CONCERT INVESTMENT SERIES, 485BPOS, 1999-08-18

CONCERT INVESTMENT SERIES
485BPOS, 1999-08-18

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As filed with the Securities and Exchange Commission on August 18,
1999

Registration Nos. 33-11716
811-5018

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

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

Post-Effective Amendment No. 24

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940

Amendment No. 24

CONCERT INVESTMENT SERIES (Formerly Common Sense Trust)
(Exact Name of Registrant as Specified in Declaration of Trust)

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

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

CHRISTINA T. SYDOR, ESQ.
Secretary

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

Approximate Date of Proposed Public Offering: Continuous

It is proposed that this filing will become effective:

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

If appropriate, check the following box:

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

CONCERT INVESTMENT SERIES
SELECT PORTFOLIOS

EMERGING GROWTH PORTFOLIO
MID CAP PORTFOLIO
GROWTH PORTFOLIO
GROWTH AND INCOME PORTFOLIO
GOVERNMENT PORTFOLIO

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement contains the following pages and
Documents:

Front Cover

Contents Page

Part A - Prospectus

Part B - Statement of Additional Information

Part C - Other Information

Signature Page

Exhibits

<PAGE>

Part A
<PAGE>

Emerging Growth Portfolio

Mid Cap Portfolio

Growth Portfolio

Growth and Income Portfolio

Government Portfolio

Concert Investment Series

Prospectus

AUGUST 18, 1999

SELECT PORTFOLIOS

Shares of each portfolio are offered to insurance company separate accounts
which fund certain variable annuity and variable life insurance contracts and to
qualified retirement and pension plans. This prospectus should be read together
with the prospectus for the contracts.

The Securities and Exchange Commission has not approved or disapproved these
Securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.

[SB] Smith Barney
[MF] Mutual Funds

<PAGE>

Contents
<TABLE>
<S> <C>
Things you should know before investing
- --------------------------------------------
Portfolio goals, strategies and risks:
- --------------------------------------------
Select Emerging Growth Portfolio 2
- --------------------------------------------
Select Mid Cap Portfolio 4
- --------------------------------------------
Select Growth Portfolio 6
- --------------------------------------------
Select Growth and Income Portfolio 8
- --------------------------------------------
Select Government Portfolio 10
- --------------------------------------------

More on the Portfolios' Investments 12
- --------------------------------------------

Management 13
- --------------------------------------------

Share Transactions 14
- --------------------------------------------

Distributions, Dividends and Taxes 15
- --------------------------------------------

Share Price 16
- --------------------------------------------
</TABLE>
About the manager

The funds' investment manager is SSBC Fund Management Inc., an affiliate of
Salomon Smith Barney Inc. The manager selects the funds' investments
and oversees their operations. The manager and Salomon Smith Barney are subsid-
iaries of Citigroup Inc. Citigroup businesses produce a broad range of finan-
cial services.

Concert Investment Series--Select Portfolios
<PAGE>

Select Emerging Growth Portfolio
Investment objective

The fund seeks capital appreciation.

Key investments

The fund invests in common stocks of small and medium sized companies consid-
ered by the manager to be "emerging growth" companies. These are primarily do-
mestic companies, in the early stages of their life cycles, characterized by
relatively high earnings growth. The manager selects investments from among
companies that have market capitalizations in the lowest 25% of all publicly
traded U.S. companies.

How the manager selects the fund's investments

The manager emphasizes individual security selection while spreading invest-
ments among many industries and sectors. The manager uses quantitative analysis
to identify individual companies that it believes offer exceptionally high
prospects for growth. The manager purchases these companies' stocks when it be-
lieves they are reasonably priced. This style of stock selection is commonly
known as "growth at a reasonable price." Quantitative methods are also used to
control portfolio risk related to broad macroeconomic factors, such as interest
rate changes. The manager selects investments for their potential capital ap-
preciation; any ordinary income is incidental. In selecting individual compa-
nies for investment, the manager looks for:

. Above average earnings growth

. A pattern of reported earnings that exceed market expectations

. Rising earnings estimates over the next several quarters

. High relative return on invested capital

. Reasonable price/earnings multiple

Principal risks of investing in the fund

Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if any of the following occurs:

. Stock prices decline generally

. Emerging growth companies fall out of favor with investors

. The manager's judgment about the attractiveness, value or potential apprecia-
tion of a particular stock proves to be incorrect

. A particular product or service developed by an emerging growth company is
unsuccessful, the company does not meet earnings expectations or other events
depress the value of the company's stock

Compared to large, established companies, emerging growth companies are more
likely to have limited product lines, limited capital resources and less expe-
rienced management. In addition, securities of emerging growth companies are
more likely to:

. Experience sharper swings in market value

. Be harder to sell at times and prices the manager believes appropriate

. Offer greater potential for gains and losses

Who may want to invest in the fund

The fund may be an appropriate investment if you:

. Are seeking to participate in the long term growth potential of emerging
growth companies

. Currently have exposure to fixed income investments and less volatile equity
investments and wish to broaden your investment portfolio

. Are willing to accept the risks of investing in the stock market and the spe-
cial risks of investing in emerging growth companies with limited track rec-
ords

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Select Emerging Growth Portfolio, continued
Total return and performance
- --------------------------------------------------------------------------------

The fund's total return will vary from year to year, and its performance will
vary compared with that of unmanaged indices. Although variations in the fund's
performance are an indication of the risks of investing in the fund, past per-
formance does not necessarily indicate how the fund will perform in the future.

Fees and expenses
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
------------------------------------------------------------
<S> <C>
Maximum sales charge on purchases (as a % of offering
price) None
------------------------------------------------------------
Maximum deferred sales charge on redemptions
(as a % of the lower of net asset value at purchase or
redemption) None
------------------------------------------------------------
Annual fund operating expenses (paid by the portfolio as
a % of net assets)
------------------------------------------------------------
Management fee 0.75%
------------------------------------------------------------
Distribution and service (12b-1) fees None
------------------------------------------------------------
Other expenses 0.25
------------------------------------------------------------
Total annual fund operating expenses 1.00%
------------------------------------------------------------
</TABLE>
The table sets
forth the fees
and expenses
you will pay if
you invest in
shares of the
portfolio.

Example
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Number
of
years
you
own
your
shares 1 year* 3 years*
----------------------
<S> <C> <C>
$102 $318
----------------------
</TABLE>
The example
helps you com-
pare the costs
of investing in
the portfolio
with other mu-
tual funds.
Your actual
costs may be
higher or low-
er.
*The example assumes:
.You invest $10,000 for the period shown

.You redeem all of your shares at the end of the period
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Select Mid Cap Portfolio
Investment objective

The fund seeks long-term growth of capital.

Key investments

The fund invests primarily in equity securities of medium sized companies,
which are companies with market capitalizations within the range of
capitalizations of the companies included in the Standard & Poors MidCap 400
Index at the time of investment. Equity securities include exchange traded and
over-the-counter common stocks, preferred stocks, debt securities convertible
into 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 or larger than those of medium
sized companies (i.e., companies considered to be small or large capitalization
companies), and up to 25% of its assets in securities of foreign issuers both
directly and through depositary receipts for those securities.

How the manager selects the fund's investments

The manager focuses on medium capitalization companies that exhibit either at-
tractive growth characteristics or attractive value characteristics. The man-
ager selects individual "growth" stocks for investment in two ways: by identi-
fying those companies which exhibit the most favorable growth prospects and by
identifying those companies which have favorable valuations relative to their
growth characteristics. This strategy is commonly known as "growth at a reason-
able price" and offers investors style diversification within a single mutual
fund. In selecting companies for investment, the manager looks for:

. Growth characteristics, including high historic growth rates and high rela-
tive growth compared with companies in the same industry or sector

. Value characteristics, including low price/earnings ratios and other statis-
tics indicating that a security is undervalued

. Increasing profits and sales

. Competitive advantages that could be more fully exploited by a company

. Skilled management that is committed to long-term growth

. Potential for a long-term investment by the fund

The manager uses fundamental research to find stocks with strong growth poten-
tial and also uses quantitative analysis to determine whether these stocks are
relatively undervalued or overvalued compared to stocks with similar fundamen-
tal characteristics. The manager's quantitative valuations determine whether
and when the fund will purchase and sell stocks that it identifies through fun-
damental research.

Principal risks of investing in the fund

Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, because of the following:

. U.S. stock markets go down, or perform poorly relative to other types of in-
vestments

. An adverse company specific event, such as an unfavorable earnings report,
negatively affects the stock price of a company in which the fund invests

. Medium capitalization stocks fall out of favor with investors

. The manager's judgment about the attractiveness, growth prospects, value or
potential appreciation of a particular stock proves to be incorrect

Because the fund invests primarily in medium capitalization companies, an in-
vestment in the fund may be more volatile and more susceptible to loss than an
investment in a fund which invests primarily in large capitalization companies.
Medium capitalization companies may have more limited product lines, markets
and financial resources than large capitalization companies. They may have
shorter operating histories and more erratic businesses, although they gener-
ally have more established businesses than small capitalization companies. The
prices of medium capitalization company stocks tend to be more volatile than
the prices of large capitalization company stocks.

Investments in securities of foreign issuers involve greater risks than those
of domestic issuers, such risks may include:

. Foreign markets may have less volume, liquidity and government supervision

. Imposition of exchange controls or other restrictions on investments and ad-
verse government actions

. Changes in foreign currency rates relative to the U.S. dollar will affect the
U.S. dollar value of the fund's assets

Who may want to invest in the fund

The fund may be an appropriate investment if you:

. Are seeking to participate in the long term growth potential of the U.S.
stock market

. Are looking for an investment with potentially greater return but higher risk
than a fund that invests primarily in large cap companies

. Are willing to accept the risks of investing in the stock market

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Select Mid Cap Portfolio, continued
Total return and performance
- --------------------------------------------------------------------------------

The fund's total return will vary
from year to year, and its per-
formance will vary compared with
that of unmanaged 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
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
------------------------------------------------------------
<S> <C>
Maximum sales charge on purchases (as a % of offering
price) None
------------------------------------------------------------
Maximum deferred sales charge on redemptions
(as a % of the lower of net asset value at purchase or
redemption) None
------------------------------------------------------------
Annual fund operating expenses (paid by the portfolio as
a % of net assets)
------------------------------------------------------------
Management fee 0.75%
------------------------------------------------------------
Distribution and service (12b-1) fees None
------------------------------------------------------------
Other expenses 0.20
------------------------------------------------------------
Total annual fund operating expenses 0.95%
------------------------------------------------------------
</TABLE>
The table sets
forth the fees
and expenses
you will pay if
you invest in
shares of the
portfolio.

Example
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Number
of
years
you
own
your
shares 1 year* 3 years*
----------------------
<S> <C> <C>
$97 $303
----------------------
</TABLE>
The example
helps you com-
pare the costs
of investing in
the portfolio
with other mu-
tual funds.
Your actual
costs may be
higher or low-
er.
*The example assumes:
.You invest $10,000 for the period shown

Concert Investment Series--Select Portfolios Prospectus

5
<PAGE>

Select Growth Portfolio
Investment objective

The fund seeks capital appreciation.

Key investments

The fund invests principally in U.S. common stocks and other equity securities,
typically of established companies with large market capitalizations.

How the manager selects the fund's investments

The manager uses a "bottom-up" strategy, primarily focusing on individual secu-
rity selection, with less emphasis on industry and sector allocation. The man-
ager selects investments for their capital appreciation; any ordinary income is
incidental. In selecting individual companies for investment, the manager looks
for:

. Growth characteristics, including high historic growth rates and high rela-
tive growth compared with companies in the same industry or sector

. Value characteristics, including low price/earnings ratios and other statis-
tics indicating that a security is undervalued

. Increasing profits and sales

. Competitive advantages that could be more fully exploited by a company

. Skilled management that is committed to long-term growth

. Potential for a long-term investment by the fund

The manager uses fundamental research to find stocks with strong growth poten-
tial, and then uses quantitative analysis to determine whether these stocks are
relatively undervalued or overvalued compared to stocks with similar fun-
damental characteristics. The manager's quantitative valuations determine
whether and when the fund will purchase or sell the stocks that it identifies
through fundamental research. This style of stock selection is commonly known
as "growth at a reasonable price."

Principal risks of investing in the fund

Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if any of the following occurs:

. Stock prices decline generally

. Large capitalization companies fall out of favor with investors

. The manager's judgment about the attractiveness, value or potential apprecia-
tion of a particular stock proves to be incorrect

. The company does not meet earnings expectations or other events depress the
value of the company's stock

The fund may engage in active and frequent trading, resulting in high portfolio
turnover. Frequent trading also increases transaction costs, which could de-
tract from the fund's performance.

Who may want to invest in the fund

The fund may be an appropriate investment if you:

. Are an aggressive investor seeking to participate in the long term growth po-
tential of the stock market

. Are willing to accept the risks of investing in common stocks

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Select Growth Portfolio, continued
Total return and performance
- --------------------------------------------------------------------------------

Fees and expenses
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
------------------------------------------------------------
<S> <C>
Maximum sales charge on purchases (as a % of offering
price) None
------------------------------------------------------------
Maximum deferred sales charge on redemptions
(as a % of the lower of net asset value at purchase or
redemption) None
------------------------------------------------------------
Annual fund operating expenses (paid by the portfolio as
a % of net assets)
------------------------------------------------------------
Management fee 0.75%
------------------------------------------------------------
Distribution and service (12b-1) fees None
------------------------------------------------------------
Other expenses 0.20%
------------------------------------------------------------
Total annual fund operating expenses 0.95%
------------------------------------------------------------
</TABLE>
The table sets
forth the fees
and expenses
you will pay if
you invest in
shares of the
portfolio.

Example
- --------------------------------------------------------------------------------

Concert Investment Series--Select Portfolios Prospectus

7
<PAGE>

Select Growth and Income Portfolio
Investment objective

The fund seeks reasonable growth and income.

Key investments

The fund invests in a portfolio consisting principally of equity securities,
including convertible securities, that provide dividend or interest income.
However, it may also invest in non-income producing investments for potential
appreciation in value. The fund emphasizes U.S. stocks with large market capi-
talizations. The fund's convertible securities may be of any credit quality and
may include below investment grade securities (commonly known as "junk bonds").

How the manager selects the fund's investments

The manager emphasizes individual security selection while spreading the fund's
investments among industries and sectors. The manager uses a two-step selection
process commonly known as "growth at a reasonable price."

First, the manager uses quantitative analysis to find stocks with strong growth
potential, and to determine whether these securities are relatively undervalued
or overvalued. Quantitative factors include:

. Growth characteristics, including high historic growth rates and high rela-
tive growth compared with companies in the same industry or sector

. Value characteristics, including low price/earnings ratios and other statis-
tics indicating that a security is undervalued

Then, the manager uses fundamental qualitative research to verify these equity
securities' growth potential. Qualitative factors include:

. Management with established track records, or favorable changes in current
management

. Improvement in a company's competitive position

. Positive changes in corporate strategy

These quantitative and qualitative factors, as well as expected dividends and
income, influence the fund's purchases and sales of securities.

Principal risks of investing in the fund

Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if any of the following occurs:

. Stock prices decline generally

. Large capitalization companies fall out of favor with investors

. Companies in which the fund invests suffer unexpected losses or lower than
expected earnings

. The manager's judgment about the attractiveness, value or income potential of
a particular security proves to be incorrect

. The issuer of a debt security owned by the fund defaults on its obligation to
pay principal and/or interest or has its credit rating downgraded. This risk
is higher for below investment grade securities. These securities are consid-
ered speculative because they have a higher risk of issuer default, are sub-
ject to greater price volatility and may be illiquid

The fund may engage in active and frequent trading, resulting in high portfolio
turnover. Frequent trading also increases transaction costs, which could de-
tract from the fund's performance.

Who may want to invest in the fund

The fund may be an appropriate investment if you:

. Are seeking reasonable long term growth and current income

. Are willing to accept the risks of investing in the stock market

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Select Growth and Income Portfolio, continued
Total return and performance
- --------------------------------------------------------------------------------

Fees and expenses
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
------------------------------------------------------------
<S> <C>
Maximum sales charge on purchases (as a % of offering
price) None
------------------------------------------------------------
Maximum deferred sales charge on redemptions
(as a % of the lower of net asset value at purchase or
redemption) None
------------------------------------------------------------
Annual fund operating expenses (paid by the portfolio as
a % of net assets)
------------------------------------------------------------
Management fee 0.75%
------------------------------------------------------------
Distribution and service (12b-1) fees None
------------------------------------------------------------
Other expenses 0.20%
------------------------------------------------------------
Total annual fund operating expenses 0.95%
------------------------------------------------------------
</TABLE>
The table sets
forth the fees
and expenses
you will pay if
you invest in
shares of the
portfolio.

Example
- --------------------------------------------------------------------------------

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Select Government Portfolio
Investment objective

The fund seeks high current return consistent with preservation of capital.

Key investments

The fund invests primarily in government debt issued or guaranteed by the U.S.
government, its agencies or instrumentalities. These securities include U.S.
Treasury securities, mortgage-related and asset-backed securities. Some govern-
ment guaranteed mortgage-related securities are backed by the full faith and
credit of the U.S. Treasury, some are supported by the right of the issuer to
borrow from the U.S. government and some are backed only by the credit of the
issuer itself.

In order to hedge against changes in interest rates, the fund also may purchase
or sell options on U.S. government securities and enter into interest rate
futures contracts and options on these contracts.

How the manager selects the fund's investments

The manager focuses on identifying undervalued sectors and securities. Specifi-
cally, the manager:

. Determines sector and maturity weightings based on intermediate and long-term
assessments of the economic environment and relative value factors based on
interest rate outlook

. Uses research to uncover inefficient sectors of the government and mortgage
markets and adjusts portfolio positions to take advantage of new information

. Measures the potential impact of supply/demand imbalances, yield curve shifts
and changing prepayment patterns to identify individual securities that bal-
ance potential return and risk

Principal risks of investing in the fund

Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if any of the following occurs:

. Interest rates increase, causing the prices of fixed income securities to de-
cline and reducing the value of the fund's portfolio

. Prepayment risk (or call risk). As interest rates decline, the issuers of se-
curities held by the fund may prepay principal earlier than scheduled, forc-
ing the fund to reinvest in lower yielding securities

. Extension risk. As interest rates increase, slower than expected principal
payments may extend the average life of fixed income securities, locking in
below-market interest rates and reducing the value of these securities

. The manager's judgment about interest rates or the attractiveness, value or
income potential of a particular security proves incorrect

. Changes in interest rates or the value of securities cause the value of op-
tions or futures contracts held by the fund to decline, resulting in dispro-
portionate losses to the fund's portfolio

Who may want to invest in the fund

The fund may be an appropriate investment if you:

. Are seeking income consistent with preservation of capital

. Are willing to accept the interest rate risks and market risks of investing
in government bonds and mortgage-related securities

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Select Government Portfolio, continued
Total return and performance
- --------------------------------------------------------------------------------

Fees and expenses
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
------------------------------------------------------------
<S> <C>
Maximum sales charge on purchases (as a % of offering
price) None
------------------------------------------------------------
Maximum deferred sales charge on redemptions
(as a % of the lower of net asset value at purchase or
redemption) None
------------------------------------------------------------
Annual fund operating expenses (paid by the portfolio as
a % of net assets)
------------------------------------------------------------
Management fee 0.60%
------------------------------------------------------------
Distribution and service (12b-1) fees None
------------------------------------------------------------
Other expenses 0.20%
------------------------------------------------------------
Total annual fund operating expenses 0.80%
------------------------------------------------------------
</TABLE>
The table sets
forth the fees
and expenses
you will pay if
you invest in
shares of the
portfolio.

Example
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Number
of
years
you
own
your
shares 1 year* 3 years*
----------------------
<S> <C> <C>
$82 $255
----------------------
</TABLE>
The example
helps you com-
pare the costs
of investing in
the portfolio
with other mu-
tual funds.
Your actual
costs may be
higher or low-
er.
*The example assumes:
.You invest $10,000 for the period shown

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

More on the Portfolios' Investments

Equity securities

Equity securities include exchange traded and over-the-counter common and pre-
ferred stocks, debt securities convertible into equity securities, and warrants
and rights relating to equity securities.

Securities of foreign issuers
all Portfolios except Government Portfolio

Emerging Growth Fund, Growth Fund and Growth and Income Fund may invest up to
20% of their assets, and Mid Cap Fund up to 25% of its assets, in foreign secu-
rities, including those of issuers in emerging market countries.

Investments in securities of foreign entities and securities denominated in
foreign currencies involve special risks. These include possible political and
economic instability and the possible imposition of exchange controls or other
restrictions on investments. Since each fund may invest in securities denomi-
nated or quoted in currencies other than the U.S. dollar, changes in foreign
currency rates relative to the U.S. dollar will affect the U.S. dollar value of
the fund's assets. Emerging market investments offer the potential for signifi-
cant gains but also involve greater risks than investing in more developed
countries. Political or economic stability, lack of market liquidity and gov-
ernment actions such as currency controls or seizure of private business or
property may be more likely in emerging markets.

Derivative transactions
All Portfolios

The funds may, but need not, use derivative contracts, such as futures and op-
tions on securities, securities indices or currencies; options on these
futures; forward currency contracts; and interest rate or currency swaps for
any of the following purposes:

. To hedge against the economic impact of adverse changes in the market value
of portfolio securities because of changes in stock market prices, currency
exchange rates or interest rates

. As a substitute for buying or selling securities

. To enhance a fund's return

A derivative contract will obligate or entitle a fund to deliver or receive an
asset or cash payment based on the change in value of one or more securities,
currencies or indices. Even a small investment in derivative contracts can have
a big impact on a fund's stock market, currency and interest rate exposure.
Therefore, using derivatives can disproportionately increase losses and reduce
opportunities for gains when stock prices, currency rates or interest rates are
changing. A fund may not fully benefit from or may lose money on derivatives if
changes in their value do not correspond accurately to changes in the value of
the fund's holdings. The other parties to certain derivative contracts present
the same types of default risk as issuers of fixed income securities. Deriva-
tives can also make a fund less liquid and harder to value, especially in de-
clining markets.

Temporary defensive investments
All Portfolios

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

Special restrictions
All Portfolios Except Mid Cap Portfolio

Each fund, except Mid Cap Portfolio, will not purchase any securities issued by
a company primarily engaged in the manufacture of alcohol or tobacco.

Goals/Policies
All Portfolios

Each fund's goal and investment policies generally may be changed by the
trustees without shareholder approval.

Master/feeder option

Each of the funds may in the future seek to achieve its investment objective by
investing all of its net assets in another investment company having the same
investment objective and substantially the same investment policies and
restrictions as those applicable to the fund. Shareholders of such a fund will
be given at least 30 days prior notice of any such investment.

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Management
The Concert Investment Series offers a family of fund choices to help meet the
varying needs of investors. The manager and Salomon Smith Barney are
subsidiaries of Citigroup Inc. Citigroup businesses provide a broad range of
financial services--asset management, banking and consumer finance, credit and
charge cards, insurance, investments, investment banking and trading--and use
diverse channels to make them available to consumer and corporate customers
around the world.

The portfolio managers

The portfolio managers are primarily responsible for the day-to-day operation
of the funds indicated below. The table also shows the business experience of
each portfolio manager.

<TABLE>
<CAPTION>
Portfolio
Fund Manager(s) Since Past 5 Years' Business Experience
- -----------------------------------------------------------------------------------------
<C> <C> <C> <S>
Emerging Growth Sandip Bhagat inception investment officer of the manager and pres-
ident of
Travelers Investment Management Company, an
affiliate of the manager
- -----------------------------------------------------------------------------------------
Mid Cap and Growth Larry Weissman inception investment officer of the manager and man-
aging director of Salomon Smith Barney
since October, 1997; portfolio manager of
Neuberger & Berman, LLC, 1995-97; portfolio
manager of College Retirement Equities Fund
prior thereto
- -----------------------------------------------------------------------------------------
Growth and Income R. Jay Gerken inception investment officer of the manager and man-
aging director of Salomon Smith Barney
- -----------------------------------------------------------------------------------------
Government James E. Conroy inception investment officer of the manager and man-
aging director of Salomon Smith Barney
- -----------------------------------------------------------------------------------------
</TABLE>

Management fees

For its services, the manager receives a fee during the portfolios' fiscal year
equal on an annual basis to 0.75% of the Select Emerging Growth, MidCap, Growth
and Growth and Income Portfolios' average daily net assets and 0.60% of the Se-
lect Government Portfolio's average daily net assets.
Distributor

The portfolios have entered into an agreement with CFBDS, Inc. to distribute
the portfolios' shares.

Year 2000 issue

Information technology experts are concerned about computer systems' ability to
process date-related information on and after January 1, 2000. This situation,
commonly known as the "Year 2000" issue, could have an adverse impact on the
portfolios. The cost of addressing the Year 2000 issue, if substantial, could
adversely affect companies and governments that issue securities held by the
underlying funds. Technology experts have indicated that the risk of loss due
to the Year 2000 issue may be greater with regard to foreign companies and
govern-ments. The manager and distributor are addressing the Year 2000 issue
for their systems. Each portfolio has been informed by its other service
providers that they are taking similar measures. Although the portfolios do not
expect the Year 2000 issue to adversely affect them, the portfolios cannot
guarantee that the efforts of each portfolio or its service providers to
correct the problem will be successful.

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Share Transactions
Availability of shares

Individuals may not purchase shares directly from the portfolios. You should
read the prospectus for your insurance company's variable contract to learn how
to purchase a variable contract based on the portfolios.

Each portfolio may sell its shares directly to separate accounts established
and maintained by insurance companies for the purpose of funding variable annu-
ity and variable life insurance contracts and to certain qualified pension and
retirement plans. The variable insurance products and qualified plans may or
may not make investments in all the portfolios described in this prospectus.
Shares of the portfolios are sold at net asset value.

The interests of different variable insurance products and qualified plans in-
vesting in a portfolio could conflict due to differences of tax treatment and
other considerations. The portfolios currently do not foresee any disadvantages
to investors arising from the fact that each portfolio may offer its shares to
different insurance company separate accounts that serve as the investment me-
dium for their variable annuity and variable life products and to qualified
plans. Nevertheless, the board of trustees intends to monitor events to iden-
tify any material irreconcilable conflicts which may arise, and to determine
what action, if any, should be taken in response to these conflicts. If a con-
flict were to occur, one or more insurance companies' separate accounts or
qualified plans might be required to withdraw their investments in one or more
portfolios and shares of another portfolio may be substituted.

The sale of shares may be suspended or terminated if required by law or regula-
tory authority or if it is in the best interests of the portfolios' sharehold-
ers. Each portfolio reserves the right to reject any specific purchase order.

Redemption of shares

Redemption requests may be placed by separate accounts of participating insur-
ance companies and by qualified plans. The redemption price of the shares of
each portfolio will be the net asset value next determined after receipt by the
portfolio of a redemption request in good order. The value of redeemed shares
may be more or less than the price paid for the shares. Sales proceeds will
normally be forwarded to the selling insurance company or qualified plan on the
next business day after receipt of a redemption request in good order but in no
event later than 3 days following receipt of instructions. Each portfolio may
suspend sales or postpone payment dates during any period in which any of the
following conditions exist:

. the New York Stock Exchange is closed;

. trading on the New York Stock Exchange is restricted;

. an emergency exists as a result of which disposal by the portfolio of securi-
ties is not reasonably practicable or it is not reasonably practicable for a
fund to fairly determine the value of its net assets; or

. as permitted by SEC order in extraordinary circumstances.

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Distributions, Dividends and Taxes
Taxes

Each portfolio intends to qualify and be taxed as a "regulated investment com-
pany" under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company,
each portfolio must meet certain income and diversification tests and distribu-
tion requirements. As a regulated investment company meeting these require-
ments, a portfolio will not be subject to federal income tax on its net invest-
ment income and net capital gains that it distributes to its shareholders. All
income and capital gain distributions are automatically reinvested in addi-
tional shares of the portfolio at net asset value and are includable in gross
income of the separate accounts holding such shares. See the accompanying con-
tract prospectus for information regarding the federal income tax treatment of
distributions to the separate accounts and to holders of the contracts.

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 portfolios normally pay dividends and distribute capital gains, if any, as
follows:

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income Capital Distributions
Dividend Gain Mostly
Fund Distributions Distributions From
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Emerging Growth Annually Annually Gain
- -------------------------------------------------------------------------------------
Mid Cap Annually Annually Gain
- -------------------------------------------------------------------------------------
Growth Annually Annually Gain
- -------------------------------------------------------------------------------------
Growth and Income Quarterly Annually Both
- -------------------------------------------------------------------------------------
Government Monthly Annually Income
- -------------------------------------------------------------------------------------
</TABLE>

Each portfolio is also subject to asset diversification regulations promulgated
by the U.S. Treasury Department under the Code. The regulations generally pro-
vide that, as of the end of each calendar quarter or within 30 days thereafter,
no more than 55% of the total assets of each portfolio may be represented by
any one investment, no more than 70% by any two investments, no more than 80%
by any three investments, and no more than 90% by any four investments. For
this purpose all securities of the same issuer are considered a single invest-
ment. An alternative diversification test may be satisfied under certain cir-
cumstances. If a portfolio should fail to comply with these regulations or
fails to qualify for the special tax treatment afforded regulated investment
companies under the Code, contracts invested in that portfolio would not be
treated as annuity, endowment or life insurance contracts under the Code.

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Share Price

Each portfolio's net asset value is the value of its assets minus its liabili-
ties. The price of each portfolio's shares is based on each portfolio's respec-
tive net asset value. Each portfolio calculates its net asset value every day
the New York Stock Exchange is open. The Exchange is closed on certain holidays
listed in the Statement of Additional Information. This calculation is done
when regular trading closes on the Exchange (normally 4:00 p.m., Eastern time).
Each portfolio, with the exception of the Government Portfolio, may invest in
securities issued by foreign issuers; such securities may trade on weekends or
other days on which a portfolio does not price its shares and thus the value of
the portfolio's shares may change on days when you will not be able to purchase
or redeem the portfolio's shares. The value of each underlying fund is the
fund's net asset value at the time of computation.

The portfolios generally value their securities based on market prices or quo-
tations. When reliable market prices or quotations are not readily available,
the portfolios may price those securities at fair value. Fair value is deter-
mined in accordance with procedures approved by the portfolios' board. Short-
term investments that have a maturity of more than 60 days are generally valued
based on market prices or quotations. Short-term investments that have a matu-
rity of 60 days or less are valued at amortized cost. Using this method, a
portfolio constantly amortizes over the remaining life of a security the dif-
ference between the principal amount due at maturity and the cost of the secu-
rity to the portfolio.

In order to buy, redeem or exchange shares at that day's price, an insurance
company separate account or a qualified plan must place its order with the
transfer agent before the New York Stock Exchange closes. If the New York Stock
Exchange closes early, the order must be placed prior to the actual closing
time. Otherwise, the investor will receive the next business day's price.

Concert Investment Series--Select Portfolios Prospectus
<PAGE>

Concert Investment Series
Select Portfolios

Emerging Growth Portfolio Growth and Income Portfolio

Mid Cap Portfolio Government Portfolio

Growth Portfolio

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

Additional Information About the
Portfolios

Shareholder Reports
Annual and semiannual reports to shareholders provide additional information
about the portfolios' investments. These reports discuss the market conditions
and investment strategies that affected each portfolio's performance.

Statement of Additional Information
The statement of additional information provides more detailed information
about each portfolio. It is incorporated by reference into (is legally part of)
this prospectus.

You can make inquiries about the portfolios or obtain shareholder reports or
the statement of additional information (without charge), by contacting your
Salomon Smith Barney Financial Consultant or dealer representative, by calling
the portfolios at 1-800-451-2010, or by writing to the portfolios at Smith Bar-
ney Mutual Funds, 388 Greenwich Street, MF2, New York, New York 10013.

Visit Our Web Site
Our web site is located at www.smithbarney.com

You can also review the portfolios' shareholder reports, prospectus and state-
ment of additional information at the Securities and Exchange Commission's Pub-
lic Reference Room in Washington, D.C. You can get copies of these materials
for a fee by writing to the Public Reference Section of the Commission, Wash-
ington, D.C. 20549-6009. Information about the public reference room may be ob-
tained 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 makes a statement about the portfolios that is not in this prospec-
tus, you should not rely upon that information. Neither the portfolios nor the
distributor is offering to sell shares of the portfolios to any person to whom
the portfolios may not lawfully sell their shares.

(SM) Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.

(Investment Company Act file no. 811-05018)

[FD 01659 8/99]

Part B

August 18, 1999

Statement of Additional Information

Concert Investment Series
388 Greenwich Street
New York, NY 10013

Select Emerging Growth
Portfolio

Select Growth and Income
Portfolio
Select Mid Cap Portfolio
Select Government
Portfolio
Select Growth Portfolio

Concert Investment Series (the "Trust") currently offers twelve separate
investment portfolios, five of which are described in this Statement of
Additional Information ("SAI") (the investment portfolios described herein
are individually referred to as a "Portfolio," and collectively, the
"Portfolios"). This SAI expands upon and supplements the information
contained in the prospectus dated August 18, 1999 for the Portfolios, as
amended or supplemented from time to time, and should be read in
conjunction therewith.

The prospectus may be obtained from designated insurance companies offering
separate accounts ("separate accounts") which fund certain variable annuity
and variable life insurance contracts (each, a "contract") and qualified
pension and retirement plans or by writing or calling the Concert Series at
the address or telephone number listed above. This SAI, although not in
itself a prospectus, is incorporated by reference into the prospectus in
its entirety.

TABLE OF CONTENTS

Page

General Information 2
Goals and Investment Policies 2
Investment Practices 6
Risk Factors 20
Investment Restrictions 25
Trustees and Officers 27
Investment Advisory Agreements 29
Distributor 31
Portfolio Turnover 31
Portfolio Transactions and Brokerage 31
Determination of Net Asset Value 32
Taxes 33
Performance 34
Additional Information about Portfolios 35
Financial Statements 37
Appendix A - Ratings of Bonds, Notes and Commercial Paper A-1

GENERAL INFORMATION

SSBC Fund Management, Inc., formerly Mutual Management Corp. ("SSBC" or the
"manager"), 388 Greenwich Street, New York, NY 10013 was incorporated on
March 12, 1968 and renders investment management advice to investment
companies with aggregate assets under management in excess of $115 billion
as of January 31, 1999. The manager is an affiliate of Salomon Smith
Barney Inc. ("Salomon Smith Barney"). The manager and Salomon Smith Barney
are subsidiaries of Citigroup Inc., a financial services company that uses
diverse channels to offer a broad range of financial services to consumer
and corporate customers around the world. Among these businesses are
Citibank, Commercial Credit, Primerica Financial Services, Salomon Smith
Barney, SSB Citi Asset Management, Travelers Life & Annuity, and Travelers
Property Casualty.

CFBDS, Inc. (the "Distributor") is the distributor of the Portfolios'
shares.

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.

The differences in goals and investment policies among the Portfolios can
be expected to affect the return of each Portfolio and the degree of market
and financial risk to which each Portfolio is subject. The goal and
investment policies, the percentage limitations, and the kinds of
securities in which each Portfolio may invest are generally not fundamental
policies and therefore may be changed by the Trustees without shareholder
approval. Although each Portfolio has a different goal which it pursues
through separate investment policies, each Portfolio, except the Mid Cap
Portfolio, will not purchase any securities issued by any company primarily
engaged in the manufacture of alcohol or tobacco.

Each of the Portfolios 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 Portfolio takes a temporary defensive position, it
may be unable to achieve its investment objective.

Select Emerging Growth Portfolio

Select Emerging Growth Portfolio 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 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 Portfolio 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
portfolio 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 Portfolio 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 Portfolio 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 Portfolio may invest up to 20%
of its total assets in securities of foreign issuers.

Select Mid Cap Portfolio

Select Mid Cap Portfolio seeks long-term growth of capital. The Portfolio
attempts to achieve its investment objective by investing, under normal
market conditions, substantially all of its assets in equity securities and
at least 65% of its total assets in equity securities of medium-sized
companies. Medium sized companies are those whose market capitalization is
within the market capitalization range of companies in the S&P MidCap Index
at the time of the Portfolio's investment. The size of the companies in
the Index changes with market conditions and the composition of the Index.
As of January 29, 1999, the largest market capitalization of a company in
the Index was $11.4 billion and the smallest market capitalization was
$0.24 billion. Companies whose capitalization falls outside this range
after purchase continue to be considered medium-sized companies for
purposes of the 65% policy. Investing in medium-capitalization stocks may
involve greater risk than investing in large capitalization stocks since
they can be subject to more abrupt or erratic movements. However, they tend
to involve less risk than stocks of small capitalization companies. The
Portfolio may invest up to 35% of its assets in equity securities of
companies with market capitalizations that do not qualify them as medium
sized at the time of the Portfolio's investment.

The Portfolio 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 Portfolio 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 Portfolio's expenses and to meet redemption requests. It is
the policy of the Portfolio to be as fully invested in equity securities as
practicable at all times.

Consistent with its investment objective and policies described above, the
Portfolio may invest up to 25% of its total assets in foreign securities,
including both direct investments and investments made through depository
receipts. The Portfolio 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.

Select Growth Portfolio

Select Growth Portfolio 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 Portfolio 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 Portfolio 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 Portfolio, 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 Portfolio
may also invest up to 20% of its total assets in securities of foreign
issuers and in investment companies. Since the Portfolio may take
substantial risks in seeking its goal of capital appreciation, it is not
suitable for investors unable or unwilling to assume such risks.

Select Growth and Income Portfolio

Select Growth and Income Portfolio 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 a fixed income security. The
Portfolio may purchase convertible securities rated Ba or lower by Moody's
Investors Service, Inc. ("Moody's") or BB or lower by Standard & Poor's
Ratings Group ("S&P") and may also purchase non-rated securities considered
by the manager to be of comparable quality. Although the Portfolio 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
Portfolio, 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio may also invest up
to 20% of its total assets in securities of foreign issuers and in
investment companies. The Portfolio may engage in portfolio management
strategies and techniques involving options, futures contracts and options
on futures.

Select Government Portfolio

Select Government Portfolio seeks high current return consistent with
preservation of capital. The Portfolio 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 Portfolio may enter into repurchase agreements with domestic banks or
broker-dealers deemed creditworthy by the manager solely for purposes of
investing the Portfolio's cash reserves or when the Portfolio is in a
temporary defensive posture. The Portfolio 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 Portfolio may also write secured put options and enter into
closing or offsetting purchase transactions with respect to such options.
The Portfolio may write both listed and over-the-counter options.

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

? interest paid on the Portfolio'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 Portfolio 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 Portfolio's investment objective will be achieved.

The Portfolio 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 Portfolio 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
Portfolio'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 Portfolio.

The Portfolio 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 Portfolio'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 Portfolio reduces its
potential for capital appreciation on debt securities if interest rates
decline. Thus, if market prices of debt securities increase, the Portfolio
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 Portfolio's total return and not
to "enhance" monthly distributions. During periods when the Portfolio has
capital loss carryforwards, any capital gains generated from such
transactions will be retained in the Portfolio. The purchase and sale of
options may result in a high portfolio turnover rate.

INVESTMENT PRACTICES

This section contains a discussion of certain investment practices. The
Portfolios indicated may engage in these and any other practices not
prohibited by their investment restrictions. For further information about
risks associated with these practices, see "Risk Factors" below.

EQUITY SECURITIES

Common Stocks (All Portfolios except Government Portfolio). Each Portfolio
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 Portfolios except
Government Portfolio). Each Portfolio 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 Portfolios except Government Portfolio). Each Portfolio may
purchase warrants. Warrants acquired by a Portfolio 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 Portfolio'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 Portfolios except Government Portfolio). Each Portfolio 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. The Portfolios each invest in
restricted securities and 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 Portfolio 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 Portfolio'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 Portfolio 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.

Securities of Foreign Issuers (All Portfolios except Government Portfolio).
The Emerging Growth Portfolio, the Growth Portfolio and the Growth and
Income Portfolio may invest up to 20% of the value of their total assets
and the Mid Cap Portfolio may invest up to 25% of the value of its total
assets in securities of foreign governments and companies of developed and
emerging markets countries.

Each Portfolio 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 Portfolio may invest in ADRs through
both sponsored and unsponsored arrangements.

The Emerging Growth Portfolio, the Mid Cap Portfolio, the Growth Portfolio
and the Growth and Income Portfolio may invest in the securities of
developing countries, commonly known as "emerging markets" countries. See
"Risk Factors Securities of Developing /Emerging Market Countries".

FIXED INCOME SECURITIES

Corporate Debt Obligations (All Portfolios). Each Portfolio 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 Portfolios). The U.S. Government
securities in which the Portfolios 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 Portfolio). The Government
Portfolio 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 Portfolio), 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 Portfolio's higher yielding
securities might be converted to cash, and the Portfolio 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 Portfolio buys mortgage-related securities at a premium,
mortgage foreclosures or mortgage prepayments may result in a loss to the
Portfolio 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 Portfolio 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 Portfolio 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 Portfolio will,
however, be distributed to shareholders. Foreclosures impose no risk to
principal investment because of the GNMA guarantee.

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

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

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

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

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

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

In quoting yields for GNMA Certificates, the customary practice is to
assume that the Certificates will have a 12 year life. Compared on this
basis, GNMA Certificates have historically yielded roughly 1/4 of 1.00%
more than high grade corporate bonds and 1/2 of 1.00% more than
U.S. Government and U.S. Government agency bonds.

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") creates 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 Portfolio). The Portfolio 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 Portfolio 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 Portfolio 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 Portfolio owns or has the right to acquire. In either
circumstance, the Portfolio maintains in a segregated account (which is
marked to market daily) either the security covered by the Forward
Commitment or appropriate securities as required by the Investment Company
Act of 1940, as amended (the "1940 Act") (which may have maturities which
are longer than the term of the Forward Commitment) with the Portfolio'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 Portfolio forgoes or reduces the potential
for both gain and loss in the security which is being hedged by the Forward
Commitment sale.

The Portfolio 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 Portfolio may reinvest the
proceeds in another Forward Commitment. The Portfolio'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
Portfolio relies on the other party to complete the transaction; should the
other party fail to do so, the Portfolio might lose a purchase or sale
opportunity that could be more advantageous than alternative opportunities
at the time of the failure.

The Portfolio 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 Portfolio's custodian in an aggregate amount
equal to the amount of its commitment as long as the obligation to purchase
or sell continues.

Short-Term Investments (All Portfolios). In certain circumstances the
Portfolios 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 Portfolio is
investing in short-term investments as a temporary defensive posture, the
applicable Portfolio's investment objective may not be achieved.

Commercial Paper (All Portfolios). 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 Portfolios 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.

DERIVATIVE CONTRACTS

Options, Futures Contracts and Related Options (All Portfolios)

Selling Call and Put Options (Emerging Growth Portfolio, Mid Cap Portfolio,
Growth Portfolio, Growth and Income Portfolio and Government Portfolio).
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 Portfolio'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 Portfolio, Growth Portfolio and Growth and Income Portfolio
sell call options only on a covered basis. Government Portfolio sells call
options either on a covered basis, or for cross-hedging purposes. A call
option is covered if the Portfolio owns or has the right to acquire the
underlying securities subject to the call option at all times during the
option period. Thus, Government Portfolio may sell options on U.S.
Government securities or forward commitments of such securities. An option
is for cross-hedging purposes (relative to Government Portfolio only) to
hedge against a security which the Portfolio owns or has the right to
acquire. In such circumstances, Government Portfolio maintains in a
segregated account with the Portfolio'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 Portfolio sells put options only on a
secured basis, which means that, at all times during the option period, the
Portfolio 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 Portfolio generally
sells put options when the manager wishes to purchase the underlying
security for the Portfolio'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
Portfolio 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 Portfolio. The Portfolio 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 Portfolio would
also realize a gain if an option it has sold lapses unexercised. A
Portfolio may sell options that are listed on an exchange as well as
options that are traded over-the-counter. A Portfolio 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 Portfolio 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 Portfolio 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 Portfolio loses the potential for gain on the
underlying security above the exercise price while the option is
outstanding; by writing a put option a Portfolio 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 Portfolio may be
able to write.

Purchasing Call and Put Options (All Portfolios). A Portfolio 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 Portfolio 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 Portfolio 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 Portfolio'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 Portfolio's volatility
by increasing the impact of changes in the market price of the underlying
securities on the Portfolio's net asset value. The Portfolios may purchase
either listed or over-the-counter options.

Options on Stock Indexes (All Portfolios except Government Portfolio).
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 Portfolio 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 Portfolio 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 (Mid Cap Portfolio). The Portfolio 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 Portfolio'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 Portfolio 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 Portfolios). Each Portfolio 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 the Portfolios 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 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.

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

At any time prior to expiration of the futures contract, the Portfolio 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 Portfolio, and the Portfolio realizes a
loss or a gain.

When a Portfolio 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 Portfolio 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 Portfolio
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
Portfolio's securities ("defensive hedge"). To the extent that the
Portfolio'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 Portfolio of a market decline and, by
so doing, provides an alternative to the liquidation of securities
positions in the Portfolio with attendant transaction costs.

For example, if Government Portfolio 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 Portfolio's securities declined during the period the
contracts were outstanding, the value of the Portfolio's futures contracts
should increase, thereby protecting the Portfolio 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 Portfolio
engages in transactions in listed options, futures or related options, the
Portfolio 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 Portfolio, the Portfolio
could experience a loss of all or part of the value of the option.
Transactions are entered into by a Portfolio only with brokers or financial
institutions deemed creditworthy by the manager.

Each Portfolio'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
Portfolio owns, or futures contracts will be purchased to protect a
Portfolio against an increase in the price of securities of currencies it
has committed to purchase or expects to purchase. A Portfolio pays
commissions on futures contracts and options transactions.

Options on Futures Contracts (All Portfolios). A Portfolio 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 Portfolio is
subject to initial margin and maintenance requirements similar to those
applicable to futures contracts. In addition, net option premiums received
by a Portfolio 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 Portfolio 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 (Mid Cap Portfolio). 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 Portfolio 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 Portfolio engages in forward currency transactions in
anticipation of, or to protect itself against fluctuations in exchange
rates. The Portfolio 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 Portfolio 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 Portfolio 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 Portfolio may not always be able to enter into foreign
currency forward contracts at attractive prices and this will limit the
Portfolio's ability to use such contract to hedge or cross-hedge its
assets. Also, with regard to the Portfolio'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 Portfolio's
cross-hedges and the movements in the exchange rates of foreign currencies
in which the Portfolio'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 Portfolio, however, may
enter into forward contracts with deposit requirements or commissions.

A put option on currency gives the Portfolio, 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
Portfolio, as purchaser, the right (but not the obligation) to purchase a
specified amount of currency at the exercise price until its expiration.
The Portfolio 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 Portfolio
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 Portfolio
anticipates purchasing securities.

The Portfolio'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 Portfolio 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
Portfolio 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 Portfolio 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 Portfolio
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.

Use of Segregated and Other Special Accounts (All Portfolios). Use of
many hedging and other strategic transactions including currency and market
index transactions by the Portfolio will require, among other things, that
the Portfolio segregate cash, liquid securities or other assets with its
Custodian, or a designated sub-custodian, to the extent the Portfolio'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 Portfolio 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 Portfolio, for example, will require the Portfolio 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 Portfolio on an index will require
the Portfolio 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 Portfolio will require the Portfolio to segregate liquid securities
equal to the exercise price. Except when the Portfolio 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
Portfolio to buy or sell a foreign currency will generally require the
Portfolio to hold an amount of that currency, liquid securities denominated
in that currency equal to the Portfolio's obligations or to segregate
liquid securities equal to the amount of the Portfolio's obligations.

OTC options entered into by the Portfolio, 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 Portfolio will not be required to do so. As a result, when
the Portfolio 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 Portfolio other than those described above generally
settle with physical delivery, and the Portfolio 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
Portfolio 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 Portfolio 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 Portfolio'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 Portfolio 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 Portfolio 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 Portfolio. Moreover, instead of segregating
assets if it holds a futures contract or forward contract, the Portfolio
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 Portfolios). Each Portfolio may enter into
repurchase agreements with broker-dealers or domestic banks. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the
Portfolio) 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 Portfolio 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 Portfolio 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 Portfolio 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
Portfolio 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 or accounts that are 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 Portfolios, funds or accounts
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 Portfolio than would be available to a
Portfolio 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 (Mid Cap and Government Portfolios). Mid Cap
Portfolio and Government Portfolio may invest in 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. Any securities purchased with the funds obtained from the
agreement and securities collateralizing the agreement will have a maturity
date no later than the repayment date. Generally, the Portfolio will be
able to keep the interest income associated with the "coupon" on those
securities, subject to the payment of a fee to the dealer. Such
transactions are generally advantageous because the Portfolio attempts to
lock-in 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 Portfolio intends
to use the reverse repurchase technique only when the manager believes it
will be advantageous to the Portfolio. The use of reverse repurchase
agreements may exaggerate any interim increase or decrease in the value of
the Portfolio's assets. The Portfolio's custodian bank will maintain a
separate account for the Portfolio with securities having a value equal to
or greater than such commitments.

Short Sales against the Box (Emerging Growth Portfolio, Mid Cap Portfolio,
Growth Portfolio and Growth and Income Portfolio). Each Portfolio 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 Portfolio
contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short. In a short sale, the Portfolio
does not immediately deliver the securities sold and does not receive the
proceeds from the sale. The Portfolio 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.

To secure its obligation to deliver the securities sold short, the
Portfolio 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 Portfolio 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
Portfolio, because the Portfolio may want to continue to receive interest
and dividend payments on securities in its portfolio that are convertible
into the securities sold short.

Loans of Portfolio Securities (All Portfolios). Each of the Portfolios
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
Portfolio and is marked to market daily. While such securities are on
loan, the borrower is required to pay the Portfolio any income accruing
thereon. Furthermore, the Portfolio may invest the cash collateral in
portfolio securities thereby increasing the return to the Portfolio as well
as increasing the market risk to the Portfolio. A Portfolio 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 Portfolio believe that lending securities is in the
best interests of the Portfolio'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 Portfolio 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 Portfolio and its shareholders, but any gain can be
realized only if the borrower does not default. Each Portfolio 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 Portfolio'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 Portfolios 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 Portfolio 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
Portfolio 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 Portfolio will suffer from the
inability to invest in higher yield securities.

Below Investment Grade Fixed-Income Securities. Securities rated in the
fourth highest ratings category by an NRSRO, such as those 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 the fourth highest ratings
category by an NRSRO, including those rated below Baa by Moody's or BBB by
S&P, are not "investment grade," and may have more 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 Portfolio, to the extent it owns such
securities, to replace those securities with lower yielding securities.
This could result in a decreased return.

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

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

With respect to certain foreign countries, there is the possibility of
expropriation of assets, confiscatory taxation, political or social
instability or diplomatic developments which could affect investment in
those countries. There may be less publicly available information about a
foreign security than about a security issued by a U.S. company, and
foreign entities may not be subject to accounting, auditing and financial
reporting standards and requirements comparable to those of United States
entities. In addition, certain foreign investments made by the Portfolio
may be subject to foreign withholding taxes, which would reduce the
Portfolio's total return on such investments and the amounts available for
distributions by the Portfolio 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 Portfolio are not
invested and no return is earned thereon. The inability of each Portfolio
to make intended security purchases due to settlement problems could cause
the Portfolio to miss attractive investment opportunities. Inability to
dispose of portfolio securities due to settlement problems could result
either in losses to the Portfolio due to subsequent declines in value of
the portfolio security or, if the Portfolio 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
Portfolio 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 Portfolio 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 Portfolio to obtain or to
enforce a judgment against the issuers of such securities.

Currency Risks. The U.S. dollar value of securities denominated in a
foreign currency will vary with changes in currency exchange rates, which
can be volatile. Accordingly, changes in the value of the currency in
which a Portfolio's investments are denominated relative to the U.S. dollar
will affect the Portfolio'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 Portfolio's securities are quoted would reduce the Portfolio'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. 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 Portfolio'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 Portfolio 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 Portfolio
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 Portfolio'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
Portfolio 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
Portfolio, including an investment in conventional securities, reflects an
implicit prediction about future changes in the value of that investment.
Every Portfolio investment also involves a risk that the portfolio
manager's expectations will be wrong. Transactions in derivative
instruments often enable a Portfolio to take investment positions that more
precisely reflect the portfolio manager's expectations concerning the
future performance of the various investments available to the Portfolio.
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 Portfolio in order to achieve an average portfolio volatility
that is within the expected range for that type of Portfolio.

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 Portfolios are not
readily marketable and are subject to a Portfolio'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 Portfolio's portfolio is
reviewed and analyzed by the Portfolio's portfolio manager to assess the
risk and reward of each such instrument in relation to the Portfolio'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 Portfolio 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 Portfolio, 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
Portfolio 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 Portfolio assets.

Furthermore, in the case of a Futures Contract purchase, in order to be
certain that each Portfolio has sufficient assets to satisfy its
obligations under a Futures Contract, the Portfolio segregates and commits
to back the Futures Contract an amount of cash and liquid securities equal
in value to the current value of the underlying instrument less the margin
deposit.

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

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

Year 2000. The investment management services provided to each Portfolio
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 Portfolio's operations, including the
handling of securities trades, pricing and account services. The manager
has advised each Portfolio 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 Portfolio'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 Portfolio services at
that time. The foregoing is a year 2000 readiness disclosure.

Portfolio Turnover. Each Portfolio 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 Portfolio and the Government Portfolio may experience a high rate of
portfolio turnover. This may occur, for example, if the Portfolio 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 Portfolio and the Government Portfolio are not expected to
exceed 400%; and the annual turnover rates of the Emerging Growth
Portfolio, the Mid Cap Portfolio and the Growth and Income Portfolio 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 Portfolio 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

The Portfolios have adopted the following fundamental investment
restrictions for the protection of shareholders. Under the 1940 Act, a
fundamental policy of a portfolio may not be changed without the vote of a
majority, as defined in the 1940 Act, of the outstanding voting securities
of the portfolio. Such majority is defined as the lesser of (a) 67% or
more of the shares present at the meeting, if the holders of more than 50%
of the outstanding shares of the portfolio are present or represented by
proxy, or (b) more than 50% of the outstanding shares. The percentage
limitations contained in the restrictions listed below (other than with
respect to (1) below) apply at the time of purchases of securities.

The investment policies adopted by the Portfolios prohibit each Portfolio
from:

1. Borrowing money except that (a) the Portfolio 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 Portfolio 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 Portfolio 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.

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

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

4. Purchasing or selling real estate, real estate mortgages,
commodities or commodity contracts, but this restriction shall
not prevent the Portfolio from (a) investing in securities of
issuers engaged in the real estate business or 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
Portfolio's investment objective and policies); or (d)
investing in real estate investment trust securities.

5. Issuing "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.

The Portfolios have also adopted certain nonfundamental investment
restrictions that may be changed by the Trust's Board of Trustees at any
time. Accordingly the Portfolios are prohibited from:

1. Purchasing 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 Portfolio 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.

2. Making short sales of securities or maintaining a short
position.

3. Pledging, hypothecating, mortgaging or otherwise encumbering
more than 33-1/3% of the value of a Portfolio's total assets.

4. Making investments for the purpose of exercising control or
management.

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

6. 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.

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); 62.

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; 61.

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

HEATH B. McLENDON,* Trustee. Managing Director of Salomon Smith Barney;
President and Chairman of 59 investment companies associated with SSB,
President and Director of the manager and Travelers Investment Adviser,
Inc. ("TIA"); Chairman of Smith Barney Strategy Advisers Inc.; 66.

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; 57.

_______________
* Denotes a Trustee that is an "interested person" of the Trust within the
meaning of the 1940 Act.

OFFICERS

Heath B. McLendon, President (See description under "Trustees").

Lewis E. Daidone, Senior Vice President and Treasurer (Age 42). 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 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 48). Managing
Director of Salomon Smith Barney; Mr. Conroy serves as Investment Officer
of four Smith Barney Mutual Funds. His address is 388 Greenwich Street,
New York, New York 10013.

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

R. Jay Gerken, Vice President and Investment Officer (Age 48). Managing
Director of Salomon Smith Barney; Mr. Gerken is Vice President and
Investment Officer of two other Smith Barney Mutual Funds. His address is
388 Greenwich Street, New York, New York 10013.

Jeffrey Russell, Vice President and Investment Officer (Age 42). 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 38). Managing
Director of Salomon Smith Barney; Prior to October 1997, Portfolio Manager
of Newberger & Berman LLC; Prior to 1995, Portfolio Manager of College
Retirement Equities Fund. His address is 388 Greenwich Street, New York,
New York 10013.

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

As of August 1, 1999, 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 August 1, 1999, 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.

TRUSTEE COMPENSATION

Information regarding compensation paid to the Trustees of the Trust is set
forth below. Because the Portfolios are newly organized, the compensation
shown below pertains to amounts paid by the previously established
investment portfolios of the Trust (collectively, the "Funds"), which Funds
are not offered by this SAI or the related Prospectus, for the calendar
year ended December 31, 1998. Mr. McLendon is not compensated for his
service as Trustee, because of his affiliation with the manager. With the
exception of Mr. McLendon, no Trustee serves on the Board of any other
investment company in the Smith Barney Fund Complex.

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

Name

EM INT G
G/I GVT MB

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

Total
Compen-
sation
Paid From
Trust and
Fund
Complex

Dr. Donald M.
Carlton
$2,640
$478
$36,95
4
$12,58
4
$2,26
9
$1,074
- -
$56,000
Dr. A. Benton
Cocanougher

2,640
478

36,954

12,584

2,269
1,074
- -
56,000
Stephen Randolph
Gross

2,640
478

36,954

12,584

2,269
1,074
- -
56,000
Heath B. McLendon*
- -
- -
- -
- -
- -
- -
- -
- -
Dr. Alan G. Merten

2,472
443

33,555

11,491

2,062

976
- -
51,000
Dr. Steven
Muller(2)

614
116

11,957

3,923

709

329
- -
17,649
Dr. R. Richardson
Pettit

2,640
478

36,954

12,584

2,269
1,074
- -
56,000
Alan B. Shepard,
Jr.(2)

2,100
372

26,093

9,089

1,592
754
- -
40,000

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

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

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

INVESTMENT ADVISORY AGREEMENTS

Investment Manager. The manager provides investment advisory and
management services to the Trust, and to other investment companies
affiliated with Salomon Smith Barney.

The Trust and the manager are parties to a separate Investment Advisory
Agreement for each Portfolio (each, an "Advisory Agreement" and together,
the "Advisory Agreements"). An investment advisory agreement with the
manager and the Trust, on behalf of each Portfolio, was approved by the
Board of Trustees of the Trust at a meeting held on July 14, 1999. 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 Portfolio'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 Portfolio. 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 investment
management fees at the following rates, based on the following amounts of
their average daily net assets:

? For Emerging Growth Portfolio, Growth and Income Portfolio, Mid Cap
Portfolio, and Growth Portfolio (calculated separately for each
Portfolio), 0.75% of the Portfolio's average daily net assets.

? For the Government Portfolio, 0.60% of the Portfolio's average daily net
assets.

The manager may, from time to time, agree to waive its investment advisory
fees or any portion thereof or elect to reimburse a Portfolio for ordinary
business expenses in excess of an agreed upon amount.

The average daily net assets of each Portfolio are determined by taking the
average of all of the determinations of net asset value of such Portfolio
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.

Each Portfolio's Advisory Agreement 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 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 Portfolio 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 Portfolio'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.

DISTRIBUTOR

CFBDS, Inc., located at 21 Milk Street, Boston MA 02109-5408 (the
"Distributor"), distributes shares of the Portfolios 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.

The Distributor acts as the principal underwriter of the shares of the
Portfolios pursuant to a written agreement for the Portfolios
("Underwriting Agreement"). 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 Portfolio 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.

PORTFOLIO TURNOVER

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

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 transactions 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 Portfolio
may place brokerage transactions with affiliated persons of the manager.
In selecting broker/dealers and in negotiating commissions, the manager
considers the firm's reliability, the quality of its execution services on
a continuing basis and its financial condition. When more than one firm is
believed to meet these criteria, preference may be given to firms that also
provide research services to the Trust or the manager.

Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment adviser, under certain circumstances, to cause an
account to pay a broker or dealer who supplies brokerage and research
services a commission for effecting a securities transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting the transaction. Brokerage and research services include
(a) furnishing advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities, (b) furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and the performance of accounts,
(c) effecting securities transactions and performing functions incidental
thereto (such as clearance, settlement and custody), and (d) furnishing
other products or services that assist the manager or the Subadviser in
fulfilling their investment-decision making responsibilities.
[/R]
Pursuant to provisions of the relevant Advisory Agreement, the Trustees
have authorized the manager to cause the Trust to incur brokerage
commissions in an amount higher than the lowest available rate in return
for research services provided to the manager. The manager is of the
opinion that the continued receipt of supplemental investment research
services from dealers is essential to its provision of high quality
portfolio management services to the Trust. The manager undertakes that
such higher commissions will not be paid by the Trust unless (a) the
manager determines in good faith that the amount is reasonable in relation
to the services in terms of the particular transaction or in terms of the
manager's overall responsibilities with respect to the accounts as to which
it exercises investment discretion, (b) such payment is made in compliance
with the provisions of Section 28(e) and other applicable state and federal
laws, and (c) in the opinion of the manager, the total commissions paid by
the Trust are reasonable in relation to the expected benefits to the Trust
over the long term. The investment advisory fees paid by the Trust under
the Advisory Agreements are not reduced as a result of the manager's
receipt of research services. During the fiscal year ended October 31,
1998, the Trust directed the payment of $519,062 in brokerage commissions
to brokers because of research services provided to the Trust's
portfolios.

To the extent consistent with the NASD Rules, 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 Portfolios effect their 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 Portfolios. In
the opinion of the manager, the benefits from research services to the
Portfolios 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 Portfolios will not be disproportionate to the benefits
received by the Portfolios 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
Portfolios 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 Portfolios. In making such
allocations among the Trust and other advisory accounts, the main factors
considered by the manager over the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, and the size of investment
commitments generally held.

Each Portfolio has paid no brokerage commissions to date.

The Portfolios may from time to time place brokerage transactions with
brokers that may be considered affiliated persons of the manager or the
Distributor. Such affiliated persons currently include Salomon Smith
Barney (successor to Smith Barney Inc. "Smith Barney") and Robinson
Humphrey, Inc. ("Robinson Humphrey"), because they are affiliated with the
manager.

DETERMINATION OF NET ASSET VALUE

The assets attributable to each Portfolio reflect the value of separate
interests in a single portfolio of securities. The net asset value of the
shares will be determined separately by subtracting the expenses and
liabilities. The net asset value of the shares of each Portfolio is
determined at 4:00 p.m., New York time (or at the close of the New York
Stock Exchange (the "Exchange"), if earlier) on each business day on which
the Exchange is open.

The value of equity securities is computed by (i) valuing listed or
unlisted securities for which market quotations are readily available at
the prices reported by an independent pricing services, or as supplied by
the National Association of Securities Dealers Automated Quotations
(NASDAQ) or by broker-dealers, and (ii) 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 Board of 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.

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. 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 Portfolio's net asset value unless the manager, under the
supervision of the Board of Trustees, determines that the particular event
would materially affect net asset value. As a result, a Portfolio's net
asset value may be significantly affected by such trading on days when a
shareholder has no access to the Portfolios.

U.S. Government securities are traded in the over-the-counter market and
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. Debt securities having a
remaining maturity of 60 days or less are valued on an amortized cost basis
to the extent this approximates market value.

TAXES

General. The following is a summary of certain federal income tax
considerations that may affect the Portfolios and their shareholders. The
discussion relates only to Federal income tax law as applicable to U.S.
citizens. Distributions by the Portfolios also may be subject to state,
local and foreign taxes, and their treatment under state, local and foreign
income tax laws may differ from the Federal income tax treatment. The
summary is not intended as a substitute for individual tax advice, and
investors are urged to consult their tax advisors as to the tax
consequences of an investment in any Portfolio of the Trust.

Tax Status of the Portfolios.

Each Portfolio will be treated as a separate taxable entity for Federal
income tax purposes.

Each Portfolio intends to qualify separately each year as a "regulated
investment company" under the Code. A qualified Portfolio will not be
liable for Federal income taxes to the extent that its taxable net
investment income and net realized capital gains are distributed to its
shareholders, provided that each Portfolio distributes at least 90% of the
sum of its net investment income and any excess of its net short-term
capital gain over its net long-term capital loss.

Each Portfolio intends to accrue dividend income for Federal income tax
purposes in accordance with the rules applicable to regulated investment
companies. In some cases, these rules may have the effect of accelerating
(in comparison to other recipients of the dividend) the time at which the
dividend is taken into account by a Portfolio as taxable income.

Each intends at least annually to declare and make distributions of
substantially all of its taxable income and net taxable capital gains to
its shareowners (i.e., the Separate Accounts). Such distributions are
automatically reinvested in additional shares of the Portfolio at net asset
value and are includable in gross income of the separate accounts holding
such shares. See the accompanying contract prospectus for information
regarding the federal income tax treatment of distributions to the separate
accounts and to holders of the contracts.

Tax treatment of shareholders. The Trust has been informed that certain of
the life insurance companies offering contracts intend to qualify each of
the subaccounts as a "segregated asset account" within the meaning of the
Code. For a subaccount to qualify as a segregated asset account, the
Portfolio in which such subaccount hold shares must meet the
diversification requirements of Section 817(h) of the Code and the
regulations promulgated thereunder. To meet those requirements, a
Portfolio generally may not invest more than certain specified percentages
of its assets in the securities of any one, two, three or four issuers.
For these purposes, all obligations of the United States Treasury and each
governmental instrumentality are treated as securities of separate issuers.

Income on assets of a subaccount qualified as a segregated asset account
whose underlying investments are adequately diversified will not be taxable
to contract owners. However, in the event a subaccount is not so
qualified, all annuities allocating any amount of premiums to such
subaccount will not qualify as annuities for federal income tax purposes
and the holders of such annuities would be taxed on any income on the
annuities for any taxable year.

The Trust has undertaken to meet the diversification requirements of
Section 817(h) of the Code. This undertaking may limit the ability of a
particular Portfolio to make certain otherwise permitted investments.

PERFORMANCE

From time to time, the Portfolios may quote a yield or total return in
advertisements or in reports and other communications to shareholders. The
Trust may include comparative performance information in advertising or
marketing the Portfolio's shares. Such performance information may include
data from the following industry and financial publications: Barron's,
Business Week, CDA Investment Technologies Inc., Changing Times, Forbes,
Fortune, Institutional Investor, Investors Daily, Money, Morningstar Mutual
Fund Values, The New York Times, USA Today and The Wall Street Journal.

Yield

A Portfolio's 30-day yield figure described below is calculated according
to a formula prescribed by the SEC. The formula can be expressed as
follows: YIELD = 2[( [(a-b/(c*d))/l] + 1)6 - 1], where

a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursement)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period

For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations purchased by the Portfolio at a discount or
premium, the formula generally calls for amortization of the discount or
premium; the amortization schedule will be adjusted monthly to reflect
changes in the market values of the debt obligations.

Investors should recognize that in periods of declining interest rates a
Portfolio's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates, the Portfolio's yield will
tend to be somewhat lower. In addition, when interest rates are falling,
the inflow of net new money to the Portfolio from the continuous sale of
its shares will likely be invested in portfolio instruments producing lower
yields than the balance of the Portfolio's investments, thereby reducing
the current yield of the Portfolio. In periods of rising interest rates,
the opposite can be expected to occur.

Average Annual Total Return

"Average annual total return" figures, as described below, are computed
according to a formula prescribed by the SEC. The formula can be expressed
as follows: P(l+T)/n = ERV, where:

P = a hypothetical initial payment of $ 1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a Hypothetical $ 1,000
investment made at the beginning of a 1-, 5- or 10-year
period at the end of the 1-, 5- or 10-year period (or
fractional portion thereof), assuming reinvestment of
all dividends and distributions.

Each Portfolio is newly organized and therefore has no performance history.

ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS

Voting. The Trust offers shares of the Portfolios only for purchase by
insurance company separate accounts. Thus, the insurance company is
technically the shareholder of the Portfolios, and under the 1940 Act, is
deemed to be in control of the Portfolios. Nevertheless, with respect to
any Concert Series shareholder meeting, an insurance company will solicit
and accept timely voting instructions from its contract owners who own
units in a separate account investment division which corresponds to shares
in the Portfolios in accordance with the procedures set forth in the
accompanying prospectus of the applicable contract issued by the insurance
company and to the extent required by law. Shares of the Trust
attributable to contract owner interests for which no voting instructions
are received will be voted by an insurance company in proportion to the
shares for which voting instructions are received.

Transfer Agent

First Data Investor Services Group, Inc. is located at Exchange Place,
Boston, Massachusetts 02109.

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 Portfolio.

Shareholder Reports

Semi-annual statements are furnished to shareholders, and annually such
statements are audited by the independent auditors.

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 shares of
beneficial interest of $.01 par value, in the Portfolios. Shares issued are
fully paid, non-assessable and have no preemptive or conversion rights. In
the event of liquidation of any Portfolio, shareholders of such Portfolio
are entitled to share pro rata in the net assets of the Portfolio available
for distribution to shareholders.

As of December 31, 1997, the name of the Trust was changed from the Common
Sense Funds Trust to Concert Investment Series.

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 Portfolio 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 Portfolio are borne solely by that class, and each
class of shares of each Portfolio has exclusive voting rights with respect
to provisions of the Plan which pertains to that class of each Portfolio.
All shares have equal voting rights, except that only shares of the
respective Portfolio are entitled to vote on matters concerning only that
Portfolio. 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.

As of August 1, 1999, no person was known to own beneficially or of record
as much as five percent of the outstanding shares of any Portfolio of the
Trust.

Other Information about Certain Banking Laws

The Glass-Steagall Act prohibits certain financial institutions, such as
Citibank, from underwriting securities of open-end investment companies,
such as the Trust. Citibank believes that its services under the Management
Agreements and the activities performed by it or its affiliates as Service
Agents are not under-writing and are consistent with the Glass-Steagall Act
and other relevant federal and state laws. However, there is no controlling
precedent regarding the performance of the combination of investment
advisory, share-holder servicing and administrative activities by banks.
State laws on this issue may differ from applicable federal law, and banks
and financial institutions may be required to register as dealers pursuant
to state securities laws. Changes in either federal or state statutes or
regulations, or in their interpretations, could prevent Citibank or its
affiliates from continuing to perform these services. If Citibank or its
affiliates were to be prevented from acting as the Manager or Service
Agent, the Trust would seek alternative means for obtaining these services.
The Trust does not expect that shareholders would suffer any adverse
financial consequences as a result of any such occurrence.

FINANCIAL STATEMENTS

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

APPENDIX A

RATINGS OF BONDS, NOTES AND COMMERCIAL PAPER

Moody's Investors Service, Inc.

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

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

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

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

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

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

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

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

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

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

Standard & Poor's

AAA - Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.

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

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

BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.

BB, B, CCC, CC, C - Debt rated 'BB', 'B', 'CCC', 'CC' or 'C' is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation. 'BB' indicates the lowest degree of speculation and 'C' the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. Plus (+) or
Minus (-): The ratings from 'AA' to 'B' may be modified by the addition of
a plus or minus sign to show relative standing within the major rating
categories.

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

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

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

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

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

Fitch IBCA, Inc.

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

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

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

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

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

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

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

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

COMMERCIAL PAPER RATINGS

Moody's Investors Service, Inc.

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

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

Standard & Poor's

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

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

Fitch IBCA, Inc.

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

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

Fitch's short-term ratings are as follows:

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

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

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

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

Duff & Phelps Inc.

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

Duff 1 - Indicates a high certainty of timely payment.

Duff 2 - Indicates a good certainty of timely payment: liquidity factors
and company fundamentals are sound.

The Thomson BankWatch ("TBW")

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

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

Part C. Other Information

Item 23. Exhibits.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(17) Certificate of Amendment of the Agreement
and Declaration of Trust dated December 30, 1997 incorporated by
reference to Registrant's Amendment No. 21, filed on December 15,
1998.

(18) Form of Certificate of Designation of Mid Cap Fund
dated February 17, 1999 is incorporated by reference to Registrant's
Amendment No. 22, filed on February 26, 1999.

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

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

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

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

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

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

(2) Form of Dealer Agreement is incorporated by
reference to Registrant's Post-Effective Amendment No. 22, filed on
February 26, 1999.

(f) Retirement Plan for Directors is
incorporated by reference to Registrant's Post-Effective Amendment
No. 22, filed on February 26, 1999.

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

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

(h)(2) Form of Sub-Transfer Agency Agreement
(Incorporated herein by reference to Form N-1A of Registrant's Post-
Effective Amendment No. 20, filed on February 27, 1998).

(i) Previously filed.

(j) Consent of Independent Auditors filed
herewith.

(k) Not applicable.

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

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

(l)(3) Investment Letter for Common Sense II
Emerging Growth Fund and Common Sense II
International Equity Fund (Incorporated
herein by reference to Exhibit 13.3 filed
with Post-Effective Amendment No. 15, filed
August 11, 1995).

(m)(1) Form of Amended and Restated Class A
Distribution Plan is incorporated by reference to Registrant's Post-
Effective Amendment No. 22, filed on February 26, 1999.

(m)(2) Form of Amended and Restated Class B
Distribution Plan is incorporated by reference to Registrant's Post-
Effective Amendment No. 22, filed on February 26, 1999.

(m)(3) Form of Amended and Restated Servicing
Agreement for Class A shares is incorporated by reference to
Registrant's Post-Effective Amendment No. 22, filed on February 26,
1999.

(m)(4) Form of Amended and Restated Servicing
Agreement for Class B shares is incorporated by reference to
Registrant's Post-Effective Amendment No. 22, filed on February 26,
1999.

(n) Financial Data Schedules are incorporated by reference
to Form N-1A of Registrant's Post-Effective Amendment No. 22, filed
on February 26, 1999.

(o) Rule 18f-3 Plan. (Incorporated herein by
reference to Form N-1A of Registrant's
Post-Effective Amendment No. 18, filed on
February 28, 1997.)

Item 24. Persons Controlled by or under Common Control with
Registrant.

None

Item 25. Indemnification.

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

Item 26. Business and Other Connections of Investment Adviser

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

SSBC, 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. SSBC
is a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc., which in turn is a wholly owned subsidiary
of Citigroup Inc. SSBC is registered as an
investment adviser under the Investment Advisers Act of 1940
(the "Advisers Act").

The list required by this Item 26 of the officer and
directors of SSBC 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 SSBC
pursuant to the Advisers Act (SEC File No. 801-8314).

Item 27. Principal Underwriters.

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

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

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

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

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

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

Item 28. Location of Books and Records.

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

Item 29. Management Services.

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

Item 30. Undertakings.

None.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant, CONCERT INVESTMENT SERIES, certifies that it meets all
requirements for effectiveness of this registration statement under
Rule 485(b) under the Securities Act and has duly caused this Post-
Effective Amendment No. 23 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 18th day of August,
1999.

CONCERT INVESTMENT SERIES

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

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

Signature: Title: Date:

/s/Heath B. McLendon Chairman of the Board August 18, 1999
Heath B. McLendon (Chief Executive
Officer)

/s/ Lewis E. Daidone Senior Vice President August 18, 1999
Lewis E. Daidone and Treasurer (Chief
Financial and
Accounting Officer)

/s/ Donald M. Carlton* Trustee August 18, 1999
Donald M. Carlton

/s/ A. Benton Cocanougher* Trustee August 18, 1999
A. Benton Cocanougher

/s/ Stephen R. Gross* Trustee August 18, 1999
Stephen R. Gross

/s/ Alan G. Merten* Trustee August 18, 1999
Alan G. Merten

/s/ R. Richardson Pettit* Trustee August 18, 1999
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

j. Consent of Independent Auditors

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Independent
Auditors" and to the use of our report dated December 15, 1998, on the
Concert Investment Series (comprising, respectively, the Emerging Growth
Fund, Government Fund, Growth Fund, Growth and Income Fund, International
Equity Fund and Municipal Bond Fund) which is incorporated by reference
in this Registration Statement (Form N-1A No. 33-11716 and 811-5018) of
the Concert Investment Series.

ERNST & YOUNG LLP

New York, New York
August 13, 1999