ------------------------------------------
                                                  YEAR         
                                YEAR ENDED        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                      $10.41         $10.32                        $10.41         $10.32
 OF THE PERIOD
--------------------------------------------------------------------------------------------------------------------- 
Net investment income                             0.66           0.15                          0.59           0.14
Net realized and unrealized                       0.17           0.09                          0.17           0.09
 gain
--------------------------------------------------------------------------------------------------------------------- 
Total from investment                             0.83           0.24                          0.76           0.23
 operations
--------------------------------------------------------------------------------------------------------------------- 
Less distributions from and                      (0.66)         (0.15)                        (0.59)         (0.14)
 in excess of net investment
 income
--------------------------------------------------------------------------------------------------------------------- 
NET ASSET VALUE, END OF THE                                                                                        
 PERIOD                                         $10.58         $10.41                        $10.58         $10.41 
--------------------------------------------------------------------------------------------------------------------- 
TOTAL RETURN(1)                                   8.35%          2.36%(3)                      7.55%          2.18%(3)
--------------------------------------------------------------------------------------------------------------------- 
NET ASSETS AT END OF PERIOD                                                                                     
 (MILLIONS)                                     $14            $11                           $12            $14 
--------------------------------------------------------------------------------------------------------------------- 
Ratio of expenses to average                                                                                        
 net assets                                       1.15%          1.09%                         1.90%          1.84% 
Ratio of net investment                                                                                            
 income to
 average net assets                               6.44           6.50                          5.69           5.74 
--------------------------------------------------------------------------------------------------------------------- 
PORTFOLIO TURNOVER                                 104%           276%(3)                       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, 1995.
(3)  Not annualized.


                        Concert Investment Series -- 34
<PAGE>
 
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------

MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
                                                                                   YEAR ENDED OCTOBER 31
                                                                           -----------------------------------------
CLASS 1 SHARES                                                             1998    1997     1996     1995      1994
--------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>     <C>      <C>      <C>      <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                              $13.83   $13.77   $12.89   $14.07
-------------------------------------------------------------------------------------------------------------------
Net investment income                                                               0.69     0.70     0.74     0.71
Net realized and unrealized gain (loss)                                             0.39     0.11     0.87    (1.18)
-------------------------------------------------------------------------------------------------------------------
Total from investment operations                                                    1.08     0.81     1.61    (0.47)
-------------------------------------------------------------------------------------------------------------------
LESS:
Distributions from net investment income                                           (0.66)   (0.71)   (0.73)   (0.71)
Distributions from and in excess of net realized     gain                          (0.04)   (0.04)      --       --
-------------------------------------------------------------------------------------------------------------------
Total distributions                                                                (0.70)   (0.75)   (0.73)   (0.71)
-------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD                                                    $14.21   $13.83   $13.77   $12.89
-------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1)                                                                     8.04%    6.09%   12.72%   (3.38%)
-------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (MILLIONS)                                            $  104   $  119   $  119   $  112
-------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets                                             0.98%    1.05%    0.96%    0.99%
Ratio of net investment income to average net     assets                            4.93     5.13     5.58     5.27
-------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER                                                                    50%      80%      49%       4%
-------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
                                        CLASS A SHARES                              CLASS B SHARES
                            ----------------------------------------    ------------------------------------------            
                                                                                         YEAR      
                            YEAR ENDED    YEAR ENDED    PERIOD ENDED    YEAR ENDED       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,                              $13.83        $13.78                         $13.82         $13.78
 BEGINNING OF PERIOD
------------------------------------------------------------------------------------------------------------------
Net investment income                           0.65          0.11                           0.54           0.09
Net realized and                                0.40          0.04                           0.40           0.04
 unrealized gain
------------------------------------------------------------------------------------------------------------------
Total from investment                                                                                            
 operations                                     1.05          0.15                           0.94           0.13 
------------------------------------------------------------------------------------------------------------------
LESS:
Distributions from net                         (0.63)        (0.10)                         (0.52)         (0.09)
 investments income
Distributions from net                         (0.04)           --                          (0.04)            --
 realized gains
------------------------------------------------------------------------------------------------------------------
Total distributions                            (0.67)        (0.10)                         (0.56)         (0.09)
------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF                                                                                          
 PERIOD                                       $14.21        $13.83                         $14.20         $13.82 
------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1)                                 7.77%         1.12%(2)                       6.98%          0.93%(2)
------------------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF                          $9            $2                             $3             $1
 PERIOD (MILLIONS)
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to                                                                                              
 average net
 assets                                         1.19%         1.30%                          1.94%          2.05% 
Ratio of net investment
 income to average
 net assets                                     4.79          4.82                           4.04           4.06 
------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER                                50%           80%                            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.


                        Concert Investment Series -- 35
                               
 
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.  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

Page
   
General Information										
		2
Goals and Investment Policies									
		2
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		
    				1



GENERAL INFORMATION
   
Mutual Management Corp., formerly Smith Barney Mutual Funds Management Inc. 
(the "manager"), was incorporated on March 12, 1968 and renders investment 
management advice to investment companies with aggregate assets under 
management in excess of $_____ 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.

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. Except as stated below, the Fund 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 with 
market capitalizations of between $1 billion and $5 billion at the time of 
investment. 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 $5 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 or BB or 
lower by 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 described in the Prospectus.
    
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 or S&P. 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 ''A'' or higher. The Fund may invest up to 25% of its total assets in 
Municipal Bonds rated ''Baa'' by Moody's or ''BBB'' by S&P or any non-rated 
Municipal Bonds having characteristics similar to Municipal Bonds rated 
''Baa'' or ''BBB.'' Municipal Bonds rated BBB or Baa 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 which 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 ratings described 
in the Prospectus.  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 money market and 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 also 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.  There are variations in the 
risks involved in holding Municipal Bonds, both within a particular 
classification and among classifications, depending on numerous factors.  
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 
principal and interest on Municipal Bonds.

The Fund may invest up to 10% of its net assets in illiquid securities which 
include Municipal Bonds issued in limited placements under which the Fund 
represents that it is purchasing for investment purposes only, repurchase 
agreements maturing in more than seven days and other securities subject to 
legal or contractual restrictions on resale. Municipal Bonds acquired in 
limited placements generally may be resold only in a privately negotiated 
transaction to one or more other institutional investors. Restricted 
securities are generally purchased 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. A Fund 
position in restricted securities might adversely affect the liquidity and 
marketability of such securities. 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. Generally lower rated Municipal Bonds provide a higher yield than 
higher rated Municipal Bonds of similar maturity but are subject to greater 
market and financial 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 
concentration policies 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 relate 
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 Omnibus Budget Reconciliation Act of 1993, which was signed into law on 
August 10, 1993, included certain provisions intended to prevent the 
conversion of ordinary income into capital gain. One such provision affects 
tax-exempt securities by requiring that gains on certain debt instruments 
purchased at a market discount be treated as ordinary income to the extent of 
the accrued market discount. The law extends this treatment to market 
discount bonds issued before July 18, 1984 and to tax-exempt bonds, if the 
bonds are acquired after April 30, 1993. Such bonds were exempt from the 
market discount rules under prior law. 

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).  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).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).  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 Funds).  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).  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.

Small Capitalization Companies (Emerging Growth Fund).  Emerging Growth Fund 
invests in securities of companies with market capitalization or estimated 
revenues of not more than [$500 million] at the time of initial investment.  
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.

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. 
	
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. Since each Fund may invest in securities 
denominated or quoted in currencies other than the U.S. dollar, changes in 
foreign currency exchange rates may affect the value of investments in the 
portfolio and the accrued income and unrealized appreciation or depreciation 
of investments. Changes in foreign currency rates relative to the U.S. dollar 
will affect the U.S. dollar value of the Fund's assets denominated in that 
currency and the Fund's yield on such assets. 
	
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.
	
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. 

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. A developing country generally is considered to be a 
country that is in the initial stages of its industrialization cycle. 
Investing in the equity and fixed-income 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 economics of developed countries; however, such markets often 
have provided higher rates of return to investors. 
	
One or more of the risk 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 
governments were never finally settled. There can be no assurance that any 
investments that the 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. 

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 
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 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.

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. 

There may be less publicly available information about a foreign company than 
about a U.S. company, and foreign companies may not be subject to accounting, 
auditing, and financial reporting standards and requirements comparable to or 
as uniform as those of U.S. companies.  Foreign securities markets, while 
growing in volume, have, for the most part, substantially less volume than 
U.S. markets, and securities of many foreign companies are less liquid and 
their price more volatile than securities of comparable U.S. companies.  
Transaction costs on foreign securities markets are generally higher than in 
the U.S.  There is generally less government supervision and regulation of 
exchanges, brokers and issuers than there is in the U.S. A Fund might have 
greater difficulty taking appropriate legal action in foreign courts. 
Dividend and interest income from foreign securities will generally be 
subject to withholding taxes by the country in which the issuer is located 
and may not be recoverable by the Fund or the investors.  Capital gains are 
also subject to taxation in some foreign countries.

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 is scheduled to occur on January 1, 
1999, when 11 European countries adopt a single currency - the euro.  For 
participating countries, EMU will mean sharing a single currency and single 
official interest rate and adhering to agreed upon limits on government 
borrowing.  Budgetary decisions will remain in the hands of each 
participating country, but will be subject to each country's commitment to 
avoid "excessive deficits" and other more specific budgetary criteria.  A 
European Central Bank will be 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:

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:
    
A Fund 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 Director of the manager and Travelers Investment Adviser, Inc.  
("TIA"); Chairman of Smith Barney Strategy Advisers Inc.  Prior to 
July 1993, Senior Executive Vice President of Shearson Lehman Brothers Inc., 
Vice Chairman of Shearson Asset Management, Director of Pan-Agora Asset 
Management, Inc.  and Pan-Agora Asset Management Limited; 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" (within the meaning of 
Section 2(a)(19) of the Investment Company Act of 1940).  Mr. McLendon is an 
interested person of the manager and the Trust by reason of his position with 
the manager.
    
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; prior to July 1993, Managing Director of  
Shearson Lehman Advisors ("SLA").   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; prior to July 1993, Managing Director of 
SLA.   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; prior to July 1993, Managing Director of 
SLA.  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.
	
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 and the related mutual 
funds for which the Trustees serve as trustees noted above is set forth 
below.  The compensation shown for the Funds is for the fiscal year ended 
October 31, 1998, while the total compensation shown for the Funds and other 
related mutual 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.
    
COMPENSATION TABLE
   
Name of Person

Aggregate Compensation
From Registrant (3)


  EM         INT          G          
G/I        GVT         MB   





Pensio
n or 
Retire
-ment 
Benefi
ts 
Accrue
d as 
Part 
of 
Fund 
Expens
es
(4)

Total(
1) 
Compen
sation 
From 
Regist
rant 
and 
Fund 
Comple
x Paid 
to 
Direct
ors

Numb
er 
of 
Fund
s 
For 
Whic
h 
Trus
tee 
Serv
es 
With
in 
Fund 
Com-
plex











Dr. Donald M. 
Carlton






-

1
Dr. A. Benton 
Cocanougher






-

1
Stephen Randolph 
Gross






-

1
Heath B. 
McLendon*






-

42
Dr. Alan G. 
Merten






-

1
Dr. Steven 
Muller(2)






-

0
Dr. R. 
Richardson 
Pettit






-

1
Alan B. Shepard, 
Jr.(2)






-

1










    
*Represents Interested Trustee.
   
(1)	Amounts reflected are for the calendar year ended December 31, 1998.  
[During this period, the Mid Cap Fund had not commenced operations.]

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

(3)	The Trustees instituted a retirement plan effective April 1, 1996.  For 
the current Trustees not affiliated with the manager, the annual retirement 
benefit payable per year for a ten year period is 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 reduced benefit.

(4)	Retirement benefits accrued are $_______, $_______, $_______, $_______, 
$_______, and $_______, 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.
    
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

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.


Emergi
ng 
Growth

Internati
onal 
Equity

Growth

Growt
h & 
Incom
e

Governmen
t

Municip
al Bond

October 31, 1998






Accounting Services






Gross Advisory Fees






Contractual Expense 
Reimbursement






Voluntary Expense 
Reimbursement













October 31, 1997






Accounting Services
$37,19
8
$21,601
$420,04
3
$161,
748
$55,786
$39,999
Gross Advisory Fees
904,95
9
267,897
20,533,
544
7,574
,209
1,702,968
704,693
Contractual Expense 
Reimbursement
 - 
 - 
 - 
 - 
 - 
 - 
Voluntary Expense 
Reimbursement
 - 
 - 
 - 
 - 
 - 
 - 







October 31, 1996






Accounting Services
$79,62
0
$30,600
$406,93
1
$168,
039
$93,056
$99,374
Gross Advisory Fees
376,43
6
130,149
17,148,
560
6,017
,204
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 VKAC.  Van Kampen 
American Capital Asset Management Inc. 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.

The Distributor may be deemed to be an underwriter for purposes of the 
Securities Act of 1933. From time to time, the Distributor 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 Investments 
giving PFS Investments 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.


Emerg
ing 
Growt
h

Interna
tional 
Equity

Growth

Growth & 
Income

Governm
ent

Municipa
l Bond

October 31, 1998






Total Underwriting 
Commissions






Amount Retained By Funds'  
Distributor*






Amount Received By PFS 
Investments













October 31, 1997






Total Underwriting 
Commissions
$3,84
6,082
$608,72
6
$18,00
2,508
$6,979,9
66
$808,85
8
$487,303
Amount Retained By Funds' 
Distributor*
251,2
47
37,018
2,787,
423
825,118
98,702
87,157
Amount Received By PFS 
Investments
3,594
,835
571,708
15,215
,088
6,154,84
8
710,156
400,146







October 31, 1996






Total Underwriting 
Commissions
$1,51
9,351
$235,79
1
$19,30
3,603
$5,144,5
00
$950,01
9
$1,029,1
47
Amount Retained By Funds'  
Distributor*
124,7
77
21,437
3,405,
104
888,760
162,072
124,395
Amount Received By PFS 
Investments
1,394
,574
214,354
15,898
,499
4,255,74
0
1,173,8
67
904,752







	
*  Prior to October 8, 1998, the Funds' disributor was PFS Distributors, Inc.  
On October 8, 1998, CFBDS, Inc. became the funds' distributor.  The portion 
of commissions retained by the CFBDS in 1998 was ____________ for Emerging 
Growth Fund,  ____________ for International Equity Fund, ____________ for 
Growth Fund, ____________ for Growth & Income Fund, ____________ for 
Government Fund and ____________ for Municipal Bond Fund.
    
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 the Distributor 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 the Distributor 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 of the Distributor 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 the contingent deferred sales 
charge paid upon certain redemptions of Class B shares, 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 the Distributor'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 Distributor'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 the Distributor 
until either the applicable Plan is terminated or not renewed. In that event, 
the Distributor's expenses in excess of service fees and distribution fees 
received or accrued through the termination date will be the Distributor'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 Distributor's corresponding expenses for each class 
separately. 

Actual distribution expenditures paid by the Distributor with respect to 
Class B shares 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 be carried forward and may be 
reimbursed by the Fund or its shareholders from payments received through 
contingent deferred sales charges in future years and from payments under the 
Class B Plan so long as such Plan is in effect. For example, if in a fiscal 
year the Distributor incurred distribution expenses under the Class B Plan of 
$1 million, of which $500,000 was recovered in the form of contingent 
deferred sales charges paid by investors and $400,000 was reimbursed in the 
form of payments made by the Fund to the Distributor under the Class B Plan, 
the balance of $100,000, would be subject to recovery in future fiscal years 
from such sources. 

If the Class B Plan was terminated or not continued, the Fund would not be 
contractually obligated and has no liability to pay the Distributor 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 the Distributor to provide the Trustees 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 the Distributor under each Plan 
in that the Distributor 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 $_______ or 0.25%, 
respectively, of the Class A shares' average net assets.  Such expenses were 
paid to reimburse the Distributor for payments made to Service Organizations 
for servicing Fund shareholders and for administering the Class A Plan.  For 
the fiscal year ended October 31, 1998, the Fund's aggregate expenses under 
the Class B Plan were $_______ or 1.00% of the Class B shares' average net 
assets.  Such expenses were paid to reimburse the Distributor for the 
following payments: $_______ for commissions and transaction fees paid to 
broker-dealers and other Service Organizations in respect of sales of Class B 
shares of the Fund and $_______ for fees paid to Service Organizations 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 $_______ or 
0.25%, respectively, of the Class A shares' average net assets.  Such 
expenses were paid to reimburse the Distributor for payments made to Service 
Organizations for servicing Fund shareholders and for administering the 
Class A Plan.  For the fiscal year ended October 31, 1998, the Fund's 
aggregate expenses under the Class B Plan were $_______ or 1.00% of the 
Class B shares' average net assets.  Such expenses were paid to reimburse the 
Distributor for the following payments: $_______ for commissions and 
transaction fees paid to broker-dealers and other Service Organizations in 
respect of sales of Class B shares of the Fund and $_______ for fees paid to 
Service Organizations 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 $_______ or 0.25%, respectively, of 
the Class A shares' average net assets.  Such expenses were paid to reimburse 
the Distributor for payments made to Service Organizations for servicing Fund 
shareholders and for administering the Class A Plan.  For the fiscal year 
ended October  31, 1998, the Fund's aggregate expenses under the Class B Plan 
were $_______ or 1.00% of the Class B shares' average net assets.  Such 
expenses were paid to reimburse the Distributor for the following payments: 
$_______ for commissions and transaction fees paid to broker-dealers and 
other Service Organizations in respect of sales of Class B shares of the Fund 
and $_______ for fees paid to Service Organizations 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 $_______ or 0.25%, 
respectively, of the Class A shares' average net assets.  Such expenses were 
paid to reimburse the Distributor for payments made to Service Organizations 
for servicing Fund shareholders and for administering the Class A Plan.  For 
the fiscal year ended October 31, 1998, the Fund's aggregate expenses under 
the Class B Plan were $_______ or 1.00% of the Class B shares' average net 
assets.  Such expenses were paid to reimburse the Distributor for the 
following payments: $_______ for commissions and transaction fees paid to 
broker-dealers and other Service Organizations in respect of sales of Class B 
shares of the Fund and $_______ for fees paid to Service Organizations 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 $_______ or 0.25%, 
respectively, of the Class A shares' average net assets.  Such expenses were 
paid to reimburse the Distributor for payments made to Service Organizations 
for servicing Fund shareholders and for administering the Class A Plan.  For 
the fiscal year ended October 31, 1998, the Fund's aggregate expenses under 
the Class B Plan were $_______ or 1.00% of the Class B shares' average net 
assets.  Such expenses were paid to reimburse the Distributor for the 
following payments: $_______ for commissions and transaction fees paid to 
broker-dealers and other Service Organizations in respect of sales of Class B 
shares of the Fund and $_______ for fees paid to Service Organizations 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 $_______ or 0.25%, 
respectively, of the Class A shares' average net assets.  Such expenses were 
paid to reimburse the Distributor for payments made to Service Organizations 
for servicing Fund shareholders and for administering the Class A Plan.  For 
the fiscal year ended October 31, 1998, the Fund's aggregate expenses under 
the Class B Plan were $_______ or 1.00% of the Class B shares' average net 
assets.  Such expenses were paid to reimburse the Distributor for the 
following payments: $_______ for commissions and transaction fees paid to 
broker-dealers and other Service Organizations in respect of sales of Class B 
shares of the Fund and $_______ for fees paid to Service Organizations for 
servicing Class B shareholders and administering the Class B Plan.
    
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 which 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.

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, the amount of commissions paid to brokers selected 
primarily on the basis of research services provided to the manager and the 
value of these specific transactions.


Emergin
g 
Growth

Interna
tional 
Equity

Growth

Growth & 
Income

Governm
ent

Municip
al Bond

1998






Total Brokerage 
Commissions






Commissions for 
Research Services






Value of Research 
Transactions













1997






Total Brokerage 
Commissions
$185,24
2
$115,01
6
$10,105,
482
$2,428,0
87
$140,19
0
 - 
Commissions for 
Research Services
77,926
 - 
3,257,86
8
759,080

 - 
Value of Research 
Transactions
90,303,
044
 - 
1,471,81
7,568
612,451,
022
 - 
 - 







1996






Total Brokerage 
Commissions
$99,218
$94,895
$10,114,
647
$2,273,7
25
$160,18
1
 - 
Commissions for 
Research Services
73,884
 - 
3,194,44
2
896,669
 - 
 - 
Value of Research 
Transactions
13,016,
975
 - 
2,657,95
2,353
821,323,
593
 - 
 - 

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 include Salomon Smith Barney Inc.  ("Smith Barney") 
and, prior to October 8, 1998, 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 commissions to these brokers during the periods 
shown:

Commissions Paid:
   
						Salomon
				Robinson	Smith		
Fiscal 1998 Commissions		Humphrey	Barney		
				
Emerging Growth			
International Equity			
Growth				
Growth & Income			
Government				
Municipal Bond			


Fiscal 1998 Percentage				
				
Emerging Growth			
International Equity			
Growth				
Growth & Income			
Government				
Municipal Bond			
				
				
Valuation of transactions with				
affiliates to total transactions				
				
Emerging Growth			
International Equity			
Growth				
Growth & Income			
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			-		-		-		--
				
				
Valuation of transactions with				
affiliates to total transactions				
				
Emerging Growth			-		-		-		--
International Equity			-		-		1.43%		--
Growth				0%		0.04%		0%		0.28%
Growth & Income			-		-		0%		--
Government				-		2.34%		-		--
Municipal Bond			-		-		-		--
				
				
Fiscal 1996 Commissions				
				
Emerging Growth			-		$   1,835		
International Equity			-		--		
Growth				$7,200	 	 240,982		
Growth & Income			  2,400		   92,761		
Government				--	  	   28,322		
Municipal Bond			-		--		

						Salomon
				Robinson	Smith
Fiscal 1996 Percentages		Humphrey	Barney

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

							Salomon
  Value of transactions with		Robinson	Smith
affiliates to total transactions		Humphrey	Barney

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

    
DETERMINATION OF NET ASSET VALUE
   
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 Net Asset Valuation
    
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 Net Asset Valuation

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 Net Asset Valuation
    
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.

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.
   
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,
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.

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%.

PFS Investments 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.
	
oConcert Peachtree Growth Fund 

o	Concert Social Awareness Fund 

o	Smith Barney Appreciation Fund Inc. 

o Smith Barney Concert Allocation Series Inc.-Balanced Portfolio 

o Smith Barney Concert Allocation Series Inc.-Conservative Portfolio 

o Smith Barney Concert Allocation Series Inc.- Growth Portfolio 

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

o Smith Barney Concert Allocation Series Inc.-Income Portfolio 

o Smith Barney Investment Grade Bond Fund 

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

o **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. A capital gain or loss for tax 
purposes will be realized upon the exchange, depending upon the cost or other 
basis of shares redeemed. 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 saving 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 their 
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. Any taxable gain or loss will be recognized by the shareholder 
upon redemption of shares.

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.
    
DIVIDENDS, 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 during the year over its total 
losses on the sale of securities, 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 so qualifying, a Fund will not be subject to 
federal income taxes on amounts paid by it as dividends and distributions to 
shareholders.  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.  Each Fund expects to be treated as a 
separate entity for purposes of determining federal tax treatment.
   
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 Municipal Bond interest income.  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 exempt-interest obligations.  In addition, 
the Fund must distribute at least (i) 90% of the excess of its 
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 gains over any 
net long-term capital losses) 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-exempt 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.

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.  "Substantial user" is 
defined under U.S. Treasury Regulations to include a non-exempt person who 
regularly uses in his trade or business a part of any facilities financed 
with the tax-exempt obligations and whose gross revenues derived from such 
facilities exceed five percent of the total revenues derived from the 
facilities by all users, or who occupies more than five percent of the usable 
area of the facilities or for whom the facilities or a part thereof were 
specifically constructed, reconstructed or acquired.  Examples of "related 
persons" include certain related natural persons, affiliated corporations, a 
partnership and its partners and an S corporation and its shareholders.

Interest on indebtedness incurred by a shareholder to purchase or carry 
shares of Municipal Bond Fund is not deductible for federal income tax 
purposes if the Fund distributes exempt-interest dividends during the 
shareholder's taxable year.  If a shareholder receives an exempt-interest 
dividend with respect to any shares and such shares are held for six months 
or less, any capital loss on the sale or exchange of the shares will be 
disallowed to the extent of the amount of such exempt-interest dividend.

If, during any taxable year, Municipal Bond Fund realizes net capital gains 
(the excess of net long-term capital gains over net short-term capital 
losses) 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 
gains 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 gains".  As pointed out 
above, the Fund will be subject to tax for any year on its undistributed 
investment company taxable income and net capital gains.

Each Fund is subject to a 4% excise tax to the extent it fails to distribute 
to its shareholders during any calendar year at least (1) 98% of its ordinary 
taxable income for the twelve months ended December 31, plus (2) 98% of its 
capital gain net income for the twelve months ended October 31 of such year.  
Each Fund intends to distribute sufficient amounts to avoid liability for the 
excise tax.
    
The Tax Reform Act added a provision that, for years beginning after 
December 31, 1989, 75% of the excess of a corporation's adjusted current 
earnings (generally, earning and profits, with adjustments) over its other 
alternative minimum taxable income is an item of tax preference for 
corporations.  All tax-exempt interest is included in the definition of 
"adjusted current earnings" so a portion of such interest is included in 
computing the alternative minimum tax on corporations.  For shareholders that 
are financial institutions, the Tax Reform Act eliminates their ability to 
deduct interest payments to the extent allocated on a pro rata basis to the 
purchase of Fund shares.
   
Dividends from net investment income and distributions from any short-term 
capital gains 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 qualify for the 70% dividends received deduction for corporations.  To 
qualify for the dividends received deduction, a corporate shareholder must 
hold the shares on which the dividend is paid for more than 45 days.
    
Dividends and distributions declared payable to shareholders of record after 
September 30 of any year and paid before February 1 of the following year are 
considered taxable income to shareholders on December 31 even though paid in 
the next year.

A capital gain dividend received after the purchase of the shares of any one 
of the Funds in the Trust reduces the net asset value of the shares by the 
amount of the distribution and will be subject to income taxes.  
Distributions from long-term capital gains are taxable to shareholders as 
long-term capital gains, regardless of how long the shareholder has held Fund 
shares.  Such dividends and distributions from short-term capital gains are 
not eligible for the dividends received deduction referred to above.  Any 
loss on the sale of Fund shares held for less than six months is treated as a 
long-term capital loss to the extent of any long-term capital gain 
distribution paid on such shares, subject to any exception that may be 
provided by IRS regulations for losses incurred under certain systematic 
withdrawal plans.  All dividends and distributions are taxable to the 
shareholder 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 each Fund are sold or exchanged within 90 days of acquisition, 
and shares of the same or a related mutual fund are acquired, to the extent 
the sales charge 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.

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.  The Trust 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 Trust shares with 
respect to any shareholder who is not exempt from withholding and who fails 
to furnish the Trust 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 Emerging Growth Fund, International Equity 
Fund, Growth Fund, Growth and Income Fund, Government Fund and Municipal Bond 
Fund may write, purchase or sell. Such options and contracts are 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 are not classified as Section 1256 contracts and are 
not subject to the marked-to-market rule or to 60/40 gain or loss treatment.  
Any gains or losses recognized by Government Fund 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 Government 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 the Emerging Growth Fund's, the International Equity Fund's, the 
Growth Fund's, the Growth and Income Fund's, the Government Fund's and 
Municipal Bond Fund's 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.
   
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.  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 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 this 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.  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
	10/31/98					
ii)	total return for five year period ended
	10/31/98					     --		     --		     
--
iii)	total return since inception
	(based on inception date of 2/21/95)		     --
iv)	total return since inception
	(based on inception date of 8/08/96)  				     --	
	     --

International Equity Fund

i)	total return for one year period ended
	10/31/98					  
ii)	total return for five year period ended
	10/31/98					     --		     --		     
--
iii)	total return since inception
	(based on inception date of 3/17/95)		     --		  
iv)	total return since inception
	(based on inception date of 8/08/96)		  

Growth Fund

i)	total return for one year period ended
	10/31/98				
ii)	total return for five year period ended
	10/31/98							     --		     
--
iii)	Total return for the ten year period ended 
	10/31/98					  
iv)	total return since inception
	(based on inception date of 4/14/87)		 
v)	total return since inception
	(based on inception date of 5/03/94)		 

							Class 1		Class A	
	Class B
							Shares		Shares	
	Shares

Growth and Income Fund

i)	total return for one year period ended
	10/31/98					
ii)	total return for five year period ended
	10/31/98							 
ii)	total return since inception
	(based on inception date of 4/14/87)		  
iv)	total return since inception
	(based on inception date of 5/03/94)		   

Government Fund

i)	total return for one year period ended
	10/31/98	      			
ii)	total return for five year period ended
	10/31/98	     						     --		     
--
iii)	total return since inception
	(based on inception date of 4/14/87)		 
iv)	total return since inception
	(based on inception date of 5/03/94)		   
v)	yield	  					  

Municipal Bond Fund

i)	total return for one year period ended
	10/31/98					  
ii)	total return for five year period ended
	10/31/98							     --		     
--
iii)	total return since inception
	(based on inception date of 7/13/88)		 	
iv)	total return since inception
	(based on inception date of 8/08/96)		   
v)	yield						     
vi)	tax equivalent yield				   
    	
	* 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 the maximum annual contribution to an 
IRA is the lesser of 100% of compensation or $2,000.  An IRA may also be 
established for a spouse who has no compensation (or who elects to be treated 
as having no compensation), and the limitation on the maximum annual 
contributions to the two IRAs is the lesser of 100% of compensation or 
$2,250.

Under the Tax Reform Act of 1986, whether contributions to an IRA are 
deductible for federal income tax purposes depends on whether an individual 
(or his/her spouse) is a participant in an employer-sponsored plan and on the 
adjusted gross income of the individual.

In the case of an individual who is a participant in an employer-sponsored 
plan, no deduction is available for IRA contributions if his adjusted gross 
income reaches certain levels ($35,000 for a single individual, $50,000 for 
married individuals filing jointly and $10,000 for married individuals filing 
separately) and the deduction is phased out ratably if his adjusted gross 
income falls within certain ranges ($25,000-$35,000 for a single individual, 
$40,000-$50,000 for married individuals filing jointly and $0-$10,000 for 
married individuals filing separately).  IRA contributions, up to the annual 
limit, remain fully deductible for all single individuals with less than 
$25,000 of annual adjusted gross income and all married individuals with less 
than $40,000 of annual adjusted gross income.  Individuals who are 
disqualified from making deductible IRA contributions can make non-deductible 
contributions to their IRAs, subject to the same limitation on maximum annual 
contribution discussed 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, 1997 is 
incorporated herein by reference in its entirety.
    



APPENDIX A


RATINGS OF MUNICIPAL BONDS, NOTES AND COMMERCIAL PAPER

Description of Four Highest Municipal Bond Ratings

Moody's Investors Service, Inc.  ("Moody's"):

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 edge." Interest payments are protected by a large or by an 
exceptionally stable margin and principal is secure.  While the various 
protective elements are likely to change, such changes as can be visualized 
are most unlikely to impair the fundamentally strong position of such issues.

Aa - Bonds 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 which 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 which suggest a susceptibility to impairment some time in the 
future.

Baa - Bonds that are rated Baa are considered 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.

Standard & Poor's Ratings Group ("S&P"):

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

AA - Debt rated AA has a very strong capacity to pay interest and repay 
principal and differs from the higher-rated issues only in small degree.

A - Debt rated A has a strong capacity to pay interest and repay principal 
although it is somewhat more susceptible to the adverse effects of changes in 
circumstances and economic conditions than debt in higher-rated categories.

BBB - Debt rated BBB is regarded as having 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.

Description of State and Local Government Municipal Note Ratings

Notes are assigned distinct rating symbols in recognition of the differences 
between short-term and long-term credit risk.  Factors affecting the 
liquidity of the borrower and short-term cyclical elements are critical in 
short-term ratings, while other factors of major importance in bond risk-- 
long-term secular trends for example-- may be less important over the short 
run.

Moody's Investors Service, Inc.:

Moody's ratings for state and municipal notes and other short-term loans are 
designated Moody's Investment Grade ("MIG").  A short-term rating may also 
be assigned on an issue having a demand feature, a variable-rate demand 
obligation.  Such ratings will be designated as "VMIG."  Short-term ratings 
on issues with demand features are differentiated by the use of the VMIG 
symbol to reflect such characteristics as payment upon periodic demand rather 
than fixed maturity dates and payment relying on external liquidity.  
Additionally, investors should be alert to the fact that the source of 
payment may be limited to the external liquidity with no or limited legal 
recourse to the issuer in the event the demand is not met.  Symbols used are 
as follows:

MIG/VMIG 1 - Loans bearing this designation are of the best quality, enjoying 
strong protection from established cash flows of funds, superior liquidity 
support or demonstrated broad-based access to the market for refinancing.

MIG 2/VMIG 2 - Loans bearing this designation are of high quality, with 
margins of protection ample although not so large as in the preceding group.

Standard & Poor's Ratings Group:

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

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

Description of Highest Commercial Paper Ratings

Moody's Investors Service, Inc.:

Prime-1 - Issuers (or related supporting institutions) rated Prime-1 have a 
superior capacity for repayment of short-term promissory obligations.  Prime-
1 repayment capacity 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 charges and high internal 
cash generation; and well-established access to a range of financial markets 
and assured sources of alternate liquidity.

Standard & Poor's Ratings Group:

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




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.)

		 a.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.)

		 a.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.)

		 a.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.)

		 a.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.)

		 a.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.)

		 a.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.)

		 a.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.)

		 a.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.)

		 a.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.)


		 a.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.)

		 a.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.)

		 a.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.)

		 a.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.)

		 a.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.)

		 a.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.)

a.17 Certificate of Amendment of the Agreement 
and Declaration of Trust dated December 30, 
1997 filed herewith.

a.18 Form of Certificate of Designation of Mid 
Cap
Fund dated January 15, 1999 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 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.)

		 c.2		Specimen copy of 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.)

		 c.3		Specimen copy of 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		Form of Underwriting Agreement for Common 
Sense Trust(Incorporated herein by reference 
to Form N-1A of Registrant's Post-Effective 
Amendment No. 17, filed on March 21, 1996.).

		 e.2		Form of Selling Agreement with PFS 
Investments, Inc. (Incorporated herein by 
reference to Form N-1A of Registrant's 
Post-Effective Amendment No. 17, filed on 
March 21, 1996.).

		 f.	Not applicable.

		 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).
	
		h.3		Form of Administrative/Management Agreement
 filed herewith.

		h.4		Individual Retirement Account Application. 
(Incorporated by reference to Exhibit 14.1 
with Post-Effective Amendment No. 9, filed 
November 10, 1993.)

		h.5		403(b)(7) Custodial Account Application. 
(Incorporated by reference to Exhibit 14.2 
with Post-Effective Amendment No. 9, filed 
November 10, 1993.)

		h.6		Simplified Employee Pension Account 
Application. (Incorporated by reference to 
Exhibit 14.3 filed with Post-Effective 
Amendment No. 9, filed November 10, 1993.)

i. Not applicable.

		j. Consent of Independent Auditors 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 Class A Distribution Plan 
(Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 17, filed on March 21, 1996.).

		m.2		Form of Class B Distribution 
Plan(Incorporated herein by reference to 
Form N-1A of Registrant's Post-Effective 
Amendment No. 17, filed on March 21, 1996.).

		m.3		Form of Servicing Agreement for Class A 
shares of Common Sense Trust (Incorporated 
herein by reference to Form N-1A of 
Registrant's Post-Effective Amendment No. 17, 
filed on March 21, 1996.).

		m.4		Form of Servicing Agreement for Class B 
shares of Common Sense Trust(Incorporated 
herein by reference to Form N-1A of 
Registrant's Post-Effective Amendment No. 17, 
filed on March 21, 1996.).

		m.5 Form of Distribution Agreement filed 
herewith.

		n.		Financial Data Schedules.+

		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.)

+  To be filed by further amendment.

Item 25.  Persons Controlled by or under Common Control with 
Registrant.

	None

Item 24.  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 - Mutual Management Corp. ("MMC)
(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 28  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.

	(a) PFS  Distributors ("PFS") currently acts as distributor
for: Concert Investment Series; Concert Social 
Awareness Fund; Concert Peachtree Growth Fund; 
Smith Barney Appreciation Fund, Inc.
Smith Barney Concert Allocation Series Inc;
Smith  Barney Money Funds, Inc. - Cash Portfolio;
Smith Barney Exchange Reserve Fund;
and Smith Barney Investment Grade Bond Fund.

On  May 8, 1995, PFS changed its name from Common Sense
Distributors to PFS Distributors, its current name. The
information  required by this Item 29 with  respect  to
each   director,  officer  and  partner   of   PFS   is
incorporated  by reference to Schedule A  of  FORM  BD,
filed by PFS pursuant to the Securities Exchange Act of
1934 (SEC File No. 8-37352).


	(c)  Commissions and other compensation received by each 
principal underwriter who is not an affiliated person of the 
Registrant or an affiliated person of such an affiliated person, 
directly or indirectly, from the Registrant during the Registrant's 
last fiscal year.

	Inapplicable.

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 Mutual Management Corp., 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 the Adviser, 
will 
be maintained at its offices, located at Mutual Management Corp., 
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 PFS Distributors, Inc., 3120 Breckinridge Blvd., 
Bldg. 1200, Duluth, Georgia 30199-0001.



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, has duly caused this Post-
Effective Amendment No. 21 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 15th day of December, 
1998. 
 

						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	December 15, 1998
Heath B. McLendon		(Chief Executive 
Officer)

/s/ Lewis E. Daidone	Senior Vice President	December 15, 1998
Lewis E. Daidone		and Treasurer (Chief
Financial and 
Accounting Officer)

/s/ Donald M. Carlton*		Trustee		December 15, 1998
Donald M. Carlton		

/s/ A. Benton Cocanougher*	Trustee		December 15, 1998
A. Benton Cocanougher

/s/ Stephen R. Gross*		Trustee		December 15, 1998
Stephen R. Gross

/s/ Alan G. Merten*		Trustee		December 15, 1998
Alan G. Merten

/s/ R. Richardson Pettit*	Trustee		December 15, 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.17 		Certificate of Amendment of the Agreement and 
Declaration
Of Trust dated December 30, 1997.

a.18		Form of Certificate of Designation for Mid Cap Fund.

h.3		Form of Administrative/Management Agreement.

j.		Consent of Independent Auditors.

m.5		Form of Distribution Agreement.
	
n. Financial Data Schedules.+

+To be filed by further amendment.