ICloud Contacts Sync

I hope this is the correct forum. Am I doing something wrong or does the sync of contacts with iCloud only transfer the contact list and not any of the Smart Groups I have set up in my address book?

I find I have misstated the issue. The Smart Groups show up fine in the Address book when you access them through contacts. But if you pick addresses in Mac Mail, you do not see any of the Smart Groups as long as the default location for the Address Book is the iCloud. This iCloud stuff is really frustrating - at least to me.