Registration No. 33-40823
                 811-6318

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM N-1A


REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
X
Pre-Effective Amendment No. _______

Post-Effective Amendment No.      32    	    X

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940

Amendment No.        32              X

CONSULTING GROUP CAPITAL MARKETS FUNDS
(Exact name of Registrant as Specified in Charter)

222 Delaware Avenue, Wilmington, Delaware 19801
(Address of Principal Executive Offices)     (Zip Code)

Registrant's Telephone Number, including Area Code:
(302) 888-4104

Christina T. Sydor
Consulting Group Capital Markets Funds
7 World Trade Center, 39th Floor
New York, New York 10048
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: Continuous


It is proposed that this filing will become effective:

	immediately upon filing pursuant to paragraph (b) of Rule 485

XXX	on July 30, 2001 pursuant to paragraph (b) of Rule 485

	60 days after filing pursuant to paragraph (a)(1)

	on (date) pursuant to paragraph (a)(1)

	75 days after filing pursuant to paragraph (a)(2)

	on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

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

Title of Securities Being Registered:  Shares of Beneficial Interest, par
value $0.001 per share.

PART A
<PAGE>

                           [LOGO OF CONSULTING GROUP]


                               Consulting Group
                             Capital Markets Funds

                        Global Sciences and Technology
                                  Investments



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INVESTMENT PRODUCTS: NOT  FDIC  INSURED . NO  BANK  GUARANTEE . MAY LOSE VALUE

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         Prospectus
         July 30, 2001
                                                             [LOGO OF TRAK]

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.


<PAGE>


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Table of Contents

<TABLE>
<CAPTION>
                                                        Page
                    <S>                                 <C>
                    Investments, Risks and Performance    2
                    -----------------------------------------
                       Investment objective               2
                    -----------------------------------------
                       Principal investment strategies    2
                    -----------------------------------------
                       Fee table                          4
                    -----------------------------------------
                    More on the Portfolio's Investments   5
                    -----------------------------------------

                    The Manager                           7
                    -----------------------------------------

                    Asset Allocation Programs             9
                    -----------------------------------------
                    Investment and account information   10
                    -----------------------------------------
                       Account transactions              10
                    -----------------------------------------
                       Valuation of shares               11
                    -----------------------------------------
                       Dividends and distributions       11
                    -----------------------------------------
                       Taxes                             11
                    -----------------------------------------
                    Financial Highlights                 13
                    -----------------------------------------
                    Appendix A                          A-1
                    -----------------------------------------
                    Appendix B                          B-1
                    -----------------------------------------
</TABLE>

                                  1 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

<PAGE>


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Investments, Risks and Performance

Investment objective

Global Sciences and Technology Investments (the "Portfolio") seeks capital
appreciation by investing primarily in equity securities of both domestic and
foreign companies.

Principal investment strategies

The Portfolio invests primarily in the securities of companies principally
engaged in the technology, telecommunications and healthcare sectors. The broad
industry categories in which these companies may be found include, but are not
limited to, computer software and hardware; network and capital broadcasting;
internet and internet-related businesses; the ownership, operation,
development, production, sale, and distribution of goods or services used in
the broadcast and media industries; communications services or equipment; the
design, manufacture, or sale of electric components; defense and data storage
and retrieval; pharmaceuticals; medical diagnostic, biochemical or other
healthcare research and development; healthcare facilities, healthcare products
and services and biotechnology. The relative size of the Portfolio's
investments within these industries will vary from time to time, and at times,
some of these industries may not be represented in the Portfolio's holdings.

The Portfolio may invest without limitation in securities of foreign issuers
and will invest in securities of issuers located in at least three different
countries, including the U.S. The Portfolio may also invest up to 20% of its
assets in companies located in emerging markets and may invest in securities
denominated in one or more currencies. It may invest in companies of any size
or market capitalization.

The Portfolio may invest a portion of its assets in debt securities and may
invest up to 20% of its assets in debt securities rated below investment grade
(commonly known as "junk bonds").

How the investment advisers select the Portfolio's investments

The manager has selected two investment advisers to manage the Portfolio. The
investment advisers seek to invest in companies focused on the future, with
favorable long-term growth potential from new or innovative products or
services. The investment advisers analyze specific companies within the
technology, telecommunication and healthcare sectors. To determine whether a
company is principally doing
business in a sector, it must meet at least one of the following tests:

 .  At least 50% of its gross income or its net sales must come from activities
   in the sector;

 .  At least 50% of its assets must be devoted to producing revenues from the
   sector; or

 .  Based on other available information, an investment adviser determines that
   the company's primary business is within the sector.

In analyzing specific companies, the investment advisers look for several of
the following characteristics:

 .  Above average per share earnings growth

 .  High return on invested capital

 .  Sound financial and accounting policies

 .  Overall financial strength

 .  Strong competitive advantage

 .  Effective research and product development

 .  Effective marketing

 .  Strong management

The Portfolio may, but is not required to, use various techniques such as
buying and selling futures and options contracts to increase or decrease its
exposure to changing securities prices or other factors that affect securities
values. If the Portfolio's strategies do not work as intended, the Portfolio
may not achieve its objective.

Principal risks of investing in the Portfolio

An investment in the Portfolio involves specific risks relating to the nature
of its investment strategies. You should invest in the Portfolio only if you
are capable of bearing the risks described below.

 .  You could lose money on your investment or the Portfolio may not perform as
   well as other investments

 .  Stock markets are volatile and can decline significantly in response to
   adverse issuer, political, regulatory, market or economic developments.
   Different parts of the market can react differently to these developments

 .  The Portfolio may invest a substantial portion of its assets in foreign
   securities. Foreign markets can be more volatile than the U.S. market
   because of increased risks of adverse issuer, political, regulatory, market
   or economic developments. Currency fluctuations may adversely impact the
   Portfolio's investments. These

                                  2 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

<PAGE>


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                                   Investments, Risks and Performance, continued


  risks are more pronounced to the extent the Portfolio invests in issuers
  located in emerging markets. Most emerging markets are smaller, less liquid
  and more volatile than developed markets. In addition, political or economic
  instability, lack of market liquidity and government actions such as currency
  controls or seizure of private businesses or property may be more likely in
  emerging markets

 .  The technology sector is subject to greater volatility than the overall
   stock market. Technology companies can be significantly affected by
   obsolescence of existing technology, short product cycles, falling prices
   and profits and competition from new market entrants. The technology sector
   may be subject to greater governmental regulation than many other industry
   sectors, and changes in governmental policies and the need for regulatory
   approvals may have a material adverse effect on the sector

 .  The biotechnology sector can be significantly affected by patent
   considerations, intense competition, rapid technological change and
   obsolescence and governmental regulation. Biotechnology companies can have
   persistent losses during a new product's transition from development to
   production and revenue patterns may be erratic

 .  Telecommunications companies may be significantly affected by the federal
   deregulation of cable and broadcasting and are subject to competitive
   pressures and strict government regulation of rates of return and services
   that may be offered

 .  The Portfolio can invest in issuers with a broad range of market
   capitalizations. Small and medium market capitalization companies are those
   companies with market capitalizations under $5 billion. The value of medium
   and smaller capitalized companies may involve greater risks, such as limited
   product lines, markets or managerial resources. To the extent the Portfolio
   invests in medium and smaller capitalized companies, the Portfolio's
   investments may be more volatile and less liquid than funds investing
   primarily in securities of large capitalization companies

 .  To the extent the Portfolio invests in debt securities, it is subject to the
   risks of investing in debt securities. These include the risk that an issuer
   may default on its obligation to pay principal and/or interest; the
   security's credit rating may be downgraded; an issuer of a security may
   prepay principal earlier than scheduled, which could force the Portfolio to
   reinvest in lower yielding securities (call or prepayment risk) and slower
   than expected payments may extend a security's life, locking in below-market
   interest rates, increasing the security's duration and reducing its value

 .  Investment in high yield securities, commonly known as "junk bonds" involves
   a high degree of risk. These securities are considered speculative with
   respect to the issuer's ability to pay interest and principal and are
   susceptible to default and decline in market value because of adverse
   economic and business developments. The market values for these securities
   tend to be very volatile and they are less liquid than investment grade debt
   securities

 .  The Portfolio is "non-diversified" which means that it may invest a larger
   percentage of its assets in one issuer than a diversified fund. To the
   extent the Portfolio concentrates its assets in fewer issuers, the Portfolio
   will be more susceptible to negative events affecting those issuers. In
   addition, because the Portfolio invests in narrow segments of the economy,
   its investments are not as diversified as most mutual funds and far less
   diversified than the broad securities market. This means that the Portfolio
   tends to be more volatile than other mutual funds and the value of its
   portfolio holdings tend to increase or decrease more rapidly. As a result,
   the value of your investment in the Portfolio may rise or fall rapidly

                                  3 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

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                                   Investments, Risks and Performance, continued


Performance

Because this Portfolio commenced operations on November 28, 2000, the Portfolio
does not yet have a sufficient operating history to generate the performance
information which other Portfolios of Consulting Group Capital Markets Funds
(the "Trust") show in bar and table form at this location of a Prospectus.

Year to date (22.50)% (through 2nd Quarter/2001) (excluding maximum annual
TRAK(R) fee)

                                   Fee table

This table describes the fees and expenses you may pay if you buy and hold
shares of the Portfolio and is based upon estimated expenses for the
Portfolio's current fiscal year.

<TABLE>
               <S>                                        <C>
               Shareholder fees                            None
               (fees paid directly from your investment)

               Maximum annual TRAK(R) fee*                  1.50%

               Annual Portfolio operating expenses
               (expenses that are deducted from Portfolio
                 assets)
                  Management fee                            0.90%
                  Administration fee                        0.20%
                  Other expenses                            1.86%

                                                           -----
               Total annual Portfolio operating expenses    2.96%
               Management fee waiver**                     (1.66)%
                                                           -----
               Net annual Portfolio operating expenses      1.30%
                                                           =====
</TABLE>

*  Fee payable under the TRAK(R) Personalized Investment Advisory Service for
   asset allocation services. See "Asset Allocation Programs."
** Management has agreed to waive a portion of the management fee because it
   has voluntarily agreed to limit total annual Portfolio expenses to 1.30% of
   average net assets. The fee waiver will remain in effect until changed by
   the Board of Trustees.


Example

This example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. Your actual costs
may be higher or lower.

The example assumes:

 .  You invest $10,000 in the Portfolio for the time periods indicated;

 .  You reinvest all dividends and distributions;

 .  You redeem at the end of each period;

 .  Your investment has a 5% return each year; and

 .  The Portfolio's operating expenses remain the same.

Under these assumptions, your costs including the maximum annual TRAK(R) fee,
would be:

<TABLE>
<CAPTION>
After 1 After 3 After 5 After 10
 year    years   years   years
<S>     <C>     <C>     <C>
 $447.. $1,349  $2,260   $4,582
</TABLE>

                                  4 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

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More on the Portfolio's Investments


The section entitled "Investments, Risks and Performance" describes the
Portfolio's investment objectives and its principal investment strategies and
risks. This section provides some additional information about the Portfolio's
investments and certain investment management techniques the Portfolio may use.
More information about the Portfolio's investments and portfolio management
techniques, some of which entail risk, is included in the Statement of
Additional Information (SAI). To find out how to obtain an SAI, please turn to
the back cover of this prospectus.

Equity Investments. The Portfolio may invest in all types of equity securities.
Equity securities include exchange-traded and over-the-counter common and
preferred stocks, warrants, rights, convertible securities, depositary receipts
and shares, trust certificates, limited partnership interests, shares of other
investment companies and real estate investment trusts and equity
participations.

Fixed Income Investments.  The Portfolio may invest a portion of its assets in
fixed income securities. Fixed income investments include bonds, notes
(including structured notes), convertible securities, eurodollar and yankee
dollar instruments, preferred stocks and money market instruments. The
Portfolio does not invest in mortgage backed, asset backed or municipal
securities. Fixed income securities may be issued by corporate and governmental
issuers and may have all types of interest rate payment and reset terms,
including fixed rate, adjustable rate, zero coupon, contingent, deferred,
payment-in-kind and auction rate features.

An individual security's maturity is the date upon which the issuer must pay
back the face amount of the security. A security may have an "effective"
maturity which is shorter or longer than its stated maturity depending on the
degree of prepayment or extension risk associated with that security. Duration
is the measure of an individual security's price sensitivity to changing
interest rates. The longer a security's duration, the more sensitive that
security's price will be to changes in interest rates.

Foreign Securities. Investments in securities of foreign entities and
securities quoted or denominated in foreign currencies involve special risks.
These include possible political and economic instability and possible
imposition of exchange controls or other restrictions on investments. If the
Portfolio invests in securities denominated or quoted in currencies other than
the U.S. dollar, changes in foreign currency rates relative to the U.S. dollar
will affect the U.S. dollar value of the Portfolio's assets.

Emerging market investments offer the potential of significant gains but also
involve greater risks than investing in more developed countries. Investing in
the emerging markets involves exposure to potentially unstable governments,
economies based on only a few industries and securities markets that trade a
small number of securities and therefore may be illiquid. In addition, emerging
markets may present the risk of nationalization of businesses, restrictions on
foreign ownership, and repatriation of assets and may have less protection of
personal property. The Consulting Group generally considers all of the western
European countries, Canada, Australia, New Zealand, Hong Kong, Singapore and
Japan to have developed markets and economies and the rest of the countries in
the world to have emerging markets and economies.

Economic and monetary union (EMU) in Europe began to be implemented on January
1, 1999, when 11 European countries adopted a single currency--the euro. The
conversion to the euro is being phased in over a three year period, during
which time valuation, systems and other operational problems may occur in
connection with the Portfolio's investments quoted in 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 will remain in the hands of each participating
country, but will be subject to each country's commitment to avoid "excessive
deficits" and other more specific budgetary criteria. A European Central Bank
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 the international
markets.

                                  5 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

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                                  More on the Portfolio's Investments, continued




                                Credit Quality

 The Portfolio's rating criteria are applied at the time of purchase. If a
 security is subsequently downgraded, the investment adviser may, but is not
 required to, sell the security. If a security is rated differently by two or
 more rating organizations, the investment adviser may use the higher rating to
 determine the security's rating category.

 Securities are considered investment grade if they are:

 .  rated in one of the top four long-term rating categories by a nationally
   recognized statistical rating organization.

 .  unrated securities that the investment adviser believes to be of comparable
   quality.

 Securities are considered below investment grade if they are rated below the
 top four long-term ratings or are of equivalent quality if unrated. Below
 investment grade securities, also known as "high yield securities," (commonly
 known as "junk bonds") are subject to:

 .  the increased risk of an issuer's inability to meet principal and interest
   obligations.

 .  greater price volatility because of a heightened sensitivity to changing
   interest rates.

 .  less liquidity.

Derivative contracts. The Portfolio may, but is not required to, use derivative
contracts for any of the following purposes:

 .  To hedge against adverse changes caused by changing interest rates, stock
   market prices or currency exchange rates in the market value of securities
   held by or to be bought for the Portfolio.

 .  As a substitute for purchasing or selling securities.

 .  To shorten or lengthen the effective maturity or duration of the Portfolio's
   fixed income investments.

 .  To enhance the Portfolio's potential gain in non-hedging situations.

 .  To increase the Portfolio's liquidity.

The Portfolio may use various types of derivative instruments, including
options on securities and securities indices, futures and options on futures,
forward currency contracts, currency futures contracts and options on
currencies and currency futures. A derivative contract will obligate or entitle
the Portfolio to deliver or receive an asset or a cash payment based on the
change in value of
one or more designated securities, currencies or indices. Even a small
investment in derivative contracts can have a big impact on the Portfolio's
interest rate, stock market and currency exposure. Therefore, using derivatives
can disproportionately increase Portfolio losses and reduce opportunities for
gains when interest rates, stock prices or currency rates are changing. The
Portfolio 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 Portfolio's holdings. The other party to certain derivative contracts
presents the same types of credit risk as issuers of fixed income securities.
Derivatives can also make the Portfolio's assets less liquid and harder to
value, especially in declining markets.

High Yield Securities. The Portfolio can invest in high yield securities. These
are commonly known as "junk bonds" and involve a substantial risk of loss.
These securities are considered speculative with respect to the issuer's
ability to pay interest and principal and are susceptible to default or decline
in market value because of adverse economic and business developments. The
market values for high yield securities tend to be very volatile, and these
securities are less liquid than investment grade debt securities. The Portfolio
may experience increased price sensitivity to changing interest rates and
greater risk of loss because of default or declining credit quality. In
addition, adverse company specific events are more likely to render the issuer
unable to make interest and/or principal payments. A negative perception of the
high yield market may develop, depressing the price and liquidity of high yield
securities. This negative perception could last for a significant period of
time.

Defensive investing. The Portfolio 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. The Portfolio's investments in these assets are managed
by Smith Barney Fund Management LLC.

Impact of high portfolio turnover. The Portfolio may engage in active and
frequent trading to achieve its principal investment strategies. This may lead
to the realization and distribution to shareholders of higher capital gains,
which would increase their tax liability. Frequent trading also increases
transaction costs, which could detract from the Portfolio's performance.

Investment Policies. The Portfolio's non-fundamental investment policies
generally may be changed by the Board of Trustees without shareholder approval.

                                  6 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

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The Manager

The manager. The Consulting Group, a division of Smith Barney Fund Management
LLC ("SBFM")(formerly known as SSB Citi Fund Management LLC), serves as the
manager for the Portfolio. "SBFM" is a wholly-owned subsidiary of Salomon Smith
Barney Holdings Inc., which in turn is a wholly-owned subsidiary of Citigroup
Inc. Citigroup businesses produce a broad range of financial services--asset
management, banking and consumer finance, credit and charge cards, insurance,
investments, investment banking and trading--and use diverse channels to make
them available to consumer and corporate customers around the world. As
manager, the Consulting Group selects and oversees professional money managers
who are responsible for investing the assets of the Portfolio. The Consulting
Group was established to match the investment needs of institutional investors
and substantial individual investors with appropriate and well-qualified
investment advisers. Since 1973, the Consulting Group has grown to become one
of the nation's foremost organizations providing portfolio evaluation, asset
allocation, market analysis and investment adviser selection services.

The Portfolio is part of a series of portfolios which comprise the Trust. The
Trust is a series company that consists of the Portfolio and the following
additional portfolios which are offered in separate prospectuses, copies of
which can be obtained from any Salomon Smith Barney Financial Consultant:

 .  Government Money Investments

 .  Intermediate Fixed Income Investments

 .  Long-Term Bond Investments

 .  Municipal Bond Investments

 .  Mortgage Backed Investments

 .  High Yield Investments

 .  Balanced Investments

 .  Large Capitalization Value Equity Investments

 .  Large Capitalization Growth Investments

 .  Small Capitalization Value Equity Investments

 .  Small Capitalization Growth Investments

 .  International Equity Investments

 .  International Fixed Income Investments

 .  Emerging Markets Equity Investments

 .  Multi-Strategy Market Neutral Investments

 .  Multi-Sector Fixed Income Investments

 .  S & P 500 Index Investments

The investment advisers. INVESCO Funds Group, Inc. ("INVESCO") and Elijah Asset
Management, LLC ("Elijah"), as investment advisers, are responsible for the
day-to-day investment operations of the Portfolio in accordance with the
Portfolio's investment objectives and policies. The Portfolio's assets are
allocated among each investment adviser according to the following percentages:
INVESCO 50% and Elijah 50%. The names and addresses of the investment advisers
are included below:

 CO-INVESTMENT ADVISERS

 INVESCO Funds Group, Inc.
 7800 East Union Avenue
 Suite 1100
 Denver, CO 80237

   PORTFOLIO MANAGERS
   INVESCO utilizes a team management approach

 Elijah Asset Management, LLC
 100 Pine Street
 Suite 420
 San Francisco, CA 94111

   PORTFOLIO MANAGERS
   Ronald Elijah
   Andrew Roediger
   Roderick Berry
   Prior to founding Elijah in 1999, Mr. Elijah was a portfolio manager at
   Robertson, Stephens & Company. Messrs. Roediger and Berry are also founding
   members of Elijah. Mr. Berry previously served as a portfolio manager at
   Robertson, Stephens & Company.


The investment adviser selection process. Subject to the review and approval of
the Board of Trustees, the Consulting Group is responsible for selecting,
supervising

                                  7 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

<PAGE>


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                                                          The Manager, continued


and evaluating investment advisers who manage the Portfolio's assets. The
Consulting Group may adjust the allocation of the Portfolio's assets among the
investment advisers by up to 10%. Any adjustment affecting more than 10% of the
Portfolio's assets will be made by the Board of Trustees. The Consulting Group
employs a rigorous evaluation process to select those investment advisers that
have distinguished themselves through consistent and superior performance. The
Consulting Group is also responsible for communicating performance expectations
and evaluations to each investment adviser and ultimately recommending to the
Board of Trustees whether the investment adviser's contract should be renewed.
The Consulting Group provides written reports to the Trustees regarding the
results of its evaluation and monitoring functions.


                            The Evaluation Process

 The Consulting Group screens more than 3,000 registered investment advisory
 firms, tracks the performance of more than 700 firms on its comprehensive
 database and evaluates the strength and performance of advisory firms in
 Consulting Group programs each year. Throughout the evaluation, the Consulting
 Group focuses on a number of key issues:

 .  level of expertise

 .  relative performance and consistency of performance

 .  strict adherence to investment discipline or philosophy

 .  personnel, facility and financial strength

 .  quality of service and communication.

The Portfolio relies upon an exemptive order from the Securities and Exchange
Commission which permits the manager to select new investment advisers or
replace existing investment advisers without first obtaining shareholder
approval for the change. The Trustees, including a majority of the
"non-interested" Trustees, must approve each new investment advisory contract.
This allows the manager to act more quickly to change investment advisers when
it determines that a change is beneficial to shareholders by avoiding the delay
of calling and holding shareholder meetings to approve each change. In
accordance with the exemptive order, the Portfolio will provide investors with
information about each new investment adviser and its investment advisory
contract within 90 days of the engagement of a new investment adviser.

Management fees. The Consulting Group receives fees from the Portfolio for its
services at an annual rate of 0.90% of its average daily net assets. For the
fiscal period ended March 31, 2001, the Consulting Group received a management
fee equal to 0.84% of the Portfolio's average daily net assets. In turn, the
Consulting Group pays the investment advisers a portion of this fee for their
services. In addition, the Portfolio paid SBFM a fee at an annual rate of 0.20%
of the Portfolio's average daily net assets for administration services.

Possible Conflict of Interest. The advisory fee paid by each portfolio in the
Trust to the manager and the portion of that advisory fee paid by the manager
to each investment adviser varies depending upon the portfolio of the Trust
selected. For this reason, the manager could retain a larger portion of the
advisory fee by recommending to clients in its asset allocation program certain
portfolios in the Trust over other portfolios for asset allocation. You should
consider this possible conflict of interest when evaluating the manager's asset
allocation recommendation. The manager intends to comply with standards of
fiduciary duty that require it to act solely in the best interest of a
participant when making investment recommendations.

                                  8 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

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Asset Allocation Programs

Shares of the Trust's portfolios are available to participants in advisory
programs or asset based fee programs sponsored by Salomon Smith Barney Inc.,
including the TRAK(R) Personalized Investment Advisory Service, or other
qualified investment advisers approved by the Consulting Group. The advisory
services provide investors with asset allocation recommendations, which are
implemented through the portfolios.

Advisory services generally include:

 .  evaluating the investor's investment objectives and time horizon

 .  analyzing the investor's risk tolerance

 .  recommending an allocation of assets among the portfolios in the Trust

 .  providing monitoring reports containing an analysis and evaluation of an
   investor's account and recommending any changes

While an advisory service makes a recommendation, the ultimate investment
decision is up to the investor and not the provider of the advisory service.

Under an advisory service, an investor typically pays an advisory fee that may
vary based on a number of factors. The maximum fee for assets invested in the
Trust under a Salomon Smith Barney advisory service is 1.50% of average
quarter-end net assets. This fee may be reduced in certain circumstances. The
fee under a Salomon Smith Barney advisory program may be paid either by
redemption of shares of the Trust or by separate payment.

                                  9 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

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Investment and Account Information

Account transactions

Purchase of Shares. You may purchase shares of the Portfolio if you are a
participant in an advisory program or asset based fee program sponsored by
Salomon Smith Barney, including TRAK(R), or by qualified investment advisers
not affiliated with Salomon Smith Barney. Purchases of shares of the Portfolio
must be made through a brokerage account maintained with Salomon Smith Barney
or through a broker that clears securities transactions through Salomon Smith
Barney (an introducing broker). You may establish a brokerage account with
Salomon Smith Barney free of charge in order to purchase shares of the
Portfolio.

 .  The minimum initial aggregate investment in the TRAK program is $10,000. The
   minimum investment in the Portfolio is $100.

 .  There is no minimum on additional investments.

 .  The minimum initial aggregate investment in the TRAK program for employees
   of Salomon Smith Barney and members of their immediate families, and
   retirement accounts or plans for those persons, is $5,000.

 .  The Portfolio and the TRAK program may vary or waive the investment minimums
   at any time.

 .  You may establish a Systematic Withdrawal/Investment Schedule. For more
   information, contact your Investment Professional or consult the SAI.

Shares of the Portfolio are sold at net asset value per share without
imposition of a sales charge but will be subject to any applicable advisory
program fee. All orders to purchase accepted by Salomon Smith Barney or the
introducing broker before 4:00 p.m., Eastern time, will receive that day's
share price. Orders accepted after 4:00 p.m. will receive the next day's share
price. All purchase orders must be in good order to be accepted. This means you
have provided the following information:

 .  Name of the portfolio

 .  Account Number

 .  Dollar amount or number of shares to be purchased

 .  Signatures of each owner exactly as the account is registered

The Portfolio reserves the right to reject purchase orders or to stop offering
its shares without notice. No order will be accepted unless Salomon Smith
Barney has received and accepted an advisory agreement signed by the investor
participating in the TRAK(R) program or other advisory program sponsored by
Salomon Smith Barney. With respect to investors participating in advisory
programs sponsored by entities other than Salomon Smith Barney, Salomon Smith
Barney must have received and accepted the appropriate documents before the
order will be accepted. Payment for shares must be received by Salomon Smith
Barney or the introducing broker within three business days after the order is
placed in good order.

Redemption of Shares. You may sell shares of the Portfolio at net asset value
on any day the New York Stock Exchange is open by contacting your broker. All
redemption requests accepted by Salomon Smith Barney or an introducing broker
before 4:00 p.m. Eastern time on any day will be executed at that day's share
price. Orders accepted after 4:00 p.m. will be executed at the next day's
price. All redemption orders must be in good form, which may require a
signature guarantee (available from most banks, dealers, brokers, credit unions
and federal savings and loan associations, but not from a notary public) to
assure the safety of your account. If you discontinue your Salomon Smith Barney
advisory service, you must redeem your shares in the Portfolio.

The Portfolio has the right to suspend redemptions of shares and to postpone
the transmission of redemption proceeds to a shareholder's account at Salomon
Smith Barney or at an introducing broker for up to seven days, as permitted by
law. Redemption proceeds held in an investor's brokerage account generally will
not earn any income and Salomon Smith Barney or the introducing broker may
benefit from the use of temporarily uninvested funds. A shareholder who pays
for shares of the Portfolio by personal check will be credited with the
proceeds of a redemption of those shares after the purchaser's check has
cleared, which may take up to 15 days.

Exchange of Shares. An investor that participates in an advisory program may
exchange shares in the Portfolio for shares in any other portfolio in the Trust
at net asset value without payment of an exchange fee. Be sure to consider the
investment objectives and policies of any portfolio into which you make an
exchange. An exchange is a taxable transaction except for exchanges within a
retirement account.

The Consulting Group may limit additional exchanges and/or purchases by a
shareholder if it determines that the shareholder is pursuing a pattern of
frequent exchanges. Excessive exchange transactions can adversely affect the
Portfolio's performance, hurting the Portfolio's other shareholders. If the
Consulting Group discovers a pattern of frequent exchanges, it will provide
notice in

                                 10 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

<PAGE>


--------------------------------------------------------------------------------
                                   Investment and Account Information, continued


writing or by telephone to the shareholder at least 15 days before suspending
his or her exchange privilege. During the 15-day period the shareholder will be
required either to redeem his or her shares in the Portfolio or establish an
allocation which the shareholder expects to maintain for a significant period
of time.

Accounts with Low Balances. If your account falls below $7,500 as a result of
redemptions (and not because of performance or payment of the Salomon Smith
Barney Advisory Service fees), Salomon Smith Barney or the introducing broker
may ask you to increase the size of your account to $7,500 within thirty days.
If you do not increase the account to $7,500, Salomon Smith Barney may redeem
the shares in your account at net asset value and remit the proceeds to you.
The proceeds will be deposited in your brokerage account unless you instruct
otherwise.

Valuation of shares

The Portfolio offers its shares at its net asset value per share. The Portfolio
calculates net asset value once daily as of the close of regular trading on the
New York Stock Exchange (generally at 4:00 p.m., New York time) on each day the
exchange is open. The exchange is closed on certain holidays listed in the SAI.
If the exchange closes early, the Portfolio accelerates calculation of net
asset value and transaction deadlines to the actual closing time.

The Portfolio generally values its fund securities based on market prices or
quotations. The Portfolio's currency conversions, if any, are done when the
London stock exchange closes. When reliable market prices or quotations are not
readily available, or when the Consulting Group believes they are unreliable or
that the value of a security has been materially affected by events occurring
after the securities or currency exchanges close, the Portfolio may price those
securities at fair value. Fair value is determined in accordance with
procedures approved by the Board of Trustees. A mutual fund that uses fair
value to price securities may value those securities higher or lower than
another fund using market quotations to price the same securities.

International markets may be open, and trading may take place, on days when
U.S. markets are closed. For this reason, the values of foreign securities
owned by the Portfolio could change on days when shares of the Portfolio cannot
be bought or redeemed.

Dividends and distributions

The Portfolio intends to distribute all or substantially all of its net
investment income and realized capital gains, if any, for each taxable year.
The Portfolio declares and pays dividends, if any, from net investment income
annually. The Portfolio declares and distributes realized net capital gains, if
any, annually, typically in December. All dividends and capital gains are
reinvested in shares of the Portfolio unless the shareholder elects to receive
them in cash.

The Portfolio expects distributions to be primarily from capital gains.

Taxes
              ----------------------------------------------------

              Transactions                Federal Tax Status

              ----------------------------------------------------
              Sales or exchange of         Usually capital gain or
                shares                     loss; long-term only if
                                           shares owned more than
                                           one year
              ----------------------------------------------------
              Distributions of long-term   Long-term capital gain
                capital gain
              ----------------------------------------------------
              Distributions of short-term  Ordinary income
                capital gain
              ----------------------------------------------------
              Dividends from net           Ordinary income
                investment income
              ----------------------------------------------------
              Any of the above received    Not a taxable event
                by a retirement account
              ----------------------------------------------------

Long-term capital gain distributions are taxable to you as long-term capital
gain regardless of how long you have owned your shares. You may want to avoid
buying shares when the Portfolio is about to declare a capital gain
distribution or a taxable dividend, because it will be taxable to you even
though it may actually be a return of a portion of your investment.

After the end of each year, you will receive a Form 1099 indicating your
dividends and distributions for the prior year, which are taxable as described
above even if reinvested, and your redemptions during that year. If you do not
provide the Portfolio with your correct taxpayer identification number and any
required certifications, you may be subject to a backup withholding tax of the
Portfolio's distributions, dividends and redemption proceeds. Because each
shareholder's circumstances are different and special tax rules may apply, you
should consult your tax adviser about your investment in the Portfolio.

As noted above, investors, out of their own assets, will pay an advisory
service fee. For most investors who are individuals, this fee will be treated
as a "miscellaneous itemized deduction" for federal income tax purposes.

                                 11 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

<PAGE>


--------------------------------------------------------------------------------
                                   Investment and Account Information, continued


Under current federal income tax law, an individual's miscellaneous itemized
deductions for any taxable year will be allowed as a deduction only to the
extent the aggregate of these deductions exceeds 2% of adjusted gross income.
Such deductions are also subject to the general limitation on itemized
deductions for individuals having, in 2001, adjusted gross income in excess of
$132,950 ($66,475 for married individuals filing separately).

                                 12 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

<PAGE>


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


Financial Highlights

The financial highlights tables are intended to help you understand the
performance of each portfolio for the past five years (or since inception if
less than 5 years). The information in the following tables was audited by KPMG
LLP, independent auditors, whose report, along with each portfolio's financial
statements, is included in the annual report (available upon request). Certain
information reflects financial results for a single share. Total return
represents the rate that a shareholder would have earned (or lost) on a share
of a fund assuming reinvestment of all dividends and distributions.
For a share of beneficial interest outstanding throughout the period ended
March 31:

Large Capitalization Growth Investments
<TABLE>
<CAPTION>
                ================================================
                                                     2001(1)(2)
                ================================================
                <S>                                  <C>
                Net Asset Value, Beginning of Period $    8.00
                ------------------------------------------------
                Loss From Operations:
                  Net investment loss(3)                 (0.2)
                  Net realized and unrealized loss      (2.78)
                ------------------------------------------------
                Total Loss From Operations              (2.80)
                ------------------------------------------------
                Less Distributions From:
                  Net investment income                     --
                ------------------------------------------------
                Total Distributions                         --
                ------------------------------------------------
                Net Asset Value, End of Period       $    5.20
                ------------------------------------------------
                Total Return++                        (35.00)%
                ------------------------------------------------
                Net Assets, End of Period (000s)     $  10,419
                ------------------------------------------------
                Ratios to Average Net Assets+:
                  Expenses(3)(4)                         1.30%
                  Net investment loss                   (0.60)
                ------------------------------------------------
                Portfolio Turnover Rate                    55%
                ================================================
</TABLE>

(1)For the period from November 28, 2000 (commencement of operations) to March
   31, 2001.
(2)Per share amounts have been calculated using the monthly average shares
   method.
(3)The manager has waived a portion of its management fee and reimbursed
   expenses of $69,415 for the period ended March 31, 2001. If such fees were
   not waived or expenses not reimbursed, the per share decrease to net
   investment income and the actual expense ratio would have been as follows:

<TABLE>
<CAPTION>
                                              Expense Ratio
                                            Without Fee Waiver
                      Per Share Decrease to    and Expense
                      Net Investment Income   Reimbursement

                 ==============================================
                 <S>  <C>                   <C>
                 2001         $0.04                2.96%+
</TABLE>

(4)As a result of a voluntary expense limitation, the ratio of expenses to
   average net assets will not exceed 1.30%.
++ Total return is not annualized, as it may not be representative of the total
   return for the year.
+  Annualized.

                                 13 | GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS

<PAGE>


                    (This page is intentionally left blank)

<PAGE>

                                  APPENDIX A

                              Investment Indices
Following are definitions of indices that are utilized in the Client's
Recommendation and Review.

Lehman Brothers Government/Corporate Bond Index
Composed of publicly issued, fixed rate, non-convertible domestic debt in three
major classifications: industrial, utility, financial as well as the domestic
debt of the U.S. Government or any agency thereof. All issues have at least one
year to maturity, or an outstanding par value of at least $100 million for U.S.
Government issues and $50 million for corporate issues. All corporate issues
have a minimum rating of Baa by Moody's or BBB by Standard & Poor's.

Lehman Brothers Aggregate Bond Index
Composed of the Lehman Intermediate Government/ Corporate Bond Index and the
Mortgage-Backed Securities Index and also includes treasury issues, agency
issues, corporate bond issues and mortgage-backed securities.

Lehman Brothers Long Term Government/Corporate Bond Index
Includes all bonds covered by the Lehman Brothers Government/Corporate Bond
Index, with maturities of 10 years or longer. Total return includes income and
appreciation/depreciation as a percentage of original investment.

Lehman Brothers Intermediate Government/Corporate Bond Index
A subset of the Lehman Brothers Government/Corporate Bond Index covering issues
with maturities up to ten years.

Lehman Brothers Mortgage Backed Securities Bond Index
Contains all fixed income securities issued and backed by mortgage pools of
GNMA's, FHLMC's, FNMA's, Graduated Payment Mortgage (GPM's), but not Graduated
Equity Mortgages (GEM).

Lehman Brothers Municipal Bond Index
A composite measure of the total return performance of the municipal bond
market, which includes more than two million different bond issues. For
simplicity, the market is divided into seven major sectors, with the
performance of each sector weighted according to issue volume (adjusted
annually).

Lipper Balanced Funds Average
An average of the reinvested performance of funds whose primary objective is to
conserve principal by maintaining at all times a balanced portfolio of both
stocks and bonds. Typically, the stock/bond ratio ranges around 60 percent/40
percent, respectively.

Lipper Corporate Debt Funds A Rated Average
An average of the reinvested performance of funds that invest at least 65% of
their assets in corporate debt issues rated "A" or better or government issues.

Lipper Corporate Debt Funds A Rated Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper Emerging Markets Funds Average
An average of the reinvested performance of funds that invest at least 65% of
total assets in emerging market equity securities, where emerging market is
defined by a country's gross national product per capita or other economic
measures.

Lipper General Municipal Debt Funds Average
An average of the reinvested performance of funds that invest at least 65% of
their assets in municipal debt issues in the top four credit ratings.

Lipper General Municipal Funds Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper General World Funds Average
An average of the reinvested performance of the following twelve Lipper
investment objectives: Gold Oriented, Global, Global Small Company,
International, International Small Company, European Region, Pacific Ex Japan,
Pacific Region, Emerging Markets, Japanese, Latin American and Canadian Funds.

Lipper Growth Funds Average
An average of the reinvested performance of funds that normally invest in
companies whose long-term earnings are expected to grow significantly faster
than the earnings of the stocks represented in the major unmanaged stock
indices.

Lipper Growth Funds Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper International Funds Average
An average of the reinvested performance of funds that invest their assets in
securities whose primary trading markets are outside of the United States.

Lipper International Funds Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper International Income Funds Average
An average of the reinvested performance of funds that invest primarily in U.S.
dollar and non-U.S. dollar debt securities located in at least three countries
excluding the United States, except in periods of market weakness.

Lipper Large-Cap Growth Funds Average
An average of the reinvested performance of funds that normally invest in
companies with long-term earnings expected to grow significantly faster than
the earnings of the stocks represented in a major unmanaged stock index. These
funds will normally have an above-average price-to-earnings ratio,
price-to-book ratio and three-year earnings growth figure, compared to the U.S.
diversified large-cap funds

                                      A-1

<PAGE>

                                  APPENDIX A

                        Investment Indices--(Continued)

universe average. Large-cap funds will generally invest at least 75% of their
assets in companies with market capitalizations (on a three-year weighted
basis) greater than 300% of the dollar-weighted median market capitalization of
the S&P Mid-Cap 400 Index.

Lipper Multi-Cap Value Funds Average
An average of the reinvested performance of funds that normally invest in
companies considered to be undervalued relative to a major unmanaged stock
index based on price-to-current earnings, book value, asset value or other
factors. These funds will normally have a below-average price-to-earnings
ratio, price-to-book ratio and three-year earnings growth figure, compared to
the U.S. diversified multi-cap funds universe average. Multi-cap funds will
generally have between 25% to 75% of their assets invested in companies with
market capitalizations (on a three-year weighted basis) greater than 300% of
the dollar-weighted median market capitalization of the S&P Mid-Cap 400 Index.

Lipper Small-Cap Growth Funds Average
An average of the reinvested performance of funds that normally invest in
companies with long-term earnings expected to grow significantly faster than
the earnings of the stocks represented in a major unmanaged stock index. These
funds will normally have an above-average price-to-earnings ratio,
price-to-book ratio and three-year earnings growth figure, compared to the U.S.
diversified small-cap funds universe average. Small-cap funds will generally
invest at least 75% of their assets in companies with market capitalizations
(on a three-year weighted basis) of less than 250% of the dollar-weighted
median market capitalization of the S&P Small-Cap 600 Index.

Lipper Small-Cap Value Funds Average
An average of the reinvested performance of funds that normally invest in
companies considered to be undervalued relative to a major unmanaged stock
index based on price-to-current earnings, book value, asset value or other
factors. These funds will normally have a below-average price-to-earnings
ratio, price-to-book ratio and three-year earnings growth figure, compared to
the U.S. diversified small-cap funds universe average. Small-cap funds will
generally invest at least 75% of their assets in companies with market
capitalizations (on a three-year weighted basis) of less than 250% of the
dollar-weighted median market capitalization of the S&P Small-Cap 600 Index.

Lipper Small Company Funds Average
An average of the reinvested performance of funds that by their prospectus or
portfolio practice, limit investments to companies on the basis of the size of
the company.

Lipper Small Company Funds Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper U.S. Government Money Market Funds Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper U.S. Mortgage Funds Average
An average of the reinvested performance of funds that invest at least 65% of
their assets in mortgages/securities issued or guaranteed as to principal and
interest by the U.S. Government and certain federal agencies.

Morgan Stanley EAFE (Capitalization Weighted)
A composite portfolio of equity (stock market) total returns for the countries
of Europe, Australia, New Zealand and the Far East. The return for each country
is weighted on the basis of its market capitalization.

Morgan Stanley Emerging Equity Markets Free Gross Dividend Index
A composite portfolio consisting of equity total returns for countries with low
to middle per capita income, as determined by the World Bank. Some of these
countries include: Argentina, Greece, India, Malaysia and Turkey. The return
for each country is weighted on the basis of its total market capitalization.

90-Day Treasury Bill Index
Unweighted average of weekly auction offering rates of 90-Day Treasury Bills.
Treasury Bills are backed by the full faith and credit of the U.S. Government.

Russell 1000 Index
The 1,000 largest U.S. companies by market capitalization, representing
approximately 92% of the Russell 3000 Index, the smallest of which has about
$1.4 billion in market capitalization. The average market capitalization for a
company in this index is $13 billion.

Russell 1000 Value Index
Contains those Russell 1000 securities with less-than-average growth
orientation. Companies in this index generally have low price-to-book and
earnings ratios and lower forecasted growth values than stocks in the Russell
1000 Growth Index.

Russell 1000 Growth Index
Contains those Russell 1000 securities with greater-than-average growth
orientation. Companies in this index tend to exhibit high price-to-book and
earnings ratios and higher forecasted growth values than stocks in the Russell
1000 Value Index.

Russell 2000 Index
Composed of the 2,000 smallest U.S. securities as determined by total market
capitalization, representing approximately 8.0% of the Russell 3000 Index. The
average market capitalization for a company in this index is $530 million, with
the largest being $1.4 billion.

Russell 2000 Value Index
Contains those Russell 2000 securities with less-than-average growth
orientation. Companies in this index generally have low price-to-book and
earnings ratios and lower forecasted growth values than stocks in the Russell
2000 Growth Index.

                                      A-2

<PAGE>

                                  APPENDIX A

                        Investment Indices--(Continued)


Russell 2000 Growth Index
Contains those Russell 2000 securities with greater-than-average growth
orientation. Companies in this index tend to exhibit high price-to-book and
earnings ratios and higher forecasted growth values than stocks in the Russell
2000 Value Index.

Standard & Poor's 500 Index
Tracks the total return of 500 of the largest stocks in the United States,
which includes a representative sample of leading companies in leading
industries. The return of each stock is weighted on the basis of the stock's
capitalization.

Salomon Brothers Non-U.S. Government Bond Index
A market capitalization-weighted index consisting of government bond markets of
Austria, France, Spain, Australia, Germany, Sweden, Belgium, Italy, United
Kingdom, Canada, Japan, Denmark and the Netherlands.

Wilshire Large Company Growth Equity Index
Focuses on the top 750 companies of the Wilshire 5000 in terms of market
capitalization. The smallest company's capitalization is $675 million. The
index excludes companies meeting one or more of the following criteria: less
than 5 years of operating history, high dividend payout, low price-to-book or
low return on equity.
Wilshire Large Company Value Equity Index
Focuses on the top 750 companies of the Wilshire 5000 in terms of market
capitalization. The smallest company's capitalization is $675 million. The
index excludes companies that do not rank favorably on a relative basis due to
their high price-to-earnings and price-to-book ratios, or low yield.

Wilshire Small Company Growth Equity Index
Focuses on companies that rank between 751-1,750 of the Wilshire 5000 in terms
of market capitalization. The smallest company's capitalization is $58 million.
The index excludes companies meeting one or more of the following criteria:
less than two years operating history, high yield, little or no earnings growth
or low beta.

Wilshire Small Company Value Equity Index
Focuses on companies that rank between 751-1,750 of the Wilshire 5000 in terms
of market capitalization. The smallest company's capitalization is $58 million.
The index excludes companies that do not rank favorably on a relative basis
because of their high price-to-earnings and price-to-book ratios, or low yield.

                                      A-3

<PAGE>


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<PAGE>

                                  APPENDIX B

The following are copies of the proposed and final exemption and a technical
amendment to the final exemption from the Department of Labor from certain
provisions of the Employee Retirement Income Security Act of 1974 relating to
the purchase of shares and participation in TRAK by certain retirement plans
and individual retirement accounts.

--------------------------------------------------------------------------------
PENSION AND WELFARE BENEFITS ADMINISTRATION

[Application Nos. D-10809 and D-10865]

Notice of Proposed Individual Exemption to Amend and Replace Prohibited
Transaction Exemption (PTE) 99-15, Involving Salomon Smith Barney Inc., Located
in New York, NY

AGENCY: Pension and Welfare Benefits Administration, U.S. Department of Labor.

ACTION: Notice of proposed individual exemption to modify and replace PTE
99-15.
----------------------------
SUMMARY: This document contains a notice of pendency before the Department of
Labor (the Department) of a proposed and replacement individual exemption
which, if granted, would amend PTE 99-15 (64 FR 1648, April 5, 1999), an
exemption granted to Salomon Smith Barney. PTE 99-15 relates to the operation
of the TRAK Personalized Investment Advisory Service product (the TRAK Program)
and the Trust for Consulting Group Capital Markets Funds (the Trust). If
granted, the proposed exemption would affect participants and beneficiaries of
and fiduciaries with respect to employee benefit plans (the Plans)
participating in the TRAK Program.

EFFECTIVE DATE: If granted, the proposed amendment will be effective as of
April 1, 2000.

DATES: Written comments and requests for a public hearing should be received by
the Department on or before July 17, 2000.

ADDRESSES: All written comments and requests for a public hearing (preferably,
three copies) should be sent to the Office of Exemption Determinations, Pension
and Welfare Benefits Administration, Room N-5649, U.S. Department of Labor, 200
Constitution Avenue, NW, Washington, DC 20210, Attention: Application Nos.
D-10809 and D-10865. The applications pertaining to the proposed exemption and
the comments received will be available for public inspection in the Public
Documents Room of the Pension and Welfare Benefits Administration, U.S.
Department of Labor, Room N-5507, 200 Constitution Avenue, NW, Washington, DC
20210.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady, Office of Exemption
Determinations, Pension and Welfare Benefits Administration, U.S. Department of
Labor, telephone (202) 219-8881. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: Notice is hereby given of the pendency before the
Department of a proposed exemption that would amend and replace PTE 99-15. PTE
99-15, provides an exemption from certain prohibited transaction restrictions
of section 406 of the Employee Retirement Income Security Act of 1974 (the Act)
and from the sanctions resulting from the application of section 4975 of the
Internal Revenue Code of 1986 (the Code), as amended, by reason of section
4975(c)(1) of the Code. Specifically, PTE 99-15 provides exemptive relief from
the restrictions of section 406(a) of the Act and the sanctions resulting from
the application of section 4975 of the Code, by reason of section 4975(c)(1)(A)
through (D) of the Code, for the purchase or redemption of shares in the Trust
by an employee benefit plan, an individual retirement account (the IRA), a
retirement plan for a self-employed individual (the Keogh Plan), or an
individual account pension plan that is subject to the provisions of Title I of
the Act and established under section 403(b) of the Code (the Section 403(b)
Plan). PTE 99-15 also provides exemptive relief from the restrictions of
section 406(b) of the Act and the sanctions resulting from the application of
section 4975 of the Code, by reason of section 4975(c)(1)(E) and (F) of the
Code, with respect to the provision, by the Consulting Group of Salomon Smith
Barney (the Consulting Group), of (1) investment advisory services or (2) an
automatic reallocation option to an independent fiduciary of a participating
Plan (the Independent Plan Fiduciary) which may result in such fiduciary's
selection of a portfolio (the Portfolio) in the TRAK Program for the investment
of Plan assets./1/
--------
 /1 /PTE 99-15 also (a) described a series of corporate mergers which changed
the names of the parties identified in two prior TRAK exemptions which it
superseded [i.e., PTE 94-50 (59 FR 32024, June 21, 1994) and PTE 92-77 (55 FR
45833, October 5, 1992)] and which would permit broader distribution of
TRAK-related products; (b) implemented a recordkeeping reimbursement offset
procedure under the TRAK Program; (c) adopted an automated reallocation option
under the TRAK Program that would reduce the asset allocation (or "outside")
fee paid to Salomon Smith Barney by a Plan investor; and (d) expanded the scope
of the exemption to include Section 403(b) Plans. PTE 94-50 permitted Smith,
Barney Inc. (Smith Barney), Salomon Smith Barney's predecessor, to add a
daily-traded collective investment fund (the GIC Fund) to the existing Fund
portfolios and to describe the various entities operating the GIC Fund. PTE
94-50 also replaced references to Shearson Lehman Brothers, Inc. (Shearson
Lehman) with Smith Barney and amended and replaced PTE 92-77. Finally, PTE
92-77 permitted Shearson Lehman to make the TRAK Program available to Plans
that acquired shares in the former Trust for TRAK Investments and allowed the
Consulting Group to provide investment advisory services to an Independent Plan
Fiduciary which might result in such fiduciary's selection of a Portfolio in
the TRAK Program for the investment of Plan assets.

 As of December 31, 1998, the TRAK Program held assets that were in excess of
$9.6 billion. Of those assets, approximately $1.9 billion were held in 407 Plan
accounts having cash or deferred compensation arrangements and approximately
$4.2 billion were held in more than 59,000 employee benefit plan and
IRA/Keogh-type Plan accounts. At present, the Trust consists of 17 Portfolios
that are managed by the Consulting Group and advised by one or more
unaffiliated sub-advisers selected by Salomon Smith Barney.

 Salomon Smith Barney requests a modification of PTE 99-15 and a replacement of
that exemption with a new exemption for purposes of uniformity./2/
Specifically, Salomon Smith Barney requests that the term "affiliate," as set
forth in PTE 99-15, in Section II(h) of the General Conditions and in Section
III(b) of the Definitions, be amended and clarified to avoid possible
misinterpretation. In this regard, Salomon Smith Barney also requests that the
term "officer" be defined and incorporated into the proposed exemption, in new
Section III(d), to limit the affiliate definition to persons who have a
significant management role. Further, Salomon Smith Barney requests that
Section II(i) of PTE 99-15 be amended to permit an independent sub-adviser (the
Sub-Adviser), under certain circumstances, to exceed the current one percent
limitation on the acquisition of securities that are issued by Salomon Smith
Barney and/or its affiliates, notably in the Sub-Adviser's replication of a
third-party index. If granted, the proposed exemption would be effective as of
April 1, 2000.

 The proposed exemption has been requested in an application filed on behalf of
Salomon Smith Barney pursuant to section 408(a) of the Act and section
4975(c)(2) of the Code, and in accordance with the procedures set forth in 29
CFR Part 2570, Subpart B (55 FR 32836, August 10, 1990). Effective December 31,
1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR 47713, October
17, 1978) transferred the authority of the Secretary of the Treasury to issue
exemptions of the type requested to the Secretary of Labor. Accordingly, the
proposed exemption is being issued solely by the Department.
--------
 /2 /The Department deems PTE 94-50 as having been effectively superseded by
PTE 99-15. Therefore, the proposed amendments described herein will not apply
to PTE 94-50.

                                      B-1

<PAGE>

I. Proposed Modification of the Term "Affiliate''

 Salomon Smith Barney represents that in early December 1999, Citigroup and
State Street Corporation announced an agreement to form a joint venture called
CitiStreet LLC, a Delaware limited liability company (the Joint Venture). The
Joint Venture, which was closed on April 1, 2000, is each 50 percent owned by
Keeper Holdings LLC (Citi), a wholly owned subsidiary of Citigroup, and by
State Street Bank and Trust Company (State Street), a wholly owned subsidiary
of State Street Corporation. Both Citigroup and State Street Corporation are
publicly-held corporations.

 Salomon Smith Barney explains that the formation of the Joint Venture may have
resulted in the disqualification of State Street Global Advisers (SSgA), a
division of State Street, from acting as a Sub-Adviser in the TRAK Program due
to certain ambiguities in the meaning of the word "affiliate." Salomon Smith
Barney represents that SSgA is currently a Sub-Adviser with respect to
approximately $800 million in assets in the International Equity Investments
Portfolio and the Emerging Markets Equity Investments Portfolio.

A. Sections II(h) and III(b)

 Section II(h) of PTE 99-15 provides that--

 Any sub-adviser (the Sub-Adviser) that acts for the Trust to exercise
investment discretion over a Portfolio will be independent of Salomon Smith
Barney and its affiliates.

 Although the term "independent" is not defined in the exemption, Salomon Smith
Barney notes that this condition was added to the original Shearson Lehman
exemption request when Shearson Lehman agreed not to use affiliated
Sub-Advisers. Therefore, Salomon Smith Barney presumes that the term
"independent" means "not an affiliate." Salomon Smith Barney represents that
Section III(b) of PTE 99-15 defines the term "affiliate" of Salomon Smith
Barney to include:

 (1) Any person directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with Salomon Smith Barney.
(For purposes of this subparagraph, the term "control" means the power to
exercise a controlling influence over the management or policies of a person
other than an individual.)

 (2) Any officer, director or partner in such person, and

 (3) Any corporation or partnership of which such person is an officer,
director or a 5 percent partner or owner.

 Salomon Smith Barney notes that problems of interpretation have arisen because
subparagraphs (2) and (3) of the affiliate definition use the term "such
person" rather than referring directly to Salomon Smith Barney. Salomon Smith
Barney explains that when defining an "affiliate" of Salomon Smith Barney, the
definition may be construed to encompass only relationships with Salomon Smith
Barney that involve shared control, influence or economic interests or it could
be interpreted to cover affiliates of Salomon Smith Barney's affiliates, where
there is no basis for common management or identical economic interests,
because subparagraphs (2) and (3) have no clear antecedents.

 Salomon Smith Barney asserts that State Street is not under common corporate
control with either it or any of its corporate affiliates. Instead, State
Street is a subsidiary of an independently-owned and managed public company.
Therefore, there is no control relationship, as contemplated in subparagraph
(1) of Section III(b), between Citigroup and State Street Corporation, the
respective parent companies of Salomon Smith Barney and of State Street.
Salomon Smith Barney also states that the Joint Venture is not necessarily its
affiliate under subparagraph (1) of the definition because Salomon Smith
Barney's indirect 50 percent ownership interest in the Joint Venture is not a
"controlling interest." Therefore, if the Joint Venture is not an affiliate,
Salomon Smith Barney believes that State Street is not a partner of Salomon
Smith Barney, nor an officer or director of Salomon Smith Barney, as
contemplated in subparagraph (2) of Section III(b). Further, Salomon Smith
Barney explains that State Street's exclusive ownership by State Street
Corporation does not trigger the ownership provisions of subparagraph (3) of
Section III(b).

 In addition to the above, Salomon Smith Barney states that it will not
exercise control or influence in the operation of the Joint Venture that will
inure to State Street. In addition, Salomon Smith Barney represents that Citi
will not exercise control of the Joint Venture because it has only a 50 percent
interest. Further, since all significant corporate actions of the Joint Venture
will require unanimity, Salomon Smith Barney explains that neither Citi nor
State Street will be able to exercise exclusive control over the Joint Venture.

B. Proposed Amendment

 Salomon Smith Barney submits that subparagraph (1) of Section III(b) does not
require any clarification. However, it proposes that subparagraphs (2) and (3)
of the affiliate definition be modified to cover only those persons and
entities that have a significant role in the decisions made by Salomon Smith
Barney or which are managed or influenced by Salomon Smith Barney. These
entities or persons include individual officers, directors and partners in
Salomon Smith Barney and its corporate affiliates, and corporations and
partnerships in which Salomon Smith Barney and its corporate affiliates have a
10 percent or greater interest. Salomon Smith Barney believes that this
tailoring of the affiliate definition will avoid future problems in determining
the independence of the Sub-Advisers, including SSgA.

 Thus, on the basis of the foregoing, Section III(b) of PTE 99-15 is hereby
modified in this notice of proposed exemption to read as follows:

 (b) An "affiliate" of Salomon Smith Barney includes--

 (1) Any person directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with Salomon Smith Barney;
(For purposes of this subparagraph, the term "control" means the power to
exercise a controlling influence over the management or policies of a person
other than an individual.)

 (2) Any individual who is an officer, director or partner in Salomon Smith
Barney or a person who is described in subparagraph (b)(1);

 (3) Any corporation or partnership of which Salomon Smith Barney or an
affiliate described in subparagraph (b)(1), is a 10 percent or more partner or
owner; and

 (4) Any corporation or partnership of which any individual which is an officer
or director of Salomon Smith Barney, is a 10 percent or more partner or owner.

 In connection with the revised affiliate definition, Salomon Smith Barney
requests that the term "officer" be defined in new subparagraph (d) of Section
III to limit this portion of the affiliate definition to individuals who have a
significant management role. Salomon Smith Barney points out that there are job
titles at fairly modest levels of authority within it as well as in any
company, and it wishes to ensure that future factual inquiries into an
individual's

                                      B-2

<PAGE>

status as an affiliate do not require that it contact virtually every official
in its corporate population in a due diligence effort. Therefore, Salomon Smith
Barney proposes that Section III(d) should read as follows:

 The term "officer" means a president, any vice president in charge of a
principal business unit, division or function (such as sales, administration or
finance), or any other officer who performs a policy-making function for the
entity.

 Under the foregoing modifications, Salomon Smith Barney believes that Sections
II(h) and III(b) of the proposed exemption will no longer have conflicting
meanings.

II. Proposed Modification of the One Percent Limitation on Stock Issued by
Salomon Smith Barney and/or Its Affiliates

 Salomon Smith Barney represents that there are a number of established market
indexes that have been created by parties which are unaffiliated with
Citigroup, its indirect parent. For example, the S&P 500 Index is a widely-used
benchmark index of domestic equity performance. This index consists of 500
stocks that have been selected by the Standard & Poor's Company (S&P) for
market capitalization, liquidity and industry group representation. The index
is market-value weighted so the performance of the larger of the included
companies has a greater impact on the performance of the index as a whole.
Currently, the common stock (the Common Stock) of Citigroup represents 1.57
percent of the S&P 500 Index.

 In addition to the S&P 500 Index, Salomon Smith Barney explains that the
Russell 3000 Index is composed of the 3,000 largest United States companies,
based upon total market capitalization. Salomon Smith Barney also points out
that there are a number of Russell Indexes which are based on subsets of the
Russell 3000 Index. These Indexes include (a) the Russell 2000 Index, which
measures the performance of the smallest 2,000 United States companies in the
Russell 3000 Index and therefore, excludes Citigroup; and (b) the Russell 1000
Index, which measures the performance of the 1,000 largest United States
companies in the Russell 3000 Value Index and includes Citigroup. In addition,
Salomon Smith Barney represents that there are further subsets of the Russell
Indexes which are based upon Russell's characterization of stock as either
"Growth" or "Value." For example, Salomon Smith Barney explains that Citigroup
is included within these subsets. As of March 31, 2000, Citigroup Common Stock
represented 3.8981 percent of the Russell 1000 Value Index and 3.6343 percent
of the Russell 3000 Value Index.

A. Section II(i)

 Based upon the foregoing descriptions of the stock indexes, Salomon Smith
Barney requests that Section II(i) of PTE 99-15 be modified in order to permit
an independent Sub-Adviser which manages the assets in a Portfolio to exceed
the one percent investment limitation on securities issued by Salomon Smith
Barney and/or its affiliates under certain circumstances. As currently drafted,
Section II(i) states that--

 Immediately following the acquisition by a Portfolio of any securities that
are issued by Salomon Smith Barney and/or its affiliates, the percentage of
that Portfolio's net assets invested in such securities will not exceed one
percent.

 In other words, the exception will apply to "any higher percentage" which may
result from a Sub-Adviser's management of an index fund (the Index Fund)
Portfolio which includes Citigroup Common Stock. The index will be an
established third party index and the Sub-Adviser will track the index results
using the "passive full replication" trading method./3/

 Because the Sub-Adviser will purchase and sell Citigroup Common Stock to
approximate the performance of an index rather than reflect the Sub-Adviser's
evaluation of the Common Stock in its individual merits, Salomon Smith Barney
states that any additional investment by a Portfolio in Citigroup Common Stock
over the one percent threshold will result from the implementation of the
trading method and not from the Sub-Adviser's exercise of investment
discretion.

 Due to the one percent limitation of Section II(i), Salomon Smith Barney states
that active Sub-Advisers for the Consulting Group may not own or trade Citigroup
Common Stock and they will continue to be prohibited from trading in Citigroup
Common Stock. However, Salomon Smith Barney proposes that passive or pure Index
Fund Sub-Advisers be permitted to hold Citigroup Common Stock in their
portfolios which exceed the one percent limitation to the extent such higher
percentage is necessary to replicate the underlying index./4/ Salomon Smith
Barney points out that pure index Sub-Advisers that are responsible for
investing only a portion of the assets in the Consulting Group Capital Markets
Large Cap Value Fund and the Large Cap Growth Consulting Group Capital Markets
Fund, are currently in compliance with the one percent limitation. These
Portfolios, which consist of both an actively-managed portion and a distinct,
passively-managed portion, held less than one percent of the their total assets
in Citigroup Common Stock.

 If an index-based Sub-Adviser were to manage a greater portion or all of
either of the aforementioned Portfolios, Salomon Smith Barney explains that the
total Portfolio may include Citigroup Common Stock which breaches the one
percent threshold. Similarly, Salomon Smith Barney notes that if the entire
Portfolio, such as the Consulting Group Capital Markets S&P 500 Index
Investment Fund Portfolio, has the investment objective of providing results
that correspond to the price and yield performance of the S&P 500 Index, the
Sub-Adviser would be expected to approximate the cited percentage of 1.57
percent for Citigroup Common Stock in the S&P 500 Index. This would also
violate the one percent investment limitation.

 Salomon Smith Barney states that the present one percent limitation placed on
Citigroup Common Stock increases the likelihood that the performance of an
Index Fund Portfolio will not replicate the applicable index. Because Citigroup
is among the largest companies on the basis of capitalization in the S&P 500,
Salomon Smith Barney states that Citigroup's performance can have a significant
impact in index performance calculations. However, if Citigroup Common Stock is
not proportionately represented, Salomon Smith Barney explains that Index Fund
performance will deviate from the index whether Citigroup Common Stock does
well or underperforms.

--------
 /3/According to Salomon Smith Barney, there are two forms of index
trading--passive full replication (wherein each stock in the same weightings as
the index is owned by a mutual fund) and sampling (in which each sector, but
not necessarily all stocks in such sector, in the same weightings as the index
is also owned by a mutual fund). Salomon Smith Barney notes that sampling is
used most often when a portfolio is smaller and cannot efficiently replicate
the entire index.

--------
 /4/In its management of a "pure" Index Fund, the Sub-Adviser does not evaluate
individual companies to identify attractive investment candidates or to
eliminate underperforming investments. Instead, the Sub-Adviser attempts to
mirror the composition of the relevant index as closely as possible by adjusting
the Portfolio holdings daily to reflect the companies included in the index and
their relative weightings. Because performance of the Index Fund is tied to the
performance of the index that it tracks, investors are advised that this
investment strategy may mean losses if the applicable index performs poorly
relative to other indexes or individual stocks.

The performance of a pure Index Fund generally does not mirror the index
performance exactly. The index is merely a composite performance figure, based
upon an established selection of companies. It does not represent actual assets
being managed so there are no expenses deducted from its performance results.
In contrast, an Index Fund Portfolio represents actual assets under management
and has liquidity requirements associated with Fund operation. To meet
redemption requests and to pay expenses, the Index Fund must maintain a portion
of its assets in cash and cash equivalents.

                                      B-3

<PAGE>

 In any event, Salomon Smith Barney believes that the one percent limitation
has the effect of depriving a Plan of the opportunity to invest in a Fund
(available to non-Plan investors) that might otherwise track the applicable
index more exactly. Because many Plan sponsors are anxious to have an Index
Fund available through the TRAK Program, Salomon Smith Barney wishes to move
quickly to accommodate the Plan market's design preferences.

 For these reasons, Salomon Smith Barney requests that the current one percent
restriction be lifted and allowed to be exceeded with respect to Portfolio
investments that are made by passive Sub-Advisers in Citigroup Common Stock in
their replication of third-party indexes. In addition, Salomon Smith Barney
seeks the flexibility to have the Portfolios consist, in whole or in part, of
Index Funds that are managed by passive Sub-Advisers. However, the ownership by
a Portfolio of Citigroup Common Stock which is in excess of the one percent
limitation would result solely from the activities of the passive Sub-Adviser
in replicating an index.

B. Exemptive Safeguards

 Section II(i) of the proposed exemption has been further expanded to include a
number of substantive safeguards for the protection of Plans investing under
the TRAK Program. In this regard, Section II(i) requires that the amount held
by the Sub-Adviser in managing an Index Fund Portfolio be held in order to
replicate an established third party index. In addition, Section II(i) states
that the index must represent the investment performance of a specific segment
of the public market for equity securities in the United States and/or foreign
countries. In this regard, the organization creating the index must be (a)
engaged in the business of providing financial information; (b) a publisher of
financial news information; or (c) a public stock exchange or association of
securities dealers. The index must also be created and maintained by an
organization independent of Salomon Smith Barney and its affiliates and must be
a generally-accepted standardized index of securities which is not specifically
tailored for use by Salomon Smith Barney and its affiliates.

 Moreover, Section II(i) requires that the acquisition or disposition of
Citigroup Common Stock must not include any agreement, arrangement or
understanding regarding the design or operation of the Portfolio acquiring the
Citigroup Common Stock, which is intended to benefit Salomon Smith Barney or
any party in which Salomon Smith Barney may have an interest.

 Finally, Section II(i) requires that an Independent Plan Fiduciary authorize
the investment of a Plan's assets in an Index Fund Portfolio which purchases
and/or holds Citigroup Common Stock while the Sub-Adviser will be responsible
for voting any shares of Citigroup Common Stock that are held by an Index Fund
on any matter in which shareholders of Citigroup Common Stock are required or
permitted to vote.

Notice to Interested Persons

 Notice of the proposed exemption will be mailed by first class mail to the
Independent Plan Fiduciary of each Plan currently participating in the TRAK
Program, or, in the case of a Section 404(c) Plan, to the recordholder of Trust
shares. Such notice will be given within 15 days of the publication of the
notice of pendency in the Federal Register. The notice will contain a copy of
the notice of proposed exemption as published in the Federal Register and a
supplemental statement, as required pursuant to 29 CFR 2570.43(b)(2). The
supplemental statement will inform interested persons of their right to comment
on and/or to request a hearing with respect to the pending exemption. Written
comments and hearing requests are due within 45 days of the publication of the
proposed exemption in the Federal Register.

General Information

 The attention of interested persons is directed to the following:

 (1) The fact that a transaction is the subject of an exemption under section
408(a) of the Act and section 4975(c)(2) of the Code does not relieve a
fiduciary or other party in interest or disqualified person from certain other
provisions of the Act and the Code, including any prohibited transaction
provisions to which the exemption does not apply and the general fiduciary
responsibility provisions of section 404 of the Act, which require, among other
things, a fiduciary to discharge his or her duties respecting the plan solely
in the interest of the participants and beneficiaries of the plan and in a
prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it
affect the requirements of section 401(a) of the Code that the plan operate for
the exclusive benefit of the employees of the employer maintaining the plan and
their beneficiaries;

 (2) The proposed exemption, if granted, will extend to transactions prohibited
under section 406(b)(3) of the Act and section 4975(c)(1)(F) of the Code;

 (3) Before an exemption can be granted under section 408(a) of the Act and
section 4975(c)(2) of the Code, the Department must find that the exemption is
administratively feasible, in the interest of the plan and of its participants
and beneficiaries and protective of the rights of participants and
beneficiaries of the plan;

 (4) This proposed exemption, if granted, will be supplemental to, and not in
derogation of, any other provisions of the Act and the Code, including
statutory or administrative exemptions. Furthermore, the fact that a
transaction is subject to an administrative or statutory exemption is not
dispositive of whether the transaction is in fact a prohibited transaction; and

 (5) This proposed exemption, if granted, is subject to the express condition
that the facts and representations set forth in the notice of proposed
exemption relating to PTE 99-15 and this notice, accurately describe, where
relevant, the material terms of the transactions to be consummated pursuant to
this exemption.

Written Comments and Hearing Requests

 All interested persons are invited to submit written comments or requests for
a hearing on the pending exemption to the address above, within the time frame
set forth above, after the publication of this proposed exemption in the
Federal Register. All comments will be made a part of the record. Comments
received will be available for public inspection with the referenced
applications at the address set forth above.

Proposed Exemption

 Based on the facts and representations set forth in the application, the
Department is considering granting the requested exemption under the authority
of section 408(a) of the Act and section 4975(c)(2) of the Code and in
accordance with the procedures set forth in 29 CFR Part 2570, Subpart B (55 FR
32836, August 10, 1990).

Section I. Covered Transactions

 A. If the exemption is granted, the restrictions of section 406(a) of the Act
and the sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(A) through (D) of the Code, shall not apply, to
the purchase or redemption of shares by an employee benefit

                                      B-4

<PAGE>

plan, an individual retirement account (the IRA), a retirement plan for
self-employed individuals (the Keogh Plan), or an individual account pension
plan that is subject to the provisions of Title I of the Act and established
under section 403(b) of the Code (the Section 403(b) Plan; collectively, the
Plans) in the Trust for Consulting Group Capital Market Funds (the Trust),
established by Salomon Smith Barney, in connection with such Plans'
participation in the TRAK Personalized Investment Advisory Service product (the
TRAK Program).

 B. If the exemption is granted, the restrictions of section 406(b) of the Act
and the sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(E) and (F) of the Code, shall not apply, to the
provision, by the Consulting Group, of (1) investment advisory services or (2)
an automatic reallocation option (the Automatic Reallocation Option) to an
independent fiduciary of a participating Plan (the Independent Plan Fiduciary),
which may result in such fiduciary's selection of a portfolio (the Portfolio)
in the TRAK Program for the investment of Plan assets. This proposed exemption
is subject to the following conditions that are set forth below in Section II.

Section II. General Conditions

 (a) The participation of Plans in the TRAK Program will be approved by an
Independent Plan Fiduciary. For purposes of this requirement, an employee,
officer or director of Salomon Smith Barney and/or its affiliates covered by an
IRA not subject to Title I of the Act will be considered an Independent Plan
Fiduciary with respect to such IRA.

 (b) The total fees paid to the Consulting Group and its affiliates will
constitute no more than reasonable compensation.

 (c) No Plan will pay a fee or commission by reason of the acquisition or
redemption of shares in the Trust.

 (d) The terms of each purchase or redemption of Trust shares shall remain at
least as favorable to an investing Plan as those obtainable in an arm's length
transaction with an unrelated party.

 (e) The Consulting Group will provide written documentation to an Independent
Plan Fiduciary of its recommendations or evaluations based upon objective
criteria.

 (f) Any recommendation or evaluation made by the Consulting Group to an
Independent Plan Fiduciary will be implemented only at the express direction of
such Independent Plan Fiduciary, provided, however, that--

 (1) If such Independent Plan Fiduciary shall have elected in writing (the
Election), on a form designated by Salomon Smith Barney from time to time for
such purpose, to participate in the Automatic Reallocation Option under the
TRAK Program, the affected Plan or participant account will be automatically
reallocated whenever the Consulting Group modifies the particular asset
allocation recommendation which the Independent Plan Fiduciary has chosen. Such
Election shall continue in effect until revoked or terminated by the
Independent Plan Fiduciary in writing.

 (2) Except as set forth below in paragraph II(f)(3), at the time of a change
in the Consulting Group's asset allocation recommendation, each account based
upon the asset allocation model (the Allocation Model) affected by such change
would be adjusted on the business day of the release of the new Allocation
Model by the Consulting Group, except to the extent that market conditions, and
order purchase and redemption procedures may delay such processing through a
series of purchase and redemption transactions to shift assets among the
affected Portfolios.

 (3) If the change in the Consulting Group's asset allocation recommendation
exceeds an increase or decrease of more than 10 percent in the absolute
percentage allocated to any one investment medium (e.g., a suggested increase
in a 15 percent allocation to greater than 25 percent, or a decrease of such 15
percent allocation to less than 5 percent), Salomon Smith Barney will send out
a written notice (the Notice) to all Independent Plan Fiduciaries whose current
investment allocation would be affected, describing the proposed reallocation
and the date on which such allocation is to be instituted (the Effective Date).
If the Independent Plan Fiduciary notifies Salomon Smith Barney, in writing, at
any time within the period of 30 calendar days prior to the proposed Effective
Date that such fiduciary does not wish to follow such revised asset allocation
recommendation, the Allocation Model will remain at the current level, or at
such other level as the Independent Plan Fiduciary then expressly designates,
in writing. If the Independent Plan Fiduciary does not affirmatively "opt out"
of the new Consulting Group recommendation, in writing, prior to the proposed
Effective Date, such new recommendation will be automatically effected by a
dollar-for-dollar liquidation and purchase of the required amounts in the
respective account.

 (4) An Independent Plan Fiduciary will receive a trade confirmation of each
reallocation transaction. In this regard, for all Plan investors other than
Section 404(c) Plan accounts (i.e., 401(k) Plan accounts), Salomon Smith Barney
will mail trade confirmations on the next business day after the reallocation
trades are executed. In the case of Section 404(c) Plan participants,
notification will depend upon the notification provisions agreed to by the Plan
recordkeeper.

 (g) The Consulting Group will generally give investment advice in writing to
an Independent Plan Fiduciary with respect to all available Portfolios.
However, in the case of a Plan providing for participant-directed investments
(the Section 404(c) Plan), the Consulting Group will provide investment advice
that is limited to the Portfolios made available under the Plan.

 (h) Any sub-adviser (the Sub-Adviser) that acts for the Trust to exercise
investment discretion over a Portfolio will be independent of Salomon Smith
Barney and its affiliates.

 (i) Immediately following the acquisition by a Portfolio of any securities
that are issued by Salomon Smith Barney and/or its affiliates, such as
Citigroup Inc. common stock (the Citigroup Common Stock), the percentage of
that Portfolio's net assets invested in such securities will not exceed one
percent. However, this percentage limitation may be exceeded if--

 (1) The amount held by a Sub-Adviser in managing a Portfolio is held in order
to replicate an established third party index.

 (2) The index represents the investment performance of a specific segment of
the public market for equity securities in the United States and/or foreign
countries. The organization creating the index must be--

 (i) Engaged in the business of providing financial information;

 (ii) A publisher of financial news information; or

 (iii) A public stock exchange or association of securities dealers. The index
is created and maintained by an organization independent of Salomon Smith
Barney and its affiliates and is a generally-accepted standardized index of
securities which is not specifically tailored for use by Salomon Smith Barney
and its affiliates.

 (3) The acquisition or disposition of Citigroup Common Stock does not include

                                      B-5

<PAGE>

any agreement, arrangement or understanding regarding the design or operation
of the Portfolio acquiring the Citigroup Common Stock, which is intended to
benefit Salomon Smith Barney or any party in which Salomon Smith Barney may
have an interest.

 (4) The Independent Plan Fiduciary authorizes the investment of a Plan's
assets in an Index Fund which purchases and/or holds Citigroup Common Stock and
the Sub-Adviser is responsible for voting any shares of Citigroup Common Stock
that are held by an Index Fund on any matter in which shareholders of Citigroup
Common Stock are required or permitted to vote.

 (j) The quarterly investment advisory fee that is paid by a Plan to the
Consulting Group for investment advisory services rendered to such Plan will be
offset by such amount as is necessary to assure that the Consulting Group
retains no more than 20 basis points from any Portfolio (with the exception of
the Government Money Investments Portfolio and the GIC Fund Portfolio for which
the Consulting Group and the Trust will retain no investment management fee)
which contains investments attributable to the Plan investor.

 (k) With respect to its participation in the TRAK Program prior to purchasing
Trust shares,

 (1) Each Plan will receive the following written or oral disclosures from the
Consulting Group:

 (A) A copy of the Prospectus for the Trust discussing the investment
objectives of the Portfolios comprising the Trust, the policies employed to
achieve these objectives, the corporate affiliation existing between the
Consulting Group, Salomon Smith Barney and its subsidiaries and the
compensation paid to such entities./5/

 (B) Upon written or oral request to Salomon Smith Barney, a Statement of
Additional Information supplementing the Prospectus which describes the types
of securities and other instruments in which the Portfolios may invest, the
investment policies and strategies that the Portfolios may utilize and certain
risks attendant to those investments, policies and strategies.
--------

 /5/The fact that certain transactions and fee arrangements are the subject of
an administrative exemption does not relieve the Independent Plan Fiduciary
from the general fiduciary responsibility provisions of section 404 of the Act.
In this regard, the Department expects the Independent Plan Fiduciary to
consider carefully the totality of the fees and expenses to be paid by the
Plan, including the fees paid directly to Salomon Smith Barney or to other
third parties.

 (C) A copy of the investment advisory agreement between the Consulting Group
and such Plan relating to participation in the TRAK Program and, if applicable,
informing Plan investors of the Automatic Reallocation Option.

 (D) Upon written request of Salomon Smith Barney, a copy of the respective
investment advisory agreement between the Consulting Group and the
Sub-Advisers.

 (E) In the case of a Section 404(c) Plan, if required by the arrangement
negotiated between the Consulting Group and the Plan, an explanation by a
Salomon Smith Barney Financial Consultant (the Financial Consultant) to
eligible participants in such Plan, of the services offered under the TRAK
Program and the operation and objectives of the Portfolios.

 (F) A copy of the proposed exemption and the final exemption, if granted,
pertaining to the exemptive relief described herein.

 (2) If accepted as an investor in the TRAK Program, an Independent Plan
Fiduciary of an IRA or Keogh Plan, is required to acknowledge, in writing,
prior to purchasing Trust shares that such fiduciary has received copies of the
documents described above in subparagraph (k)(1) of this Section.

 (3) With respect to a Section 404(c) Plan, written acknowledgement of the
receipt of such documents will be provided by the Independent Plan Fiduciary
(i.e., the Plan administrator, trustee or named fiduciary, as the recordholder
of Trust shares). Such Independent Plan Fiduciary will be required to represent
in writing to Salomon Smith Barney that such fiduciary is (a) independent of
Salomon Smith Barney and its affiliates and (b) knowledgeable with respect to
the Plan in administrative matters and funding matters related thereto, and
able to make an informed decision concerning participation in the TRAK Program.

 (4) With respect to a Plan that is covered under Title I of the Act, where
investment decisions are made by a trustee, investment manager or a named
fiduciary, such Independent Plan Fiduciary is required to acknowledge, in
writing, receipt of such documents and represent to Salomon Smith Barney that
such fiduciary is (a) independent of Salomon Smith Barney and its affiliates,
(b) capable of making an independent decision regarding the investment of Plan
assets and (c) knowledgeable with respect to the Plan in administrative matters
and funding matters related thereto, and able to make an informed decision
concerning participation in the TRAK Program.

 (l) Subsequent to its participation in the TRAK Program, each Plan receives
the following written or oral disclosures with respect to its ongoing
participation in the TRAK Program:

 (1) The Trust's semi-annual and annual report which will include financial
statement for the Trust and investment management fees paid by each Portfolio.

 (2) A written quarterly monitoring statement containing an analysis and an
evaluation of a Plan investor's account to ascertain whether the Plan's
investment objectives have been met and recommending, if required, changes in
Portfolio allocations.

 (3) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly, detailed investment performance monitoring
report, in writing, provided to an Independent Plan Fiduciary of such Plan
showing, Plan level asset allocations, Plan cash flow analysis and annualized
risk adjusted rates of return for Plan investments. In addition, if required by
such arrangement, Financial Consultants will meet periodically with Independent
Plan Fiduciaries of Section 404(c) Plans to discuss the report as well as with
eligible participants to review their accounts' performance.

 (4) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly participant performance monitoring report
provided to a Plan participant which accompanies the participant's benefit
statement and describes the investment performance of the Portfolios, the
investment performance of the participant's individual investment in the TRAK
Program, and gives market commentary and toll-free numbers that will enable the
participant to obtain more information about the TRAK Program or to amend his
or her investment allocations.

 (5) On a quarterly and annual basis, written disclosures to all Plans of the
(a) percentage of each Portfolio's brokerage commissions that are paid to
Salomon Smith Barney and its affiliates and (b) the average brokerage
commission per share paid by each Portfolio to Salomon Smith Barney and its
affiliates, as compared to the average brokerage commission per share paid by
the Trust to brokers other than Salomon Smith Barney and its affiliates, both
expressed as cents per share.

                                      B-6

<PAGE>

 (m) Salomon Smith Barney shall maintain, for a period of six years, the
records necessary to enable the persons described in paragraph (n) of this
Section to determine whether the conditions of this exemption have been met,
except that (1) a prohibited transaction will not be considered to have
occurred if, due to circumstances beyond the control of Salomon Smith Barney
and/or its affiliates, the records are lost or destroyed prior to the end of
the six year period, and (2) no party in interest other than Salomon Smith
Barney shall be subject to the civil penalty that may be assessed under section
502(i) of the Act, or to the taxes imposed by section 4975(a) and (b) of the
Code, if the records are not maintained, or are not available for examination
as required by paragraph (n) below.

 (n)(1) Except as provided in section (2) of this paragraph and notwithstanding
any provisions of subparagraphs (a)(2) and (b) of section 504 of the Act, the
records referred to in paragraph (m) of this Section II shall be
unconditionally available at their customary location during normal business
hours by:

 (A) Any duly authorized employee or representative of the Department or the
Service;

 (B) Any fiduciary of a participating Plan or any duly authorized
representative of such fiduciary;

 (C) Any contributing employer to any participating Plan or any duly authorized
employee representative of such employer; and

 (D) Any participant or beneficiary of any participating Plan, or any duly
authorized representative of such participant or beneficiary.

 (2) None of the persons described above in subparagraphs (B)-(D) of this
paragraph (n) shall be authorized to examine the trade secrets of Salomon Smith
Barney or commercial or financial information which is privileged or
confidential.

Section III. Definitions

 For purposes of this proposed exemption:

 (a) The term "Salomon Smith Barney" means Salomon Smith Barney Inc. and any
affiliate of Salomon Smith Barney, as defined in paragraph (b) of this Section
III.

 (b) An "affiliate" of Salomon Smith Barney includes--

 (1) Any person directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with Salomon Smith Barney;
(For purposes of this subparagraph, the term "control" means the power to
exercise a controlling influence over the management or policies of a person
other than an individual.)

 (2) Any individual who is an officer (as defined in Section III(d) hereof),
director or partner in Salomon Smith Barney or a person described in
subparagraph (b)(1);

 (3) Any corporation or partnership of which Salomon Smith Barney or an
affiliate described in subparagraphs(b)(1), is a 10 percent or more partner or
owner; and

 (4) Any corporation or partnership of which any individual which is an officer
or director of Salomon Smith Barney, is a 10 percent or more partner or owner.

 (c) An "Independent Plan Fiduciary" is a Plan fiduciary which is independent
of Salomon Smith Barney and its affiliates and is either--

 (1) A Plan administrator, sponsor, trustee or named fiduciary, as the
recordholder of Trust shares under a Section 404(c) Plan;

 (2) A participant in a Keogh Plan;

 (3) An individual covered under (i) a self-directed IRA or (ii) a Section
403(b) Plan, which invests in Trust shares;

 (4) A trustee, investment manager or named fiduciary responsible for
investment decisions in the case of a Title I Plan that does not permit
individual direction as contemplated by Section 404(c) of the Act; or

 (5) A participant in a Plan, such as a Section 404(c) Plan, who is permitted
under the terms of such Plan to direct, and who elects to direct the investment
of assets of his or her account in such Plan.

 (d) The term "officer" means a president, any vice president in charge of a
principal business unit, division or function (such as sales, administration or
finance), or any other officer who performs a policymaking function for the
entity.

Section IV. Effective Dates

 If granted, this proposed exemption will be effective as of April 1, 2000,
with respect to the amendments to Section II(i) and Section III(b) and the
inclusion of new Section III(d).

 The availability of this proposed exemption is subject to the express
condition that the material facts and representations contained in the
application for exemption are true and complete and accurately describe all
material terms of the transactions. In the case of continuing transactions, if
any of the material facts or representations described in the applications
change, the exemption will cease to apply as of the date of such change. In the
event of any such change, an application for a new exemption must be made to
the Department.

 For a more complete statement of the facts and representations supporting the
Department's decision to grant PTE 92-77, PTE 94-50 and PTE 99-15, refer to the
proposed exemptions and the grant notices which are cited above.

 Signed at Washington, D.C., this 25th day of May, 2000.

Ivan L. Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.

[FR Doc. 00-13643 Filed 5-31-00; 8:45 am]

                                      B-7

<PAGE>

--------------------------------------------------------------------------------
DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 2000-45; Exemption Application Nos. D-10809
and D-10865]

Grant of Individual Exemption To Amend and Replace Prohibited Transaction
Exemption (PTE) 99-15, Involving Salomon Smith Barney Inc. (Salomon Smith
Barney), Located in New York, NY

AGENCY: Pension and Welfare Benefits Administration, Department of Labor.

ACTION: Grant of individual exemption to modify and replace PTE 99-15.
--------------------------------------------------------------------------------
SUMMARY: This document contains a final exemption (the Final Exemption) by the
Department of Labor (the Department) which amends and replaces PTE 99-15 (64 FR
1648, April 5, 1999), an exemption granted to Salomon Smith Barney. PTE 99-15
relates to the operation of the TRAK Personalized Investment Advisory Service
product (the TRAK Program) and the Trust for Consulting Group Capital Markets
Funds (the Trust). These transactions are described in a notice of pendency
(the Proposed Exemption) that was published in the Federal Register on June 1,
2000 at 65 FR 35138.

EFFECTIVE DATES: This exemption is effective as of April 1, 2000 with respect
to the amendments to Section II(i) and Section III(b) of the grant notice. In
addition, this exemption is effective as of April 1, 2000 with respect to the
inclusion of new Section III(d) in the grant notice.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady, Office of Exemption
Determinations, Pension and Welfare Benefits Administration, U.S. Department of
Labor, telephone (202) 219-8881. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: On June 1, 2000, the Department published, in the
Federal Register, the above referenced Proposed Exemption which would amend and
replace PTE 99-15. PTE 99-15, provides an exemption from certain prohibited
transaction restrictions of section 406 of the Employee Retirement Income
Security Act of 1974 (the Act) and from the sanctions resulting from the
application of section 4975 of the Internal Revenue Code of 1986 (the Code), as
amended, by reason of section 4975(c)(1) of the Code. Specifically, PTE 99-15
provides exemptive relief from the restrictions of section 406(a) of the Act
and the sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(A) through (D) of the Code, for the purchase or
redemption of shares in the Trust by an employee benefit plan, an individual
retirement account (the IRA), a retirement plan for a self-employed individual,
or an individual account pension plan that is subject to the provisions of
Title I of the Act and established under section 403(b) of the Code (the
Section 403(b) Plan; collectively, the Plans).

 PTE 99-15 also provides exemptive relief from the restrictions of section
406(b) of the Act and the sanctions resulting from the application of section
4975 of the Code, by reason of section 4975(c)(1)(E) and (F) of the Code, with
respect to the provision, by the Consulting Group of Salomon Smith Barney (the
Consulting Group), of (1) investment advisory services or (2) an automatic
reallocation option to an independent fiduciary of a participating Plan (the
Independent Plan Fiduciary) which may result in such fiduciary's selection of a
portfolio (the Portfolio) in the TRAK Program for the investment of Plan
assets./1/

 In the Proposed Exemption, Salomon Smith Barney requested a modification of
PTE 99-15 and a replacement of that exemption with a new exemption for purposes
of uniformity./2/ Specifically, Salomon Smith Barney requested that the term
"affiliate," as set forth in PTE 99-15, in Section II(h) of the General
Conditions and in Section III(b) of the Definitions, be amended and clarified to
avoid possible misinterpretation. In this regard, Salomon Smith Barney also
requested that the term "officer" be defined and incorporated into the Proposed
Exemption, in new Section III(d), to limit the affiliate definition to persons
who have a significant management role. Further, Salomon Smith Barney requested
that Section II(i) of PTE 99-15 be amended to permit an independent sub-adviser
(the Sub-Adviser), under certain circumstances, to exceed the current one
percent limitation on the acquisition of securities that are issued by Salomon
Smith Barney and/or its affiliates, notably in the Sub-Adviser's replication of
a third-party index (the Index). The Final Exemption is effective as of April 1,
2000 with respect to the amendments to Sections II(i) and III(b) of the grant
notice, and is effective as of July 10, 2000 with respect to Section III(d) of
the grant notice.

 The Proposed Exemption was requested in an application filed on behalf of
Salomon Smith Barney pursuant to section 408(a) of the Act and section
4975(c)(2) of the Code, and in accordance with the procedures (the Procedures)
set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, August 10, 1990).
Effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978
(43 FR 47713, October 17, 1978) transferred the authority of the Secretary of
the Treasury to issue exemptions of the type requested to the Secretary of
Labor. Accordingly, this Final Exemption is being issued solely by the
Department.

 The Proposed Exemption gave interested persons an opportunity to comment and
to request a hearing. During the comment period, the Department received two
written comments and no requests for a hearing. One of the comments was
submitted by the holder of an IRA which participates in the TRAK Program. The
commenter said he concurred with the modifications proposed by Salomon Smith
Barney to amend and clarify the terms "affiliate" and "officer." The commenter
also stated that he supported the proposed modification of the one percent
limitation on the acquisition, by an independent Sub-Adviser, of securities
that are issued by Salomon Smith Barney and/or its affiliates in the
Sub-Adviser's replication of an Index. The commenter explained that he believed
the requested changes made sense and would be beneficial to all TRAK Program
participants. Therefore, the commenter urged the Department to approve the
Final Exemption.

 The second comment was submitted by Salomon Smith Barney. The comment is
intended to clarify and modify the preamble (the Preamble) of the Proposed
Exemption.
--------
 /1/PTE 99-15 also (a) described a series of corporate mergers which changed
the names of the parties identified in two prior TRAK exemptions which it
superseded [i.e., PTE 94-50 (59 FR 32024, June 21, 1994) and PTE 92-77 (55 FR
45833, October 5, 1992)] and which would permit broader distribution of
TRAK-related products; (b) implemented a recordkeeping reimbursement offset
procedure under the TRAK Program; (c) adopted an automated reallocation option
under the TRAK Program that would reduce the reallocation option under the TRAK
Program that would reduce the Plan-level investment advisory fee (the Outside
Fee) paid to Salomon Smith Barney by a Plan investor; and (d) expanded the
scope of the exemption to include Section 403(b) Plans.
 PTE 94-50 permitted Smith, Barney Inc. (Smith Barney), Salomon Smith Barney's
predecessor, to add a daily-traded collective investment fund (the GIC Fund) to
the existing portfolios (the Portfolios) of mutual funds (the Funds) comprising
the Trust, and to describe the various entities operating the GIC Fund. PTE
94-50 also replaced references to Shearson Lehman Brothers, Inc. (Shearson
Lehman) with Smith Barney and amended and replaced PTE 92-77.
 Finally, PTE 92-77 permitted Shearson Lehman to make the TRAK Program
available to Plans that acquired shares in the former Trust for TRAK
Investments and allowed the Consulting Group to provide investment advisory
services to an Independent Plan Fiduciary which might result in such
fiduciary's selection of a Portfolio in the TRAK Program for the investment of
Plan assets.
 /2/The Department deems PTE 94-50 as having been effectively superseded by PTE
99-15. Therefore, the amendments described herein do not apply to PTE 94-50.


                                      B-8

<PAGE>

Following is a discussion of Salomon Smith Barney's comment letter and the
Department's responses with respect thereto.

 1. Modifications to the Proposed Exemption. On page 35139 of the Proposed
Exemption, the first paragraph of the Preamble states that "As of December 31,
1998, the TRAK Program held assets that were in excess of $9.6 billion." Also,
in that same paragraph, the last sentence states, in part, that "one or more
unaffiliated [S]ub-advisers [is] selected by Salomon Smith Barney." Salomon
Smith Barney notes that the December 31, 1998 valuation date at the beginning
of the paragraph should be changed to September 30, 1999 and the last words of
the paragraph should be changed from "Salomon Smith Barney" to "the Consulting
Group," which actually chooses the Sub-Advisers.

 In addition, on page 35140 of the Proposed Exemption, the last paragraph of
the Preamble states, in part, that--

 Due to the one percent limitation of Section II(i), Salomon Smith Barney
states that active Sub-Advisers for the Consulting Group may not own or trade
Citigroup Common Stock and they will continue to be prohibited from trading in
Citigroup Common Stock. Salomon Smith Barney wishes to clarify that active
Sub-Advisers also do not trade in Citigroup Common Stock because of
restrictions that apply under Rule 12d3-1(c) of the Investment Company Act of
1940 (the ICA)./3/

 On page 35141 of the Proposed Exemption, the third sentence of the first
"carry-over" paragraph of the Preamble identifies two Funds which currently
comply with the one percent limitation on investments in Citigroup Common
Stock. These Funds are the "Consulting Group Capital Markets Large Cap Value
Fund" and the "Large Cap Growth Consulting Group Capital Markets Fund."
However, Salomon Smith Barney suggests, for the purpose of clarity, that the
formal names of the subject Funds be specified. Thus, Salomon Smith Barney
explains that the proper names for the Funds are the "Consulting Group Capital
Markets Funds Large Capitalization Value Equity Investments" and the
"Consulting Group Capital Markets Funds Large Capitalization Growth
Investments." Similarly, in the next paragraph of the Proposed Exemption on

page 35141 of the Preamble, Salomon Smith Barney wishes to clarify that the
formal name for the S&P Fund designated as the "Consulting Group Capital
Markets S&P 500 Index Investment Fund Portfolio" is the "Consulting Group
Capital Markets S&P Index Investment Fund Portfolio."

 In response to these comments, the Department acknowledges the foregoing
clarifications to the names for the Funds identified in the Preamble of the
Proposed Exemption.

 2. General Information. As a matter of general information, Salomon Smith
Barney states that beginning with the billing cycle commencing on January 1,
2001, the Outside Fee charged to 401(k) Plan clients will be calculated on the
average daily asset value for the quarter for which the fee is billed rather
than the asset value on the last day of the quarter. Salomon Smith Barney
explains that this change generally conforms to the billing procedure in the
industry generally and is believed to be more equitable since it reflects the
asset value over time rather than on a single day during a calendar quarter
which may not be representative of the account balance during the period.

 In response to this comment, the Department notes Salomon Smith Barney's
modification to the billing procedure in the calculation of the Outside Fee for
participants in the TRAK Program that are section 401(k) Plans.

 For further information regarding the comments or other matters discussed
herein, interested persons are encouraged to obtain copies of the exemption
application files (Exemption Application Nos. D-10809 and D-10865) the
Department is maintaining in this case. The complete application files, as well
as all supplemental submissions received by the Department, are made available
for public inspection in the Public Documents Room of the Pension and Welfare
Benefits Administration, Room N-5638, U.S. Department of Labor, 200
Constitution Avenue, N.W., Washington, D.C. 20210.

 Accordingly, after giving full consideration to the entire record, including
the written comments received, the Department has decided to grant the
exemption subject to the modifications and clarifications described above.

General Information

 The attention of interested persons is directed to the following:

 (1) The fact that a transaction is the subject of an exemption under section
408(a) of the Act and section 4975(c)(2) of the Code does not relieve a
fiduciary or other party in interest or disqualified person from certain other
provisions of the Act and the Code, including any prohibited transaction
provisions to which the exemption does not apply and the general fiduciary
responsibility provisions of section 404 of the Act, which require, among other
things, a fiduciary to discharge his or her duties respecting the plan solely
in the interest of the participants and beneficiaries of the plan and in a
prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it
affect the requirements of section 401(a) of the Code that the plan operate for
the exclusive benefit of the employees of the employer maintaining the plan and
their beneficiaries;

 (2) The exemption will extend to transactions prohibited under section
406(b)(3) of the Act and section 4975(c)(1)(F) of the Code;

 (3) In accordance with section 408(a) of the Act and section 4975(c)(2) of the
Code, and the Procedures cited above, and based upon the entire record, the
Department finds that the exemption is administratively feasible, in the
interest of the plan and of its participants and beneficiaries and protective
of the rights of participants and beneficiaries of the plan;

 (4) The exemption will be supplemental to, and not in derogation of, any other
provisions of the Act and the Code, including statutory or administrative
exemptions. Furthermore, the fact that a transaction is subject to an
administrative or statutory exemption is not dispositive of whether the
transaction is in fact a prohibited transaction; and

 (5) The exemption is subject to the express condition that the Summary of
Facts and Representations set forth in the notice of proposed exemption
relating to PTE 99-15, as amended by this Final Exemption, accurately describe,
where relevant, the material terms of the transactions to be consummated
pursuant to this exemption.

Exemption

 Under the authority of section 408(a) of the Act and section 4975(c)(2) of the
Code and in accordance with the Procedures set forth above, the Department
hereby amends PTE 99-15 as follows:

Section I. Covered Transactions

 A. The restrictions of section 406(a) of the Act and the sanctions resulting
from the application of section 4975 of the Code, by
--------
 /3/Rule 12d3-1(c) of the ICA states that an acquiring company, such as a
registered investment company, may not acquire a general partnership interest
or a security issued by the acquiring company's investment adviser, promoter,
or principal underwriter, or by any affiliated person of such investment
adviser, promoter, or principal underwriter.


                                      B-9

<PAGE>

reason of section 4975(c)(1)(A) through (D) of the Code, shall not apply, to
the purchase or redemption of shares by an employee benefit plan, an individual
retirement account (the IRA), a retirement plan for self-employed individuals
(the Keogh Plan), or an individual account pension plan that is subject to the
provisions of Title I of the Act and established under section 403(b) of the
Code (the Section 403(b) Plan; collectively, the Plans) in the Trust for
Consulting Group Capital Market Funds (the Trust), established by Salomon Smith
Barney, in connection with such Plans' participation in the TRAK Personalized
Investment Advisory Service product (the TRAK Program).

 B. The restrictions of section 406(b) of the Act and the sanctions resulting
from the application of section 4975 of the Code, by reason of section
4975(c)(1)(E) and (F) of the Code, shall not apply, to the provision, by the
Consulting Group, of (1) investment advisory services or (2) an automatic
reallocation option (the Automatic Reallocation Option) to an independent
fiduciary of a participating Plan (the Independent Plan Fiduciary), which may
result in such fiduciary's selection of a portfolio (the Portfolio) in the TRAK
Program for the investment of Plan assets.

 This exemption is subject to the following conditions that are set forth below
in Section II.

Section II. General Conditions

 (a) The participation of Plans in the TRAK Program will be approved by an
Independent Plan Fiduciary. For purposes of this requirement, an employee,
officer or director of Salomon Smith Barney and/or its affiliates covered by an
IRA not subject to Title I of the Act will be considered an Independent Plan
Fiduciary with respect to such IRA.

 (b) The total fees paid to the Consulting Group and its affiliates will
constitute no more than reasonable compensation.

 (c) No Plan will pay a fee or commission by reason of the acquisition or
redemption of shares in the Trust.

 (d) The terms of each purchase or redemption of Trust shares shall remain at
least as favorable to an investing Plan as those obtainable in an arm's length
transaction with an unrelated party.

 (e) The Consulting Group will provide written documentation to an Independent
Plan Fiduciary of its recommendations or evaluations based upon objective
criteria.

 (f) Any recommendation or evaluation made by the Consulting Group to an
Independent Plan Fiduciary will be implemented only at the express direction of
such Independent Plan Fiduciary, provided, however, that--

 (1) If such Independent Plan Fiduciary shall have elected in writing (the
Election), on a form designated by Salomon Smith Barney from time to time for
such purpose, to participate in the Automatic Reallocation Option under the
TRAK Program, the affected Plan or participant account will be automatically
reallocated whenever the Consulting Group modifies the particular asset
allocation recommendation which the Independent Plan Fiduciary has chosen. Such
Election shall continue in effect until revoked or terminated by the
Independent Plan Fiduciary in writing.

 (2) Except as set forth below in paragraph II(f)(3), at the time of a change
in the Consulting Group's asset allocation recommendation, each account based
upon the asset allocation model (the Allocation Model) affected by such change
would be adjusted on the business day of the release of the new Allocation
Model by the Consulting Group, except to the extent that market conditions, and
order purchase and redemption procedures, may delay such processing through a
series of purchase and redemption transactions to shift assets among the
affected Portfolios.

 (3) If the change in the Consulting Group's asset allocation recommendation
exceeds an increase or decrease of more than 10 percent in the absolute
percentage allocated to any one investment medium (e.g., a suggested increase
in a 15 percent allocation to greater than 25 percent, or a decrease of such 15
percent allocation to less than 5 percent), Salomon Smith Barney will send out
a written notice (the Notice) to all Independent Plan Fiduciaries whose current
investment allocation would be affected, describing the proposed reallocation
and the date on which such allocation is to be instituted (the Effective Date).
If the Independent Plan Fiduciary notifies Salomon Smith Barney, in writing, at
any time within the period of 30 calendar days prior to the proposed Effective
Date that such fiduciary does not wish to follow such revised asset allocation
recommendation, the Allocation Model will remain at the current level, or at
such other level as the Independent Plan Fiduciary then expressly designates,
in writing. If the Independent Plan Fiduciary does not affirmatively "opt out"
of the new Consulting Group recommendation, in writing, prior to the proposed
Effective Date, such new recommendation will be automatically effected by a
dollar-for-dollar liquidation and purchase of the required amounts in the
respective account.

 (4) An Independent Plan Fiduciary will receive a trade confirmation of each
reallocation transaction. In this regard, for all Plan investors other than
Section 404(c) Plan accounts (i.e., 401(k) Plan accounts), Salomon Smith Barney
will mail trade confirmations on the next business day after the reallocation
trades are executed. In the case of Section 404(c) Plan participants,
notification will depend upon the notification provisions agreed to by the Plan
recordkeeper.

 (g) The Consulting Group will generally give investment advice in writing to
an Independent Plan Fiduciary with respect to all available Portfolios.
However, in the case of a Plan providing for participant-directed investments
(the Section 404(c) Plan), the Consulting Group will provide investment advice
that is limited to the Portfolios made available under the Plan.

 (h) Any sub-adviser (the Sub-Adviser) that acts for the Trust to exercise
investment discretion over a Portfolio will be independent of Salomon Smith
Barney and its affiliates.

 (i) Immediately following the acquisition by a Portfolio of any securities
that are issued by Salomon Smith Barney and/or its affiliates, such as
Citigroup Inc. common stock (the Citigroup Common Stock), the percentage of
that Portfolio's net assets invested in such securities will not exceed one
percent. However, this percentage limitation may be exceeded if--

 (1) The amount held by a Sub-Adviser in managing a Portfolio is held in order
to replicate an established third party index (the Index).

 (2) The Index represents the investment performance of a specific segment of
the public market for equity securities in the United States and/or foreign
countries. The organization creating the Index must be--

 (i) Engaged in the business of providing financial information;

 (ii) A publisher of financial news information; or

 (iii) A public stock exchange or association of securities dealers.

 The Index is created and maintained by an organization independent of Salomon
Smith Barney and its affiliates and is a generally-accepted standardized Index
of

                                     B-10

<PAGE>

securities which is not specifically tailored for use by Salomon Smith Barney
and its affiliates.

 (3) The acquisition or disposition of Citigroup Common Stock does not include
any agreement, arrangement or understanding regarding the design or operation
of the Portfolio acquiring the Citigroup Common Stock, which is intended to
benefit Salomon Smith Barney or any party in which Salomon Smith Barney may
have an interest.

 (4) The Independent Plan Fiduciary authorizes the investment of a Plan's
assets in an Index Fund which purchases and/or holds Citigroup Common Stock and
the Sub-Adviser is responsible for voting any shares of Citigroup Common Stock
that are held by an Index Fund on any matter in which shareholders of Citigroup
Common Stock are required or permitted to vote.

 (j) The quarterly investment advisory fee that is paid by a Plan to the
Consulting Group for investment advisory services rendered to such Plan will be
offset by such amount as is necessary to assure that the Consulting Group
retains no more than 20 basis points from any Portfolio (with the exception of
the Government Money Investments Portfolio and the GIC Fund Portfolio for which
the Consulting Group and the Trust will retain no investment management fee)
which contains investments attributable to the Plan investor.

 (k) With respect to its participation in the TRAK Program prior to purchasing
Trust shares,

 (1) Each Plan will receive the following written or oral disclosures from the
Consulting Group:

 (A) A copy of the Prospectus for the Trust discussing the investment
objectives of the Portfolios comprising the Trust, the policies employed to
achieve these objectives, the corporate affiliation existing between the
Consulting Group, Salomon Smith Barney and its subsidiaries and the
compensation paid to such entities./4/

 (B) Upon written or oral request to Salomon Smith Barney, a Statement of
Additional Information supplementing the Prospectus which describes the types
of securities and other instruments in which the Portfolios may invest, the
investment policies and strategies that the Portfolios may utilize and certain
risks attendant to those investments, policies and strategies.

 (C) A copy of the investment advisory agreement between the Consulting Group
and such Plan relating to participation in the TRAK Program and, if applicable,
informing Plan investors of the Automatic Reallocation Option.

 (D) Upon written request of Salomon Smith Barney, a copy of the respective
investment advisory agreement between the Consulting Group and the
Sub-Advisers.

 (E) In the case of a Section 404(c) Plan, if required by the arrangement
negotiated between the Consulting Group and the Plan, an explanation by a
Salomon Smith Barney Financial Consultant (the Financial Consultant) to
eligible participants in such Plan, of the services offered under the TRAK
Program and the operation and objectives of the Portfolios.

 (F) A copy of the Proposed Exemption and the Final Exemption pertaining to the
exemptive relief described herein.

 (2) If accepted as an investor in the TRAK Program, an Independent Plan
Fiduciary of an IRA or Keogh Plan, is required to acknowledge, in writing,
prior to purchasing Trust shares that such fiduciary has received copies of the
documents described above in subparagraph (k)(1) of this Section.

 (3) With respect to a Section 404(c) Plan, written acknowledgement of the
receipt of such documents will be provided by the Independent Plan Fiduciary
(i.e., the Plan administrator, trustee or named fiduciary, as the recordholder
of Trust shares). Such Independent Plan Fiduciary will be required to represent
in writing to Salomon Smith Barney that such fiduciary is (a) independent of
Salomon Smith Barney and its affiliates and (b) knowledgeable with respect to
the Plan in administrative matters and funding matters related thereto, and
able to make an informed decision concerning participation in the TRAK Program.

 (4) With respect to a Plan that is covered under Title I of the Act, where
investment decisions are made by a trustee, investment manager or a named
fiduciary, such Independent Plan Fiduciary is required to acknowledge, in
writing, receipt of such documents and represent to Salomon Smith Barney that
such fiduciary is (a) independent of Salomon Smith Barney and its affiliates,
(b) capable of making an independent decision regarding the investment of Plan
assets and (c) knowledgeable with respect to the Plan in administrative matters
and funding matters related thereto, and able to make an informed decision
concerning participation in the TRAK Program.

 (l) Subsequent to its participation in the TRAK Program, each Plan receives
the following written or oral disclosures with respect to its ongoing
participation in the TRAK Program:

 (1) The Trust's semi-annual and annual report which will include financial
statement for the Trust and investment management fees paid by each Portfolio.

 (2) A written quarterly monitoring statement containing an analysis and an
evaluation of a Plan investor's account to ascertain whether the Plan's
investment objectives have been met and recommending, if required, changes in
Portfolio allocations.

 (3) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly, detailed investment performance monitoring
report, in writing, provided to an Independent Plan Fiduciary of such Plan
showing Plan level asset allocations, Plan cash flow analysis and annualized
risk adjusted rates of return for Plan investments. In addition, if required by
such arrangement, Financial Consultants will meet periodically with Independent
Plan Fiduciaries of Section 404(c) Plans to discuss the report as well as with
eligible participants to review their accounts' performance.

 (4) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly participant performance monitoring report
provided to a Plan participant which accompanies the participant's benefit
statement and describes the investment performance of the Portfolios, the
investment performance of the participant's individual investment in the TRAK
Program, and gives market commentary and toll-free numbers that will enable the
participant to obtain more information about the TRAK Program or to amend his
or her investment allocations.

 (5) On a quarterly and annual basis, written disclosures to all Plans of the
(a) percentage of each Portfolio's brokerage commissions that are paid to
Salomon Smith Barney and its affiliates and (b) the average brokerage
commission per share paid by each Portfolio to Salomon Smith Barney and its
affiliates, as compared to the average brokerage commission per share paid by
the
--------
 /4 /The fact that certain transactions and fee arrangements are the subject of
an administrative exemption does not relieve the Independent Plan Fiduciary
from the general fiduciary responsibility provisions of section 404 of the Act.
In this regard, the Department expects the Independent Plan Fiduciary to
consider carefully the totality of the fees and expenses to be paid by the
Plan, including the fees paid directly to Salomon Smith Barney or to other
third parties.


                                     B-11

<PAGE>

Trust to brokers other than Salomon Smith Barney and its affiliates, both
expressed as cents per share.

 (m) Salomon Smith Barney shall maintain, for a period of six years, the
records necessary to enable the persons described in paragraph (n) of this
Section to determine whether the conditions of this exemption have been met,
except that (1) a prohibited transaction will not be considered to have
occurred if, due to circumstances beyond the control of Salomon Smith Barney
and/or its affiliates, the records are lost or destroyed prior to the end of
the six year period, and (2) no party in interest other than Salomon Smith
Barney shall be subject to the civil penalty that may be assessed under section
502(i) of the Act, or to the taxes imposed by section 4975(a) and (b) of the
Code, if the records are not maintained, or are not available for examination
as required by paragraph (n) below.

 (n)(1) Except as provided in section (2) of this paragraph and notwithstanding
any provisions of subparagraphs (a)(2) and (b) of section 504 of the Act, the
records referred to in paragraph (m) of this Section II shall be
unconditionally available at their customary location during normal business
hours by:

 (A) Any duly authorized employee or representative of the Department or the
Service;

 (B) Any fiduciary of a participating Plan or any duly authorized
representative of such fiduciary;

 (C) Any contributing employer to any participating Plan or any duly authorized
employee representative of such employer; and

 (D) Any participant or beneficiary of any participating Plan, or any duly
authorized representative of such participant or beneficiary.

 (2) None of the persons described above in subparagraphs (B)-(D) of this
paragraph (n) shall be authorized to examine the trade secrets of Salomon Smith
Barney or commercial or financial information which is privileged or
confidential.

Section III. Definitions

 For purposes of this exemption:

 (a) The term "Salomon Smith Barney" means Salomon Smith Barney Inc. and any
affiliate of Salomon Smith Barney, as defined in paragraph (b) of this Section
III.

 (b) An "affiliate" of Salomon Smith Barney includes--

 (1) Any person directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with Salomon Smith Barney
(For purposes of this subparagraph, the term "control" means the power to
exercise a controlling influence over the management or policies of a person
other than an individual);

 (2) Any individual who is an officer (as defined in Section III(d) hereof),
director or partner in Salomon Smith Barney or a person described in
subparagraph (b)(1);

 (3) Any corporation or partnership of which Salomon Smith Barney, or an
affiliate described in subparagraphs(b)(1), is a 10 percent or more partner or
owner; and

 (4) Any corporation or partnership of which any individual which is an officer
or director of Salomon Smith Barney is a 10 percent or more partner or owner.

 (c) An "Independent Plan Fiduciary" is a Plan fiduciary which is independent
of Salomon Smith Barney and its affiliates and is either--

 (1) A Plan administrator, sponsor, trustee or named fiduciary, as the
recordholder of Trust shares under a Section 404(c) Plan;

 (2) A participant in a Keogh Plan;

 (3) An individual covered under (i) a self-directed IRA or (ii) a Section
403(b) Plan, which invests in Trust shares;

 (4) A trustee, investment manager or named fiduciary responsible for
investment decisions in the case of a Title I Plan that does not permit
individual direction as contemplated by Section 404(c) of the Act; or

 (5) A participant in a Plan, such as a Section 404(c) Plan, who is permitted
under the terms of such Plan to direct, and who elects to direct, the
investment of assets of his or her account in such Plan.

 (d) The term "officer" means a president, any vice president in charge of a
principal business unit, division or function (such as sales, administration or
finance), or any other officer who performs a policymaking function for the
entity.

Section IV. Effective Dates

 This exemption is effective as of April 1, 2000 with respect to the amendments
to Section II(i) and Section III(b) of this grant notice. In addition, this
exemption is effective as of April 1, 2000 with respect to the inclusion of new
Section III(d) in the grant notice.

 The availability of this exemption is subject to the express condition that
the material facts and representations contained in the application for
exemption are true and complete and accurately describe all material terms of
the transactions. In the case of continuing transactions, if any of the
material facts or representations described in the applications change, the
exemption will cease to apply as of the date of such change. In the event of
any such change, an application for a new exemption must be made to the
Department.

 For a more complete statement of the facts and representations supporting the
Department's decision to grant PTE 92-77, PTE 94-50 and PTE 99-15, refer to the
proposed exemptions and the grant notices which are cited above.

 Signed at Washington, D.C., this 31st day of August, 2000.

Ivan L. Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.

[FR Doc. 00-22853 Filed 9-6-00; 8:45 am]

                                     B-12

<PAGE>

--------------------------------------------------------------------------------
DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 2000-45; Exemption Application Nos. D-10809
and D-10865]

Grant of Individual Exemption to Amend and Replace Prohibited Transaction
Exemption (PTE) 99-15, Involving Salomon Smith Barney Inc. (Salomon Smith
Barney), Located in New York, NY

AGENCY: Pension and Welfare Benefits Administration, U.S. Department of Labor
(the Department).

ACTION: Notice of Technical Correction.
--------------------------------------------------------------------------------
 On September 7, 2000, the Department published in the Federal Register (65 FR
54315) a final exemption which amends and replaces PTE 99-15 (64 FR 1648, April
5, 1999), an exemption granted to Salomon Smith Barney. PTE 99-15 relates to
the operation of the TRAK Personalized Investment Advisory Service product (the
TRAK Program) and the Trust for Consulting Group Capital Markets Funds (the
Consulting Group).

 On page 54316 of the grant notice, the last sentence of the third paragraph of
the Supplementary Information, erroneously refers to an effective date of July
10, 2000 with respect to Section III(d) of the grant notice. Thus, the sentence
should be revised to read as follows:

 The Final Exemption is effective as of April 1, 2000 with respect to the
amendments to Sections II(i) and III(b) of the grant notice and the inclusion
of new Section III(d) of the grant notice.

 Also on page 54316 of the grant notice, clause (c) of Footnote 1, should be
revised as follows to describe more accurately the purpose of the automated
reallocation option:

 (c) adopted an automated reallocation option under the TRAK Program which
would afford an Independent Plan Fiduciary the option of having his or her
asset allocation adjusted automatically whenever the Consulting Group changes
an allocation model;

FOR FURTHER INFORMATION CONTACT:
Ms. Jan D. Broady of the Department at (202) 219-8881. (This is not a toll-free
number.)

Signed at Washington, DC, this 18th day of September, 2000.

Ivan L. Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits
Administration, Department of Labor.

[FR Doc. 00-24388 Filed 9-21-00; 8:45 am]

TK 2088S

                                     B-13

<PAGE>


                    (This page is intentionally left blank)

<PAGE>

    For More Information



If you want more information about the Portfolio, the following resources are
available upon request.

Annual and Semiannual Reports

Additional information about the Portfolio's investments will be available in
the Portfolio's annual and semiannual reports to shareholders. The Portfolio's
annual report will contain a discussion of the market conditions and investment
strategies that significantly affected the Portfolio's performance during its
last fiscal year.

Statement of Additional Information

The Statement of Additional Information provides more detailed information
about the Portfolio and is incorporated into this prospectus by reference.

Investment Professional

The investor's Financial Consultant is available to answer questions about the
Portfolio or the investor's overall asset allocation program.

Investors can get free copies of reports and SAIs, request other information
and discuss their questions about the Portfolio by contacting their Financial
Consultant, or by writing to the Portfolio's sub-transfer agent, PFPC

Global Fund Services, at:

   Consulting Group Capital Markets Funds
   c/o PFPC Global Fund Services
   P.O. Box 9699
   Providence, RI 02940-9699

   or by calling the Portfolio's transfer agent at 800-451-2010

Information about the Portfolio (including the SAI) can be reviewed and copied
at the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-202-942-8090. Reports and other information about the Portfolio are available
on the EDGAR Database on the Commission's Internet site at http://www.sec.gov.
Copies of this information may be obtained for a duplicating fee by electronic
request at the following E-mail address: publicinfo@sec.gov, or by writing the
Commission's Public Reference Section, Washington, D.C. 20549-0102.

If someone makes a statement about the Portfolio that is not in this
prospectus, you should not rely upon that information. Neither the Portfolio
nor the distributor is offering to sell shares of the Portfolio to any person
to whom the Portfolio may not lawfully sell its shares.

Investment Company Act File No. 811-06318

                                                [LOGO OF SALOMON SMITH BARNEY]

Salomon Smith Barney Inc. is a wholly-owned subsidiary of Citigroup Inc.
Citigroup businesses produce a broad range of financial services--asset
management, banking and consumer finance, credit and charge cards, insurance,
investments and investment banking and trading--and use diverse channels to
make them available to consumer and corporate customers around the world.

(R)2001 Salomon Smith Barney Inc.    TK2096   7/01

<PAGE>

                                  [LOGO OF CONSULTING GROUP]




                               Consulting Group
                             Capital Markets Funds

                   Multi-Strategy Market Neutral Investments




--------------------------------------------------------------------------------
INVESTMENT PRODUCTS: NOT  FDIC  INSURED . NO  BANK  GUARANTEE . MAY  LOSE
                                     VALUE

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

         Prospectus
         July 30, 2001
                                                             [LOGO OF TRAK]

      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.

<PAGE>


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




Table of Contents


<TABLE>
<S>                                               <C>
Investments, Risks and Performance                  2
------------------------------------------------------
   Investment objective                             2
------------------------------------------------------
   Principal investment strategies                  2
------------------------------------------------------
   Principal risks of investing in the Portfolio    4
------------------------------------------------------
   Performance                                      5
------------------------------------------------------
   Fee table                                        5
------------------------------------------------------

More on the Portfolio's Investments                 6
------------------------------------------------------

The Manager                                         7
------------------------------------------------------

Asset Allocation Programs                           9
------------------------------------------------------

Investment and Account Information                 10
------------------------------------------------------
   Account transactions                            10
------------------------------------------------------
   Valuation of shares                             11
------------------------------------------------------
   Dividends and distributions                     11
------------------------------------------------------
   Taxes                                           11
------------------------------------------------------
Financial Highlights                               12
------------------------------------------------------
Appendix A                                        A-1
------------------------------------------------------
Appendix B                                        B-1
------------------------------------------------------
</TABLE>


1 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>


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



Investments, Risks and Performance

Investment objective

Long-term capital appreciation.


Principal investment strategies



The Portfolio invests primarily in securities of U.S. companies of various
market capitalizations. A portion of the Portfolio's assets may be invested in
securities of companies located outside the U.S. The manager allocates the
assets among investment advisers employing three portfolio management
strategies:


 .  Convertible arbitrage

 .  Merger arbitrage

 .  Equity market neutral


Through these strategies, the Portfolio attempts to achieve capital
appreciation from stock selection and other strategies rather than from general
stock market movements. Each of the strategies involves taking both long and
short positions in securities. The long positions generally increase in price
in a rising market (and decrease in a declining market). Short positions
generally incur losses in a rising market (and profit from market declines).
Consequently, the long and short positions tend to cancel out the effect of
general stock market trends. Using convertible arbitrage or merger arbitrage,
the Portfolio seeks to profit either by identifying price differentials among
related securities or inefficiencies in the market's pricing of certain
securities. Using an equity market neutral strategy, the Porfolio seeks to
select undervalued stocks for its long positions and overvalued stocks for its
short positions. The Portfolio's strategies are intended to produce favorable
returns regardless of the general trend in the market and to minimize the risks
associated with investing in the equity markets. However, there is no assurance
that such favorable returns will be achieved. The Portfolio's strategies are
discussed in further detail below.




Convertible Arbitrage. A portion of the Portfolio's assets are invested in
accordance with a convertible arbitrage strategy, which is implemented by
Calamos Asset Management ("Calamos"). Convertible arbitrage consists of buying
debt securities, preferred stocks and other securities convertible into common
stock and hedging a portion of the equity risk inherent in these securities.
This hedging is achieved by selling short some or all of the common stock
issuable upon exercise of the convertible security. If the market price of the
common stock increases above the conversion price on the convertible security,
the price of the convertible security will increase.

The Portfolio's increased liability on the short position would, in whole or in
part, reduce this gain. If the price of the common stock declines, any decline
in the price of the convertible security would offset the Portfolio's gain on
the short position. The Portfolio profits from this strategy by receiving
interest and/or dividends on the convertible security and by adjusting the
amount of equity risk that is hedged by short sales.

In selecting securities for the Portfolio, Calamos:

 .  analyzes the default risk on the convertible security using traditional
   credit analysis

 .  employs fundamental equity analysis to determine the capital appreciation
   potential of the common stock into which the security is convertible

 .  considers the risk/return potential of a convertible hedge strategy with
   respect to the security

 .  considers the diversification of the Portfolio and other portfolio
   composition criteria

In its equity and credit analysis, Calamos considers:

 .  The issuer's financial soundness

 .  Interest and dividend coverage

 .  Earnings and cash-flow forecasts

 .  Quality of management

In determining the appropriate portion of the Portfolio's equity exposure to
hedge, Calamos considers:

 .  The general outlook for interest rates and equity markets

 .  The availability of stock to sell short

 .  Expected returns and volatility

Merger Arbitrage. A portion of the Portfolio's assets are allocated to Pegasus
Investments, Inc. ("Pegasus") to pursue a merger arbitrage strategy. Merger
arbitrage is designed to profit from the successful completion of announced
merger and acquisition transactions involving publicly owned companies. The
Portfolio does not speculate on unannounced transactions or where a definitive
agreement does not exist. A number of trading practices may be employed to
capture the potential profit of merger and acquisition transactions. Typically,
the Portfolio establishes merger arbitrage positions by purchasing the shares
of a target company at a discount to the value of the consideration offered in
the merger or tender offer (whether cash or securities). When the consideration
is shares of the acquiring company, the Portfolio may also

2 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>


--------------------------------------------------------------------------------
                                   Investments, Risks and Performance, continued




sell short shares of the acquiring company. The number of shares sold short
generally is based on the exchange ratio specified in the merger agreement.
Hedging the target shares against the consideration offered in the merger or
tender offer produces the merger arbitrage profit spread--effectively the
discount to the merger consideration at which the target company trades--which
will be received by the Portfolio upon the transaction closing. Such merger
arbitrage positions both establish defined trading profit spreads and also are
intended to provide an overall portfolio hedge against general market
volatility. The merger arbitrage spread is available because of:

 .  Market perception that the transaction may be delayed, renegotiated or
   cancelled

 .  The time value of money, that is, the discount an investor is willing to
   accept when selling shares today instead of waiting for the merger and
   acquisition transaction to close

 .  Market, industry or company specific events which create trading
   opportunities during the course of a merger and acquisition transaction

Pegasus seeks to achieve high absolute returns on investments. At the same
time, Pegasus seeks to create a portfolio the market value of which is not
volatile compared to the general equities market and which is generally not
affected by overall movements in the U.S. equity markets. Pegasus intends to
maintain positions that are substantially hedged and diversified principally
among U.S. issuers involved in merger and acquisition transactions with respect
to which a definitive agreement has been signed and approved by the Board of
Directors of the companies involved. In selecting transactions in which to
invest, Pegasus focuses on preservation of capital and minimalization of risks.
Pegasus also evaluates among other things:

 .  The strategic rationale for the merger and acquisition transaction

 .  The terms, conditions and valuation of the transaction

 .  The financial and competitive business condition of the merging companies
   and the industries in which they participate

 .  Regulatory, financing and business contingencies to the transaction

 .  Trading liquidity and downside risk assessment

 .  Its ability to diversify among specific transactions and industries


Equity Market Neutral. SSgA Funds Management, Inc. ("SSgA") (formerly known as
State Street Global Advisors), manages the portion of the Portfolio's assets
that are invested in accordance with an equity market neutral strategy. Using
this strategy, SSgA purchases stocks of companies it believes are undervalued
and will outperform the equity markets. At the same time, it sells short the
stocks of companies it believes are overvalued and will underperform the
general market. The stocks purchased and sold short frequently have similar
characteristics such as capitalization and industry, so that changes in price
arising solely from general market movements may be expected to be offset by
the long and short positions. Positive returns generally occur when the
Portfolio's stock selection strategy establishes long positions which
appreciate more than its short positions in a rising market and short positions
which depreciate more than its long positions in a falling market.



In selecting stocks and short positions for the Portfolio, SSgA focuses upon a
stock's current relative value and the company's future earnings potential.
SSgA looks for the following to identify long and short positions for the
Portfolio:


 .  Valuations relative to book value, cash flow, sales and earnings

 .  Changes in earnings estimates relative to the price

 .  Whether there is a consensus among analysts

 .  Changes in individual earnings estimates

                                  Short Sales

 Each of the Portfolio's strategies employs short sales to a significant
 degree. In a short sale, the Portfolio borrows securities from a broker and
 sells the borrowed securities. The proceeds of the sale are generally used to
 secure the Portfolio's obligation to the lending broker and are invested in
 liquid securities. Since the Portfolio is obligated to return the borrowed
 securities, the Portfolio will benefit from a short sale if the market price
 of the security sold short declines in value because the Portfolio would have
 to pay less to replace the borrowed security. The Portfolio will incur a loss
 if the security increases in price because the Portfolio would have to pay
 more to replace the borrowed security.

3 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>


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

                                   Investments, Risks and Performance, continued





Principal risks of investing in the Portfolio

An investment in the Portfolio involves specific risks relating to the nature
of its investment strategies. You should invest in the Portfolio only if you
are capable of bearing these risks.


Equity Securities. Although the Portfolio's strategies attempt to neutralize
the effect of general trends in the equity markets, your investment in the
Portfolio is subject to the risks associated with investing in equity
securities generally. Equity securities, particularly common stocks, have
historically generated higher average returns than fixed income securities, but
have also experienced significantly more volatility in those returns. You could
lose money on your investment or the Portfolio might not perform as well as
other investments if any of the following occurs:


 .  Equity markets drop in price, experience significant volatility, or perform
   poorly relative to fixed income investments

 .  An adverse event, such as an unfavorable earnings report, depresses the
   price of a particular company's stock or reduces trading liquidity


 .  An investment adviser is incorrect about the attractiveness, value or
   potential appreciation or depreciation of a particular investment


Short Sales. Short sales are an integral part of each of the Portfolio's
strategies. Short sales involve risks, including:

 .  The Portfolio may incur a loss as a result of a short sale if the market
   value of the borrowed security increases between the date of the short sale
   and the date the Portfolio replaces the security

 .  The Portfolio may be unable to repurchase the borrowed security at a
   particular time or at an acceptable price. When the Portfolio is short a
   security, the lender may terminate the loan at a time when the Portfolio is
   unable to borrow the same security from another lender. When this happens
   the Portfolio is required to close out its short position at the current
   market price

 .  Although the Portfolio's gain is limited to the amount received upon selling
   a security short, its potential loss is unlimited

 .  The Portfolio might be unable to implement these strategies because of the
   lack of attractive short sale opportunities

Merger Arbitrage. Generally, there may be a risk of insufficient merger
arbitrage investment opportunities to implement this strategy in the event of a
significant reduction in public company merger and acquisition activity. In
addition to risks generally associated with equity securities and short sales,
merger arbitrage involves the risk of loss in the event:

 .  A proposed transaction is not completed, is negatively renegotiated or is
   delayed and the price of the target company's securities declines. This
   failure or delay may result from regulatory restrictions, negative
   competitive or financial developments, the inability to obtain shareholder
   approval, the absence of financing or other transaction contingencies.
   Because the market price of the target's securities will generally have
   risen significantly in response to the proposed transaction, the
   corresponding market decline may be substantial

 .  A merger transaction fails or its completion is significantly delayed, which
   may cause the price of the stock of the acquiring company, which the
   Portfolio has sold short, to increase significantly

Convertible Arbitrage. In addition to the risks associated with equity
securities and short sales, convertible arbitrage also entails risks associated
with fixed income securities. These risks include:

 .  If interest rates go up, the prices of fixed income securities tend to
   decline

 .  The issuer of a security owned by the Portfolio may default on its
   obligation to pay principal and/or interest or its credit rating may be
   downgraded


All strategies. Each of the strategies is based to some extent on historical
correlations between the price movements of different securities. In some
market conditions, these historical correlations may not reflect current market
conditions and may cause an investment adviser's judgment about the
attractiveness of particular securities or strategies to be incorrect. This may
result in the Portfolio incurring a loss or the Portfolio's net asset value
being more volatile than if these strategies were not used.


Impact of high portfolio turnover The Portfolio may engage in active and
frequent trading to achieve its principal investment strategies. This may lead
to the realization and distribution to shareholders of higher capital gains,
which would increase their tax liability. Frequent trading also increases
transaction costs, which could detract from the Portfolio's performance.

4 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>


--------------------------------------------------------------------------------
                                   Investments, Risks and Performance, continued



Performance



The bar chart and tables below indicate the risks and returns of investing in
the Portfolio. The bar chart shows changes in the performance of the Portfolio
from year to year since its founding on May 10, 1999. The table shows how the
Portfolio's average annual returns for different calendar periods compare to
those of the Portfolio's benchmark index. The Portfolio's past performance does
not necessarily indicate how the Portfolio will perform in the future.


[CHART]
Percentage Total Returns for
Multi-Strategy Market Neutral Investments

00    6.64%


Calendar year ended December 31


AVERAGE ANNUAL TOTAL RETURNS


(for the periods ended December 31, 2000)

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

<TABLE>
                                       One   Five   Life of  Inception
                                      year   years Portfolio   Date
         --------------------------------------------------------------
         <S>                         <C>     <C>   <C>       <C>
         Portfolio (without advisory
          program fee)*               6.64%   n/a    8.09%    5/10/99
         S&P 500                     (9.10)%  n/a    0.27%      **
         Three Month T-Bill Index     5.99%   n/a    5.29%      **
         --------------------------------------------------------------
</TABLE>


* The Portfolio is available only to investors participating in an advisory
  program. These programs charge an annual fee, which in the case of TRAK(R)
  may be up to 1.5%.


**Index comparison begins on 5/10/99.



PORTFOLIO'S BEST AND WORST CALENDAR QUARTERS

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


                                   Total
                                  return   Quarter /Year

                     --------------------------------------
                     Best          3.25%      3rd/2000
                     Worst        (1.04)%     4th/2000
                     --------------------------------------
                     Year-to-date  2.86%  through 2nd/2001
                     --------------------------------------




                                  BENCHMARKS



 The Portfolio's primary benchmark is the S&P 500 Composite Stock Index (S&P
 500 Index), a broad-based unmanaged index of widely held common stocks. In
 addition, the Portfolio compares its performance with the Three-Month T-Bill
 Index, composed of one three-month U.S. T-Bill whose return is tracked until
 its maturity. Unlike the Portfolio, the S&P 500 Index and the Three Month
 T-Bill Index are unmanaged and do not include any expenses.



Fee table


This table describes the fees and expenses you may pay if you buy and hold
shares of the Portfolio and is based upon estimated expenses for the
Portfolio's current fiscal year.


<TABLE>
               <S>                                        <C>
               Shareholder fees                              None
               (fees paid directly from your investment)

               Maximum annual TRAK(R) fee*                 1.50 %

               Annual Portfolio operating expenses
               (expenses that are deducted from Portfolio
                assets)
                  Management fee                           1.80 %
                  Administration                           0.20 %
                  Other expenses                           0.66 %
                                                          -------
               Total annual Portfolio operating expenses   2.66 %
               Management fee waiver **                   (0.76)%
                                                          -------
               Net annual Portfolio operating expenses     1.90 %
                                                          =======
</TABLE>


*  Fee payable under the TRAK(R) Personalized Investment Advisory Service for
   asset allocation services. See "Asset Allocation Programs."

** Management has agreed to waive a portion of the management fee because it
   has voluntarily agreed to limit total annual Portfolio operating expenses to
   1.90% of average net assets. The fee waiver will remain in effect until
   changed by the Board of Trustees.


Example

This example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. Your actual costs
may be higher or lower.

The example assumes:

 .  You invest $10,000 in the Portfolio for the time periods indicated;


 .  You reinvest all dividends and distributions;


 .  You redeem at the end of each period;

 .  Your investment has a 5% return each year; and

 .  The Portfolio's operating expenses remain the same.

Under these assumptions, your costs including the maximum annual TRAK(R) fee,
would be:



                        After 1 After 3 After 5 After 10
                         year    years   years   years
                         $418   $1,264  $2,124   $4,339



5 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>


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



More on the Portfolio's Investments


The section entitled "Investments, Risks and Performance" describes the
Portfolio's investment objective and its principal investment strategies and
risks. This section provides some additional information about the Portfolio's
investments and certain investment management techniques the Portfolio may use.
More information about the Portfolio's investments and portfolio management
techniques, some of which entail risk, is included in the Statement of
Additional Information (SAI). To find out how to obtain an SAI, please turn to
the back cover of this prospectus.

Equity Investments. Equity securities include exchange-traded and
over-the-counter common and preferred stocks, warrants, rights, convertible
securities, depositary receipts and shares, trust certificates, limited
partnership interests, shares of other investment companies, real estate
investment trusts and equity participations.

Convertible Securities. Convertible securities include debt obligations and
preferred stock of an issuer which are convertible at a stated exchange rate
into common stock of the issuer. Convertible securities generally offer lower
interest or dividend yields than non-convertible securities of similar quality.
As with all fixed income securities, the market value of convertible securities
tends to decline as interest rates increase and, conversely, to increase as
interest rates decline. However, when the market price of the common stock
underlying a convertible security exceeds the conversion price, the convertible
security tends to reflect the market price of the underlying common stock. As
the market price of the underlying common stock declines, the convertible
security tends to trade increasingly on a yield basis, and thus may not decline
in price to the same extent as the underlying common stock. Convertible
securities rank senior to common stocks in an issuer's capital structure and
consequently entail less risk than the issuer's common stock.

Foreign Securities. Investments in securities of foreign entities and
securities quoted or denominated in foreign currencies involve special risks.
The Portfolio may invest in foreign securities directly or in the form of
depositary receipts. The risks of foreign investment include possible political
and economic instability and the possible imposition of exchange controls or
other restrictions on investments. If the Portfolio invests in securities
denominated or quoted in currencies other than the U.S. dollar, changes in
foreign currency rates relative to the U.S. dollar will affect the U.S. dollar
value of the Portfolio's assets.




Economic and monetary union (EMU) in Europe began to be implemented on January
1, 1999, when 11 European countries adopted a single currency--the euro. The
conversion to the euro is being phased in over a three year period, during
which time valuation, systems and other operational problems may occur in
connection with the Portfolio's investments quoted in 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 will remain in the hands of each participating
country, but will be subject to each country's commitment to avoid ''excessive
deficits'' and other more specific budgetary criteria. A European Central Bank
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 the international
markets.



Defensive investing. The Portfolio 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. The Portfolio's investments in these assets are managed
by Smith Barney Fund Management LLC.


6 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>


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


The Manager


The manager. The Consulting Group, a division of Smith Barney Fund Management
LLC (formerly known as SSB Citi Fund Management LLC) ("SBFM"), serves as the
manager for the Portfolio. SBFM is a wholly-owned subsidiary of Salomon Smith
Barney Holdings Inc., which in turn is a wholly-owned subsidiary of Citigroup
Inc. Citigroup businesses produce a broad range of financial services--asset
management, banking and consumer finance, credit and charge cards, insurance,
investments, investment banking and trading--and use diverse channels to make
them available to consumer and corporate customers around the world. As
manager, the Consulting Group selects and oversees professional money managers
who are responsible for investing the assets of the Portfolio. The Consulting
Group was established to match the investment needs of institutional investors
and substantial individual investors with appropriate and well-qualified
investment advisers. Since 1973, the Consulting Group has grown to become one
of the nation's foremost organizations providing portfolio evaluation, asset
allocation, market analysis and investment adviser selection services.



The Portfolio is part of a series of portfolios which comprise the Consulting
Group Capital Markets Funds (the "Trust"). The Trust is a series company that
consists of the Portfolio and the following additional portfolios which are
offered in separate prospectuses, copies of which can be obtained from any
Salomon Smith Barney Financial Consultant:


 .  Government Money Investments

 .  Intermediate Fixed Income Investments

 .  Long-Term Bond Investments

 .  Municipal Bond Investments

 .  Mortgage Backed Investments

 .  High Yield Investments

 .  Multi-Sector Fixed Income Investments

 .  Balanced Investments

 .  Large Capitalization Value Equity Investments

 .  Large Capitalization Growth Investments

 .  Small Capitalization Value Equity Investments

 .  S & P 500 Index Investments

 .  Small Capitalization Growth Investments


 .  Global Sciences and Technology Investments


 .  International Equity Investments

 .  International Fixed Income Investments

 .  Emerging Markets Equity Investments



The investment advisers. The investment advisers are responsible for the
day-to-day investment operations of the Portfolio in accordance with the
Portfolio's investment objectives and policies. The Portfolio's assets are
allocated among three investment advisers according to the following
percentages: Pegasus Investments, Inc.--33.3%, SSgA Funds Management,
Inc.--33.3%, Calamos Asset Management--33.3%. The name and address of each
investment adviser, and the name and background of each portfolio manager, is
included in the box below.

 CO-INVESTMENT ADVISERS

 PEGASUS INVESTMENTS, INC.
 One Boston Place
 Boston, Massachusetts 02108

   PORTFOLIO MANAGERS
   Paul B. Kopperl
   Andrew D. Kopperl
   Brian M.O. Kopperl and
   Douglas E. Francis,
   who are president, director, a managing director and a managing director,
   respectively, of Pegasus.

 SSgA FUNDS MANAGEMENT, INC.
 Two International Place
 Boston, Massachusetts 02110

   PORTFOLIO MANAGERS
   David A. Hanna
   Peter B. Wiley
   Jeffrey P. Adams and
   Peter M. Stonberg,
   each of whom is a principal of SSgA.

 CALAMOS ASSET MANAGEMENT
 1111 East Warrenville Road
 Naperville, Illinois 60563

   PORTFOLIO MANAGERS
   John P. Calamos
   Nicholas P. Calamos
   John P. Calamos, Jr.,
   who are the president and chief investment officer, managing director and
   vice president, respectively, of Calamos.



7 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>


--------------------------------------------------------------------------------
                                                          The Manager, continued





The investment adviser selection process. Subject to the review and approval of
the Board of Trustees, the Consulting Group is responsible for selecting,
supervising and evaluating investment advisers who manage the Portfolio's
assets. The Consulting Group may adjust the allocation of the Portfolio's
assets among the investment advisers by up to 10%. Any adjustment affecting
more than 10% of the Portfolio's assets will be made by the Board of Trustees.
The Consulting Group employs a rigorous evaluation process to select those
investment advisers that have distinguished themselves through consistent and
superior performance. The Consulting Group has retained Hedge Fund Research,
Inc., at its own expense, to provide statistical and other factual information
with respect to the Portfolio's investment advisers and potential investment
advisers. The Consulting Group is also responsible for communicating
performance expectations and evaluations to each investment adviser and
ultimately recommending to the Board of Trustees whether an investment
adviser's contract should be renewed. The Consulting Group provides written
reports to the Trustees regarding the results of its evaluation and monitoring
functions.



                            The Evaluation Process



 The Consulting Group screens more than 3,000 registered investment advisory
 firms, tracks the performance of more than 700 firms on its comprehensive
 database and evaluates the strength and performance of advisory firms in
 Consulting Group programs each year. Throughout the evaluation, the Consulting
 Group focuses on a number of key issues:



 .  level of expertise



 .  relative performance and consistency of performance



 .  strict adherence to investment discipline or philosophy



 .  personnel, facility and financial strength



 .  quality of service and communication.




The Portfolio relies upon an exemptive order from the Securities and Exchange
Commission which permits the manager to select new investment advisers or
replace existing investment advisers without first obtaining shareholder
approval for the change. The Trustees, including a majority of the
"non-interested" Trustees, must approve each new investment advisory contract.
This allows the manager to act more quickly to change investment advisers when
it determines that a change is beneficial to shareholders by avoiding the delay
of calling and holding shareholder meetings to approve each change. In
accordance with the exemptive order, the Portfolio will provide investors with
information about each new investment adviser and its investment advisory
contract within 90 days of the engagement of a new investment adviser.



Management Fees. The Consulting Group receives fees from the Portfolio for its
services at an annual rate of 1.80% of its average daily net assets. For the
fiscal year ended March 31, 2001, the Consulting Group received a management
fee equal to 1.36% of the Portfolio's average daily net assets. In turn, the
Consulting Group pays the investment advisers a portion of this fee for their
services. For the fiscal year ended March 31, 2001, the Portfolio paid  SBFM a
fee at an annual rate of 0.20% of the Portfolio's average daily net assets for
administration services.



Possible Conflict of Interest. The advisory fee paid by each portfolio in the
Trust to the manager and the portion of that advisory fee paid by the manager
to each investment adviser varies depending upon the portfolio of the Trust
selected. For this reason, the manager could retain a larger portion of the
advisory fee by recommending to clients in its asset allocation program certain
portfolios in the Trust over other portfolios for asset allocation. You should
consider this possible conflict of interest when evaluating the manager's asset
allocation recommendation. The manager intends to comply with standards of
fiduciary duty that require it to act solely in the best interest of a
participant when making investment recommendations.


8 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>


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






Asset Allocation Programs


Shares of the Portfolio are available to participants in advisory programs or
asset based fee programs sponsored by Salomon Smith Barney Inc., including the
TRAK(R) Personalized Investment Advisory Service, or other qualified investment
advisers approved by the Consulting Group. The advisory services provide
investors with asset allocation recommendations, which are implemented through
the Portfolio.

Advisory services generally include:

 .  evaluating the investor's investment objectives and time horizon

 .  analyzing the investor's risk tolerance

 .  recommending an allocation of assets among the portfolios in the Trust

 .  providing monitoring reports containing an analysis and evaluation of an
   investor's account and recommending any changes

While an advisory service makes a recommendation, the ultimate investment
decision is normally up to the investor and not the provider of the advisory
service.

Under an advisory service, an investor typically pays an advisory fee that may
vary based on a number of factors. The maximum fee for assets invested in the
Trust under a Salomon Smith Barney advisory service is 1.50% of average
quarter-end net assets. This fee may be reduced in certain circumstances. The
fee under a Salomon Smith Barney advisory program may be paid either by
redemption of shares of the Trust or by separate payment.


9 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS

<PAGE>


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

Investment and Account Information


Account transactions


Purchase of Shares. You may purchase shares of the Portfolio if you are a
participant in an advisory program or asset based fee program sponsored by
Salomon Smith Barney, including TRAK(R), or by qualified investment advisers
not affiliated with Salomon Smith Barney. Purchases of shares of the Portfolio
must be made through a brokerage account maintained with Salomon Smith Barney
or through a broker that clears securities transactions through Salomon Smith
Barney (an introducing broker). You may establish a brokerage account with
Salomon Smith Barney free of charge in order to purchase shares of the
Portfolio.

 .  The minimum initial aggregate investment in the TRAK program is $10,000. The
   minimum investment in the Portfolio is $100.

 .  There is no minimum on additional investments.

 .  The minimum initial aggregate investment in the TRAK program for employees
   of Salomon Smith Barney and members of their immediate families, and
   retirement accounts or plans for those persons, is $5,000.

 .  The Portfolio and the TRAK program may vary or waive the investment minimums
   at any time.

 .  You may establish a Systematic Withdrawal/Investment Schedule. For more
   information, contact your Investment Professional or consult the SAI.

Shares of the Portfolio are sold at net asset value per share without
imposition of a sales charge but will be subject to any applicable advisory
program fee. All orders to purchase accepted by Salomon Smith Barney or the
introducing broker before 4:00 p.m., Eastern time, will receive that day's
share price. Orders accepted after 4:00 p.m. will receive the next day's share
price. All purchase orders must be in good order to be accepted. This means you
have provided the following information:

 .  Name of the Portfolio

 .  Account Number

 .  Dollar amount or number of shares to be purchased

 .  Signatures of each owner exactly as the account is registered

The Portfolio reserves the right to reject purchase orders or to stop offering
its shares without notice. No order will be accepted unless Salomon Smith
Barney has received and accepted an advisory agreement signed by investors
participating in the TRAK(R) program or other advisory program sponsored by
Salomon Smith Barney.

With respect to investors participating in advisory programs sponsored by
entities other than Salomon Smith Barney, Salomon Smith Barney must have
received and accepted the appropriate documents before the order will be
accepted. Payment for shares must be received by Salomon Smith Barney or the
introducing broker within three business days after the order is placed in good
order.


Redemption of Shares. You may sell shares of the Portfolio at net asset value
on any day the New York Stock Exchange is open by contacting your broker. All
redemption requests accepted by Salomon Smith Barney or an introducing broker
before 4:00 p.m. Eastern time on any day will be executed at that day's share
price. Orders accepted after 4:00 p.m. will be executed at the next day's
price. All redemption orders must be in good form, which may require a
signature guarantee (available from most banks, dealers, brokers, credit unions
and federal savings and loan associations, but not from a notary public) to
assure the safety of your account. If you discontinue your Salomon Smith Barney
advisory service, you must redeem your shares in the Portfolio.


The Portfolio has the right to suspend redemptions of shares and to postpone
the transmission of redemption proceeds to a shareholder's account at Salomon
Smith Barney or at an introducing broker for up to seven days, as permitted by
law. Redemption proceeds held in an investor's brokerage account generally will
not earn any income and Salomon Smith Barney or the introducing broker may
benefit from the use of temporarily uninvested funds. A shareholder who pays
for shares of the Portfolio by personal check will be credited with the
proceeds of a redemption of those shares after the purchaser's check has
cleared, which may take up to 15 days.

Exchange of Shares. An investor that participates in an advisory program may
exchange shares in the Portfolio for shares in any other portfolio in the Trust
at net asset value without payment of an exchange fee. Be sure to consider the
investment objectives and policies of any Portfolio into which you make an
exchange. An exchange is a taxable transaction except for exchanges within a
retirement account.

The Consulting Group may limit additional exchanges and/or purchases by a
shareholder if it determines that the shareholder is pursuing a pattern of
frequent exchanges. Excessive exchange transactions can adversely affect a
Portfolio's performance, hurting the Portfolio's other shareholders. If the
Consulting Group discovers a pattern of frequent exchanges, it will provide
notice in writing or by telephone to the shareholder at least 15 days before
suspending his or her exchange privilege. During the 15-day period the
shareholder will be required either to redeem his or her shares in the
Portfolio or establish an allocation which the shareholder expects to maintain
for a significant period of time.

10 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>


--------------------------------------------------------------------------------
                                   Investment and Account Information, continued



Accounts with Low Balances. If your account falls below $7,500 as a result of
redemptions (and not because of performance or payment of the Salomon Smith
Barney Advisory Service fees), Salomon Smith Barney or the introducing broker
may ask you to increase the size of your account to $7,500 within thirty days.
If you do not increase the account to $7,500, Salomon Smith Barney may redeem
the shares in your account at net asset value and remit the proceeds to you.
The proceeds will be deposited in your brokerage account unless you instruct
otherwise.

Valuation of shares

The Portfolio offers its shares at their net asset value per share. The
Portfolio calculates its net asset value once daily as of the close of regular
trading on the New York Stock Exchange (generally at 4:00 p.m., New York time)
on each day the exchange is open. If the Exchange closes early, the Portfolio
accelerates calculation of net asset value and transaction deadlines to the
actual closing time. The Exchange is closed on certain holidays listed in the
SAI.


The Portfolio generally values its fund securities based on market prices or
quotations. The Portfolio's currency conversions, if any, are done when the
London stock exchange closes. When reliable market prices or quotations are not
readily available, or when the Consulting Group believes they are unreliable or
that the value of a security has been materially affected by events occurring
after the securities or currency exchanges close, the Portfolio may price those
securities at fair value. Fair value is determined in accordance with
procedures approved by the Board of Trustees. A mutual fund that uses fair
value to price securities may value those securities higher or lower than
another fund using market quotations to price the same securities.


International markets may be open, and trading may take place, on days when
U.S. markets are closed. For this reason, the values of foreign securities
owned by the Portfolio could change on days when shares of the Portfolio cannot
be bought or redeemed.

Dividends and distributions


The Portfolio intends to distribute all or substantially all of its net
investment income and realized capital gains, if any, for each taxable year.
The Portfolio declares and pays dividends, if any, from net investment income
annually. The Portfolio declares and distributes realized net capital gains, if
any, annually, typically in December. All dividends and capital gains are
reinvested in shares of the Portfolio unless the shareholder elects to receive
them in cash.


The Portfolio expects distributions to be primarily from capital gains, a
substantial portion of which may be short-term.

Taxes

<TABLE>
<CAPTION>
------------------------------------------------------

Transactions                  Federal Tax Status
------------------------------------------------------
<S>                           <C>
Sales or exchange of shares   Usually capital gain or
                              loss; long-term only if
                              shares owned more
                              than one year
------------------------------------------------------
Distributions of long-term    Long-term capital gain
  capital gain
------------------------------------------------------
Distributions of short-term   Ordinary income
  capital gain
------------------------------------------------------
Dividends from net investment Ordinary income
  income
------------------------------------------------------
Any of the above received by  Not a taxable event
  a tax-deferred retirement
  account
------------------------------------------------------
</TABLE>


Long-term capital gain distributions are taxable to you as long-term capital
gain regardless of how long you have owned your shares. You may want to avoid
buying shares when the Portfolio is about to declare a capital gain
distribution or a taxable dividend because it will be taxable to you even
though it may actually be a return of a portion of your investment.


After the end of each year, you will receive a Form 1099 indicating your
dividends and distributions for the prior year, which are taxable as described
above even if reinvested, and your redemptions during that year. If you do not
provide the Portfolio with your correct taxpayer identification number and any
required certifications, you may be subject to a backup withholding tax of the
Portfolio's distributions, dividends and redemption proceeds. Because each
shareholder's circumstances are different and special tax rules may apply, you
should consult your tax adviser about your investment in the Portfolio.



As noted above, investors, out of their own assets, will pay an advisory
service fee. For most investors who are individuals, this fee will be treated
as a "miscellaneous itemized deduction" for federal income tax purposes. Under
current federal income tax law, an individual's miscellaneous itemized
deductions for any taxable year will be allowed as a deduction only to the
extent the aggregate of these deductions exceeds 2% of adjusted gross income.
Such deductions are also subject to the general limitation on itemized
deductions for individuals having, in 2001, adjusted gross income in excess of
$132,950 ($66,475 for married individuals filing separately).


11 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>


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

Financial Highlights


The financial highlights tables are intended to help you understand the
performance of the Portfolio for the past 5 years (or since inception if less
than 5 years). Certain information reflects financial results for a single
share. Total return represents the rate that a shareholder would have earned
(or lost) on a Portfolio share assuming reinvestment of all dividends and
distributions. The information in the following table was audited by KPMG LLP,
independent auditors, whose report, along with the Portfolio's financial
statements, is included in the annual report (available upon request).


For a share of beneficial interest outstanding throughout the period ended
March 31:

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

<TABLE>
<CAPTION>
                                                               2001(2)
2000(1)(2)


--------------------------------------------------------------------------------
----
<S>                                                            <C>      <C>

Net Asset Value, Beginning of Year                               $8.36     $8.00

--------------------------------------------------------------------------------
----
Income From Operations:

  Net investment income(3)                                        0.32      0.19

  Net realized and unrealized gain                                0.23      0.44

--------------------------------------------------------------------------------
----
Total Income From Operations                                      0.55      0.63

--------------------------------------------------------------------------------
----
Less Distributions From:

  Net investment income                                          (0.35)
(0.02)
  Net realized gains                                             (0.42)
(0.25)
--------------------------------------------------------------------------------
----
Total Distributions                                              (0.77)
(0.27)
--------------------------------------------------------------------------------
----
Net Asset Value, End of Year                                     $8.14     $8.36

--------------------------------------------------------------------------------
----
Total Return                                                      6.68%
7.98%++
--------------------------------------------------------------------------------
----
Net Assets, End of Year (000s)                                 $45,122   $32,583

--------------------------------------------------------------------------------
----
Ratios to Average Net Assets:

  Total expenses before dividend expense on short sales(3)(4)     1.90%
1.90%+
  Dividend expense from short sales                               0.61
0.80+
  Total expenses                                                  2.51
2.70+
  Net investment income                                           3.71
2.65+
--------------------------------------------------------------------------------
----
  Portfolio Turnover Rate                                          317%
249%


--------------------------------------------------------------------------------
----
</TABLE>

(1)For the period from May 10, 1999 (commencement of operations) to March 31,
   2000.
(2)Per share amounts have been calculated using the monthly average shares
   method.
(3)The expense ratio and the per share decrease in net investment income before
   fee waivers were as follows:


<TABLE>
<CAPTION>
        Per Share       Expense Ratio
     Decrease to Net  Without Fee Waiver
       Investment    and Dividend Expense
         Income        from Short Sales
     --------------- --------------------
<S>  <C>             <C>
2001      $0.01              2.05%
2000       0.05              2.64+
</TABLE>


(4)As a result of a voluntary expense limitation, expense ratios will not
   exceed 1.90%.


 ++Total return is not annualized, as it may not be representative of the total
   return for the year.


 + Annualized.


12 | MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
<PAGE>

                                  APPENDIX A

                              Investment Indices
Following are definitions of indices that are utilized in the Client's
Recommendation and Review.


Lehman Brothers Government/Corporate Bond Index
Composed of publicly issued, fixed rate, non-convertible domestic debt in three
major classifications: industrial, utility, financial as well as the domestic
debt of the U.S. Government or any agency thereof. All issues have at least one
year to maturity, or an outstanding par value of at least $100 million for U.S.
Government issues and $50 million for corporate issues. All corporate issues
have a minimum rating of Baa by Moody's or BBB by Standard & Poor's.

Lehman Brothers Aggregate Bond Index
Composed of the Lehman Intermediate Government/ Corporate Bond Index and the
Mortgage-Backed Securities Index and also includes treasury issues, agency
issues, corporate bond issues and mortgage-backed securities.

Lehman Brothers Long Term Government/Corporate Bond Index
Includes all bonds covered by the Lehman Brothers Government/Corporate Bond
Index, with maturities of 10 years or longer. Total return includes income and
appreciation/depreciation as a percentage of original investment.

Lehman Brothers Intermediate Government/Corporate Bond Index
A subset of the Lehman Brothers Government/Corporate Bond Index covering issues
with maturities up to ten years.

Lehman Brothers Mortgage Backed Securities Bond Index

Contains all fixed income securities issued and backed by mortgage pools of
GNMA's, FHLMC's, FNMA's, Graduated Payment Mortgage (GPM's), but not Graduated
Equity Mortgages (GEM).


Lehman Brothers Municipal Bond Index
A composite measure of the total return performance of the municipal bond
market, which includes more than two million different bond issues. For
simplicity, the market is divided into seven major sectors, with the
performance of each sector weighted according to issue volume (adjusted
annually).

Lipper Balanced Funds Average
An average of the reinvested performance of funds whose primary objective is to
conserve principal by maintaining at all times a balanced portfolio of both
stocks and bonds. Typically, the stock/bond ratio ranges around 60 percent/40
percent, respectively.

Lipper Corporate Debt Funds A Rated Average
An average of the reinvested performance of funds that invest at least 65% of
their assets in corporate debt issues rated "A" or better or government issues.

Lipper Corporate Debt Funds A Rated Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper Emerging Markets Funds Average
An average of the reinvested performance of funds that investing at least 65%
of total assets in emerging market equity securities, where emerging market is
defined by a country's gross national product per capita or other economic
measures.

Lipper General Municipal Debt Funds Average
An average of the reinvested performance of funds that invest at least 65% of
their assets in municipal debt issues in the top four credit ratings.

Lipper General Municipal Funds Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper General World Funds Average
An average of the reinvested performance of the following twelve Lipper
investment objectives: Gold Oriented, Global, Global Small Company,
International, International Small Company, European Region, Pacific Ex Japan,
Pacific Region, Emerging Markets, Japanese, Latin American and Canadian Funds.

Lipper Growth Funds Average
An average of the reinvested performance of funds that normally invest in
companies whose long-term earnings are expected to grow significantly faster
than the earnings of the stocks represented in the major unmanaged stock
indices.

Lipper Growth Funds Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper International Funds Average

An average of the reinvested performance of funds that invest their assets in
securities whose primary trading markets are outside of the United States.


Lipper International Funds Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper International Income Funds Average

An average of the reinvested performance of funds that invest primarily in U.S.
dollar and non-U.S. dollar debt securities located in at least three countries
excluding the United States, except in periods of market weakness.


Lipper Large-Cap Growth Funds Average
An average of the reinvested performance of funds that normally invest in
companies with long-term earnings expected to grow significantly faster than
the earnings of the stocks represented in a major unmanaged stock index. These
funds will normally have an above-average price-to-earnings ratio,
price-to-book ratio and three-year earnings growth

                                      A-1
<PAGE>

                                  APPENDIX A

                        Investment Indices--(Continued)

figure, compared to the U.S. diversified large-cap funds universe average.
Large-cap funds will generally invest at least 75% of their assets in companies
with market capitalizations (on a three-year weighted basis) greater than 300%
of the dollar-weighted median market capitalization of the S&P Mid-Cap 400
Index.

Lipper Multi-Cap Value Funds Average
An average of the reinvested performance of funds that normally invest in
companies considered to be undervalued relative to a major unmanaged stock
index based on price-to-current earnings, book value, asset value or other
factors. These funds will normally have a below-average price-to-earnings
ratio, price-to-book ratio and three-year earnings growth figure, compared to
the U.S. diversified multi-cap funds universe average. Multi-cap funds will
generally have between 25% to 75% of their assets invested in companies with
market capitalizations (on a three-year weighted basis) greater than 300% of
the dollar-weighted median market capitalization of the S&P Mid-Cap 400 Index.

Lipper Small-Cap Growth Funds Average
An average of the reinvested performance of funds that normally invest in
companies with long-term earnings expected to grow significantly faster than
the earnings of the stocks represented in a major unmanaged stock index. These
funds will normally have an above-average price-to-earnings ratio,
price-to-book ratio and three-year earnings growth figure, compared to the U.S.
diversified small-cap funds universe average. Small-cap funds will generally
invest at least 75% of their assets in companies with market capitalizations
(on a three-year weighted basis) of less than 250% of the dollar-weighted
median market capitalization of the S&P Small-Cap 600 Index.

Lipper Small-Cap Value Funds Average
An average of the reinvested performance of funds that normally invest in
companies considered to be undervalued relative to a major unmanaged stock
index based on price-to-current earnings, book value, asset value or other
factors. These funds will normally have a below-average price-to-earnings
ratio, price-to-book ratio and three-year earnings growth figure, compared to
the U.S. diversified small-cap funds universe average. Small-cap funds will
generally invest at least 75% of their assets in companies with market
capitalizations (on a three-year weighted basis) of less than 250% of the
dollar-weighted median market capitalization of the S&P Small-Cap 600 Index.

Lipper Small Company Funds Average
An average of the reinvested performance of funds that by their prospectus or
portfolio practice, limit investments to companies on the basis of the size of
the company.

Lipper Small Company Funds Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper U.S. Government Money Market Funds Index
An equally weighted performance index, adjusted for capital gains distributions
and income dividends of the largest qualifying funds having this investment
objective.

Lipper U.S. Mortgage Funds Average
An average of the reinvested performance of funds that invest at least 65% of
their assets in mortgages/securities issued or guaranteed as to principal and
interest by the U.S. Government and certain federal agencies.

Morgan Stanley EAFE (Capitalization Weighted)
A composite portfolio of equity (stock market) total returns for the countries
of Europe, Australia, New Zealand and the Far East. The return for each country
is weighted on the basis of its market capitalization.

Morgan Stanley Emerging Equity Markets Free Gross Dividend Index
A composite portfolio consisting of equity total returns for countries with low
to middle per capita income, as determined by the World Bank. Some of these
countries include: Argentina, Greece, India, Malaysia and Turkey. The return
for each country is weighted on the basis of its total market capitalization.

90-Day Treasury Bill Index
Unweighted average of weekly auction offering rates of 90-Day Treasury Bills.
Treasury Bills are backed by the full faith and credit of the U.S. Government.

Russell 1000 Index

The 1,000 largest U.S. companies by market capitalization, representing
approximately 92% of the Russell 3000 Index the smallest of which has about
$1.4 billion in market capitalization. The average market capitalization for a
company in this index is $13 billion.


Russell 1000 Value Index
Contains those Russell 1000 securities with less-than-average growth
orientation. Companies in this index generally have low price-to-book and
earnings ratios and lower forecasted growth values than stocks in the Russell
1000 Growth Index.

Russell 1000 Growth Index
Contains those Russell 1000 securities with greater-than-average growth
orientation. Companies in this index tend to exhibit high price-to-book and
earnings ratios and higher forecasted growth values than stocks in the Russell
1000 Value Index.

Russell 2000 Index

Composed of the 2,000 smallest U.S. securities as determined by total market
capitalization, representing approximately 8.0% of the Russell 3000 Index. The
average market capitalization for a company in this index is $530 million, with
the largest being $1.4 billion.


                                      A-2
<PAGE>

                                  APPENDIX A

                        Investment Indices--(Continued)

Russell 2000 Value Index
Contains those Russell 2000 securities with less-than-average growth
orientation. Companies in this index generally have low price-to-book and
earnings ratios and lower forecasted growth values than stocks in the Russell
2000 Growth Index.

Russell 2000 Growth Index
Contains those Russell 2000 securities with greater-than-average growth
orientation. Companies in this index tend to exhibit high price-to-book and
earnings ratios and higher forecasted growth values than stocks in the Russell
2000 Value Index.

Standard & Poor's 500 Index

Tracks the total return of 500 of the largest stocks in the United States,
which includes a representative sample of leading companies in leading
industries. The return of each stock is weighted on the basis of the stock's
capitalization.


Salomon Brothers Non-U.S. Government Bond Index
A market capitalization-weighted index consisting of government bond markets of
Austria, France, Spain, Australia, Germany, Sweden, Belgium, Italy, United
Kingdom, Canada, Japan, Denmark and the Netherlands.

Wilshire Large Company Growth Equity Index
Focuses on the top 750 companies of the Wilshire 5000 in terms of market
capitalization. The smallest company's capitalization is $675 million. The
index excludes companies meeting one or more of the following criteria: less
than 5 years of operating history, high dividend payout, low price-to-book or
low return on equity.

Wilshire Large Company Value Equity Index

Focuses on the top 750 companies of the Wilshire 5000 in terms of market
capitalization. The smallest company's capitalization is $675 million. The
index excludes companies that do not rank favorably on a relative basis due to
their high price-to-earnings and price-to-book ratios, or low yield.


Wilshire Small Company Growth Equity Index
Focuses on companies that rank between 751-1,750 of the Wilshire 5000 in terms
of market capitalization. The smallest company's capitalization is $58 million.
The index excludes companies meeting one or more of the following criteria:
less than two years operating history, high yield, little or no earnings growth
or low beta.

Wilshire Small Company Value Equity Index
Focuses on companies that rank between 751-1,750 of the Wilshire 5000 in terms
of market capitalization. The smallest company's capitalization is $58 million.
The index excludes companies that do not rank favorably on a relative basis
because of their high price-to-earnings and price-to-book ratios, or low yield.

                                      A-3
<PAGE>

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<PAGE>

                                  APPENDIX B

The following are copies of the proposed and final exemption and a technical
amendment to the final exemption from the Department of Labor from certain
provisions of the Employee Retirement Income Security Act of 1974 relating to
the purchase of shares and participation in TRAK by certain retirement plans
and individual retirement accounts.

----------------------------
PENSION AND WELFARE BENEFITS ADMINISTRATION

[Application Nos. D-10809 and D-10865]

Notice of Proposed Individual Exemption to Amend and Replace Prohibited
Transaction Exemption (PTE) 99-15, Involving Salomon Smith Barney Inc., Located
in New York, NY

AGENCY: Pension and Welfare Benefits Administration, U.S. Department of Labor.

ACTION: Notice of proposed individual exemption to modify and replace PTE
99-15.
----------------------------
SUMMARY: This document contains a notice of pendency before the Department of
Labor (the Department) of a proposed and replacement individual exemption
which, if granted, would amend PTE 99-15 (64 FR 1648, April 5, 1999), an
exemption granted to Salomon Smith Barney. PTE 99-15 relates to the operation
of the TRAK Personalized Investment Advisory Service product (the TRAK Program)
and the Trust for Consulting Group Capital Markets Funds (the Trust). If
granted, the proposed exemption would affect participants and beneficiaries of
and fiduciaries with respect to employee benefit plans (the Plans)
participating in the TRAK Program.

EFFECTIVE DATE: If granted, the proposed amendment will be effective as of
April 1, 2000.

DATES: Written comments and requests for a public hearing should be received by
the Department on or before July 17, 2000.

ADDRESSES: All written comments and requests for a public hearing (preferably,
three copies) should be sent to the Office of Exemption Determinations, Pension
and Welfare Benefits Administration, Room N-5649, U.S. Department of Labor, 200
Constitution Avenue, NW, Washington, DC 20210, Attention: Application Nos.
D-10809 and D-10865. The applications pertaining to the proposed exemption and
the comments received will be available for public inspection in the Public
Documents Room of the Pension and Welfare Benefits Administration, U.S.
Department of Labor, Room N-5507, 200 Constitution Avenue, NW, Washington, DC
20210.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady, Office of Exemption
Determinations, Pension and Welfare Benefits Administration, U.S. Department of
Labor, telephone (202) 219-8881. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: Notice is hereby given of the pendency before the
Department of a proposed exemption that would amend and replace PTE 99-15. PTE
99-15, provides an exemption from certain prohibited transaction restrictions
of section 406 of the Employee Retirement Income Security Act of 1974 (the Act)
and from the sanctions resulting from the application of section 4975 of the
Internal Revenue Code of 1986 (the Code), as amended, by reason of section
4975(c)(1) of the Code. Specifically, PTE 99-15 provides exemptive relief from
the restrictions of section 406(a) of the Act and the sanctions resulting from
the application of section 4975 of the Code, by reason of section 4975(c)(1)(A)
through (D) of the Code, for the purchase or redemption of shares in the Trust
by an employee benefit plan, an individual retirement account (the IRA), a
retirement plan for a self-employed individual (the Keogh Plan), or an
individual account pension plan that is subject to the provisions of Title I of
the Act and established under section 403(b) of the Code (the Section 403(b)
Plan). PTE 99-15 also provides exemptive relief from the restrictions of
section 406(b) of the Act and the sanctions resulting from the application of
section 4975 of the Code, by reason of section 4975(c)(1)(E) and (F) of the
Code, with respect to the provision, by the Consulting Group of Salomon Smith
Barney (the Consulting Group), of (1) investment advisory services or (2) an
automatic reallocation option to an independent fiduciary of a participating
Plan (the Independent Plan Fiduciary) which may result in such fiduciary's
selection of a portfolio (the Portfolio) in the TRAK Program for the investment
of Plan assets./1/
--------
 /1 /PTE 99-15 also (a) described a series of corporate mergers which changed
the names of the parties identified in two prior TRAK exemptions which it
superseded [i.e., PTE 94-50 (59 FR 32024, June 21, 1994) and PTE 92-77 (55 FR
45833, October 5, 1992)] and which would permit broader distribution of
TRAK-related products; (b) implemented a recordkeeping reimbursement offset
procedure under the TRAK Program; (c) adopted an automated reallocation option
under the TRAK Program that would reduce the asset allocation (or "outside")
fee paid to Salomon Smith Barney by a Plan investor; and (d) expanded the scope
of the exemption to include Section 403(b) Plans. PTE 94-50 permitted Smith,
Barney Inc. (Smith Barney), Salomon Smith Barney's predecessor, to add a
daily-traded collective investment fund (the GIC Fund) to the existing Fund
portfolios and to describe the various entities operating the GIC Fund. PTE
94-50 also replaced references to Shearson Lehman Brothers, Inc. (Shearson
Lehman) with Smith Barney and amended and replaced PTE 92-77. Finally, PTE
92-77 permitted Shearson Lehman to make the TRAK Program available to Plans
that acquired shares in the former Trust for TRAK Investments and allowed the
Consulting Group to provide investment advisory services to an Independent Plan
Fiduciary which might result in such fiduciary's selection of a Portfolio in
the TRAK Program for the investment of Plan assets.

 As of December 31, 1998, the TRAK Program held assets that were in excess of
$9.6 billion. Of those assets, approximately $1.9 billion were held in 407 Plan
accounts having cash or deferred compensation arrangements and approximately
$4.2 billion were held in more than 59,000 employee benefit plan and
IRA/Keogh-type Plan accounts. At present, the Trust consists of 17 Portfolios
that are managed by the Consulting Group and advised by one or more
unaffiliated sub-advisers selected by Salomon Smith Barney.

 Salomon Smith Barney requests a modification of PTE 99-15 and a replacement of
that exemption with a new exemption for purposes of uniformity./2/
Specifically, Salomon Smith Barney requests that the term "affiliate," as set
forth in PTE 99-15, in Section II(h) of the General Conditions and in Section
III(b) of the Definitions, be amended and clarified to avoid possible
misinterpretation. In this regard, Salomon Smith Barney also requests that the
term "officer" be defined and incorporated into the proposed exemption, in new
Section III(d), to limit the affiliate definition to persons who have a
significant management role. Further, Salomon Smith Barney requests that
Section II(i) of PTE 99-15 be amended to permit an independent sub-adviser (the
Sub-Adviser), under certain circumstances, to exceed the current one percent
limitation on the acquisition of securities that are issued by Salomon Smith
Barney and/or its affiliates, notably in the Sub-Adviser's replication of a
third-party index. If granted, the proposed exemption would be effective as of
April 1, 2000.

 The proposed exemption has been requested in an application filed on behalf of
Salomon Smith Barney pursuant to section 408(a) of the Act and section
4975(c)(2) of the Code, and in accordance with the procedures set forth in 29
CFR Part 2570, Subpart B (55 FR 32836, August 10, 1990). Effective December 31,
1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR 47713, October
17, 1978) transferred the authority of the Secretary of the Treasury to issue
exemptions of the type requested to the Secretary of Labor. Accordingly, the
proposed exemption is being issued solely by the Department.
--------
 /2 /The Department deems PTE 94-50 as having been effectively superseded by
PTE 99-15. Therefore, the proposed amendments described herein will not apply
to PTE 94-50.

                                      B-1
<PAGE>

I. Proposed Modification of the Term "Affiliate''

 Salomon Smith Barney represents that in early December 1999, Citigroup and
State Street Corporation announced an agreement to form a joint venture called
CitiStreet LLC, a Delaware limited liability company (the Joint Venture). The
Joint Venture, which was closed on April 1, 2000, is each 50 percent owned by
Keeper Holdings LLC (Citi), a wholly owned subsidiary of Citigroup, and by
State Street Bank and Trust Company (State Street), a wholly owned subsidiary
of State Street Corporation. Both Citigroup and State Street Corporation are
publicly-held corporations.

 Salomon Smith Barney explains that the formation of the Joint Venture may have
resulted in the disqualification of State Street Global Advisers (SSgA), a
division of State Street, from acting as a Sub-Adviser in the TRAK Program due
to certain ambiguities in the meaning of the word "affiliate." Salomon Smith
Barney represents that SSgA is currently a Sub-Adviser with respect to
approximately $800 million in assets in the International Equity Investments
Portfolio and the Emerging Markets Equity Investments Portfolio.

A. Sections II(h) and III(b)

 Section II(h) of PTE 99-15 provides that--

 Any sub-adviser (the Sub-Adviser) that acts for the Trust to exercise
investment discretion over a Portfolio will be independent of Salomon Smith
Barney and its affiliates.

 Although the term "independent" is not defined in the exemption, Salomon Smith
Barney notes that this condition was added to the original Shearson Lehman
exemption request when Shearson Lehman agreed not to use affiliated
Sub-Advisers. Therefore, Salomon Smith Barney presumes that the term
"independent" means "not an affiliate." Salomon Smith Barney represents that
Section III(b) of PTE 99-15 defines the term "affiliate" of Salomon Smith
Barney to include:

 (1) Any person directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with Salomon Smith Barney.
(For purposes of this subparagraph, the term "control" means the power to
exercise a controlling influence over the management or policies of a person
other than an individual.)

 (2) Any officer, director or partner in such person, and

 (3) Any corporation or partnership of which such person is an officer,
director or a 5 percent partner or owner.

 Salomon Smith Barney notes that problems of interpretation have arisen because
subparagraphs (2) and (3) of the affiliate definition use the term "such
person" rather than referring directly to Salomon Smith Barney. Salomon Smith
Barney explains that when defining an "affiliate" of Salomon Smith Barney, the
definition may be construed to encompass only relationships with Salomon Smith
Barney that involve shared control, influence or economic interests or it could
be interpreted to cover affiliates of Salomon Smith Barney's affiliates, where
there is no basis for common management or identical economic interests,
because subparagraphs (2) and (3) have no clear antecedents.

 Salomon Smith Barney asserts that State Street is not under common corporate
control with either it or any of its corporate affiliates. Instead, State
Street is a subsidiary of an independently-owned and managed public company.
Therefore, there is no control relationship, as contemplated in subparagraph
(1) of Section III(b), between Citigroup and State Street Corporation, the
respective parent companies of Salomon Smith Barney and of State Street.
Salomon Smith Barney also states that the Joint Venture is not necessarily its
affiliate under subparagraph (1) of the definition because Salomon Smith
Barney's indirect 50 percent ownership interest in the Joint Venture is not a
"controlling interest." Therefore, if the Joint Venture is not an affiliate,
Salomon Smith Barney believes that State Street is not a partner of Salomon
Smith Barney, nor an officer or director of Salomon Smith Barney, as
contemplated in subparagraph (2) of Section III(b). Further, Salomon Smith
Barney explains that State Street's exclusive ownership by State Street
Corporation does not trigger the ownership provisions of subparagraph (3) of
Section III(b).

 In addition to the above, Salomon Smith Barney states that it will not
exercise control or influence in the operation of the Joint Venture that will
inure to State Street. In addition, Salomon Smith Barney represents that Citi
will not exercise control of the Joint Venture because it has only a 50 percent
interest. Further, since all significant corporate actions of the Joint Venture
will require unanimity, Salomon Smith Barney explains that neither Citi nor
State Street will be able to exercise exclusive control over the Joint Venture.

B. Proposed Amendment

 Salomon Smith Barney submits that subparagraph (1) of Section III(b) does not
require any clarification. However, it proposes that subparagraphs (2) and (3)
of the affiliate definition be modified to cover only those persons and
entities that have a significant role in the decisions made by Salomon Smith
Barney or which are managed or influenced by Salomon Smith Barney. These
entities or persons include individual officers, directors and partners in
Salomon Smith Barney and its corporate affiliates, and corporations and
partnerships in which Salomon Smith Barney and its corporate affiliates have a
10 percent or greater interest. Salomon Smith Barney believes that this
tailoring of the affiliate definition will avoid future problems in determining
the independence of the Sub-Advisers, including SSgA.

 Thus, on the basis of the foregoing, Section III(b) of PTE 99-15 is hereby
modified in this notice of proposed exemption to read as follows:

 (b) An "affiliate" of Salomon Smith Barney includes--

 (1) Any person directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with Salomon Smith Barney;
(For purposes of this subparagraph, the term "control" means the power to
exercise a controlling influence over the management or policies of a person
other than an individual.)

 (2) Any individual who is an officer, director or partner in Salomon Smith
Barney or a person who is described in subparagraph (b)(1);

 (3) Any corporation or partnership of which Salomon Smith Barney or an
affiliate described in subparagraph (b)(1), is a 10 percent or more partner or
owner; and

 (4) Any corporation or partnership of which any individual which is an officer
or director of Salomon Smith Barney, is a 10 percent or more partner or owner.

 In connection with the revised affiliate definition, Salomon Smith Barney
requests that the term "officer" be defined in new subparagraph (d) of Section
III to limit this portion of the affiliate definition to individuals who have a
significant management role. Salomon Smith Barney points out that there are job
titles at fairly modest levels of authority within it as well as in any
company, and it wishes to ensure that future factual inquiries into an
individual's

                                      B-2
<PAGE>

status as an affiliate do not require that it contact virtually every official
in its corporate population in a due diligence effort. Therefore, Salomon Smith
Barney proposes that Section III(d) should read as follows:

 The term "officer" means a president, any vice president in charge of a
principal business unit, division or function (such as sales, administration or
finance), or any other officer who performs a policy-making function for the
entity.

 Under the foregoing modifications, Salomon Smith Barney believes that Sections
II(h) and III(b) of the proposed exemption will no longer have conflicting
meanings.

II. Proposed Modification of the One Percent Limitation on Stock Issued by
Salomon Smith Barney and/or Its Affiliates

 Salomon Smith Barney represents that there are a number of established market
indexes that have been created by parties which are unaffiliated with
Citigroup, its indirect parent. For example, the S&P 500 Index is a widely-used
benchmark index of domestic equity performance. This index consists of 500
stocks that have been selected by the Standard & Poor's Company (S&P) for
market capitalization, liquidity and industry group representation. The index
is market-value weighted so the performance of the larger of the included
companies has a greater impact on the performance of the index as a whole.
Currently, the common stock (the Common Stock) of Citigroup represents 1.57
percent of the S&P 500 Index.

 In addition to the S&P 500 Index, Salomon Smith Barney explains that the
Russell 3000 Index is composed of the 3,000 largest United States companies,
based upon total market capitalization. Salomon Smith Barney also points out
that there are a number of Russell Indexes which are based on subsets of the
Russell 3000 Index. These Indexes include (a) the Russell 2000 Index, which
measures the performance of the smallest 2,000 United States companies in the
Russell 3000 Index and therefore, excludes Citigroup; and (b) the Russell 1000
Index, which measures the performance of the 1,000 largest United States
companies in the Russell 3000 Value Index and includes Citigroup. In addition,
Salomon Smith Barney represents that there are further subsets of the Russell
Indexes which are based upon Russell's characterization of stock as either
"Growth" or "Value." For example, Salomon Smith Barney explains that Citigroup
is included within these subsets. As of March 31, 2000, Citigroup Common Stock
represented 3.8981 percent of the Russell 1000 Value Index and 3.6343 percent
of the Russell 3000 Value Index.

A. Section II(i)

 Based upon the foregoing descriptions of the stock indexes, Salomon Smith
Barney requests that Section II(i) of PTE 99-15 be modified in order to permit
an independent Sub-Adviser which manages the assets in a Portfolio to exceed
the one percent investment limitation on securities issued by Salomon Smith
Barney and/or its affiliates under certain circumstances. As currently drafted,
Section II(i) states that--

 Immediately following the acquisition by a Portfolio of any securities that
are issued by Salomon Smith Barney and/or its affiliates, the percentage of
that Portfolio's net assets invested in such securities will not exceed one
percent.

 In other words, the exception will apply to "any higher percentage" which may
result from a Sub-Adviser's management of an index fund (the Index Fund)
Portfolio which includes Citigroup Common Stock. The index will be an
established third party index and the Sub-Adviser will track the index results
using the "passive full replication" trading method./3/

 Because the Sub-Adviser will purchase and sell Citigroup Common Stock to
approximate the performance of an index rather than reflect the Sub-Adviser's
evaluation of the Common Stock in its individual merits, Salomon Smith Barney
states that any additional investment by a Portfolio in Citigroup Common Stock
over the one percent threshold will result from the implementation of the
trading method and not from the Sub-Adviser's exercise of investment
discretion.

 Due to the one percent limitation of Section II(i), Salomon Smith Barney
states that active Sub-Advisers for the Consulting Group may not own or trade
Citigroup Common Stock and they will continue to be prohibited from trading in
Citigroup Common Stock. However, Salomon Smith Barney proposes that passive or
pure Index Fund Sub-Advisers be permitted to hold Citigroup Common Stock in
their portfolios which exceed the one percent limitation to the extent such
higher percentage is necessary
--------
 /3 /According to Salomon Smith Barney, there are two forms of index
trading--passive full replication (wherein each stock in the same weightings as
the index is owned by a mutual fund) and sampling (in which each sector, but
not necessarily all stocks in such sector, in the same weightings as the index
is also owned by a mutual fund). Salomon Smith Barney notes that sampling is
used most often when a portfolio is smaller and cannot efficiently replicate
the entire index.
to replicate the underlying index./4/ Salomon Smith Barney points out that pure
index Sub-Advisers that are responsible for investing only a portion of the
assets in the Consulting Group Capital Markets Large Cap Value Fund and the
Large Cap Growth Consulting Group Capital Markets Fund, are currently in
compliance with the one percent limitation. These Portfolios, which consist of
both an actively-managed portion and a distinct, passively-managed portion,
held less than one percent of the their total assets in Citigroup Common Stock.

 If an index-based Sub-Adviser were to manage a greater portion or all of
either of the aforementioned Portfolios, Salomon Smith Barney explains that the
total Portfolio may include Citigroup Common Stock which breaches the one
percent threshold. Similarly, Salomon Smith Barney notes that if the entire
Portfolio, such as the Consulting Group Capital Markets S&P 500 Index
Investment Fund Portfolio, has the investment objective of providing results
that correspond to the price and yield performance of the S&P 500 Index, the
Sub-Adviser would be expected to approximate the cited percentage of 1.57
percent for Citigroup Common Stock in the S&P 500 Index. This would also
violate the one percent investment limitation.

 Salomon Smith Barney states that the present one percent limitation placed on
Citigroup Common Stock increases the likelihood that the performance of an
Index Fund Portfolio will not replicate the applicable index. Because Citigroup
is among the largest companies on the basis of capitalization in the S&P 500,
Salomon Smith Barney states that Citigroup's performance can have a significant
impact in index performance calculations. However, if Citigroup Common Stock is
not proportionately represented, Salomon Smith Barney explains that Index Fund
performance will deviate from the index whether Citigroup Common Stock does
well or underperforms.
--------
 /4 /In its management of a "pure" Index Fund, the Sub-Adviser does not
evaluate individual companies to identify attractive investment candidates or
to eliminate underperforming investments. Instead, the Sub-Adviser attempts to
mirror the composition of the relevant index as closely as possible by
adjusting the Portfolio holdings daily to reflect the companies included in the
index and their relative weightings. Because performance of the Index Fund is
tied to the performance of the index that it tracks, investors are advised that
this investment strategy may mean losses if the applicable index performs
poorly relative to other indexes or individual stocks.
The performance of a pure Index Fund generally does not mirror the index
performance exactly. The index is merely a composite performance figure, based
upon an established selection of companies. It does not represent actual assets
being managed so there are no expenses deducted from its performance results.
In contrast, an Index Fund Portfolio represents actual assets under management
and has liquidity requirements associated with Fund operation. To meet
redemption requests and to pay expenses, the Index Fund must maintain a portion
of its assets in cash and cash equivalents.

                                      B-3
<PAGE>

 In any event, Salomon Smith Barney believes that the one percent limitation
has the effect of depriving a Plan of the opportunity to invest in a Fund
(available to non-Plan investors) that might otherwise track the applicable
index more exactly. Because many Plan sponsors are anxious to have an Index
Fund available through the TRAK Program, Salomon Smith Barney wishes to move
quickly to accommodate the Plan market's design preferences.

 For these reasons, Salomon Smith Barney requests that the current one percent
restriction be lifted and allowed to be exceeded with respect to Portfolio
investments that are made by passive Sub-Advisers in Citigroup Common Stock in
their replication of third-party indexes. In addition, Salomon Smith Barney
seeks the flexibility to have the Portfolios consist, in whole or in part, of
Index Funds that are managed by passive Sub-Advisers. However, the ownership by
a Portfolio of Citigroup Common Stock which is in excess of the one percent
limitation would result solely from the activities of the passive Sub-Adviser
in replicating an index.

B. Exemptive Safeguards

 Section II(i) of the proposed exemption has been further expanded to include a
number of substantive safeguards for the protection of Plans investing under
the TRAK Program. In this regard, Section II(i) requires that the amount held
by the Sub-Adviser in managing an Index Fund Portfolio be held in order to
replicate an established third party index. In addition, Section II(i) states
that the index must represent the investment performance of a specific segment
of the public market for equity securities in the United States and/or foreign
countries. In this regard, the organization creating the index must be (a)
engaged in the business of providing financial information; (b) a publisher of
financial news information; or (c) a public stock exchange or association of
securities dealers. The index must also be created and maintained by an
organization independent of Salomon Smith Barney and its affiliates and must be
a generally-accepted standardized index of securities which is not specifically
tailored for use by Salomon Smith Barney and its affiliates.

 Moreover, Section II(i) requires that the acquisition or disposition of
Citigroup Common Stock must not include any agreement, arrangement or
understanding regarding the design or operation of the Portfolio acquiring the
Citigroup Common Stock, which is intended to benefit Salomon Smith Barney or
any party in which Salomon Smith Barney may have an interest.

 Finally, Section II(i) requires that an Independent Plan Fiduciary authorize
the investment of a Plan's assets in an Index Fund Portfolio which purchases
and/or holds Citigroup Common Stock while the Sub-Adviser will be responsible
for voting any shares of Citigroup Common Stock that are held by an Index Fund
on any matter in which shareholders of Citigroup Common Stock are required or
permitted to vote.

Notice to Interested Persons

 Notice of the proposed exemption will be mailed by first class mail to the
Independent Plan Fiduciary of each Plan currently participating in the TRAK
Program, or, in the case of a Section 404(c) Plan, to the recordholder of Trust
shares. Such notice will be given within 15 days of the publication of the
notice of pendency in the Federal Register. The notice will contain a copy of
the notice of proposed exemption as published in the Federal Register and a
supplemental statement, as required pursuant to 29 CFR 2570.43(b)(2). The
supplemental statement will inform interested persons of their right to comment
on and/or to request a hearing with respect to the pending exemption. Written
comments and hearing requests are due within 45 days of the publication of the
proposed exemption in the Federal Register.

General Information

 The attention of interested persons is directed to the following:

 (1) The fact that a transaction is the subject of an exemption under section
408(a) of the Act and section 4975(c)(2) of the Code does not relieve a
fiduciary or other party in interest or disqualified person from certain other
provisions of the Act and the Code, including any prohibited transaction
provisions to which the exemption does not apply and the general fiduciary
responsibility provisions of section 404 of the Act, which require, among other
things, a fiduciary to discharge his or her duties respecting the plan solely
in the interest of the participants and beneficiaries of the plan and in a
prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it
affect the requirements of section 401(a) of the Code that the plan operate for
the exclusive benefit of the employees of the employer maintaining the plan and
their beneficiaries;

 (2) The proposed exemption, if granted, will extend to transactions prohibited
under section 406(b)(3) of the Act and section 4975(c)(1)(F) of the Code;

 (3) Before an exemption can be granted under section 408(a) of the Act and
section 4975(c)(2) of the Code, the Department must find that the exemption is
administratively feasible, in the interest of the plan and of its participants
and beneficiaries and protective of the rights of participants and
beneficiaries of the plan;

 (4) This proposed exemption, if granted, will be supplemental to, and not in
derogation of, any other provisions of the Act and the Code, including
statutory or administrative exemptions. Furthermore, the fact that a
transaction is subject to an administrative or statutory exemption is not
dispositive of whether the transaction is in fact a prohibited transaction; and

 (5) This proposed exemption, if granted, is subject to the express condition
that the facts and representations set forth in the notice of proposed
exemption relating to PTE 99-15 and this notice, accurately describe, where
relevant, the material terms of the transactions to be consummated pursuant to
this exemption.

Written Comments and Hearing Requests

 All interested persons are invited to submit written comments or requests for
a hearing on the pending exemption to the address above, within the time frame
set forth above, after the publication of this proposed exemption in the
Federal Register. All comments will be made a part of the record. Comments
received will be available for public inspection with the referenced
applications at the address set forth above.

Proposed Exemption

 Based on the facts and representations set forth in the application, the
Department is considering granting the requested exemption under the authority
of section 408(a) of the Act and section 4975(c)(2) of the Code and in
accordance with the procedures set forth in 29 CFR Part 2570, Subpart B (55 FR
32836, August 10, 1990).

Section I. Covered Transactions

 A. If the exemption is granted, the restrictions of section 406(a) of the Act
and the sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(A) through (D) of the Code, shall not apply, to
the purchase or redemption of shares by an employee benefit

                                      B-4
<PAGE>

plan, an individual retirement account (the IRA), a retirement plan for
self-employed individuals (the Keogh Plan), or an individual account pension
plan that is subject to the provisions of Title I of the Act and established
under section 403(b) of the Code (the Section 403(b) Plan; collectively, the
Plans) in the Trust for Consulting Group Capital Market Funds (the Trust),
established by Salomon Smith Barney, in connection with such Plans'
participation in the TRAK Personalized Investment Advisory Service product (the
TRAK Program).

 B. If the exemption is granted, the restrictions of section 406(b) of the Act
and the sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(E) and (F) of the Code, shall not apply, to the
provision, by the Consulting Group, of (1) investment advisory services or (2)
an automatic reallocation option (the Automatic Reallocation Option) to an
independent fiduciary of a participating Plan (the Independent Plan Fiduciary),
which may result in such fiduciary's selection of a portfolio (the Portfolio)
in the TRAK Program for the investment of Plan assets. This proposed exemption
is subject to the following conditions that are set forth below in Section II.

Section II. General Conditions

 (a) The participation of Plans in the TRAK Program will be approved by an
Independent Plan Fiduciary. For purposes of this requirement, an employee,
officer or director of Salomon Smith Barney and/or its affiliates covered by an
IRA not subject to Title I of the Act will be considered an Independent Plan
Fiduciary with respect to such IRA.

 (b) The total fees paid to the Consulting Group and its affiliates will
constitute no more than reasonable compensation.

 (c) No Plan will pay a fee or commission by reason of the acquisition or
redemption of shares in the Trust.

 (d) The terms of each purchase or redemption of Trust shares shall remain at
least as favorable to an investing Plan as those obtainable in an arm's length
transaction with an unrelated party.

 (e) The Consulting Group will provide written documentation to an Independent
Plan Fiduciary of its recommendations or evaluations based upon objective
criteria.

 (f) Any recommendation or evaluation made by the Consulting Group to an
Independent Plan Fiduciary will be implemented only at the express direction of
such Independent Plan Fiduciary, provided, however, that--

 (1) If such Independent Plan Fiduciary shall have elected in writing (the
Election), on a form designated by Salomon Smith Barney from time to time for
such purpose, to participate in the Automatic Reallocation Option under the
TRAK Program, the affected Plan or participant account will be automatically
reallocated whenever the Consulting Group modifies the particular asset
allocation recommendation which the Independent Plan Fiduciary has chosen. Such
Election shall continue in effect until revoked or terminated by the
Independent Plan Fiduciary in writing.

 (2) Except as set forth below in paragraph II(f)(3), at the time of a change
in the Consulting Group's asset allocation recommendation, each account based
upon the asset allocation model (the Allocation Model) affected by such change
would be adjusted on the business day of the release of the new Allocation
Model by the Consulting Group, except to the extent that market conditions, and
order purchase and redemption procedures may delay such processing through a
series of purchase and redemption transactions to shift assets among the
affected Portfolios.

 (3) If the change in the Consulting Group's asset allocation recommendation
exceeds an increase or decrease of more than 10 percent in the absolute
percentage allocated to any one investment medium (e.g., a suggested increase
in a 15 percent allocation to greater than 25 percent, or a decrease of such 15
percent allocation to less than 5 percent), Salomon Smith Barney will send out
a written notice (the Notice) to all Independent Plan Fiduciaries whose current
investment allocation would be affected, describing the proposed reallocation
and the date on which such allocation is to be instituted (the Effective Date).
If the Independent Plan Fiduciary notifies Salomon Smith Barney, in writing, at
any time within the period of 30 calendar days prior to the proposed Effective
Date that such fiduciary does not wish to follow such revised asset allocation
recommendation, the Allocation Model will remain at the current level, or at
such other level as the Independent Plan Fiduciary then expressly designates,
in writing. If the Independent Plan Fiduciary does not affirmatively "opt out"
of the new Consulting Group recommendation, in writing, prior to the proposed
Effective Date, such new recommendation will be automatically effected by a
dollar-for-dollar liquidation and purchase of the required amounts in the
respective account.

 (4) An Independent Plan Fiduciary will receive a trade confirmation of each
reallocation transaction. In this regard, for all Plan investors other than
Section 404(c) Plan accounts (i.e., 401(k) Plan accounts), Salomon Smith Barney
will mail trade confirmations on the next business day after the reallocation
trades are executed. In the case of Section 404(c) Plan participants,
notification will depend upon the notification provisions agreed to by the Plan
recordkeeper.

 (g) The Consulting Group will generally give investment advice in writing to
an Independent Plan Fiduciary with respect to all available Portfolios.
However, in the case of a Plan providing for participant-directed investments
(the Section 404(c) Plan), the Consulting Group will provide investment advice
that is limited to the Portfolios made available under the Plan.

 (h) Any sub-adviser (the Sub-Adviser) that acts for the Trust to exercise
investment discretion over a Portfolio will be independent of Salomon Smith
Barney and its affiliates.

 (i) Immediately following the acquisition by a Portfolio of any securities
that are issued by Salomon Smith Barney and/or its affiliates, such as
Citigroup Inc. common stock (the Citigroup Common Stock), the percentage of
that Portfolio's net assets invested in such securities will not exceed one
percent. However, this percentage limitation may be exceeded if--

 (1) The amount held by a Sub-Adviser in managing a Portfolio is held in order
to replicate an established third party index.

 (2) The index represents the investment performance of a specific segment of
the public market for equity securities in the United States and/or foreign
countries. The organization creating the index must be--

 (i) Engaged in the business of providing financial information;

 (ii) A publisher of financial news information; or

 (iii) A public stock exchange or association of securities dealers. The index
is created and maintained by an organization independent of Salomon Smith
Barney and its affiliates and is a generally-accepted standardized index of
securities which is not specifically tailored for use by Salomon Smith Barney
and its affiliates.

 (3) The acquisition or disposition of Citigroup Common Stock does not include

                                      B-5
<PAGE>

any agreement, arrangement or understanding regarding the design or operation
of the Portfolio acquiring the Citigroup Common Stock, which is intended to
benefit Salomon Smith Barney or any party in which Salomon Smith Barney may
have an interest.

 (4) The Independent Plan Fiduciary authorizes the investment of a Plan's
assets in an Index Fund which purchases and/or holds Citigroup Common Stock and
the Sub-Adviser is responsible for voting any shares of Citigroup Common Stock
that are held by an Index Fund on any matter in which shareholders of Citigroup
Common Stock are required or permitted to vote.

 (j) The quarterly investment advisory fee that is paid by a Plan to the
Consulting Group for investment advisory services rendered to such Plan will be
offset by such amount as is necessary to assure that the Consulting Group
retains no more than 20 basis points from any Portfolio (with the exception of
the Government Money Investments Portfolio and the GIC Fund Portfolio for which
the Consulting Group and the Trust will retain no investment management fee)
which contains investments attributable to the Plan investor.

 (k) With respect to its participation in the TRAK Program prior to purchasing
Trust shares,

 (1) Each Plan will receive the following written or oral disclosures from the
Consulting Group:

 (A) A copy of the Prospectus for the Trust discussing the investment
objectives of the Portfolios comprising the Trust, the policies employed to
achieve these objectives, the corporate affiliation existing between the
Consulting Group, Salomon Smith Barney and its subsidiaries and the
compensation paid to such entities./5/

 (B) Upon written or oral request to Salomon Smith Barney, a Statement of
Additional Information supplementing the Prospectus which describes the types
of securities and other instruments in which the Portfolios may invest, the
investment policies and strategies that the Portfolios may utilize and certain
risks attendant to those investments, policies and strategies.
--------
 /5 /The fact that certain transactions and fee arrangements are the subject of
an administrative exemption does not relieve the Independent Plan Fiduciary
from the general fiduciary responsibility provisions of section 404 of the Act.
In this regard, the Department expects the Independent Plan Fiduciary to
consider carefully the totality of the fees and expenses to be paid by the
Plan, including the fees paid directly to Salomon Smith Barney or to other
third parties.

 (C) A copy of the investment advisory agreement between the Consulting Group
and such Plan relating to participation in the TRAK Program and, if applicable,
informing Plan investors of the Automatic Reallocation Option.

 (D) Upon written request of Salomon Smith Barney, a copy of the respective
investment advisory agreement between the Consulting Group and the
Sub-Advisers.

 (E) In the case of a Section 404(c) Plan, if required by the arrangement
negotiated between the Consulting Group and the Plan, an explanation by a
Salomon Smith Barney Financial Consultant (the Financial Consultant) to
eligible participants in such Plan, of the services offered under the TRAK
Program and the operation and objectives of the Portfolios.

 (F) A copy of the proposed exemption and the final exemption, if granted,
pertaining to the exemptive relief described herein.

 (2) If accepted as an investor in the TRAK Program, an Independent Plan
Fiduciary of an IRA or Keogh Plan, is required to acknowledge, in writing,
prior to purchasing Trust shares that such fiduciary has received copies of the
documents described above in subparagraph (k)(1) of this Section.

 (3) With respect to a Section 404(c) Plan, written acknowledgement of the
receipt of such documents will be provided by the Independent Plan Fiduciary
(i.e., the Plan administrator, trustee or named fiduciary, as the recordholder
of Trust shares). Such Independent Plan Fiduciary will be required to represent
in writing to Salomon Smith Barney that such fiduciary is (a) independent of
Salomon Smith Barney and its affiliates and (b) knowledgeable with respect to
the Plan in administrative matters and funding matters related thereto, and
able to make an informed decision concerning participation in the TRAK Program.

 (4) With respect to a Plan that is covered under Title I of the Act, where
investment decisions are made by a trustee, investment manager or a named
fiduciary, such Independent Plan Fiduciary is required to acknowledge, in
writing, receipt of such documents and represent to Salomon Smith Barney that
such fiduciary is (a) independent of Salomon Smith Barney and its affiliates,
(b) capable of making an independent decision regarding the investment of Plan
assets and (c) knowledgeable with respect to the Plan in administrative matters
and funding matters related thereto, and able to make an informed decision
concerning participation in the TRAK Program.

 (l) Subsequent to its participation in the TRAK Program, each Plan receives
the following written or oral disclosures with respect to its ongoing
participation in the TRAK Program:

 (1) The Trust's semi-annual and annual report which will include financial
statement for the Trust and investment management fees paid by each Portfolio.

 (2) A written quarterly monitoring statement containing an analysis and an
evaluation of a Plan investor's account to ascertain whether the Plan's
investment objectives have been met and recommending, if required, changes in
Portfolio allocations.

 (3) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly, detailed investment performance monitoring
report, in writing, provided to an Independent Plan Fiduciary of such Plan
showing, Plan level asset allocations, Plan cash flow analysis and annualized
risk adjusted rates of return for Plan investments. In addition, if required by
such arrangement, Financial Consultants will meet periodically with Independent
Plan Fiduciaries of Section 404(c) Plans to discuss the report as well as with
eligible participants to review their accounts' performance.

 (4) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly participant performance monitoring report
provided to a Plan participant which accompanies the participant's benefit
statement and describes the investment performance of the Portfolios, the
investment performance of the participant's individual investment in the TRAK
Program, and gives market commentary and toll-free numbers that will enable the
participant to obtain more information about the TRAK Program or to amend his
or her investment allocations.

 (5) On a quarterly and annual basis, written disclosures to all Plans of the
(a) percentage of each Portfolio's brokerage commissions that are paid to
Salomon Smith Barney and its affiliates and (b) the average brokerage
commission per share paid by each Portfolio to Salomon Smith Barney and its
affiliates, as compared to the average brokerage commission per share paid by
the Trust to brokers other than Salomon Smith Barney and its affiliates, both
expressed as cents per share.

                                      B-6
<PAGE>

 (m) Salomon Smith Barney shall maintain, for a period of six years, the
records necessary to enable the persons described in paragraph (n) of this
Section to determine whether the conditions of this exemption have been met,
except that (1) a prohibited transaction will not be considered to have
occurred if, due to circumstances beyond the control of Salomon Smith Barney
and/or its affiliates, the records are lost or destroyed prior to the end of
the six year period, and (2) no party in interest other than Salomon Smith
Barney shall be subject to the civil penalty that may be assessed under section
502(i) of the Act, or to the taxes imposed by section 4975(a) and (b) of the
Code, if the records are not maintained, or are not available for examination
as required by paragraph (n) below.

 (n)(1) Except as provided in section (2) of this paragraph and notwithstanding
any provisions of subparagraphs (a)(2) and (b) of section 504 of the Act, the
records referred to in paragraph (m) of this Section II shall be
unconditionally available at their customary location during normal business
hours by:

 (A) Any duly authorized employee or representative of the Department or the
Service;

 (B) Any fiduciary of a participating Plan or any duly authorized
representative of such fiduciary;

 (C) Any contributing employer to any participating Plan or any duly authorized
employee representative of such employer; and

 (D) Any participant or beneficiary of any participating Plan, or any duly
authorized representative of such participant or beneficiary.

 (2) None of the persons described above in subparagraphs (B)-(D) of this
paragraph (n) shall be authorized to examine the trade secrets of Salomon Smith
Barney or commercial or financial information which is privileged or
confidential.
Section III. Definitions

 For purposes of this proposed exemption:

 (a) The term "Salomon Smith Barney" means Salomon Smith Barney Inc. and any
affiliate of Salomon Smith Barney, as defined in paragraph (b) of this Section
III.

 (b) An "affiliate" of Salomon Smith Barney includes--

 (1) Any person directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with Salomon Smith Barney;
(For purposes of this subparagraph, the term "control" means the power to
exercise a controlling influence over the management or policies of a person
other than an individual.)

 (2) Any individual who is an officer (as defined in Section III(d) hereof),
director or partner in Salomon Smith Barney or a person described in
subparagraph (b)(1);

 (3) Any corporation or partnership of which Salomon Smith Barney or an
affiliate described in subparagraphs(b)(1), is a 10 percent or more partner or
owner; and

 (4) Any corporation or partnership of which any individual which is an officer
or director of Salomon Smith Barney, is a 10 percent or more partner or owner.

 (c) An "Independent Plan Fiduciary" is a Plan fiduciary which is independent
of Salomon Smith Barney and its affiliates and is either--

 (1) A Plan administrator, sponsor, trustee or named fiduciary, as the
recordholder of Trust shares under a Section 404(c) Plan;

 (2) A participant in a Keogh Plan;

 (3) An individual covered under (i) a self-directed IRA or (ii) a Section
403(b) Plan, which invests in Trust shares;

 (4) A trustee, investment manager or named fiduciary responsible for
investment decisions in the case of a Title I Plan that does not permit
individual direction as contemplated by Section 404(c) of the Act; or

 (5) A participant in a Plan, such as a Section 404(c) Plan, who is permitted
under the terms of such Plan to direct, and who elects to direct the investment
of assets of his or her account in such Plan.

 (d) The term "officer" means a president, any vice president in charge of a
principal business unit, division or function (such as sales, administration or
finance), or any other officer who performs a policymaking function for the
entity.

Section IV. Effective Dates

 If granted, this proposed exemption will be effective as of April 1, 2000,
with respect to the amendments to Section II(i) and Section III(b) and the
inclusion of new Section III(d).

 The availability of this proposed exemption is subject to the express
condition that the material facts and representations contained in the
application for exemption are true and complete and accurately describe all
material terms of the transactions. In the case of continuing transactions, if
any of the material facts or representations described in the applications
change, the exemption will cease to apply as of the date of such change. In the
event of any such change, an application for a new exemption must be made to
the Department.

 For a more complete statement of the facts and representations supporting the
Department's decision to grant PTE 92-77, PTE 94-50 and PTE 99-15, refer to the
proposed exemptions and the grant notices which are cited above.

 Signed at Washington, D.C., this 25th day of May, 2000.

Ivan L. Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.

[FR Doc. 00-13643 Filed 5-31-00; 8:45 am]

                                      B-7
<PAGE>

----------------------------
DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 2000-45; Exemption Application Nos. D-10809
and D-10865]

Grant of Individual Exemption To Amend and Replace Prohibited Transaction
Exemption (PTE) 99-15, Involving Salomon Smith Barney Inc. (Salomon Smith
Barney), Located in New York, NY

AGENCY: Pension and Welfare Benefits Administration, Department of Labor.

ACTION: Grant of individual exemption to modify and replace PTE 99-15.
----------------------------
SUMMARY: This document contains a final exemption (the Final Exemption) by the
Department of Labor (the Department) which amends and replaces PTE 99-15 (64 FR
1648, April 5, 1999), an exemption granted to Salomon Smith Barney. PTE 99-15
relates to the operation of the TRAK Personalized Investment Advisory Service
product (the TRAK Program) and the Trust for Consulting Group Capital Markets
Funds (the Trust). These transactions are described in a notice of pendency
(the Proposed Exemption) that was published in the Federal Register on June 1,
2000 at 65 FR 35138.

EFFECTIVE DATES: This exemption is effective as of April 1, 2000 with respect
to the amendments to Section II(i) and Section III(b) of the grant notice. In
addition, this exemption is effective as of April 1, 2000 with respect to the
inclusion of new Section III(d) in the grant notice.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady, Office of Exemption
Determinations, Pension and Welfare Benefits Administration, U.S. Department of
Labor, telephone (202) 219-8881. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: On June 1, 2000, the Department published, in the
Federal Register, the above referenced Proposed Exemption which would amend and
replace PTE 99-15. PTE 99-15, provides an exemption from certain prohibited
transaction restrictions of section 406 of the Employee Retirement Income
Security Act of 1974 (the Act) and from the sanctions resulting from the
application of section 4975 of the Internal Revenue Code of 1986 (the Code), as
amended, by reason of section 4975(c)(1) of the Code. Specifically, PTE 99-15
provides exemptive relief from the restrictions of section 406(a) of the Act
and the sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(A) through (D) of the Code, for the purchase or
redemption of shares in the Trust by an employee benefit plan, an individual
retirement account (the IRA), a retirement plan for a self-employed individual,
or an individual account pension plan that is subject to the provisions of
Title I of the Act and established under section 403(b) of the Code (the
Section 403(b) Plan; collectively, the Plans).

 PTE 99-15 also provides exemptive relief from the restrictions of section
406(b) of the Act and the sanctions resulting from the application of section
4975 of the Code, by reason of section 4975(c)(1)(E) and (F) of the Code, with
respect to the provision, by the Consulting Group of Salomon Smith Barney (the
Consulting Group), of (1) investment advisory services or (2) an automatic
reallocation option to an independent fiduciary of a participating Plan (the
Independent Plan Fiduciary) which may result in such fiduciary's selection of a
portfolio (the Portfolio) in the TRAK Program for the investment of Plan
assets./1/

 In the Proposed Exemption, Salomon Smith Barney requested a modification of
PTE 99-15 and a replacement of that exemption with a new exemption for purposes
of uniformity./2/ Specifically, Salomon Smith Barney requested that the term
"affiliate," as set forth in PTE 99-15, in Section II(h) of the General
Conditions and in Section III(b) of the Definitions, be amended and clarified
to avoid possible misinterpretation. In this regard, Salomon Smith Barney also
requested that the term "officer" be defined and incorporated into the Proposed
Exemption, in new Section III(d), to limit the affiliate definition to
--------
 /1/PTE 99-15 also (a) described a series of corporate mergers which changed
the names of the parties identified in two prior TRAK exemptions which it
superseded [i.e., PTE 94-50 (59 FR 32024, June 21, 1994) and PTE 92-77 (55 FR
45833, October 5, 1992)] and which would permit broader distribution of
TRAK-related products; (b) implemented a recordkeeping reimbursement offset
procedure under the TRAK Program; (c) adopted an automated reallocation option
under the TRAK Program that would reduce the reallocation option under the TRAK
Program that would reduce the Plan-level investment advisory fee (the Outside
Fee) paid to Salomon Smith Barney by a Plan investor; and (d) expanded the
scope of the exemption to include Section 403(b) Plans.
 PTE 94-50 permitted Smith, Barney Inc. (Smith Barney), Salomon Smith Barney's
predecessor, to add a daily-traded collective investment fund (the GIC Fund) to
the existing portfolios (the Portfolios) of mutual funds (the Funds) comprising
the Trust, and to describe the various entities operating the GIC Fund. PTE
94-50 also replaced references to Shearson Lehman Brothers, Inc. (Shearson
Lehman) with Smith Barney and amended and replaced PTE 92-77.
 Finally, PTE 92-77 permitted Shearson Lehman to make the TRAK Program
available to Plans that acquired shares in the former Trust for TRAK
Investments and allowed the Consulting Group to provide investment advisory
services to an Independent Plan Fiduciary which might result in such
fiduciary's selection of a Portfolio in the TRAK Program for the investment of
Plan assets.
 /2/The Department deems PTE 94-50 as having been effectively superseded by PTE
99-15. Therefore, the amendments described herein do not apply to PTE 94-50.
persons who have a significant management role. Further, Salomon Smith Barney
requested that Section II(i) of PTE 99-15 be amended to permit an independent
sub-adviser (the Sub-Adviser), under certain circumstances, to exceed the
current one percent limitation on the acquisition of securities that are issued
by Salomon Smith Barney and/or its affiliates, notably in the Sub-Adviser's
replication of a third-party index (the Index). The Final Exemption is
effective as of April 1, 2000 with respect to the amendments to Sections II(i)
and III(b) of the grant notice, and is effective as of July 10, 2000 with
respect to Section III(d) of the grant notice.

 The Proposed Exemption was requested in an application filed on behalf of
Salomon Smith Barney pursuant to section 408(a) of the Act and section
4975(c)(2) of the Code, and in accordance with the procedures (the Procedures)
set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, August 10, 1990).
Effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978
(43 FR 47713, October 17, 1978) transferred the authority of the Secretary of
the Treasury to issue exemptions of the type requested to the Secretary of
Labor. Accordingly, this Final Exemption is being issued solely by the
Department.

 The Proposed Exemption gave interested persons an opportunity to comment and
to request a hearing. During the comment period, the Department received two
written comments and no requests for a hearing. One of the comments was
submitted by the holder of an IRA which participates in the TRAK Program. The
commenter said he concurred with the modifications proposed by Salomon Smith
Barney to amend and clarify the terms "affiliate" and "officer." The commenter
also stated that he supported the proposed modification of the one percent
limitation on the acquisition, by an independent Sub-Adviser, of securities
that are issued by Salomon Smith Barney and/or its affiliates in the
Sub-Adviser's replication of an Index. The commenter explained that he believed
the requested changes made sense and would be beneficial to all TRAK Program
participants. Therefore, the commenter urged the Department to approve the
Final Exemption.

 The second comment was submitted by Salomon Smith Barney. The comment is
intended to clarify and modify the preamble (the Preamble) of the Proposed
Exemption.

                                      B-8
<PAGE>

Following is a discussion of Salomon Smith Barney's comment letter and the
Department's responses with respect thereto.

 1. Modifications to the Proposed Exemption. On page 35139 of the Proposed
Exemption, the first paragraph of the Preamble states that "As of December 31,
1998, the TRAK Program held assets that were in excess of $9.6 billion." Also,
in that same paragraph, the last sentence states, in part, that "one or more
unaffiliated [S]ub-advisers [is] selected by Salomon Smith Barney." Salomon
Smith Barney notes that the December 31, 1998 valuation date at the beginning
of the paragraph should be changed to September 30, 1999 and the last words of
the paragraph should be changed from "Salomon Smith Barney" to "the Consulting
Group," which actually chooses the Sub-Advisers.

 In addition, on page 35140 of the Proposed Exemption, the last paragraph of
the Preamble states, in part, that--

 Due to the one percent limitation of Section II(i), Salomon Smith Barney
states that active Sub-Advisers for the Consulting Group may not own or trade
Citigroup Common Stock and they will continue to be prohibited from trading in
Citigroup Common Stock. Salomon Smith Barney wishes to clarify that active
Sub-Advisers also do not trade in Citigroup Common Stock because of
restrictions that apply under Rule 12d3-1(c) of the Investment Company Act of
1940 (the ICA)./3/

 On page 35141 of the Proposed Exemption, the third sentence of the first
"carry-over" paragraph of the Preamble identifies two Funds which currently
comply with the one percent limitation on investments in Citigroup Common
Stock. These Funds are the "Consulting Group Capital Markets Large Cap Value
Fund" and the "Large Cap Growth Consulting Group Capital Markets Fund."
However, Salomon Smith Barney suggests, for the purpose of clarity, that the
formal names of the subject Funds be specified. Thus, Salomon Smith Barney
explains that the proper names for the Funds are the "Consulting Group Capital
Markets Funds Large Capitalization Value Equity Investments" and the
"Consulting Group Capital Markets Funds Large Capitalization Growth
Investments." Similarly, in the next paragraph of the Proposed Exemption on
--------
 /3/Rule 12d3-1(c) of the ICA states that an acquiring company, such as a
registered investment company, may not acquire a general partnership interest
or a security issued by the acquiring company's investment adviser, promoter,
or principal underwriter, or by any affiliated person of such investment
adviser, promoter, or principal underwriter.

page 35141 of the Preamble, Salomon Smith Barney wishes to clarify that the
formal name for the S&P Fund designated as the "Consulting Group Capital
Markets S&P 500 Index Investment Fund Portfolio" is the "Consulting Group
Capital Markets S&P Index Investment Fund Portfolio."

 In response to these comments, the Department acknowledges the foregoing
clarifications to the names for the Funds identified in the Preamble of the
Proposed Exemption.

 2. General Information. As a matter of general information, Salomon Smith
Barney states that beginning with the billing cycle commencing on January 1,
2001, the Outside Fee charged to 401(k) Plan clients will be calculated on the
average daily asset value for the quarter for which the fee is billed rather
than the asset value on the last day of the quarter. Salomon Smith Barney
explains that this change generally conforms to the billing procedure in the
industry generally and is believed to be more equitable since it reflects the
asset value over time rather than on a single day during a calendar quarter
which may not be representative of the account balance during the period.

 In response to this comment, the Department notes Salomon Smith Barney's
modification to the billing procedure in the calculation of the Outside Fee for
participants in the TRAK Program that are section 401(k) Plans.

 For further information regarding the comments or other matters discussed
herein, interested persons are encouraged to obtain copies of the exemption
application files (Exemption Application Nos. D-10809 and D-10865) the
Department is maintaining in this case. The complete application files, as well
as all supplemental submissions received by the Department, are made available
for public inspection in the Public Documents Room of the Pension and Welfare
Benefits Administration, Room N-5638, U.S. Department of Labor, 200
Constitution Avenue, N.W., Washington, D.C. 20210.

 Accordingly, after giving full consideration to the entire record, including
the written comments received, the Department has decided to grant the
exemption subject to the modifications and clarifications described above.

General Information

 The attention of interested persons is directed to the following:

 (1) The fact that a transaction is the subject of an exemption under section
408(a) of the Act and section 4975(c)(2) of the Code does not relieve a
fiduciary or other party in interest or disqualified person from certain other
provisions of the Act and the Code, including any prohibited transaction
provisions to which the exemption does not apply and the general fiduciary
responsibility provisions of section 404 of the Act, which require, among other
things, a fiduciary to discharge his or her duties respecting the plan solely
in the interest of the participants and beneficiaries of the plan and in a
prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it
affect the requirements of section 401(a) of the Code that the plan operate for
the exclusive benefit of the employees of the employer maintaining the plan and
their beneficiaries;

 (2) The exemption will extend to transactions prohibited under section
406(b)(3) of the Act and section 4975(c)(1)(F) of the Code;

 (3) In accordance with section 408(a) of the Act and section 4975(c)(2) of the
Code, and the Procedures cited above, and based upon the entire record, the
Department finds that the exemption is administratively feasible, in the
interest of the plan and of its participants and beneficiaries and protective
of the rights of participants and beneficiaries of the plan;

 (4) The exemption will be supplemental to, and not in derogation of, any other
provisions of the Act and the Code, including statutory or administrative
exemptions. Furthermore, the fact that a transaction is subject to an
administrative or statutory exemption is not dispositive of whether the
transaction is in fact a prohibited transaction; and

 (5) The exemption is subject to the express condition that the Summary of
Facts and Representations set forth in the notice of proposed exemption
relating to PTE 99-15, as amended by this Final Exemption, accurately describe,
where relevant, the material terms of the transactions to be consummated
pursuant to this exemption.

Exemption

 Under the authority of section 408(a) of the Act and section 4975(c)(2) of the
Code and in accordance with the Procedures set forth above, the Department
hereby amends PTE 99-15 as follows:

Section I. Covered Transactions

 A. The restrictions of section 406(a) of the Act and the sanctions resulting
from the application of section 4975 of the Code, by

                                      B-9
<PAGE>

reason of section 4975(c)(1)(A) through (D) of the Code, shall not apply, to
the purchase or redemption of shares by an employee benefit plan, an individual
retirement account (the IRA), a retirement plan for self-employed individuals
(the Keogh Plan), or an individual account pension plan that is subject to the
provisions of Title I of the Act and established under section 403(b) of the
Code (the Section 403(b) Plan; collectively, the Plans) in the Trust for
Consulting Group Capital Market Funds (the Trust), established by Salomon Smith
Barney, in connection with such Plans' participation in the TRAK Personalized
Investment Advisory Service product (the TRAK Program).

 B. The restrictions of section 406(b) of the Act and the sanctions resulting
from the application of section 4975 of the Code, by reason of section
4975(c)(1)(E) and (F) of the Code, shall not apply, to the provision, by the
Consulting Group, of (1) investment advisory services or (2) an automatic
reallocation option (the Automatic Reallocation Option) to an independent
fiduciary of a participating Plan (the Independent Plan Fiduciary), which may
result in such fiduciary's selection of a portfolio (the Portfolio) in the TRAK
Program for the investment of Plan assets.

 This exemption is subject to the following conditions that are set forth below
in Section II.

Section II. General Conditions

 (a) The participation of Plans in the TRAK Program will be approved by an
Independent Plan Fiduciary. For purposes of this requirement, an employee,
officer or director of Salomon Smith Barney and/or its affiliates covered by an
IRA not subject to Title I of the Act will be considered an Independent Plan
Fiduciary with respect to such IRA.

 (b) The total fees paid to the Consulting Group and its affiliates will
constitute no more than reasonable compensation.

 (c) No Plan will pay a fee or commission by reason of the acquisition or
redemption of shares in the Trust.

 (d) The terms of each purchase or redemption of Trust shares shall remain at
least as favorable to an investing Plan as those obtainable in an arm's length
transaction with an unrelated party.

 (e) The Consulting Group will provide written documentation to an Independent
Plan Fiduciary of its recommendations or evaluations based upon objective
criteria.

 (f) Any recommendation or evaluation made by the Consulting Group to an
Independent Plan Fiduciary will be implemented only at the express direction of
such Independent Plan Fiduciary, provided, however, that--

 (1) If such Independent Plan Fiduciary shall have elected in writing (the
Election), on a form designated by Salomon Smith Barney from time to time for
such purpose, to participate in the Automatic Reallocation Option under the
TRAK Program, the affected Plan or participant account will be automatically
reallocated whenever the Consulting Group modifies the particular asset
allocation recommendation which the Independent Plan Fiduciary has chosen. Such
Election shall continue in effect until revoked or terminated by the
Independent Plan Fiduciary in writing.

 (2) Except as set forth below in paragraph II(f)(3), at the time of a change
in the Consulting Group's asset allocation recommendation, each account based
upon the asset allocation model (the Allocation Model) affected by such change
would be adjusted on the business day of the release of the new Allocation
Model by the Consulting Group, except to the extent that market conditions, and
order purchase and redemption procedures, may delay such processing through a
series of purchase and redemption transactions to shift assets among the
affected Portfolios.

 (3) If the change in the Consulting Group's asset allocation recommendation
exceeds an increase or decrease of more than 10 percent in the absolute
percentage allocated to any one investment medium (e.g., a suggested increase
in a 15 percent allocation to greater than 25 percent, or a decrease of such 15
percent allocation to less than 5 percent), Salomon Smith Barney will send out
a written notice (the Notice) to all Independent Plan Fiduciaries whose current
investment allocation would be affected, describing the proposed reallocation
and the date on which such allocation is to be instituted (the Effective Date).
If the Independent Plan Fiduciary notifies Salomon Smith Barney, in writing, at
any time within the period of 30 calendar days prior to the proposed Effective
Date that such fiduciary does not wish to follow such revised asset allocation
recommendation, the Allocation Model will remain at the current level, or at
such other level as the Independent Plan Fiduciary then expressly designates,
in writing. If the Independent Plan Fiduciary does not affirmatively "opt out"
of the new Consulting Group recommendation, in writing, prior to the proposed
Effective Date, such new recommendation will be automatically effected by a
dollar-for-dollar liquidation and purchase of the required amounts in the
respective account.

 (4) An Independent Plan Fiduciary will receive a trade confirmation of each
reallocation transaction. In this regard, for all Plan investors other than
Section 404(c) Plan accounts (i.e., 401(k) Plan accounts), Salomon Smith Barney
will mail trade confirmations on the next business day after the reallocation
trades are executed. In the case of Section 404(c) Plan participants,
notification will depend upon the notification provisions agreed to by the Plan
recordkeeper.

 (g) The Consulting Group will generally give investment advice in writing to
an Independent Plan Fiduciary with respect to all available Portfolios.
However, in the case of a Plan providing for participant-directed investments
(the Section 404(c) Plan), the Consulting Group will provide investment advice
that is limited to the Portfolios made available under the Plan.

 (h) Any sub-adviser (the Sub-Adviser) that acts for the Trust to exercise
investment discretion over a Portfolio will be independent of Salomon Smith
Barney and its affiliates.

 (i) Immediately following the acquisition by a Portfolio of any securities
that are issued by Salomon Smith Barney and/or its affiliates, such as
Citigroup Inc. common stock (the Citigroup Common Stock), the percentage of
that Portfolio's net assets invested in such securities will not exceed one
percent. However, this percentage limitation may be exceeded if--

 (1) The amount held by a Sub-Adviser in managing a Portfolio is held in order
to replicate an established third party index (the Index).

 (2) The Index represents the investment performance of a specific segment of
the public market for equity securities in the United States and/or foreign
countries. The organization creating the Index must be--

 (i) Engaged in the business of providing financial information;

 (ii) A publisher of financial news information; or

 (iii) A public stock exchange or association of securities dealers.

 The Index is created and maintained by an organization independent of Salomon
Smith Barney and its affiliates and is a generally-accepted standardized Index
of

                                     B-10
<PAGE>

securities which is not specifically tailored for use by Salomon Smith Barney
and its affiliates.

 (3) The acquisition or disposition of Citigroup Common Stock does not include
any agreement, arrangement or understanding regarding the design or operation
of the Portfolio acquiring the Citigroup Common Stock, which is intended to
benefit Salomon Smith Barney or any party in which Salomon Smith Barney may
have an interest.

 (4) The Independent Plan Fiduciary authorizes the investment of a Plan's
assets in an Index Fund which purchases and/or holds Citigroup Common Stock and
the Sub-Adviser is responsible for voting any shares of Citigroup Common Stock
that are held by an Index Fund on any matter in which shareholders of Citigroup
Common Stock are required or permitted to vote.

 (j) The quarterly investment advisory fee that is paid by a Plan to the
Consulting Group for investment advisory services rendered to such Plan will be
offset by such amount as is necessary to assure that the Consulting Group
retains no more than 20 basis points from any Portfolio (with the exception of
the Government Money Investments Portfolio and the GIC Fund Portfolio for which
the Consulting Group and the Trust will retain no investment management fee)
which contains investments attributable to the Plan investor.

 (k) With respect to its participation in the TRAK Program prior to purchasing
Trust shares,

 (1) Each Plan will receive the following written or oral disclosures from the
Consulting Group:

 (A) A copy of the Prospectus for the Trust discussing the investment
objectives of the Portfolios comprising the Trust, the policies employed to
achieve these objectives, the corporate affiliation existing between the
Consulting Group, Salomon Smith Barney and its subsidiaries and the
compensation paid to such entities./4/

 (B) Upon written or oral request to Salomon Smith Barney, a Statement of
Additional Information supplementing the Prospectus which describes the types
of securities and other instruments in which the Portfolios may invest, the
investment policies and strategies that the Portfolios may utilize and certain
risks attendant to those investments, policies and strategies.
--------
 /4 /The fact that certain transactions and fee arrangements are the subject of
an administrative exemption does not relieve the Independent Plan Fiduciary
from the general fiduciary responsibility provisions of section 404 of the Act.
In this regard, the Department expects the Independent Plan Fiduciary to
consider carefully the totality of the fees and expenses to be paid by the
Plan, including the fees paid directly to Salomon Smith Barney or to other
third parties.

 (C) A copy of the investment advisory agreement between the Consulting Group
and such Plan relating to participation in the TRAK Program and, if applicable,
informing Plan investors of the Automatic Reallocation Option.

 (D) Upon written request of Salomon Smith Barney, a copy of the respective
investment advisory agreement between the Consulting Group and the
Sub-Advisers.

 (E) In the case of a Section 404(c) Plan, if required by the arrangement
negotiated between the Consulting Group and the Plan, an explanation by a
Salomon Smith Barney Financial Consultant (the Financial Consultant) to
eligible participants in such Plan, of the services offered under the TRAK
Program and the operation and objectives of the Portfolios.

 (F) A copy of the Proposed Exemption and the Final Exemption pertaining to the
exemptive relief described herein.

 (2) If accepted as an investor in the TRAK Program, an Independent Plan
Fiduciary of an IRA or Keogh Plan, is required to acknowledge, in writing,
prior to purchasing Trust shares that such fiduciary has received copies of the
documents described above in subparagraph (k)(1) of this Section.

 (3) With respect to a Section 404(c) Plan, written acknowledgement of the
receipt of such documents will be provided by the Independent Plan Fiduciary
(i.e., the Plan administrator, trustee or named fiduciary, as the recordholder
of Trust shares). Such Independent Plan Fiduciary will be required to represent
in writing to Salomon Smith Barney that such fiduciary is (a) independent of
Salomon Smith Barney and its affiliates and (b) knowledgeable with respect to
the Plan in administrative matters and funding matters related thereto, and
able to make an informed decision concerning participation in the TRAK Program.

 (4) With respect to a Plan that is covered under Title I of the Act, where
investment decisions are made by a trustee, investment manager or a named
fiduciary, such Independent Plan Fiduciary is required to acknowledge, in
writing, receipt of such documents and represent to Salomon Smith Barney that
such fiduciary is (a) independent of Salomon Smith Barney and its affiliates,
(b) capable of making an independent decision regarding the investment of Plan
assets and (c) knowledgeable with respect to the Plan in administrative matters
and funding matters related thereto, and able to make an informed decision
concerning participation in the TRAK Program.

 (l) Subsequent to its participation in the TRAK Program, each Plan receives
the following written or oral disclosures with respect to its ongoing
participation in the TRAK Program:

 (1) The Trust's semi-annual and annual report which will include financial
statement for the Trust and investment management fees paid by each Portfolio.

 (2) A written quarterly monitoring statement containing an analysis and an
evaluation of a Plan investor's account to ascertain whether the Plan's
investment objectives have been met and recommending, if required, changes in
Portfolio allocations.

 (3) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly, detailed investment performance monitoring
report, in writing, provided to an Independent Plan Fiduciary of such Plan
showing Plan level asset allocations, Plan cash flow analysis and annualized
risk adjusted rates of return for Plan investments. In addition, if required by
such arrangement, Financial Consultants will meet periodically with Independent
Plan Fiduciaries of Section 404(c) Plans to discuss the report as well as with
eligible participants to review their accounts' performance.

 (4) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly participant performance monitoring report
provided to a Plan participant which accompanies the participant's benefit
statement and describes the investment performance of the Portfolios, the
investment performance of the participant's individual investment in the TRAK
Program, and gives market commentary and toll-free numbers that will enable the
participant to obtain more information about the TRAK Program or to amend his
or her investment allocations.

 (5) On a quarterly and annual basis, written disclosures to all Plans of the
(a) percentage of each Portfolio's brokerage commissions that are paid to
Salomon Smith Barney and its affiliates and (b) the average brokerage
commission per share paid by each Portfolio to Salomon Smith Barney and its
affiliates, as compared to the average brokerage commission per share paid by
the

                                     B-11
<PAGE>

Trust to brokers other than Salomon Smith Barney and its affiliates, both
expressed as cents per share.

 (m) Salomon Smith Barney shall maintain, for a period of six years, the
records necessary to enable the persons described in paragraph (n) of this
Section to determine whether the conditions of this exemption have been met,
except that (1) a prohibited transaction will not be considered to have
occurred if, due to circumstances beyond the control of Salomon Smith Barney
and/or its affiliates, the records are lost or destroyed prior to the end of
the six year period, and (2) no party in interest other than Salomon Smith
Barney shall be subject to the civil penalty that may be assessed under section
502(i) of the Act, or to the taxes imposed by section 4975(a) and (b) of the
Code, if the records are not maintained, or are not available for examination
as required by paragraph (n) below.

 (n)(1) Except as provided in section (2) of this paragraph and notwithstanding
any provisions of subparagraphs (a)(2) and (b) of section 504 of the Act, the
records referred to in paragraph (m) of this Section II shall be
unconditionally available at their customary location during normal business
hours by:

 (A) Any duly authorized employee or representative of the Department or the
Service;

 (B) Any fiduciary of a participating Plan or any duly authorized
representative of such fiduciary;

 (C) Any contributing employer to any participating Plan or any duly authorized
employee representative of such employer; and

 (D) Any participant or beneficiary of any participating Plan, or any duly
authorized representative of such participant or beneficiary.

 (2) None of the persons described above in subparagraphs (B)-(D) of this
paragraph (n) shall be authorized to examine the trade secrets of Salomon Smith
Barney or commercial or financial information which is privileged or
confidential.

Section III. Definitions

 For purposes of this exemption:

 (a) The term "Salomon Smith Barney" means Salomon Smith Barney Inc. and any
affiliate of Salomon Smith Barney, as defined in paragraph (b) of this Section
III.

 (b) An "affiliate" of Salomon Smith Barney includes--

 (1) Any person directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with Salomon Smith Barney
(For purposes of this subparagraph, the term "control" means the power to
exercise a controlling influence over the management or policies of a person
other than an individual);

 (2) Any individual who is an officer (as defined in Section III(d) hereof),
director or partner in Salomon Smith Barney or a person described in
subparagraph (b)(1);

 (3) Any corporation or partnership of which Salomon Smith Barney, or an
affiliate described in subparagraphs(b)(1), is a 10 percent or more partner or
owner; and

 (4) Any corporation or partnership of which any individual which is an officer
or director of Salomon Smith Barney is a 10 percent or more partner or owner.

 (c) An "Independent Plan Fiduciary" is a Plan fiduciary which is independent
of Salomon Smith Barney and its affiliates and is either--

 (1) A Plan administrator, sponsor, trustee or named fiduciary, as the
recordholder of Trust shares under a Section 404(c) Plan;

 (2) A participant in a Keogh Plan;

 (3) An individual covered under (i) a self-directed IRA or (ii) a Section
403(b) Plan, which invests in Trust shares;

 (4) A trustee, investment manager or named fiduciary responsible for
investment decisions in the case of a Title I Plan that does not permit
individual direction as contemplated by Section 404(c) of the Act; or

 (5) A participant in a Plan, such as a Section 404(c) Plan, who is permitted
under the terms of such Plan to direct, and who elects to direct, the
investment of assets of his or her account in such Plan.

 (d) The term "officer" means a president, any vice president in charge of a
principal business unit, division or function (such as sales, administration or
finance), or any other officer who performs a policymaking function for the
entity.

Section IV. Effective Dates

 This exemption is effective as of April 1, 2000 with respect to the amendments
to Section II(i) and Section III(b) of this grant notice. In addition, this
exemption is effective as of April 1, 2000 with respect to the inclusion of new
Section III(d) in the grant notice.

 The availability of this exemption is subject to the express condition that
the material facts and representations contained in the application for
exemption are true and complete and accurately describe all material terms of
the transactions. In the case of continuing transactions, if any of the
material facts or representations described in the applications change, the
exemption will cease to apply as of the date of such change. In the event of
any such change, an application for a new exemption must be made to the
Department.

 For a more complete statement of the facts and representations supporting the
Department's decision to grant PTE 92-77, PTE 94-50 and PTE 99-15, refer to the
proposed exemptions and the grant notices which are cited above.

 Signed at Washington, D.C., this 31st day of August, 2000.

Ivan L. Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.

[FR Doc. 00-22853 Filed 9-6-00; 8:45 am]

                                     B-12
<PAGE>

----------------------------
DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 2000-45; Exemption Application Nos. D-10809
and D-10865]

Grant of Individual Exemption to Amend and Replace Prohibited Transaction
Exemption (PTE) 99-15, Involving Salomon Smith Barney Inc. (Salomon Smith
Barney), Located in New York, NY

AGENCY: Pension and Welfare Benefits Administration, U.S. Department of Labor
(the Department).

ACTION: Notice of Technical Correction.
----------------------------
 On September 7, 2000, the Department published in the Federal Register (65 FR
54315) a final exemption which amends and replaces PTE 99-15 (64 FR 1648, April
5, 1999), an exemption granted to Salomon Smith Barney. PTE 99-15 relates to
the operation of the TRAK Personalized Investment Advisory Service product (the
TRAK Program) and the Trust for Consulting Group Capital Markets Funds (the
Consulting Group).

 On page 54316 of the grant notice, the last sentence of the third paragraph of
the Supplementary Information, erroneously refers to an effective date of July
10, 2000 with respect to Section III(d) of the grant notice. Thus, the sentence
should be revised to read as follows:

 The Final Exemption is effective as of April 1, 2000 with respect to the
amendments to Sections II(i) and III(b) of the grant notice and the inclusion
of new Section III(d) of the grant notice.

 Also on page 54316 of the grant notice, clause (c) of Footnote 1, should be
revised as follows to describe more accurately the purpose of the automated
reallocation option:

 (c) adopted an automated reallocation option under the TRAK Program which
would afford an Independent Plan Fiduciary the option of having his or her
asset allocation adjusted automatically whenever the Consulting Group changes
an allocation model;

FOR FURTHER INFORMATION CONTACT:
Ms. Jan D. Broady of the Department at (202) 219-8881. (This is not a toll-free
number.)

Signed at Washington, DC, this 18th day of September, 2000.

Ivan L. Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits
Administration, Department of Labor.

[FR Doc. 00-24388 Filed 9-21-00; 8:45 am]

TK 2088S

                                     B-13
<PAGE>

    For More Information



If you want more information about the Portfolio, the following resources are
available upon request.

Annual and Semiannual Reports

Additional information about the Portfolio's investments will be available in
the Portfolio's annual and semiannual reports to shareholders. The Portfolio's
annual report will contain a discussion of the market conditions and investment
strategies that significantly affected the Portfolio's performance during its
last fiscal year.

Statement of Additional Information

The Statement of Additional Information provides more detailed information
about the Portfolio and is incorporated into this prospectus by reference.

Investment Professional

The investor's Financial Consultant is available to answer questions about the
Portfolio or the investor's overall asset allocation program.

Investors can get free copies of reports and SAIs, request other information
and discuss their questions about the Portfolio by contacting their Financial
Consultant, or by writing to the Portfolio's sub-transfer agent, PFPC Global
Fund Services, at:

   Consulting Group Capital Markets Funds
   c/o PFPC Global Fund Services
   P.O. Box 9699
   Providence, RI 02940-9699

   or by calling the Portfolio's transfer agent at 800-451-2010

Information about the Portfolio (including the SAI) can be reviewed and copied
at the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-202-942-8090. Reports and other information about the Portfolio are available
on the EDGAR Database on the Commission's Internet site at http://www.sec.gov.
Copies of this information may be obtained for a duplicating fee by electronic
request at the following E-mail address: publicinfo@sec.gov, or by writing the
Commission's Public Reference Section, Washington, D.C. 20549-0102.

If someone makes a statement about the Portfolio that is not in this
prospectus, you should not rely upon that information. Neither the Portfolio
nor the distributor is offering to sell shares of the Portfolio to any person
to whom the Portfolio may not lawfully sell its shares.

Investment Company Act File No. 811-06318

                                                SalomonSmithBarney

                                                A member of citigroup [LOGO]

                                                Salomon Smith Barney is a
                                                service mark of Salomon Smith
                                                Barney Inc.



Salomon Smith Barney Inc. is a wholly-owned subsidiary of Citigroup Inc.
Citigroup businesses produce a broad range of financial services--asset
management, banking and consumer finance, credit and charge cards, insurance,
investments and investment banking and trading--and use diverse channels to
make them available to consumer and corporate customers around the world.



(R)2001 Salomon Smith Barney Inc.    TK2090   7/01



PART B
STATEMENT OF ADDITIONAL INFORMATION

CONSULTING GROUP CAPITAL MARKETS FUNDS
GLOBAL SCIENCES AND TECHNOLOGY INVESTMENTS
JULY 30, 2001


222 Delaware Avenue ~ Wilmington, Delaware 19801 ~
(212) 816-8725

This Statement of Additional Information supplements the
information contained in the current Prospectus (the
"Prospectus") of Global Sciences and Technology Investments
(the "Portfolio"), a separate series of Consulting Group
Capital Markets Funds (the "Trust"), dated July 30, 2001,
and should be read in conjunction with the Prospectus. The
Trust is a series company that consists of the Portfolio
and seventeen other portfolios offered in separate
prospectuses. The Prospectus for the Portfolio may be
obtained by contacting any Financial Consultant of Salomon
Smith Barney Inc. ("Salomon Smith Barney"), or by writing
or calling the Trust at the address or telephone number
listed above. This Statement of Additional Information,
although not in itself a prospectus, is incorporated by
reference into the Prospectus in its entirety.

CONTENTS

Trustees and Executive Officers of the Trust
1
Investment Objectives, Management Policies and Risk Factors
3
Investment Restrictions
21
Portfolio Transactions
22
Portfolio Turnover
24
Investment Management and Other Services
24
Distributor
28
Purchase of Shares
28
Redemption of Shares
29
Redemptions in Kind
29
Net Asset Value
29
Determination of Performance
30
Taxes
32
Financial Statements
36
Appendix
37

Capitalized terms used but not defined in this Statement of
Additional Information have the meanings accorded to them
in the Prospectus.

TRUSTEES AND EXECUTIVE OFFICERS OF THE TRUST

The Trustees and executive officers of the Trust, together
with information as to their principal business
occupations, are set forth below. The executive officers of
the Trust are employees of organizations that provide
services to the Portfolios. Each Trustee who is an
"interested person" of the Trust, as defined in the 1940
Act, is indicated by an asterisk.

	Walter E. Auch, Director (Age 80).  Consultant to
companies in the financial services industry; Director of
Brinson Partners; Nicholas-Applegate (each a registered
investment adviser); Legend Properties, a real estate
management company; Banyan Realty Trust; Banyan Land Fund
II; Geotek Communications Inc., an international wireless
communications company. Director or trustee of 2 investment
companies associated with Citigroup Inc.("Citigroup"). His
address is 6001 N. 62nd Place, Paradise Valley, Arizona
85253.

	Martin Brody, Director (Age 79).  Consultant, HMK
Associates; Retired Vice Chairman of the Board of
Restaurant Associates Industries, Inc. Director or trustee
of 21 investment companies associated with Citigroup. His
address is c/o HMK Associates, 30 Columbia Turnpike,
Florham Park, New Jersey 07932.

	H. John Ellis, Jr., Director (Age 74).  Retired.
Director or trustee of 2 investment companies associated
with Citigroup.  His address is 858 East Crystal Downs
Drive, Frankfort, Michigan 49635.
Stephen E. Kaufman, Director (Age 69).  Attorney.
Director or trustee of 13 investment companies associated
with Citigroup. His address is 277 Park Avenue, New York,
New York 10172.
Armon E. Kamesar, Director (Age 74).  Chairman of
TEC, an international organization of Chief Executive
Officers; Trustee, U.S. Bankruptcy Court. Director or
trustee of 2 investment companies associated with
Citigroup.  His address is 7328 Country Club Drive, La
Jolla, California 92037.
*Heath B. McLendon, Chairman of the Board (Age 68).
Managing Director of Salomon Smith Barney, President of Smith
Barney Fund Management LLC (formerly known as SSB Citi Fund
Management LLC) ("SBFM") and Travelers Investment Adviser,
Inc. ("TIA").  Mr. McLendon also serves as Chairman, Co-
Chairman or Director of 71 investment companies associated
with Citigroup.  His address is 7 World Trade Center, New
York, New York 10048.
Lewis E. Daidone, Senior Vice President and Treasurer
(Age 43).  Managing Director of Salomon Smith Barney;
Director and Senior Vice President of SBFM  and TIA.  Mr.
Daidone also serves as Senior Vice President or Executive
Vice President and Treasurer of 61 investment companies
associated with Citigroup.  His address is 125 Broad Street,
New York, New York 10004.
	Paul M. Hatch, Vice President (Age 44). Vice
President, Chief Operating Officer and Deputy Director of
National Sales of Salomon Smith Barney's Consulting Group.
Prior to 1997, Branch Manager at Southfield, MI and McLean,
VA branches.  His address is 222 Delaware Avenue,
Wilmington, Delaware, 19801.
	Frank L. Campanale, Investment Officer (Age 48).
President and Chief Executive Officer of Salomon Smith
Barney's Consulting Group. Prior to 1996, National Sales
Director for Consulting Group. His address is 222 Delaware
Avenue, Wilmington, Delaware 19801.
LeRoy T. Pease, CFA, Investment Officer (Age 42).
First Vice President of Salomon Smith Barney Consulting
Group. Prior to 1996, Chief Investment Officer of EMT Group
and Manager for Investment Strategy for Bell Atlantic,
Philadelphia, Pennsylvania.  His address is 222 Delaware
Avenue, Wilmington, Delaware, 19801.
Christina T. Sydor, Secretary (Age 51).  Managing
Director of Salomon Smith Barney; General Counsel and
Secretary of SBFM and TIA.  Ms. Sydor also serves as
Secretary of 61 investment companies associated with
Citigroup. Her address is 7 World Trade Center, New York,
New York 10048.
Irving David, Controller (Age 40). Director of
Salomon Smith Barney. Controller or Assistant Treasurer of
43 investment companies associated with Citigroup.  His
address is 125 Broad Street, New York, New York 10004.
Stephen M. Hagan, Vice President (Age 33). Vice
President of Salomon Smith Barney Consulting Group. His
address is 222 Delaware Avenue, Wilmington, Delaware,
19801.

As of July 13, 2001, the Trustees and officers as a group
owned less than 1% of the outstanding common stock of the
Trust.

Remuneration.  No director, officer or employee of Salomon
Smith Barney, SBFM or any of their affiliates will receive
any compensation from the Trust for serving as an officer
or Trustee of the Trust. The Trust pays each Trustee who is
not a director, officer or employee of Salomon Smith
Barney, the Manager, any advisor, SBFM or any of their
affiliates a fee of $32,000 per annum plus $1,000 per
meeting attended. The Trust reimburses the Trustees for
travel and out-of-pocket expenses to attend meetings of the
Board. For the calendar year ended December 31, 2000, such
fees and expenses totaled $10,355.

For the fiscal period ended March 31, 2001, the Trustees of
the Trust were paid the following compensation:
			Total
		Pension or	Total	Number
	Aggregate		Retirement Benefits
	Compensation	of Funds
	Compensation	Aggregate	Accrued as Expense	From	Served in
	Name	From Portfolio	Compensation	of Trust 	Fund
Complex**	Complex
Heath B. McLendon*	None	None	None	None	77
Walter Auch	None	$182	None	$52,800	2
Martin Brody	None	71	None	132,950	21
H. John Ellis	None	182	None	54,900	2
Armon E. Kamesar	None	182	None	55,100	2
Stephen E. Kaufman	None	182	None	114,400	13

* Designates "interested trustee".
** As of December 31, 2000

INVESTMENT OBJECTIVES, MANAGEMENT POLICIES AND RISK FACTORS

The Portfolio is a non-diversified, open-end management
investment company. The Prospectus discusses the investment
objectives of the Portfolio, a separate series of the Trust
and the policies to be employed to achieve those
objectives.  Supplemental information is set out below
concerning the types of securities and other instruments in
which the Portfolio may invest, the investment policies and
strategies the Portfolio may utilize and certain risks
attendant to those investments, policies and strategies.

The Portfolio seeks to achieve its objective by investing
primarily in equity securities of both domestic and foreign
companies.

Sector Investing. The Portfolio normally invests in the
securities of companies principally engaged in the
technology, telecommunications and healthcare sectors.  The
broad industry categories in which these companies may be
found include, but are not limited to, computer software
and hardware; network and capital broadcasting; internet
and internet-related businesses; the ownership, operation,
development, production, sale, and distribution of goods or
services used in the broadcast and media industries;
communications services or equipment; the design,
manufacture, or sale of electric components; defense and
data storage and retrieval; pharmaceuticals; medical
diagnostic, biochemical or other healthcare research and
development; healthcare facilities, healthcare products and
services and biotechnology.  The relative size of the
Portfolio's investments within these industries will vary
from time to time, and at times, some of these industries
may not be represented in the Portfolio's holdings.

The investment advisers believe that because of rapid
advances in each sector, an investment in companies with
business operations in these areas may offer substantial
opportunities for long-term capital appreciation.  Of
course, prices of common stocks of even the best managed,
most profitable corporations are subject to market risk,
which means their stock prices can decline. In addition,
swings in investor psychology or significant trading by
investors can result in price fluctuations. Industries
likely to be owned by the Portfolio include computers,
networking and internetworking software, computer aided
design, telecommunications, media and information services,
medical devices and biotechnology.  The Portfolio may also
invest in the stocks of companies that may benefit from the
commercialization of technological advances, although they
may not be directly involved in research and development.

The sectors have exhibited and may continue to exhibit
rapid growth, both through increasing demand for existing
products and services and the broadening of the sector. In
general, the stocks of large capitalized companies that are
well established in the sector and can be expected to grow
with the market will frequently be found among the
Portfolio's holdings. The expansion of each sector and its
related industries, however, also provides a favorable
environment for investment in small to medium capitalized
companies. The Portfolio's investment policy is not limited
to any minimum capitalization requirement and the Portfolio
may hold securities without regard to the capitalization of
the issuer. The investment advisers' overall stock
selection for the Portfolio is not based on the
capitalization or size of the company but rather on an
assessment of the company's fundamental prospects.

Companies in each sector face special risks. For example,
their products or services may not prove commercially
successful or may become obsolete quickly. The value of the
Portfolio's shares may be susceptible to factors affecting
the technology and science areas and to greater risk and
market fluctuation than an investment in a fund that
invests in a broader range of portfolio securities not
concentrated in any particular industry. As such, the
Portfolio is not an appropriate investment for individuals
who are not long-term investors and who, as their primary
objective, require safety of principal or stable income
from their investments.  Each sector may be subject to
greater governmental regulation than many other areas and
changes in governmental policies and the need for
regulatory approvals may have a material adverse effect on
these areas. Additionally, companies in each sector may be
subject to risks of developing technologies, competitive
pressures and other factors and are dependent upon consumer
and business acceptance as new technologies evolve.

Further, the market may value companies according to size,
or market capitalization, rather than on financial
performance. The companies in each sector may be developing
or changing.  They may be subject to greater business risks
and more sensitive to changes in economic conditions than
larger, more established companies.  Company earnings in
these sectors may fluctuate more than those of other
companies because of short product cycles and competitive
pricing.  Investors' enthusiasm for these stocks can also
change dramatically, causing stock prices to rise and fall
sharply.

Technology Securities.  Many technological products and
services are subject to rapid obsolescence, which may lower
the market value of the securities of the companies in this
sector.  Also, the Portfolio holds faster-growing, more
volatile technology companies the investment advisers
believe to be emerging leaders in their fields.  The market
prices of these companies tend to rise and fall more
rapidly than those of larger, more established companies.

Telecommunications Securities.  Companies in the media and
telecommunications sector are subject to the risks of rapid
obsolescence, lack of investor or consumer acceptance, lack
of standardization or compatibility with existing
technologies, an unfavorable regulatory environment,
intense competition, and a dependency on patent and
copyright protection.  The media sector can be
significantly (and adversely) affected by the federal
deregulation of cable and broadcasting, competitive
pressures, and government regulation, including regulation
of the concentration of investment in AM, FM, or TV
stations. The telecommunications industry, particularly
telephone operating companies, is subject to both federal
and state government regulations of rates of return and
services that may be offered. Many telecommunications
companies fiercely compete for market share.

Certain of the companies in which the Portfolio invests may
allocate greater than usual financial resources to research
and product development. The securities of such companies
may experience above-average price movements associated
with the perceived prospects of success of the research and
development programs.  In addition, companies in which the
Portfolio invests may be adversely affected by lack of
commercial acceptance of a new product or process or by
technological change and obsolescence.

Healthcare and Biotechnology Securities.  Many faster-
growing healthcare companies have limited operating
histories and their potential profitability may be
dependent on regulatory approval of their products, which
increases the volatility of these companies' security
prices. Many of these activities are funded or subsidized
by governments.  The withdrawal or curtailment of this
support could lower the profitability and market prices of
such companies.  Changes in government regulation could
also have an adverse impact.  Continuing technological
advances may mean rapid obsolescence of products and
services.  Patent considerations, intense competition,
rapid technological change and obsolescence, and government
regulation can significantly (and adversely) affect the
biotechnology sector. Biotechnology companies can have
persistent losses during a new product's transition from
development to production, and revenue patterns can be
erratic.

Equity Securities.  The Portfolio may invest in all types
of equity securities, including, but not limited to,
exchange-traded and over-the-counter common and preferred
stocks, warrants, rights, depository receipts and shares,
trust certificates, limited partnership interests, shares
of other investment companies, real estate investment
trusts and equity participations.  Common stock is an
interest in a company, limited liability company, or
similar entity that entitles the holder to a share in the
profits of the company, in the form of dividends, and the
proceeds from a sale or liquidation of the company.  The
interests of common shareholders are the most junior in a
corporate structure.  This means that in the event of the
bankruptcy of the company its creditors and any holders of
a preferred class of equity securities are paid before the
common stockholders are entitled to receive anything.
However, any assets of the company in excess of the amount
owed to creditors or preferred shareholders are shared pro-
rata among the common stockholders.  Common stockholders
normally have voting control of the company and are
entitled to vote on the election of directors and certain
fundamental corporate actions.

Preferred stocks are equity securities, but they have many
characteristics of fixed income securities.  Their
similarities to fixed income securities generally cause
preferred stocks to trade more like debt instruments than
common stocks.  Thus, the value of preferred stocks
reflects the credit risk of the company and the dividend
yield on the preferred stocks compared to prevailing
interest rates.  Preferred shares are entitled to receive
dividends before any dividend is paid to the holders of
common stock.  The dividend may be at a fixed or variable
dividend payment rate, may be payable on fixed dates or at
times determined by the company and may be payable in cash,
additional shares of preferred stock or other securities.
Many preferred stocks are redeemable at the option of the
company after a certain date.  Holders of preferred stock
are also entitled to receive a payment upon the sale or
liquidation of a company before any payment is made to the
company's common stockholders.  However, preferred stock is
an equity security and, therefore, is junior in priority of
payment to the company's creditors in the event of a
bankruptcy, including holders of the company's debt
securities.  This junior ranking to creditors makes
preferred stock riskier in some respects than fixed income
securities.

Convertible securities are preferred stocks or fixed income
securities that are convertible at the option of the
holder, or in some circumstances at the option of the
issuing company, at a stated exchange rate or formula into
the company's common stock or other equity securities.  At
the time a company sells the convertible securities, the
conversion price is normally higher than the market price
of the common stock.  A holder of convertible securities
will generally receive interest or dividends at a rate
lower than comparable debt securities, but the holder has
the potential for additional gain if the market value of
the common stock exceeds the conversion price.  When the
market price of the common stock is below the conversion
price, convertible securities tend to trade like fixed
income securities.  If the market price of the common stock
is higher than the conversion price, convertible securities
tend to trade like the common stock.  Convertible
securities rank senior to common stocks in an issuer's
capital structure and consequently may be of higher quality
and entail less risk than the issuer's common stock.

Warrants and stock purchase rights are securities
permitting, but not obligating, their holder to purchase
other securities, normally the issuer's common stock.
Stock purchase rights are frequently issued as a dividend
to a company's stockholders and represent the right to
purchase a fixed number of shares at a fixed or formula
price.  The price may reflect a discount to the market
price.  Warrants are generally sold by a company or issuer
together with fixed income securities and represent the
right to a fixed number of shares of common stock or other
securities at a fixed or formula price.  The exercise price
is normally higher than the market price at the time the
company sells the warrant.

Warrants and stock purchase rights do not carry with them
the right to receive dividends on or to vote the securities
that they entitle their holders to purchase.  They also do
not entitle the holder to share in the assets of the
company in a liquidation.  The rights to purchase common
stock or other securities conferred by a warrant or stock
purchase right can only be exercised on specific dates or
for a specific period.  Trading in these instruments is
affected both by the relationship of the exercise price to
the current market price of the common stock or other
securities and also by the period remaining until the right
or warrant expires.  An investment in warrants and stock
purchase rights may be considered more speculative than
other types of equity investments.  A warrant or stock
purchase right expires worthless if it is not exercised on
or prior to its expiration date.

ADRs, EDRs and GDRs.  The Portfolio may also purchase
American Depository Receipts ("ADRs"), European Depository
Receipts ("EDRs") and Global Depository Receipts ("GDRs")
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 depository's
transaction fees, whereas under an unsponsored arrangement,
the foreign issuer assumes no obligation and the
depository'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.  The Portfolio may invest in ADRs through both
sponsored and unsponsored arrangements.

Real Estate Investment Trusts ("REITs").  The Portfolio may
invest in REITs.  REITs are pooled investment vehicles
which invest primarily in income producing real estate or
real estate related loans or interests. REITs are generally
classified as equity REITs, mortgage REITs or a combination
of equity and mortgage REITs. Equity REITs invest the
majority of their assets directly in real property and
derive income primarily from the collection of rents.
Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs
invest the majority of their assets in real estate
mortgages and derive income from the collection of interest
payments. REITs are not taxed on income distributed to
shareholders provided they comply with the applicable
requirements of the Internal Revenue Code of 1986, as
amended (the "Code"). Debt securities issued by REITs, for
the most part, are general and unsecured obligations and
are subject to risks associated with REITs.

Investing in REITs involves certain unique risks in
addition to those risks associated with investing in the
real estate industry in general. An equity REIT may be
affected by changes in the value of the underlying
properties owned by the REIT. A mortgage REIT may be
affected by changes in interest rates and the ability of
the issuers of its portfolio mortgages to repay their
obligations. REITs are dependent upon the skills of their
managers and are not diversified. REITs are generally
dependent upon maintaining cash flows to repay borrowings
and to make distributions to shareholders and are subject
to the risk of default by lessees or borrowers. REITs whose
underlying assets are concentrated in properties used by a
particular industry, such as health care, are also subject
to risks associated with such industry.

REITs (especially mortgage REITs) are also subject to
interest rate risks. When interest rates decline, the value
of a REIT's investment in fixed rate obligations can be
expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can
be expected to decline. If the REIT invests in adjustable
rate mortgage loans the interest rates on which are reset
periodically, yields on a REIT's investments in such loans
will gradually align themselves to reflect changes in
market interest rates. This causes the value of such
investments to fluctuate less dramatically in response to
interest rate fluctuations than would investments in fixed
rate obligations.

REITs may have limited financial resources, may trade less
frequently and in a limited volume and may be subject to
more abrupt or erratic price movements than larger company
securities. Historically REITs have been more volatile in
price than the larger capitalization stocks included in
Standard & Poor's 500 Stock Index (the "S&P 500").

Other Investment Companies.  The Portfolio may invest in
the securities of other investment companies to the extent
such investments are consistent with the Portfolio's
investment objectives and policies and permissible under
the Investment Company Act of 1940, as amended (the "1940
Act"). Under the 1940 Act, the Portfolio may not acquire
the securities of other domestic or foreign investment
companies if, as a result, (i) more than 10% of the
Portfolio's total assets would be invested in securities of
other investment companies, (ii) such purchase would result
in more than 3% of the total outstanding voting securities
of any one investment company being held by the Portfolio,
or (iii) more than 5% of the Portfolio's total assets would
be invested in any one investment company. These
limitations do not apply to the purchase of shares of any
investment company in connection with a merger,
consolidation, reorganization or acquisition of
substantially all the assets of another investment company.
The Portfolio will not invest in other investment companies
for which the investment advisers or any of their
affiliates act as an investment advisor or distributor.

The Portfolio may invest up to 10% of its assets in
securities of other investment companies, including shares
in a portfolio of securities that seeks to track the
performance of an underlying equity index or a portion of
an equity index ("exchange traded funds").

The Portfolio, as a holder of the securities of other
investment companies, will bear its pro rata portion of the
other investment companies' expenses, including advisory
fees. These expenses are in addition to the direct expenses
of the Portfolio's own operations.

Short Sales.  The Portfolio may seek to hedge investments
or realize additional gains through short sales.  Short
sales are transactions in which the Portfolio sells a
security it does not own in anticipation of a decline in
the market value of that security.  To complete such a
transaction, the Portfolio borrows the security to make
delivery to the buyer.  The Portfolio is obligated to
replace the security borrowed by purchasing it at the
market price at or prior to the time of replacement.  The
price at such time may be more or less than the price at
which the security was sold by the Portfolio.  Until the
security is replaced, the Portfolio is required to repay
the lender any dividends or interest that accrue during the
period of the loan.  To borrow the security, the Portfolio
also may be required to pay a premium, which would increase
the cost of the security sold.  A portion of the net
proceeds of the short sale may be retained by the broker
(or by the Portfolio's custodian in a special custody
account), to the extent necessary to collateralize the
broker and to meet margin requirements, until the short
position is closed out.  The Portfolio will also incur
transaction costs in effecting short sales.

The Portfolio will incur a loss as a result of the short
sale if the price of the security increases between the
date of the short sale and the date on which the Portfolio
replaces the borrowed security.  The Portfolio will realize
a gain if the security declines in price between those
dates.  The amount of any gain will be decreased, and the
amount of any loss increased, by the amount of the
premiums, dividends, interest or expenses the Portfolio may
be required to pay in connection with a short sale.  An
increase in the value of a security sold short by the
Portfolio over the price at which it was sold short will
result in a loss to the Portfolio, and there can be no
assurance that the Portfolio will be able to close out the
position at any particular time or at an acceptable price.
Thus the Portfolio's losses on short sales are potentially
unlimited.

Whenever the Portfolio engages in short sales, it maintains
cash or liquid securities in an amount that, when combined
with the amount of collateral deposited with the broker in
connection with the short sale, equals the current market
value of the security sold short.  The assets so maintained
are marked to market daily.

Management currently intends to limit the Portfolio's short
sales to shares issued by exchange traded funds.  Exchange
traded funds hold portfolios of securities that seek to
track the performance of a specific index or basket of
stocks.  Utilizing this strategy will allow the Subadvisor
to adjust the Portfolio's exposure in a particular sector,
in a cost effective and convenient manner, without having
to sell the Portfolio's holdings of individual stocks in
that sector.

Investing in Small and Medium Capitalization Companies.
The Portfolio may invest in securities of all market
capitalizations.  Investing in the equity securities of
small and medium capitalization companies involves
additional risks compared to investing in large
capitalization companies.  Compared to large companies,
these companies may have more limited product lines and
capital resources; have less established markets for their
products; have earnings that are more sensitive to changes
in the economy, competition and technology and be more
dependent upon key members of management.

The market value of the common stock of small and medium
capitalization companies may be more volatile, particularly
in response to company announcements or industry events;
have less active trading markets and be harder to sell at
the time and prices that a investment adviser considers
appropriate.

Fixed Income Securities. The Portfolio may invest a portion
of its assets in fixed income (or "debt") securities.  The
market value of the obligations held by the Portfolio can
be expected to vary inversely to changes in prevailing
interest rates.  Investors also should recognize that, in
periods of declining interest rates, the 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.  Also,
when interest rates are falling, the inflow of net new
money to the Portfolio from the continuous sale of its
shares will tend to be invested in instruments producing
lower yields than the balance of its portfolio, thereby
reducing the Portfolio's current yield.  In periods of
rising interest rates, the opposite can be expected to
occur.  In addition, securities in which the Portfolio may
invest may not yield as high a level of current income as
might be achieved by investing in securities with less
liquidity, less creditworthiness or longer maturities.

The Portfolio may also invest in U.S. Government
securities, corporate bonds, debentures, non-convertible
fixed income preferred stocks and Eurodollar and Yankee
instruments.

Eurodollar Instruments and Yankee Bonds.  The Portfolio may
invest in Eurodollar certificates of deposit ("ECDs"),
Eurodollar bonds and Yankee bonds.  Eurodollar instruments
are bonds of corporate and government issuers that pay
interest and principal in U.S. dollars but are issued in
markets outside the United States, primarily in Europe.
Yankee bonds are bonds of foreign governments and their
agencies and foreign banks and corporations that pay
interest in U.S. dollars and are typically issued in the
U.S.  ECDs are U.S. dollar-denominated certificates of
deposit issued by foreign branches of domestic banks.

High Yield Securities.  The Portfolio may invest in medium
or lower rated securities and unrated securities of
comparable quality, sometimes referred to as "junk bonds."
Generally, such securities offer a higher current yield
than is offered by higher rated securities, but also (i)
will likely have some quality and protective
characteristics that, in the judgment of the rating
organizations, are outweighed by large uncertainties or
major risk exposures to adverse conditions and (ii) are
predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance
with the terms of the obligations.

The market values of certain of these securities also tend
to be more sensitive to individual corporate developments
and changes in economic conditions than higher quality
bonds.  In addition, medium and lower rated securities and
comparable unrated securities generally present a higher
degree of credit risk.  The risk of loss because of default
by these issuers is significantly greater because medium
and lower rated securities generally are unsecured and
frequently subordinated to the prior payment of senior
indebtedness. In light of these risks, the Board of
Trustees has instructed the investment advisers, in
evaluating the creditworthiness of an issue, whether rated
or unrated, to take various factors into consideration,
which may include, as applicable, the issuer's financial
resources, its sensitivity to economic conditions and
trends, the operating history of and the community support
for the facility financed by the issue, the ability of the
issuer's management and regulatory matters.

In addition, the market value of securities in lower rated
categories is more volatile than that of higher quality
securities, and the markets in which medium and lower rated
securities are traded are more limited than those in which
higher rated securities are traded.  The existence of
limited markets may make it more difficult for the
Portfolio to obtain accurate market quotations for purposes
of valuing its securities and calculating its net asset
value.  Moreover, the lack of a liquid trading market may
restrict the availability of securities for the Portfolio
to purchase and may also have the effect of limiting the
ability of the Portfolio to sell securities at their fair
value either to meet redemption requests or to respond to
changes in the economy or the financial markets.

Lower rated debt obligations also present risks based on
payment expectations.  If an issuer calls the obligation
for redemption, the Portfolio may have to replace the
security with a lower yielding security, resulting in a
decreased return for investors.  Also, the principal value
of bonds moves inversely with movements in interest rates;
in the event of rising interest rates, the value of the
securities held by the Portfolio may decline
proportionately more than a portfolio consisting of higher
rated securities.  If the Portfolio experiences unexpected
net redemptions, it may be forced to sell its higher rated
bonds, resulting in a decline in the overall credit quality
of the securities held by the Portfolio and increasing the
exposure of the Portfolio to the risks of lower rated
securities.  Investments in zero coupon bonds may be more
speculative and subject to greater fluctuations in value
because of changes in interest rates than bonds that pay
interest currently.

Subsequent to its purchase by the Portfolio, an issue of
securities may cease to be rated or its rating may be
reduced below the minimum required for purchase by the
Portfolio.  Neither event will require sale of these
securities by the Portfolio, but the investment adviser
will consider the event in determining whether the
Portfolio should continue to hold the security. See "Debt
Securities Rating Criteria" below for additional
information regarding high yield securities.

HOLDRS. HOLDRS are depository receipts issued by the HOLDRS
Trust representing individual and undivided ownership
interests in the common stock of companies involved in a
specific segment of a particular industry. Holding Company
Depository Receipts ("HOLDRS") are a service mark of
Merrill Lynch and are traded on the American Stock
Exchange.

Debt Securities Rating Criteria.  Investment grade debt
securities are those rated "BBB" or higher by Standard &
Poor's Ratings Group ("S & P"), the equivalent rating of
other nationally recognized statistical rating
organizations ("NRSROs") or determined to be of equivalent
credit quality by the investment adviser.  Debt securities
rated BBB are considered medium grade obligations with
speculative characteristics, and adverse economic
conditions or changing circumstances may weaken the
issuer's ability to pay interest and repay principal.

Below investment grade debt securities are those rated "BB"
and below by S & P or the equivalent rating of other
NRSROs.  Below investment grade debt securities or
comparable unrated securities are commonly referred to as
"junk bonds" and are considered predominantly speculative
and may be questionable as to principal and interest
payments. Changes in economic conditions are more likely to
lead to a weakened capacity to make principal payments and
interest payments. The amount of junk bond securities
outstanding has proliferated as an increasing number of
issuers have used junk bonds for corporate financing.  An
economic downturn could severely affect the ability of
highly leveraged issuers to service their debt obligations
or to repay their obligations upon maturity.  Factors
having an adverse impact on the market value of lower
quality securities will have an adverse effect on the
Portfolio's net asset value to the extent it invests in
such securities.  In addition, the Portfolio may incur
additional expenses to the extent it is required to seek
recovery upon a default in payment of principal or interest
on its portfolio holdings.

The secondary market for junk bond securities, which is
concentrated in relatively few market makers, may not be as
liquid as the secondary market for more highly rated
securities, a factor which may have an adverse effect on
the Portfolio's ability to dispose of a particular security
when necessary to meet its liquidity needs.  Under adverse
market or economic conditions, the secondary market for
junk bond securities could contract further, independent of
any specific adverse changes in the condition of a
particular issuer. As a result, the Portfolio could find it
more difficult to sell these securities or may be able to
sell the securities only at prices lower than if such
securities were widely traded.  Prices realized upon the
sale of such lower rated or unrated securities, under these
circumstances, may be less than the prices used in
calculating the Portfolio's net asset value.

Since investors generally perceive that there are greater
risks associated with lower quality debt securities of the
type in which the Portfolio may invest a portion of its
assets, the yields and prices of such securities may tend
to fluctuate more than those for higher rated securities.
In the lower quality segments of the debt securities
market, changes in perceptions of issuers' creditworthiness
tend to occur more frequently and in a more pronounced
manner than do changes in higher quality segments of the
debt securities market, resulting in greater yield and
price volatility.

Lower rated and comparable unrated debt securities tend to
offer higher yields than higher rated securities with the
same maturities because the historical financial condition
of the issuers of such securities may not have been as
strong as that of other issuers.  However, lower rated
securities generally involve greater risks of loss of
income and principal than higher rated securities.  The
investment advisers will attempt to reduce these risks
through portfolio diversification and by analysis of each
issuer and its ability to make timely payments of income
and principal, as well as broad economic trends and
corporate developments.

The definitions of the ratings of debt obligations may be
found in the Appendix following this Statement of
Additional Information.

Ratings as Investment Criteria. In general, the ratings of
an NRSRO such as Moody's Investors Service, Inc.
("Moody's") and S&P represent the opinions of those
agencies as to the quality of debt obligations that they
rate. It should be emphasized, however, that these ratings
are relative and subjective, are not absolute standards of
quality and do not evaluate the market risk of securities.
These ratings will be used by the Portfolio as initial
criteria for the selection of portfolio securities, but the
Portfolio will also rely upon the independent advice of
their respective investment advisers (separately an
investment adviser, collectively, the investment advisers)
to evaluate potential investments. Among the factors that
will be considered are the long term ability of the issuer
to pay principal and interest and general economic trends.

Subsequent to its purchase by the Portfolio, an issue of
debt obligations may cease to be rated or its rating may be
reduced below the minimum required for purchase by the
Portfolio. Neither event will require the sale of the debt
obligation by the Portfolio, but the Portfolio's investment
advisers will consider the event in their determination of
whether the Portfolio should continue to hold the
obligation. In addition, to the extent that the ratings
change as a result of changes in rating organizations or
their rating systems or owing to a corporate restructuring
of an NRSRO, the Portfolio will attempt to use comparable
ratings as standards for its investments in accordance with
its investment objectives and policies.

Risks of Non-U.S. Investments.  To the extent the Portfolio
invests in the securities of non-U.S. issuers, those
investments involve considerations and risks not typically
associated with investing in the securities of issuers in
the U.S.  These risks are heightened with respect to
investments in countries with emerging markets and
economies.  The risks of investing in securities of non-
U.S. issuers or issuers with significant exposure to non-
U.S. markets may be related, among other things, to (i)
differences in size, liquidity and volatility of, and the
degree and manner of regulation of, the securities markets
of certain non-U.S. markets compared to the securities
markets in the U.S.; (ii) economic, political and social
factors; and (iii) foreign exchange matters, such as
restrictions on the repatriation of capital, fluctuations
in exchange rates between the U.S. dollar and the
currencies in which the Portfolio's securities holdings are
quoted or denominated, exchange control regulations and
costs associated with currency exchange. The political and
economic structures in certain non-U.S. countries,
particularly emerging markets, are expected to undergo
significant evolution and rapid development, and such
countries may lack the social, political and economic
stability characteristic of more developed countries.
Unanticipated political or social developments may affect
the values of the Portfolio's investments in such
countries. The economies and securities and currency
markets of many emerging markets have experienced
significant disruption and declines. There can be no
assurances that these economic and market disruptions will
not continue.

Foreign Securities Markets and Regulations.  There may be
less publicly available information about non-U.S. markets
and issuers than is available with respect to U.S.
securities and issuers. Non-U.S. companies generally are
not subject to accounting, auditing and financial reporting
standards, practices and requirements comparable to those
applicable to U.S. companies. The trading markets for most
non-U.S. securities are generally less liquid and subject
to greater price volatility than the markets for comparable
securities in the U.S. The markets for securities in
certain emerging markets are in the earliest stages of
their development. Even the markets for relatively widely
traded securities in certain non-U.S. markets, including
emerging countries, may not be able to absorb, without
price disruptions, a significant increase in trading volume
or trades of a size customarily undertaken by institutional
investors in the U.S. Additionally, market making and
arbitrage activities are generally less extensive in such
markets, which may contribute to increased volatility and
reduced liquidity. The less liquid a market, the more
difficult it may be for the Portfolio to accurately price
its securities holdings or to dispose of such securities at
the times determined by the investment adviser to be
appropriate. The risks associated with reduced liquidity
may be particularly acute in situations in which the
Portfolio's operations require cash, such as in order to
meet redemptions and to pay its expenses.

Economic, Political and Social Factors.  Certain non-U.S.
countries, including emerging markets, may be subject to a
greater degree of economic, political and social
instability than is the case in the U.S. and Western
European countries. Such instability may result from, among
other things: (i) authoritarian governments or military
involvement in political and economic decision making;
(ii) popular unrest associated with demands for improved
economic, political and social conditions; (iii) internal
insurgencies; (iv) hostile relations with neighboring
countries; and (v) ethnic, religious and racial
disaffection and conflict. Such economic, political and
social instability could significantly disrupt the
financial markets in such countries and the ability of the
issuers in such countries to repay their obligations.
Investing in emerging countries also involves the risk of
expropriation, nationalization, confiscation of assets and
property or the imposition of restrictions on foreign
investments and on repatriation of capital invested. In the
event of such expropriation, nationalization or other
confiscation in any emerging country, the Portfolio could
lose its entire investment in that country.

Certain emerging market countries restrict or control
foreign investment in their securities markets to varying
degrees.  These restrictions may limit the Portfolio's
investment in those markets and may increase the expenses
of the Portfolio.  In addition, the repatriation of both
investment income and capital from certain markets in the
region is subject to restrictions such as the need for
certain governmental consents.  Even where this is no
outright restriction on repatriation of capital, the
mechanics of repatriation may affect certain aspects of the
Portfolio's operation.

Economies in individual non-U.S. countries may differ
favorably or unfavorably from the U.S. economy in such
respects as growth of gross domestic product, rates of
inflation, currency valuation, capital reinvestment,
resource self-sufficiency and balance of payments
positions. Many non-U.S. countries have experienced
substantial, and in some cases extremely high, rates of
inflation for many years. Inflation and rapid fluctuations
in inflation rates have had, and may continue to have, very
negative effects on the economies and securities markets of
certain emerging countries.

Economies in emerging countries generally are dependent
heavily upon international trade and, accordingly, have
been and may continue to be affected adversely by trade
barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures
imposed or negotiated by the countries with which they
trade. These economies also have been, and may continue to
be, affected adversely by economic conditions in the
countries with which they trade.

Currency Risks.  The value of the securities quoted or
denominated in international currencies may be adversely
affected by fluctuations in the relative currency exchange
rates and by exchange control regulations. The Portfolio's
investment performance may be negatively affected by a
devaluation of a currency in which the Portfolio's
investments are quoted or denominated. Further, the
Portfolio's investment performance may be significantly
affected, either positively or negatively, by currency
exchange rates because the U.S. dollar value of securities
quoted or denominated in another currency will increase or
decrease in response to changes in the value of such
currency in relation to the U.S. dollar.

Custodian Services and Related Investment Costs.  Custodian
services and other costs relating to investment in
international securities markets generally are more
expensive than in the U.S. Such markets have settlement and
clearance procedures that differ from those in the U.S. 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.  The inability of the Portfolio to make
intended securities purchases because of settlement
problems could cause the Portfolio to miss attractive
investment opportunities. Inability to dispose of a
portfolio security caused by settlement problems could
result either in losses to the Portfolio because of a
subsequent decline in value of the portfolio security or
could result in possible liability to the Portfolio. In
addition, security settlement and clearance procedures in
some emerging countries may not fully protect the Portfolio
against loss or theft of its assets.

Withholding and Other Taxes.  The Portfolio will be subject
to taxes, including withholding taxes, on income (possibly
including, in some cases, capital gains) that are or may be
imposed by certain non-U.S. countries with respect to the
Portfolio's investments in such countries. These taxes will
reduce the return achieved by the Portfolio.  Treaties
between the U.S. and such countries may not be available to
reduce the otherwise applicable tax rates.

Currency Exchange Rates.  The Portfolio's share value may
change significantly when the currencies, other than the
U.S. dollar, in which the Portfolio's investments are
quoted or denominated, strengthen or weaken against the
U.S. dollar.  Currency exchange rates generally are
determined by the forces of supply and demand in the
foreign exchange markets and the relative merits of
investments in different countries as seen from an
international perspective.  Currency exchange rates can
also be affected unpredictably by intervention by U.S. or
foreign governments or central banks or by currency
controls or political developments in the United States or
abroad.

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 adversely
affect the economy of a developing market or the
Portfolio's investments in such a market.  The claims of
many property owners against those of governments may
remain unsettled.  There can be no assurance that any
investments the Portfolio might make in such emerging
markets would 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.

Economic Monetary Union ("EMU").  On January 1, 1999, 11
European countries adopted a single currency - the Euro.
The conversion to the Euro is being phased in over a three-
year period.  For participating countries, EMU will mean
sharing a single currency and single official interest rate
and adhering to agreed-upon limits on government borrowing.
Budgetary decisions will remain in the hands of each
participating country, but will be subject to each
country's commitment to avoid "excessive deficits" and
other more specific budgetary criteria.  A European Central
Bank 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.

Forward Currency Contracts.  The Portfolio may invest in
securities quoted or denominated in foreign currencies, may
hold currencies to meet settlement requirements for foreign
securities and may engage in currency exchange transactions
in order to protect against uncertainty in the level of
future exchange rates between a particular foreign currency
and the U.S. dollar or between foreign currencies in which
the Portfolio's securities are or may be quoted or
denominated. Forward currency contracts are agreements to
exchange one currency for another, for example, to exchange
a certain amount of U.S. dollars for a certain amount of
French francs at a future date.  The date (which may be any
agreed upon fixed number of days in the future), the amount
of currency to be exchanged and the price at which the
exchange will take place will be negotiated with a currency
trader and fixed for the term of the contract at the time
the Portfolio enters into the contract.  To assure that the
Portfolio's forward currency contracts are not used to
achieve investment leverage, the Portfolio will segregate
cash or high grade securities with its custodian in an
amount at all times equal to or exceeding the Portfolio's
commitment with respect to these contracts.

Forward currency contracts (i) are traded in an interbank
market conducted directly between currency traders
(typically commercial banks or other financial
institutions) and their customers, (ii) generally have no
deposit requirements and (iii) are typically consummated
without payment of any commissions. The Portfolio, however,
may enter into forward currency contracts containing either
or both deposit requirements and commissions.

At or before the maturity of a forward currency contract,
the Portfolio may either sell a portfolio security and make
delivery of the currency, or retain the security and offset
its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the
Portfolio will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver.  If
the Portfolio retains the portfolio security and engages in
an offsetting transaction, the Portfolio, at the time of
execution of the offsetting transaction, will incur a gain
or a loss to the extent movement has occurred in forward
currency contract prices. Should forward prices decline
during the period between the Portfolio's entering into a
forward currency contract for the sale of a currency and
the date it enters into an offsetting contract for the
purchase of the currency, the Portfolio will realize a gain
to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to
purchase. Should forward prices increase, the Portfolio
will suffer a loss to the extent the price of the currency
it has agreed to purchase exceeds the price of the currency
it has agreed to sell.

In hedging specific portfolio positions, the Portfolio may
enter into a forward contract with respect to either the
currency in which the positions are denominated or another
currency deemed appropriate by the Portfolio's investment
adviser.  The amount the Portfolio may invest in forward
currency contracts is limited to the amount of the
Portfolio's aggregate investments in foreign currencies.
Risks associated with entering into forward currency
contracts include the possibility that the market for
forward currency contracts may be limited with respect to
certain currencies and, upon a contract's maturity, the
inability of the Portfolio to negotiate with the dealer to
enter into an offsetting transaction.  Forward currency
contracts may be closed out only by the parties entering
into an offsetting contract.  In addition, the correlation
between movements in the prices of those contracts and
movements in the price of the currency hedged or used for
cover will not be perfect.  There is no assurance an active
forward currency contract market will always exist. These
factors will restrict the Portfolio's ability to hedge
against the risk of devaluation of currencies in which the
Portfolio holds a substantial quantity of securities and
are unrelated to the qualitative rating that may be
assigned to any particular security.  In addition, although
forward currency contracts limit the risk of loss owing to
a decline in the value of the hedged currency, at the same
time, they limit any potential gain that might result
should the value of the currency increase.  If a
devaluation is generally anticipated, the Portfolio may not
be able to contract to sell currency at a price above the
devaluation level it anticipates.  The successful use of
forward currency contracts as a hedging technique draws
upon special skills and experience with respect to these
instruments and usually depends on the ability of the
Portfolio's investment adviser to forecast interest rate
and currency exchange rate movements correctly.  Should
interest or exchange rates move in an unexpected manner,
the Portfolio may not achieve the anticipated benefits of
forward currency contracts or may realize losses and thus
be in a worse position than if those strategies had not
been used. Many forward currency contracts are subject to
no daily price fluctuation limits so adverse market
movements could continue with respect to those contracts to
an unlimited extent over a period of time.

Options on Securities and Securities Indices.  The
Portfolio may purchase put and call options on any security
in which it may invest or options on any securities index
based on securities in which it may invest.  The Portfolio
would also be able to enter into closing sale transactions
in order to realize gains or minimize losses on options it
has purchased.

Writing Covered Call and Put Options on Securities and
Securities Indices.  The Portfolio may also write (sell)
covered call and put options on securities or on any
securities index composed of securities in which it may
invest.  Options on securities indices are similar to
options on securities, except that the exercise of
securities index options requires cash payments and does
not involve the actual purchase or sale of securities. In
addition, securities index options are designed to reflect
price fluctuations in a group of securities or segments of
the securities market rather than price fluctuations in a
single security.

The Portfolio may cover call options on a securities index
by owning securities whose price changes are expected to be
similar to those of the underlying index, or by having an
absolute and immediate right to acquire such securities
without additional cash consideration (or for additional
consideration if cash in such amount is segregated) upon
conversion or exchange of other securities in its
portfolio.  The Portfolio may cover call and put options on
a securities index by segregating assets with a value equal
to the exercise price.

Purchasing Call and Put Options.  The Portfolio will
normally purchase call options in anticipation of an
increase in the market value of securities of the type in
which they may invest. The purchase of a call option will
entitle the Portfolio, in return for the premium paid, to
purchase specified securities at a specified price during
the option period.  The Portfolio will ordinarily realize a
gain if, during the option period, the value of such
securities exceeded the sum of the exercise price, the
premium paid and transaction costs; otherwise the Portfolio
will realize either no gain or a loss on the purchase of
the call option.

The Portfolio will normally purchase put options in
anticipation of a decline in the market value of securities
in its portfolio ("protective puts") or in securities in
which it may invest. The purchase of a put option will
entitle the Portfolio, in exchange for the premium paid, to
sell specified securities at a specified price during the
option period. The purchase of protective puts is designed
to offset or hedge against a decline in the market value of
the Portfolio's securities. Put options may also be
purchased by the Portfolio for the purpose of affirmatively
benefiting from a decline in the price of securities which
it does not own. The Portfolio will ordinarily realize a
gain if, during the option period, the value of the
underlying securities decreased below the exercise price
sufficiently to more than cover the premium and transaction
costs; otherwise the Portfolio will realize either no gain
or a loss on the purchase of the put option. Gains and
losses on the purchase of protective put options would tend
to be offset by countervailing changes in the value of the
underlying portfolio securities.

Risks of Trading Options.  There is no assurance that a
liquid secondary market on an options exchange will exist
for any particular exchange-traded option, or at any
particular time. If the Portfolio is unable to effect a
closing purchase transaction with respect to covered
options it has written, the Portfolio will not be able to
sell the underlying securities or dispose of its segregated
assets until the options expire or are exercised.
Similarly, if the Portfolio is unable to effect a closing
sale transaction with respect to options it has purchased,
it will have to exercise the options in order to realize
any profit and will incur transaction costs upon the
purchase or sale of underlying securities.

Reasons for the absence of a liquid secondary market on an
exchange include the following: (i) there may be
insufficient trading interest in certain options;
(ii) restrictions may be imposed by an exchange on opening
or closing transactions or both; (iii) trading halts,
suspensions or other restrictions may be imposed with
respect to particular classes or series of options; (iv)
unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an
exchange or the Options Clearing Corporation (the "OCC")
may not at all times be adequate to handle current trading
volume; or (vi) one or more exchanges could, for economic
or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or a particular
class or series of options), in which event the secondary
market on that exchange (or in that class or series of
options) would cease to exist, although outstanding options
on that exchange, if any, that had been issued by the OCC
as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.

The Portfolio may terminate its obligations under an
exchange-traded call or put option by purchasing an option
identical to the one it has written.  Obligations under
over-the-counter options may be terminated only by entering
into an offsetting transaction with the counterparty to
such option.  Such purchases are referred to as "closing
purchase transactions."

The Portfolio may purchase and sell both options that are
traded on U.S. and foreign exchanges and options traded
over the counter with broker-dealers who make markets in
these options. The ability to terminate over-the-counter
options is more limited than with exchange-traded options
and may involve the risk that broker-dealers participating
in such transactions will not fulfill their obligations.
Until such time as the staff of the Securities and Exchange
Commission (the "SEC") changes its position, the Portfolio
will treat purchased over-the-counter options and all
assets used to cover written over-the-counter options as
illiquid securities, except that with respect to options
written with primary dealers in U.S. Government securities
pursuant to an agreement requiring a closing purchase
transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the formula.

Transactions by the Portfolio in options on securities and
indices will be subject to limitations established by each
of the exchanges, boards of trade or other trading
facilities governing the maximum number of options in each
class which may be written or purchased by a single
investor or group of investors acting in concert. Thus, the
number of options that the Portfolio may write or purchase
may be affected by options written or purchased by other
investment advisory clients. An exchange, board of trade or
other trading facility may order the liquidations of
positions found to be in excess of these limits, and it may
impose certain other sanctions.

The writing and purchase of options is a highly specialized
activity which involves investment techniques and risks
different from those associated with ordinary portfolio
securities transactions.  The successful use of protective
puts for hedging purposes depends in part on an investment
adviser's ability to predict future price fluctuations and
the degree of correlation between the options and
securities markets.

The hours of trading for options may not conform to the
hours during which the underlying securities are traded. To
the extent the options markets close before the markets for
the underlying securities, significant price movements can
take place in the underlying markets that cannot be
reflected in the options markets.

In addition to the risks of imperfect correlation between
the Portfolio's holdings and the index underlying the
option, the purchase of securities index options involves
the risk that the premium and transaction costs paid by the
Portfolio in purchasing an option will be lost.  This could
occur as a result of unanticipated movements in the price
of the securities comprising the securities index on which
the option is based.

Futures Contracts and Related Options. The Portfolio may
enter into futures contracts and purchase and write (sell)
options on these contracts, including but not limited to
interest rate, securities index and foreign currency
futures contracts and put and call options on these futures
contracts.  These contracts will be entered into only upon
the concurrence of the investment adviser that such
contracts are necessary or appropriate in the management of
the Portfolio's assets.  These contracts will be entered
into on exchanges designated by the Commodity Futures
Trading Commission ("CFTC") or, consistent with CFTC
regulations, on foreign exchanges.  These transactions may
be entered into for bona fide hedging and other permissible
risk management purposes including protecting against
anticipated changes in the value of securities the
Portfolio intends to purchase.

The Portfolio will not enter into futures contracts and
related options for which the aggregate initial margin and
premiums exceed 5% of the fair market value of the
Portfolio's assets after taking into account unrealized
profits and unrealized losses on any contracts it has
entered into. All futures and options on futures positions
will be covered by owning the underlying security or
segregation of assets.  With respect to long positions in a
futures contract or option (e.g., futures contracts to
purchase the underlying instrument and call options
purchased or put options written on these futures contracts
or instruments), the underlying value of the futures
contract at all times will not exceed the sum of cash,
short-term U.S. debt obligations or other high quality
obligations set aside for this purpose.

The Portfolio may lose the expected benefit of these
futures or options transactions and may incur losses if the
prices of the underlying securities or commodities move in
an unanticipated manner.  In addition, changes in the value
of the Portfolio's futures and options positions may not
prove to be perfectly or even highly correlated with
changes in the value of its portfolio securities.
Successful use of futures and related options is subject to
a investment adviser's ability to predict correctly
movements in the direction of the securities markets
generally, which ability may require different skills and
techniques than predicting changes in the prices of
individual securities.  Moreover, futures and options
contracts may only be closed out by entering into
offsetting transactions on the exchange where the position
was entered into (or a linked exchange), and as a result of
daily price fluctuation limits there can be no assurance
that an offsetting transaction could be entered into at an
advantageous price at any particular time.  Consequently,
the Portfolio may realize a loss on a futures contract or
option that is not offset by an increase in the value of
its portfolio securities that are being hedged or the
Portfolio may not be able to close a futures or options
position without incurring a loss in the event of adverse
price movements.

The Portfolio will incur brokerage costs whether or not its
hedging is successful and will be required to post and
maintain "margin" as a good-faith deposit against
performance of its obligations under futures contracts and
under options written by the Portfolio.  Futures and
options positions are marked to the market daily and the
Portfolio may be required to make subsequent "variation"
margin payments depending upon whether its positions
increase or decrease in value.  In this context margin
payments involve no borrowing on the part of the Portfolio.

When-Issued and Delayed Delivery Securities.  The Portfolio
may purchase securities, including U.S. government
securities, on a when-issued basis or may purchase or sell
securities for delayed delivery. In such transactions,
delivery of the securities occurs beyond the normal
settlement period, but no payment or delivery is made by
the Portfolio prior to the actual delivery or payment by
the other party to the transaction. The purchase of
securities on a when-issued or delayed delivery basis
involves the risk that the value of the securities
purchased will decline prior to the settlement date. The
sale of securities for delayed delivery involves the risk
that the prices available in the market on the delivery
date may be greater than those obtained in the sale
transaction. When-issued and delayed delivery transactions
will be fully collateralized by segregated liquid assets.

Repurchase Agreements.  The Portfolio may enter into
repurchase agreements.  Under the terms of a typical
repurchase agreement, the Portfolio would acquire an
underlying debt obligation for a relatively short period
(usually not more than one week) subject to an obligation
of the seller to repurchase, and the Portfolio to resell,
the obligation at an agreed upon price and time, thereby
determining the yield during the Portfolio's holding
period.  This arrangement results in a fixed rate of return
that is not subject to market fluctuations during the
Portfolio's holding period.  The Portfolio may enter into
repurchase agreements with respect to U.S. Government
Securities with member banks of the Federal Reserve System
and certain non-bank dealers approved by the board of
trustees.  Under each repurchase agreement, the selling
institution is required to maintain the value of the
securities subject to the repurchase agreement at not less
than their repurchase price.  The Portfolio's investment
advisers, acting under the supervision of the Board of
Trustees, review on an ongoing basis the value of the
collateral and the creditworthiness of those non-bank
dealers with whom the Portfolio enters into repurchase
agreements.  The Portfolio will not invest in a repurchase
agreement maturing in more than seven days if the
investment, together with illiquid securities held by the
Portfolio, exceeds 15% of the Portfolio's net assets.  In
entering into a repurchase agreement, the Portfolio bears a
risk of loss if the other party to the transaction defaults
on its obligations and the Portfolio is delayed or
prevented from exercising its rights to dispose of the
underlying securities, including the risk of a possible
decline in the value of the underlying securities during
the period in which the Portfolio seeks to assert its
rights to them, the risk of incurring expenses associated
with asserting those rights and the risk of losing all or a
part of the income from the agreement.

Borrowing.  Leverage increases investment risk as well as
investment opportunity.  If the income and investment gains
on securities purchased with borrowed money exceed the
interest paid on the borrowing, the net asset value of the
Portfolio's shares will rise faster than would otherwise be
the case.  On the other hand, if the income and investment
gains fail to cover the cost, including interest, of the
borrowings, or if there are losses, the net asset value of
the Portfolio's shares will decrease faster than otherwise
would be the case.

Lending Portfolio Securities.  Consistent with applicable
regulatory requirements, the Portfolio may lend portfolio
securities to brokers, dealers and other financial
organizations. The Portfolio will not lend securities to
Salomon Smith Barney unless the Portfolio has applied for
and received specific authority to do so from the
Securities and Exchange Commission ("SEC").  The
Portfolio's loan of securities will be collateralized by
cash, letters of credit or U.S. Government Securities. The
Portfolio will maintain the collateral in an amount at
least equal to the current market value of the loaned
securities. From time to time, the Portfolio may pay a part
of the interest earned from the investment of collateral
received for securities loaned to the borrower and/or a
third party that is unaffiliated with the Portfolio and is
acting as a "finder."  The Portfolio will comply with the
following conditions whenever it loans securities: (i) the
Portfolio must receive at least 100% cash collateral or
equivalent securities from the borrower; (ii) the borrower
must increase the collateral whenever the market value of
the securities loaned rises above the level of the
collateral; (iii) the Portfolio must be able to terminate
the loan at any time; (iv) the Portfolio must receive
reasonable interest on the loan, as well as any dividends,
interest or other distributions on the loaned securities
and any increase in market value; (v) the Portfolio may pay
only reasonable custodian fees in connection with the loan;
and (vi) voting rights on the loaned securities may pass to
the borrower except that, if a material event adversely
affecting the investment in the loaned securities occurs,
the Trust's Board of Trustees must terminate the loan and
regain the right to vote the securities.

Illiquid Securities. The Portfolio will not invest more
than 15% of its net assets in illiquid and other securities
that are not readily marketable.  Repurchase agreements
maturing in more than seven days will be included for
purposes of the foregoing limit.  Securities subject to
restrictions on resale under the Securities Act of 1933, as
amended (the "1933 Act") are considered illiquid unless
they are eligible for resale pursuant to Rule 144A or
another exemption from the registration requirements of the
1933 Act and are determined to be liquid by the investment
advisers.  The investment advisers determine the liquidity
of Rule 144A and other restricted securities according to
procedures adopted by the Board of Trustees. The Board of
Trustees monitors the investment advisers' application of
these guidelines and procedures. The inability of a
Portfolio to dispose of illiquid investments readily or at
reasonable prices could impair the Portfolio's ability to
raise cash for redemptions or other purposes.

Temporary Investments.  For temporary defensive purposes,
during periods when the investment advisers of the
Portfolio, in consultation with the manager, believe that
pursuing the Portfolio's basic investment strategy may be
inconsistent with the best interests of its shareholders,
the Portfolio may invest its assets in the following money
market instruments: U.S. Government Securities (including
those purchased in the form of custodial receipts),
repurchase agreements, certificates of deposit and bankers'
acceptances issued by U.S. banks or savings and loan
associations having assets of at least $500 million as of
the end of their most recent fiscal year and high quality
commercial paper.  The Portfolio's U.S. dollar-denominated
temporary investments are managed by SBFM.  The Portfolio
also may hold a portion of its assets in money market
instruments or cash in amounts designed to pay expenses, to
meet anticipated redemptions or pending investment in
accordance with its objectives and policies.  Any temporary
investments may be purchased on a when-issued basis.  The
Portfolio's investment in any other short-term debt
instruments would be subject to the Portfolio's investment
objectives and policies, and to approval by the Trust's
Board of Trustees.

Non-Diversified Classification.  The Portfolio is
classified as a non-diversified fund under the 1940 Act
which means the Portfolio is not limited in the proportion
of its assets it may invest in the obligations of a single
issuer.  As a result, the Portfolio may be subject to
greater volatility with respect to its securities holdings
than funds that are more broadly diversified.  The
Portfolio intends to conduct its operations, however, so as
to qualify as a "regulated investment company" for purposes
of the Code, which will relieve the Portfolio of any
liability for Federal income tax to the extent its earnings
are distributed to shareholders.  To qualify as a regulated
investment company, the Portfolio will, among other things,
limit its investments so that, at the close of each quarter
of the taxable year (a) not more than 25% of the market
value of the Portfolio's total assets will be invested in
the securities of a single issuer and (b) with respect to
50% of the market value of its total assets, not more than
5% of the market value of its total assets will be invested
in the securities of a single issuer and the Portfolio will
not own more than 10% of the outstanding voting securities
of a single issuer.

INVESTMENT RESTRICTIONS

The investment restrictions numbered 1 through 6 below have
been adopted by the Trust as fundamental policies of the
Portfolio. Under the 1940 Act, a fundamental policy may not
be changed without the vote of a majority of the
outstanding voting securities of the Portfolio, which is
defined in the 1940 Act as the lesser of (i) 67% or more of
the shares present at a Portfolio meeting, if the holders
of more than 50% of the outstanding shares of the Portfolio
are present or represented by proxy, or (ii) more than 50%
of the outstanding shares of the Portfolio. Investment
restrictions 7 through 11 may be changed by a vote of a
majority of the Board of Trustees at any time.

Under the investment restrictions adopted by the Portfolio:

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

	2.	The Portfolio will not borrow 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, in an amount not
exceeding 33 1/3% of the value of the Portfolio's total
assets (including the amount borrowed) valued at the lesser
of cost or market, less liabilities (not including the
amount borrowed) and (b) a Portfolio may, to the extent
consistent with its investment policies, enter into reverse
repurchase agreements, forward roll transactions and
similar investment strategies and techniques.

	3.	The Portfolio will not make loans. This
restriction does not apply to: (a) the purchase of debt
obligations in which a Portfolio may invest consistent with
its investment objectives and policies (including
participation interests in such obligations); (b)
repurchase agreements; and (c) loans of its portfolio
securities.

	4.	The Portfolio will not engage in the business of
underwriting securities issued by other persons, except to
the extent that a Portfolio may technically be deemed to be
an underwriter under the Securities Act of 1933, as
amended, in disposing of Portfolio securities.

	5.	The Portfolio will not purchase or sell real
estate, real estate mortgages, commodities or commodity
contracts, but this restriction shall not prevent a
Portfolio from (a) investing in and selling securities of
issuers engaged in the real estate business and securities
which are secured by real estate or interests therein; (b)
holding or selling real estate received in connection with
securities it holds; (c) trading in futures contracts and
options on futures contracts or (d) investing in or
purchasing real estate investment trust securities.

	6.	The Portfolio will not purchase any securities on
margin (except for such short-term credits as are necessary
for the clearance of purchases and sales of Portfolio
securities). For purposes of this restriction, the deposit
or payment by a 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.

	7.	The Portfolio will not invest in oil, gas or other
mineral leases or exploration or development programs.

	8.	The Portfolio will not make short sales of
securities, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities
sold short, except that the Portfolio may engage in short
sales on shares issued by exchange traded funds, and
provided that transactions in futures contracts and options
are not deemed to constitute selling securities short.

9. The Portfolio will not make investments for the
purpose of exercising control or management.

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

	11.	The Portfolio will not purchase any security
if, as a result, (unless the security is acquired pursuant
to a plan of reorganization or an offer of exchange) the
Portfolio would own more than 3% of any registered
investment company's outstanding voting stock; or more than
5% of the value of the Portfolio's total assets would be
invested in securities of any one registered investment
company or more than 10% of the Portfolio's total assets
would be invested in registered investment companies in
general.

The percentage limitations contained in the restrictions
listed above (other than with respect to Number 2 above)
apply at the time of purchase of securities.

PORTFOLIO TRANSACTIONS

Decisions to buy and sell securities for the Portfolio are
made by the investment advisers, subject to the overall
review of the manager and the Board of Trustees. Although
investment decisions for the Portfolio are made
independently from those of the other accounts managed by
the investment advisers investments of the type that the
Portfolio may make also may be made by those other
accounts. When the Portfolio and one or more other accounts
managed by the investment advisers are prepared to invest
in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in
a manner believed by the investment advisers to be
equitable to each. In some cases, this procedure may
adversely affect the price paid or received by the
Portfolio or the size of the position obtained or disposed
of by the Portfolio.

Transactions on U.S. stock exchanges and some foreign stock
exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are
negotiated, the cost of transactions may vary among
different brokers. On most foreign exchanges, commissions
are generally fixed. No stated commission is generally
applicable to securities traded in U.S. over-the-counter
markets, but the underwriters include an underwriting
commission or concession and the prices at which securities
are purchased from and sold to dealers include a dealer's
mark-up or mark-down. U.S. Government Securities generally
are purchased from underwriters or dealers, although
certain newly issued U.S. Government Securities may be
purchased directly from the U.S. Treasury or from the
issuing agency or instrumentality.

In selecting brokers or dealers to execute securities
transactions on behalf of the Portfolio, each investment
adviser seeks the best overall terms available. In
assessing the best overall terms available for any
transaction, the investment advisers will consider the
factors it deems relevant, including the breadth of the
market in the security, the price of the security, the
financial condition and execution capability of the broker
or dealer and the reasonableness of the commission, if any,
for the specific transaction and on a continuing basis.  In
addition, the Advisory Agreement between the Trust and the
investment advisers authorize the investment advisers, in
selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms
available, to consider the brokerage and research services
(as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the Portfolio
and/or other accounts over which the investment advisers or
their affiliates exercise investment discretion. The fees
under the Management Agreement and the Advisory Agreement,
respectively, are not reduced by reason of the Portfolio's
investment advisers receiving brokerage and research
services. The Board of Trustees of the Trust will
periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits
inuring to the Portfolio. Over-the-counter purchases and
sales by the Portfolio are transacted directly with
principal market makers except in those cases in which
better prices and executions may be obtained elsewhere.

To the extent consistent with applicable provisions of the
1940 Act and the rules and exemptions adopted by the SEC
under the 1940 Act, the Board of Trustees has determined
that transactions for the Portfolio may be executed through
Salomon Smith Barney and other affiliated broker-dealers
if, in the judgment of the investment advisers, the use of
an affiliated broker-dealer is likely to result in price
and execution at least as favorable as those of other
qualified broker-dealers, and if, in the transaction, the
affiliated broker-dealer charges the Portfolio a fair and
reasonable rate.

The Portfolio will not purchase any security, including
U.S. Government Securities or Obligations, during the
existence of any underwriting or selling group relating
thereto of which Salomon Smith Barney is a member, except
to the extent permitted by the SEC.

The Portfolio may use Salomon Smith Barney and other
affiliated broker-dealers as a commodities broker in
connection with entering into futures contracts and options
on futures contracts if, in the judgment of the investment
advisers, the use of an affiliated broker-dealer is likely
to result in price and execution at least as favorable as
those of other qualified broker-dealers, and if, in the
transaction, the affiliated broker-dealer charges the
Portfolio a fair and reasonable rate. Salomon Smith Barney
has agreed to charge the Portfolio commodity commissions at
rates comparable to those charged by Salomon Smith Barney
to its most favored clients for comparable trades in
comparable accounts.

The following table sets forth certain information
regarding the Portfolio's payment of brokerage commissions
for the fiscal period ended March 31, 2001:

Total
Brokerage
Commissions
Commissions
paid to
Salomon
Smith
Barney
% of Total
Brokerage
Commissions
paid to
Salomon Smith
Barney
% of Total
Dollar Amount of
Transactions
Involving
Commissions Paid
to Salomon Smith
Barney

$17,154
$117
0.68%
0.74%


PORTFOLIO TURNOVER

The Portfolio does not intend to seek profits through
short-term trading. Nevertheless, the Portfolio will not
consider portfolio turnover rate a limiting factor in
making investment decisions.

The Portfolio's turnover rate is calculated by dividing the
lesser of purchases or sales of its portfolio securities
for the year by the monthly average value of the portfolio
securities. Securities or options with remaining maturities
of one year or less on the date of acquisition are excluded
from the calculation. Because the Portfolio is authorized
to engage in transactions in options, it may experience
increased portfolio turnover under certain market
conditions as a result of its investment strategies. For
instance, the exercise of a substantial number of options
written by the Portfolio (because of appreciation of the
underlying security in the case of call options or
depreciation of the underlying security in the case of put
options) could result in a turnover rate in excess of 100%.
A portfolio turnover rate of 100% would occur if all of the
Portfolio's securities that are included in the computation
of turnover were replaced once during a period of one year.
For the fiscal period ended March 31, 2001, the portfolio
turnover was 55%.

Certain practices that may be employed by the Portfolio
could result in high portfolio turnover. For example,
portfolio securities may be sold in anticipation of a rise
in interest rates (market decline) or purchased in
anticipation of a decline in interest rates (market rise)
and later sold. In addition, a security may be sold and
another of comparable quality purchased at approximately
the same time to take advantage of what a investment
adviser believes to be a temporary disparity in the normal
yield relationship between the two securities. These yield
disparities may occur for reasons not directly related to
the investment quality of particular issues or the general
movement of interest rates, such as changes in the overall
demand for, or supply of, various types of securities.
Portfolio turnover rates may vary greatly from year to year
as well as within a particular year and may be affected by
cash requirements for redemptions of the Portfolio's shares
as well as by requirements that enable the Portfolio to
receive favorable tax treatment.

INVESTMENT MANAGEMENT AND OTHER SERVICES

Manager; Investment advisers; Administrator.  The manager
serves as investment manager to the Trust pursuant to an
investment management agreement ("Management Agreement").
The investment advisers serve as investment advisers to the
Portfolio pursuant to separate written agreements with the
manager ("Advisory Agreement").  SBFM serves as
administrator to the Portfolio pursuant to a written
agreement ("Administration Agreement").

The Portfolio bears its own expenses, which generally
include all costs not specifically borne by the manager,
the investment advisers, and SBFM.  Included among the
Portfolio's expenses are costs incurred in connection with
the Portfolio's organization; investment management and
administration fees; fees for necessary professional and
brokerage services; fees for any pricing service; the costs
of regulatory compliance; and costs associated with
maintaining the Trust's legal existence and shareholder
relations.  As administrator, SBFM generally oversees all
aspects of the Trust's administration and operations
including furnishing the Trust with statistical and
research data, clerical help, accounting, data processing,
bookkeeping, internal auditing and legal services and
certain other services required by the Trust, prepares
reports to the Trust's shareholders and prepares tax
returns, reports to and filings with the SEC and state blue
sky authorities. The Portfolio pays SBFM a fee for these
services that is computed daily and paid monthly at the
annual rate of 0.20% of the value of the Portfolio's
average daily net assets.

Under the Management Agreement, the Portfolio pays SBFM a
fee, calculated daily and paid monthly, based on the rates
applied to the value of each Portfolio's average daily net
assets. In addition, SBFM pays each investment adviser,
based on the rates applied to the Portfolio's average daily
net assets on a monthly basis. The management fee paid to
SBFM is 0.90%. The applicable investment advisory fee paid
by SBFM to each investment adviser and the names of the
investment adviser are indicated below:


Investment Adviser
Investment Advisory Fee
INVESCO Funds Group, Inc.
0.65%
Elijah Asset Management, LLC
0.55%


For the fiscal period ended March 31, 2001 the Portfolio
incurred investment management and administration fees as
follows:

2001
Management
Fee
Administrati
on Fee

$41,515

$9,795


	The manager has agreed to waive a portion of the fees
otherwise payable to it by the Portfolio so that the
manager would retain, as its annual management fee, no more
than 0.90% of the Portfolio's average daily net assets. For
the fiscal period ended March 31, 2001, SBFM waived $12,244
of its management fees.

SBFM, through its predecessors, was incorporated on March
12, 1968 under the laws of Delaware and is a registered
investment adviser.  SBFM renders investment advice to
investment companies that had aggregate assets under
management as of May 31, 2001 in excess of $129 billion.
The Consulting Group, a division of SBFM, has extensive
experience in providing investment adviser selection
services. The Consulting Group, through its predecessors,
was established in 1973 with the primary objective of
matching the investment needs of institutional and
individual clients with appropriate and qualified money
management organizations throughout the nation.  In 1989,
the Consulting Services Division was restructured and its
research and investment advisory evaluation services
functions were segregated and named the Consulting Group.
The Consulting Group's analysts, in the aggregate, have
many years of experience performing asset manager searches
for institutional and individual clients. They screen more
than 3,000 registered investment advisory firms and track
the performance of more than 700 firms on the manager's
comprehensive database. In addition, the manager conducts
over 300 on-site evaluations of advisors annually.

The manager and the investment advisers pay the salaries of
all officers and employees who are employed by them and the
Trust, and the manager maintains office facilities for the
Trust.  The manager and the investment advisers bear all
expenses in connection with the performance of their
respective services under the Management Agreement, the
Advisory Agreement, and the Administration Agreement.

As noted in the Prospectus, subject to the supervision and
direction of the manager and, ultimately, the Board of
Trustees, the investment advisers manage the securities
held by the Portfolio in accordance with the Portfolio's
stated investment objectives and policies, make investment
decisions for the Portfolio and place orders to purchase
and sell securities on behalf of the Portfolio.

Subject to the supervision and direction of the Board of
Trustees, the manager provides to the Trust investment
management evaluation services principally by performing
initial due diligence on prospective investment advisers
for the Portfolio and thereafter monitoring the investment
advisers' performance through quantitative and qualitative
analysis as well as periodic in-person, telephonic and
written consultations with investment advisers.  In
evaluating prospective investment advisers, the manager
considers, among other factors, each investment adviser's
level of expertise; relative performance and consistency of
performance over a minimum period of five years; level of
adherence to investment discipline or philosophy,
personnel, facilities, financial strength and quality of
service and client communications.  The manager has
responsibility for communicating performance expectations
and evaluations to the investment advisers and ultimately
recommending to the Board of Trustees whether a investment
adviser's contract should be renewed, modified or
terminated.  The manager provides written reports to the
Board of Trustees regarding the results of its evaluations
and monitoring functions.  The manager is also responsible
for conducting all operations of the Trust except those
operations contracted to a investment adviser, custodian,
transfer agent, sub-transfer agent or administrator.

Investors should be aware that the manager may be subject
to a conflict of interest when making decisions regarding
the retention and compensation of particular investment
advisers.  However, the manager's decisions, including the
identity of the investment adviser and the specific amount
of the manager's compensation to be paid to the investment
adviser, are subject to review and approval by a majority
of the Board of Trustees and separately by a majority of
the Trustees who are not affiliated with the manager or any
of its affiliates.

Investors should also be aware that through Smith Barney
Advisory Services, the Consulting Group serves as
investment adviser to each participant in such service and
receives a fee from each participant that does not vary
based on the portfolios of the Trust recommended for the
participant's investments.  At the same time, the
Consulting Group serves as the Trust's manager with
responsibility for identifying, retaining, supervising and
compensating each portfolio's investment adviser and
receives a fee from each portfolio of the Trust.  The
portion of such fee that is retained by the manager varies
based on the portfolio involved.  Consequently, the
Consulting Group, when making asset allocation
recommendations for participants in Smith Barney Advisory
Services, may be presented with a conflict of interest as
to the specific portfolios of the trust recommended for
investment.  The Consulting Group, however, is subject to
and intends to comply fully with standards of fiduciary
duty that require that it act solely in the best interest
of the participant when making investment recommendations.

The Trust has received an exemption (the "Exemption") from
certain provisions of the 1940 Act which would otherwise
require the manager to obtain formal shareholder approval
prior to engaging and entering into investment advisory
agreements with investment advisers.  The Exemption is
based on among other things:  (1) the manager will select,
monitor, evaluate and allocate assets to, the investment
advisers and ensure that the investment advisers comply
with a portfolio's investment objective, policies and
restrictions; (2) shares of a portfolio relying on the
Exemption will not be subject to any sales loads or
redemption fees or other charges for redeeming shares; (3)
the Trust will provide to shareholders certain information
about a new investment adviser and its investment advisory
contract within 90 days of the engagement of a new
investment adviser; (4) the Trust will disclose in its
prospectus the terms of the Exemption; and (5) the
Trustees, including a majority of the "non-interested"
Trustees, must approve each investment advisory contract in
the manner required under the 1940 Act.  Any changes to the
Management Agreement between the Trust and the manager
still require shareholder approval.

Code of Ethics.  Pursuant to Rule 17j-1 of the 1940 Act,
the Portfolio, its manager, investment advisers and
principal underwriter have adopted codes of ethics that
permit personnel to invest in securities for their own
accounts, including securities that may be purchased or
held by the Portfolio.  All personnel must place the
interests of clients first and avoid activities, interests
and relationships that might interfere with the duty to
make decisions in the best interests of the clients.  All
personal securities transactions by employees must adhere
to the requirements of the codes and must be conducted in
such a manner as to avoid any actual or potential conflict
of interest, the appearance of such a conflict, or the
abuse of an employee's position of trust and
responsibility.

A copy of each of these Codes of Ethics is on file with the
SEC.

Organization of the Trust.   The Trust is organized as an
unincorporated business trust under the laws of The
Commonwealth of Massachusetts pursuant to a Master Trust
Agreement dated April 12, 1991, as amended from time to
time (the "Trust Agreement").

In the interest of economy and convenience, certificates
representing shares in the Trust are not physically issued.
PFPC Trust Company, the Trust's custodian, maintains a
record of each shareholder's ownership of Trust shares.
Shares do not have cumulative voting rights, which means
that holders of more than 50% of the shares voting for the
election of Trustees can elect all Trustees. Shares are
transferable, but have no preemptive, conversion or
subscription rights. Shareholders generally vote on a
Trust-wide basis, except with respect to continuation of
the Advisory Agreement, in which case shareholders vote by
Portfolio.

Massachusetts law provides that shareholders could, under
certain circumstances, be held personally liable for the
obligations of the Trust. The Trust Agreement disclaims
shareholder liability for acts or obligations of the Trust,
however, and requires that notice of the disclaimer be
given in each agreement, obligation or instrument entered
into or executed by the Trust or a Trustee. The Trust
Agreement provides for indemnification from the Trust's
property for all losses and expenses of any shareholder
held personally liable for the obligations of the Trust.
Thus, the risk of a shareholder's incurring financial loss
on account of shareholder liability is limited to
circumstances in which the Trust would be unable to meet
its obligations, a possibility that the Trust's management
believes is remote. Upon payment of any liability incurred
by the Trust, the shareholder paying the liability will be
entitled to reimbursement from the general assets of the
Trust. The Trustees intend to conduct the operations of the
Trust in a manner so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities of
the Trust.

As of July 13, 2001, the following shareholders own of
record or beneficially 5% or more of shares of a Portfolio
of the Trust:


	Smith Barney Fund Management
	Seed Account
	Attn: Cindy Clark
	125 Broad Street 10th Floor
	New York, NY 10001
owned 1,250,000.000 shares (70.23%)

Auditors.  KPMG LLP, 757 Third Avenue, New York, New York
10017, has been selected to serve as independent auditors
of the Portfolio and to render an opinion on the
Portrfolio's financial statements for the fiscal year
ending March 31, 2002.

Distributor.  Salomon Smith Barney, 388 Greenwich Street,
New York, NY  10013 serves as the Portfolio's distributor
on a best efforts basis pursuant to a written agreement,
which was approved by the Trustees of the Trust.

Custodians.  PFPC Trust Company ("PFPC") and The Chase
Manhattan Bank ("Chase") serve as the custodians for the
Trust. The assets of the Trust are held under bank
custodianship in accordance with the 1940 Act. Under their
custody agreements with the Trust, PFPC and Chase are
authorized to establish separate accounts for foreign
securities owned by the Portfolio to be held with foreign
branches of U.S. banks as well as certain foreign banks and
securities depositories as sub-custodians of assets owned
by the Portfolio. For its custody services, PFPC and Chase
receive monthly fees charged to the Portfolio based upon
the month-end, aggregate net asset value of the Portfolio
plus certain charges for securities transactions. PFPC and
Chase are also reimbursed by the Portfolio for out-of-
pocket expenses including the costs of any foreign and
domestic sub-custodians.

Transfer Agent.  Citi Fiduciary Trust Company, located at
388 Greenwich Street, New York, New York 10013, serves as
the Portfolio's transfer and dividend-paying agent.  Under
the transfer agency agreement, the transfer agent maintains
the shareholder account records for the Portfolio, handles
certain communications between shareholders and the
Portfolio, distributes dividends and distributions payable
by the Portfolio and produces statements with respect to
account activity for the Portfolio and its shareholders.
For these services, the transfer agent receives fees from
the Portfolio computed on the basis of the number of
shareholder accounts that the transfer agent maintains for
the Portfolio during the month and is reimbursed for out-
of-pocket expenses.

Sub-Transfer Agent.  PFPC Global Fund Services, located at
P.O. Box 9699, Providence, RI 02940-9699, serves as the
Portfolio's sub-transfer agent.  Under the transfer agency
agreement, the sub-transfer agent maintains the shareholder
account records for the Portfolio, handles certain
communications between shareholders and the Portfolio and
distributes dividends and distributions payable by the
Portfolio.  For these services, the sub-transfer agent
receives a monthly fee computed on the basis of the number
of shareholder accounts it maintains for the Portfolio
during the month, and is reimbursed for out-of-pocket
expenses.

PURCHASE OF SHARES

Purchases of shares of the Portfolio through an Advisory
Service must be made through a brokerage account maintained
with Salomon Smith Barney.  Payment for Portfolio shares
must be made by check directly to Salomon Smith Barney or
to a broker that clears securities transactions through
Salomon Smith Barney.  No brokerage account or inactivity
fee is charged in connection with a brokerage account
through which an investor purchases shares of a Portfolio.

Shares of the Portfolio are available exclusively to
participants in Advisory Services and are generally
designed to relieve investors of the burden of devising an
asset allocation strategy to meet their individual needs as
well as selecting individual investments within each asset
category among the myriad choices available. Advisory
Services generally provide investment advice in connection
with investments among the Trust's portfolios by
identifying the investor's risk tolerances and investment
objectives through evaluation of an investment
questionnaire; identifying and recommending in writing an
appropriate allocation of assets among the Portfolios that
conform to those tolerances and objectives in a written
recommendation; and providing on a periodic basis, a
written monitoring report to the investor containing an
analysis and evaluation of an investor's account and
recommending any appropriate changes in the allocation of
assets among the Portfolios.  Usually under an Advisory
Service, all investment decisions ultimately rest with the
investor and investment discretion is not given to the
investment adviser.

The TRAK(r) Personalized Investment Advisory Service ("TRAK")
sponsored by Salomon Smith Barney is one such advisory
service.  Under the TRAK program, the Consulting Group, in
its capacity as investment adviser to participants in TRAK,
generally directly provides to investors asset allocation
recommendations and related services with respect to the
Portfolio based on an evaluation of an investor's
investment objective and risk tolerances.  Shares of the
Portfolio are offered for purchase and redemption at its
respective net asset value next determined, without
imposition of any initial or contingent deferred sales
charge. If the Consulting Group is paid directly by the
investors purchasing Portfolio shares based on the
recommendation of investment advisers other than the
Consulting Group, or who contract with the Consulting Group
for services other than those described above, such
investors pay, in lieu of TRAK charges, different fees for
different levels of services as agreed upon with their
investment advisers.

REDEMPTION OF SHARES

Detailed information on how to redeem shares of the
Portfolio is included in the Prospectus. The right of
redemption of shares of the Portfolio may be suspended or
the date of payment postponed (i) for any periods during
which the New York Stock Exchange, Inc. (the "NYSE") is
closed (other than for customary weekend and holiday
closings), (ii) when trading in the markets the Portfolio
normally utilizes is restricted, or an emergency, as
defined by the rules and regulations of the SEC, exists
making disposal of the Portfolio's investments or
determination of its net asset value not reasonably
practicable or (iii) for such other periods as the SEC by
order may permit for the protection of the Portfolio's
shareholders.

REDEMPTIONS IN KIND

If the Board of Trustees determines that it would be
detrimental to the best interests of the Portfolio's
shareholders to make a redemption payment wholly in cash,
the Portfolio may pay, in accordance with rules adopted by
the SEC, any portion of a redemption in excess of the
lesser of $250,000 or 1% of the Portfolio's net assets by a
distribution in kind of readily marketable portfolio
securities in lieu of cash. Redemptions failing to meet
this threshold must be made in cash. Shareholders receiving
distributions in kind of portfolio securities may incur
brokerage commissions when subsequently disposing of those
securities.

NET ASSET VALUE

The Portfolio's net asset value per share is calculated by
SBFM on each day, Monday through Friday, except days on
which the NYSE is closed.  The NYSE is currently scheduled
to be closed on New Year's Day, Martin Luther King Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas, and on the
preceding Friday when one of those holidays falls on a
Saturday or on the subsequent Monday when one of those
holidays falls on a Sunday.  On those days, securities held
by the Portfolio may nevertheless be actively traded and
the value of the Portfolio's shares could be significantly
affected.

Securities listed on a national securities exchange will be
valued on the basis of the last sale on the date on which
the valuation is made or, in the absence of sales, at the
mean between the closing bid and asked prices.  Over-the-
counter securities will be valued at the mean between the
closing bid and asked prices on each day, or, if market
quotations for those securities are not readily available,
at fair value, as determined in good faith by the
Portfolio's Board of Trustees. Short-term obligations with
maturities of 60 days or less are valued at amortized cost,
which constitutes fair value as determined by the
Portfolio's Board of Trustees.  Amortized cost involves
valuing an instrument at its original cost to the Portfolio
and thereafter assuming a constant amortization to maturity
of any discount or premium, regardless of the effect of
fluctuating interest rates on the market value of the
instrument.  All other securities and other assets of the
Portfolio will be valued at fair value as determined in
good faith by the Portfolio's Board of Trustees.

DETERMINATION OF PERFORMANCE

Average Annual Total Return

From time to time, the Trust may advertise the Portfolio's
"average annual total return" over various periods of time.
This total return figure shows the average percentage
change in value of an investment in the Portfolio from the
beginning date of the measuring period to the ending date
of the measuring period and is reduced by the maximum
Salomon Smith Barney Advisory Service fee during the
measuring period.  The figure reflects changes in the price
of the Portfolio's shares and assumes that any income,
dividends and/or capital gains distributions made by the
Portfolio during the period are reinvested in shares of the
Portfolio.  Figures will be given for recent one-, five-
and ten-year periods (if applicable) and may be given for
other periods as well (such as from commencement of the
Portfolio's operations or on a year-by-year basis).
Aggregate total returns also may be shown by means of
schedules, charts or graphs, and may indicate subtotals of
the various components of total return (that is, the change
in value of initial investment, income dividends and
capital gains distributions).

In reports or other communications to shareholders or in
advertising material, the Portfolio may quote total return
figures that do not reflect Salomon Smith Barney Advisory
Service fees (provided that these figures are accompanied
by standardized total return figures calculated as
described above), as well as compare its performance with
that of other mutual funds as listed in the rankings
prepared by Lipper Analytical Services, Inc. or similar
independent services that monitor the performance of mutual
funds or with other appropriate indices of investment
securities.  The performance information also may include
evaluations of the Portfolio published by nationally
recognized ranking services and by financial publications
that are nationally recognized, such as Barron's, Business
Week, CDA Investment Technologies, Inc., Changing Times,
Forbes, Fortune, Institutional Investor, Investor's Daily,
Kiplinger's Personal Finance Magazine, Money, Morningstar
Mutual Fund Values, The New York Times, USA Today and The
Wall Street Journal.

The Portfolio's average annual total return figures are
computed according to a formula prescribed by the SEC,
expressed as follows:

P(1+T)n = ERV

Where:
	P=	a hypothetical initial payment of $1,000
T=	average annual total return, including the
effect of the maximum annual fee for
participation in TRAK.
	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 a
1-, 5- or 10-year period (or fractional
portion thereof), assuming reinvestment of
all dividends and distributions and the
effect of the maximum annual fee for
participation in TRAK.

The ERV assumes complete redemption of the hypothetical
investment at the end of the measuring period.  The
Portfolio's net investment income changes in response to
fluctuations in interest rates and the expenses of the
Portfolio. Consequently, the given performance quotations
should not be considered as representative of the
Portfolio's performance for any specified period in the
future.

The Portfolio's performance will vary from time to time
depending upon market conditions, the composition of its
portfolio and its operating expenses. Consequently, any
given performance quotation should not be considered
representative of the Portfolio's performance for any
specified period in the future. In addition, because
performance will fluctuate, it may not provide a basis for
comparing an investment in the Portfolio with certain bank
deposits or other investments that pay a fixed yield for a
stated period of time. Investors comparing the Portfolio's
performance with that of other mutual funds should give
consideration to the quality and maturity of the respective
investment companies' portfolio securities.

Comparative performance information may be used from time
to time in advertising the Portfolio's shares, including
data from Lipper Analytical Services, Inc., Standard &
Poor's 500 Composite Stock Price Index and other industry
publications.

The Portfolio's average annual total return without the
effect of the maximum annual fee for participation in TRAK
and with the effect of fee waivers were as follows:

From November 28, 2000 through March 31,
2001
(35.00)%


The Portfolio's average annual total return with the effect
of the maximum annual fee for participation in TRAK and
with the effect of fee waivers were as follows:

From November 28, 2000 through March 31,
2001
(35.05)%



Yield and Equivalent Taxable Yield

From time to time, the Trust may also quote the Portfolio's
yield in advertisements or in reports and other
communications to shareholders.  The 30-day yield figure is
calculated according to a formula prescribed by the SEC,
expressed as follows:


YIELD = 2[(a - b + 1)6 - 1]
cd
Where:
	a = dividends and interest earned during the period.

	b= expenses accrued for the period (net of
reimbursement), including a ratable portion of the maximum
annual fee for participation in TRAK.

	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 that were
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.

The Portfolio's equivalent taxable 30-day yield is computed
by dividing the portion of the Portfolio's 30-day yield
that is tax exempt by one minus a stated income tax rate
and adding the product to any portion of the Portfolio's
yield that is not tax exempt.

Investors should recognize that in periods of declining
interest rates, the Portfolio's yield will tend to be
somewhat higher than prevailing market rates, and in
periods of rising interest rates 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
instruments producing lower yields than the balance of its
portfolio of securities, thereby reducing the current yield
of the Portfolio. In periods of rising interest rates the
opposite can be expected to occur.

TAXES

The following is a summary of certain federal income tax
considerations that may affect the Portfolio and its
shareholders.  In addition to the considerations described
below, there may be other federal, state, local or foreign
tax applications to consider.  The summary does not address
all of the potential federal income tax consequences that
may be applicable to the Portfolio or to all categories of
investors, some of which may be subject to special tax
rules.  The summary is not intended as a substitute for
individual tax advice and investors are urged to consult
their own tax advisors as to the tax consequences of an
investment in the Portfolio. The summary is based on the
laws in effect on the date of this SAI, which are subject
to change.

The Portfolio intends to qualify in each year as a separate
"regulated investment company" under the Code, by complying
with certain requirements regarding the sources and
distribution of its income and the diversification of its
assets.  Provided that the Portfolio (i) is a regulated
investment company and (ii) distributes to its shareholders
at least 90% of its taxable net investment income
(including, for this purpose, any excess of its net short-
term capital gain over its net long-term capital loss) for
a taxable year and 90% of its tax-exempt interest income
(reduced by certain expenses for that year), it will not be
liable for federal income taxes to the extent its taxable
net investment income and its net realized long-term and
short-term capital gains, if any, are distributed to its
shareholders in compliance with the Code's timing and other
requirements.

If, in any taxable year, the Portfolio fails to qualify as
a regulated investment company under the Code or fails to
meet the distribution requirement, it would be taxed in the
same manner as an ordinary corporation and distributions to
its shareholders would not be deductible by the Portfolio
in computing its taxable income.  In addition, in the event
of a failure to qualify, the Portfolio's distributions, to
the extent derived from the Portfolio's current or
accumulated earnings and profits, would constitute
dividends (eligible for the corporate dividends-received
deduction) which are taxable to shareholders as ordinary
income, even though those distributions would otherwise (at
least in part) be treated as long-term capital gains.  If
the Portfolio fails to qualify as a regulated investment
company in any year, it must pay out its earnings and
profits accumulated in that year in order to qualify again
as a regulated investment company. In addition, if the
Portfolio failed to qualify as a regulated investment
company for a period greater than one taxable year, the
Portfolio may be required to recognize any net built-in
gains with respect to certain of its assets (the excess of
the aggregate gains, including items of income, over
aggregate losses that would have been realized if it had
been liquidated) in order to qualify as a regulated
investment company in a subsequent year.

In order to avoid the application of a 4% nondeductible
excise tax on certain undistributed amounts of ordinary
income and capital gains, the Portfolio may make an
additional distribution shortly before or shortly after
December 31 in each year of any undistributed ordinary
income or capital gains.  The Portfolio generally will seek
to pay any additional dividends and distributions necessary
to avoid the application of this tax.

As described above, the Portfolio may invest in certain
types of warrants, foreign currencies, forward contracts,
options and futures contracts. The Portfolio anticipates
that these investment activities will not prevent it from
qualifying as a regulated investment company.

The Portfolio's transactions in foreign currencies, forward
contracts, options and futures contracts (including options
and futures contracts on foreign currencies) will be
subject to special provisions of the Code that, among other
things, may affect the character of gains and losses
realized by the Portfolio (i.e., may affect whether gains
or losses are ordinary or capital and, if capital, the
extent to which they are long-term or short-term),
accelerate recognition of income to the Portfolio and defer
Portfolio losses. These rules could therefore affect the
character, amount and timing of distributions to
shareholders. These provisions also (i) will require the
Portfolio to mark-to-market certain types of positions in
its portfolio (i.e., treat them as if they were closed
out), and (ii) may cause the Portfolio to recognize income
without receiving cash with which to pay dividends or make
distributions in amounts necessary to satisfy the
distribution requirements for avoiding income and excise
taxes that are referred to above.  The Portfolio will
monitor its transactions, will make the appropriate tax
elections, if any, and will make the appropriate entries in
its books and records when it acquires any foreign
currency, forward contract, option, futures contract or
hedged investment in order to mitigate the effect of these
rules and seek to prevent disqualification of the Portfolio
as a regulated investment company.

As a general rule, the Portfolio's gain or loss on a sale
or exchange of an investment will be a long-term capital
gain or loss if the Portfolio has held the investment for
more than one year and will be a short-term capital gain or
loss if it has held the investment for one year or less.
Gains or losses on the sale of debt securities denominated
in a foreign currency may be recharacterized as ordinary
income or losses, as described below.

The Portfolio expects to realize a significant amount of
net long-term capital gains that will be distributed as
described in the Prospectus. Distributions of net realized
long-term capital gains ("capital gain dividends") will be
taxable to shareholders as long-term capital gains,
regardless of how long a shareholder has held Portfolio
shares, and will be designated as capital gain dividends in
a written notice mailed to the shareholders after the close
of the Portfolio's prior taxable year. If a shareholder
receives a capital gain dividend with respect to any share
held for six months or less, then any loss on the sale or
exchange of the share, to the extent of the capital gain
dividend, will be treated as a long-term capital loss.

Dividends or other income (including, in some cases,
capital gains) received by the Portfolio from investments
in foreign securities may be subject to withholding and
other taxes imposed by such countries.  Tax conventions
between certain countries and the United States may reduce
or eliminate such taxes in some cases.  The Portfolio will
not be eligible to elect to treat any foreign taxes paid by
it as paid by its shareholders, who therefore will not be
entitled to deductions or credits for such taxes on their
own tax returns.

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

Under Section 988 of the Code, gains or losses attributable
to fluctuations in exchange rates between the time the
Portfolio accrues income or receivables or expenses or
other liabilities denominated in a foreign currency and the
time the Portfolio actually collects such income or pays
such liabilities are generally treated as ordinary income
or ordinary loss.  Similarly, gains or losses on foreign
currency, foreign currency forward contracts, certain
foreign currency options or futures contracts and the
disposition of debt securities denominated in foreign
currency, to the extent attributable to fluctuations in
exchange rates between the acquisition and disposition
dates, are also treated as ordinary income or loss.

The Portfolio is permitted to carry forward any unused
capital losses to be utilized to offset its capital gains
realized during the eight-year period following the year in
which the losses arose, which will reduce the net realized
capital gains (if any) required to be distributed to
shareholders for those years.


Dividends and Distributions

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

As a general rule, a shareholder's gain or loss on a
redemption or other disposition of Portfolio shares that is
treated as a sale under the Code will be a long-term
capital gain or loss if the shareholder has held his or her
Portfolio shares for more than one year and will be a
short-term capital gain or loss if he or she has held his
or her Portfolio shares for one year or less.

The Portfolio may realize net long-term capital gains.
Distributions of any excess of net long-term capital gain
over net short-term capital loss ("capital gain dividends")
will be taxable to shareholders as long-term capital gains,
regardless of whether received in cash or reinvested in
additional shares and how long a shareholder has held
Portfolio shares. If a shareholder receives a capital gain
dividend with respect to any share and redeems, sells or
otherwise disposes of the share before it has been held for
more than six months, then any loss, to the extent of the
capital gain dividend, will be treated as a long-term
capital loss. Additionally, any loss realized on a
redemption, exchange or other disposition of Portfolio
shares generally will be disallowed to the extent the
shares disposed of are replaced, including replacement
through the reinvesting of dividends and capital gains
distributions in the Portfolio, within a 61-day period
beginning 30 days before and ending 30 days after the
disposition of the shares.

Dividends paid from net investment income and distributions
of any excess of net short-term capital gain over net long-
term capital loss are taxable to shareholders as ordinary
income, regardless of how long shareholders have held their
Portfolio shares and whether such dividends and
distributions are received in cash or reinvested in
additional Portfolio shares.  Dividends paid by the
Portfolio that are declared from net investment income and
are attributable to qualifying dividends received by the
Portfolio from domestic corporations may qualify for the
federal dividends-received deduction for corporations.

Each shareholder will receive after the close of the
calendar year an annual statement as to the federal income
tax status of his or her dividends and distributions for
the prior calendar year. Each shareholder will also
receive, if appropriate, various written notices after the
close of the Portfolio's prior taxable year as to the
federal income tax status of the Portfolio during the
Portfolio's prior taxable year. Shareholders should consult
their tax advisors as to any state and local taxes that may
apply to these dividends and distributions and the possible
availability of an exemption from such state or local taxes
for dividends paid by the Portfolio attributable to
interest the Portfolio earns from U.S. Government
obligations.

If the Portfolio is the holder of record of any stock on
the record date for any dividends payable with respect to
the stock, these dividends will be included in the
Portfolio's gross income as of the later of (i) the date
the stock became ex-dividend with respect to the dividends
(i.e., the date on which a buyer of the stock would not be
entitled to receive the declared, but unpaid, dividends) or
(ii) the date the Portfolio acquired the stock.
Accordingly, in order to satisfy its income distribution
requirements, the Portfolio may be required to pay
dividends based on anticipated earnings, and shareholders
may receive dividends in an earlier year than would
otherwise be the case.

Investors considering buying shares of the Portfolio on or
just prior to the record date for a taxable dividend or
capital gain distribution should be aware that even if the
net asset value of the Portfolio's shares is reduced below
the investor's cost as a result of the distribution, the
amount of the forthcoming dividend or distribution payment
will be a taxable dividend or distribution payment even
though it may represent a return of invested capital.

If a shareholder fails to furnish a correct taxpayer
identification number, fails to report fully dividend or
interest income, or fails to certify that he or she has
provided a correct taxpayer identification number and that
he or she is not subject to "backup withholding," then the
shareholder may be subject to a 31% "backup withholding"
tax with respect to (i) dividends and distributions and
(ii) the proceeds of any redemptions of Portfolio shares.
An individual's taxpayer identification number is his or
her social security number. The 31% "backup withholding"
tax is not an additional tax and may be credited against a
taxpayer's federal income tax liability. Distributions to
nonresident aliens and foreign entities may be subject to
different tax rules, including other possible withholding
taxes.

The foregoing is only a summary of certain tax
considerations generally affecting the Portfolio and its
shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult
their tax advisors with specific reference to their own tax
situations, including their state and local tax
liabilities.

FINANCIAL STATEMENTS

The Portfolio's Annual Report for the fiscal year ended
March 31, 2001 is incorporated herein by reference in its
entirety.  The Annual Report was filed on June 4, 2001,
Accession Number 0000950130-01-502130.






APPENDIX - RATINGS OF DEBT OBLIGATIONS

BOND AND NOTE RATINGS

Moody's Investors Services, 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 therefore 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.

Con (..)- Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition
are rated conditionally.  These are bonds secured by (a)
earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals
which begin when facilities are completed, or (d) payments
to which some other limiting condition attaches.
Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of
condition.

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 Ratings Group

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

AA - Debt rated "AA" has a very strong capacity to pay
interest and repay principal and differs from the 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" and
"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 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.


COMMERCIAL PAPER RATINGS

Moody's Investors Service, Inc.

Issuers rated "Prime-l" (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 charges 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 Ratings Group

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 noted 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.







1

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STATEMENT OF ADDITIONAL INFORMATION

CONSULTING GROUP CAPITAL MARKETS FUNDS
MULTI-STRATEGY MARKET NEUTRAL INVESTMENTS
July 30, 2001

222 Delaware Avenue - Wilmington, Delaware 19801 -
(212) 816-8725

This Statement of Additional Information ("SAI") supplements
the information contained in the current prospectus of
Multi-Strategy Market Neutral Investments, a separate series
of the Consulting Group Capital Markets Funds (the "Trust"),
dated July 30, 2001, and should be read in conjunction with
the prospectus. The prospectus may be obtained by contacting
your Financial Consultant or by writing or calling the Trust
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.

CONTENTS


Trustees and Executive Officers
of the Trust
2
Investment Objectives, Management
Policies and Risk Factors
4
Investment Restrictions
18
Investment Management and Other
Services
21
Purchase of Shares
25
Redemption of Shares
25
Redemptions in Kind
26
Net Asset Value
26
Determination of Performance
27
Taxes
28
Distributor
32
Custodian, Transfer Agent and
Sub-Transfer Agent
32
Financial Statements
33



TRUSTEES AND EXECUTIVE OFFICERS OF THE TRUST

The Trustees and executive officers of the Trust, together
with information as to their principal business occupations,
are set forth below. The executive officers of the Trust are
employees of organizations that provide services to the
Portfolio. Each Trustee who is an "interested person" of the
Trust, as defined in the 1940 Act, is indicated by an
asterisk. As of the date of this SAI and the prospectus, the
Trustees and officers of the Trust as a group did not own
any of the outstanding shares of the Portfolio.

Walter E. Auch, Trustee (Age 80). Consultant to
companies in the financial services industry; Director of
Brinson Partners; Nicholas-Applegate (each a registered
investment adviser); Legend Properties, a real estate
management company; Banyan Realty Trust; and Banyan Land
Fund II. Director or trustee of 2 investment companies
associated with Citigroup Inc. ("Citigroup"). His address is
6001 N. 62nd Place, Paradise Valley, Arizona 85253.

Martin Brody, Trustee (Age 79).  Consultant, HMK
Associates; Retired Vice Chairman of the Board of Restaurant
Associates Industries, Inc. Director or trustee of 21
investment companies associated with Citigroup. His address
is c/o HMK Associates, 30 Columbia Turnpike, Florham Park,
New Jersey 07932.

H. John Ellis, Jr., Trustee (Age 74).  Retired.
Director or trustee of 2 investment companies associated
with Citigroup.His address is 858 East Crystal Downs Drive,
Frankfort, Michigan 49635.
Stephen E. Kaufman, Trustee (Age 69).  Attorney.
Director or trustee of 13 investment companies associated
with Citigroup. His address is 277 Park Avenue, New York,
New York 10172.
Armon E. Kamesar, Trustee (Age 74).  Chairman of
TEC, an international organization of Chief Executive
Officers; Trustee, U.S. Bankruptcy Court. Director or
trustee of 2 investment companies associated with
Citigroup.  His address is 7328 Country Club Drive, La
Jolla, California 92037.
*Heath B. McLendon, Chairman of the Board (Age 68).
Managing Director of Salomon Smith Barney, and President of
SBFM and TIA.  Mr. McLendon also serves as Chairman or Co-
Chairman of 78 investment companies associated with
Citigroup.  His address is 7 World Trade Center, New York,
New York 10048.

	Lewis E. Daidone, Senior Vice President and Treasurer
(Age 43).  Managing Director of Salomon Smith Barney;
Director and Senior Vice President of SBFM and TIA.  Mr.
Daidone also serves as Senior Vice President or Executive
Vice President and Treasurer of 83 investment companies
associated with Citigroup.  His address is 125 Broad Street,
New York, New York 10004.

	Frank L. Campanale, Investment Officer (Age 48).
President and Chief Executive Officer of Salomon Smith
Barney's Consulting Group. Prior to 1996, National Sales
Director for Consulting Group. His address is 222 Delaware
Avenue, Wilmington, Delaware 19801.

	Paul Hatch, Investment Officer (Age 44) Chief
Operating Officer of Salomon Smith Barney's Consulting Group
and Deputy Director of National Sales for Consulting Group.
Prior to 1997, a Branch Manager of a branch office of
Salomon Smith Barney Inc.  His address is 388 Greenwich
Street, New York, New York 10013.

	LeRoy T. Pease, CFA, Investment Officer (Age 42).
First Vice President of Salomon Smith Barney Consulting
Group. Prior to 1996, Chief Investment Officer of EMT Group
and manager for Investment Strategy for Bell Atlantic,
Philadelphia, Pennsylvania. His address is 222 Delaware
Avenue, Wilmington, Delaware 19801.

	Christina T. Sydor, Secretary (Age 51).  Managing
Director of Salomon Smith Barney; General Counsel and
Secretary of SBFM and TIA.  Ms. Sydor serves as Secretary of
61 investment companies associated with Citigroup.  Her
address is 7 World Trade Center, New York New York 10048.

	Irving David, Controller (Age 40).  Director of
Salomon Smith Barney and Controller or Assitant Treasurer of
43 investment companies associated with Citigroup. His
address is 125 Broad Street, New York New York 10004.
Stephen M. Hagan, Vice President (Age 33).
_______________________________. His address is 222 Delaware
Avenue, Wilmington, Delaware, 19801.

As of July 13, 2001, the Trustees and officers as a group
owned less than 1% of the outstanding common stock of the
Trust.

Remuneration

No director, officer or employee of Salomon Smith Barney,
SBFM or any of their affiliates will receive any
compensation from the Trust for serving as an officer or
Trustee of the Trust. The Trust pays each Trustee who is not
a director, officer or employee of Salomon Smith Barney, the
manager, any investment adviser, SBFM or any of their
affiliates a fee of $32,000 per annum plus $1,000 per
meeting attended. By the end of the calendar year in which a
Trustee attains the age of 80, Trustees are required to
change to emeritus status. The Trust reimburses the Trustees
for travel and out-of-pocket expenses to attend meetings of
the board.  For the calendar year ended December 31, 2000,
such fees and expenses totaled $10,355.


For the fiscal year ended March 31, 2001, the Trustees of
the Trust were paid the following compensation:






Name





Aggregate
Compensation

Pension or
Retirement
Benefits
Accrued as
Expense of
The Trust



Total
Compensation
From Fund
Complex*


Total
Number
of Funds
Served In
Complex
Heath B. McLendon**
None
None
None
78
Walter Auch
$466
None
$52,800
  2
Martin Brody
  297
None
132,950
21
H. John Ellis
  466
None
55,100
  2
Armon E. Kamesar
  472
None
55,100
  2
Stephen E. Kaufman
  466
None
114,400
13
*As of December 31, 2000
** "interested" Trustee


INVESTMENT OBJECTIVES, MANAGEMENT POLICIES AND RISK FACTORS

The prospectus discusses the investment objective of Multi-
Strategy Market Neutral Investments (the "Portfolio") and
the principal policies employed to achieve that objective.
This SAI sets out supplemental information concerning the
types of securities and other instruments in which the
Portfolio may invest, the investment policies and strategies
that the Portfolio may utilize and certain risks associated
with those investments, policies and strategies.

Short Sales.  The Portfolio will seek to neutralize the
exposure of its long equity positions to general equity
market risk and to realize additional gains through the use
of short sales (selling a security it does not own) in
anticipation of a decline in the value of the security sold
short relative to the long positions held by the Portfolio.
In pursuing the merger arbitrage strategy, the Portfolio may
use short sales as a hedge against any stock considered to
be received in the merger transaction.  To complete such a
short-sale transaction, the Portfolio must borrow the
security to make delivery to the buyer. The Portfolio then
is obligated to replace the security borrowed by purchasing
it at the market price at the time of replacement. The price
at such time may be more or less than the price at which the
security was sold by the Portfolio. Until the security is
replaced, the Portfolio is required to repay the lender any
dividends or interest that accrue during the period of the
loan. To borrow the security, the Portfolio also may be
required to pay a premium, which would increase the cost of
the security sold. The net proceeds of the short sale will
be retained by the broker (or by the Portfolio's custodian
in a special custody account) until the short position is
closed out, to the extent necessary to meet margin
requirements. The Portfolio also will incur transaction
costs in effecting short sales. The amount of any gain will
be decreased, and the amount of any loss increased, by the
amount of the premium, dividends, interest or expenses the
Portfolio may be required to pay in connection with a short
sale. An increase in the value of a security sold short by
the Portfolio over the price at which it was sold short will
result in a loss to the Portfolio, and there can be no
assurance that the Portfolio will be able to close out the
position at any particular time or at an acceptable price.
The lender of the security may demand the return of the
security at any time.

EQUITY SECURITIES

Common Stocks.  The 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.

Convertible Securities.  The Portfolio invests in
convertible securities, including debt obligations and
preferred stock of the issuer convertible at a stated
exchange rate into common stock of the issuer.  Convertible
securities generally offer lower interest or dividends
yields than non-convertible securities of similar quality.
As with all fixed income securities, the market value of
convertible securities tends to decline as interest rates
increase and, conversely, to increase as interest rates
decline.  However, when the market price of the common stock
underlying a convertible security exceeds the conversion
price, the convertible security tends to reflect the market
price of the underlying common stock. When the market price
of the common stock is below the conversion price,
convertible securities tend to trade like fixed income
securities.  If the market price of the common stock is
higher than the conversion price, convertible securities
tend to trade like the common stock.  Convertible securities
rank senior to common stocks in an issuer's capital
structure and consequently may be of higher quality and
entail less risk than the issuer's common stock.

The Portfolio may also purchase synthetic convertible
securities manufactured by other parties, including
convertible structured notes.  Convertible structured notes
are fixed income debentures linked to equity, and are
typically issued by investment banks.  Convertible
structured notes have the attributes of a convertible
security, however, the investment bank that issued the
convertible note assumes the credit risk associated with the
investment, rather than the issuer of the underlying common
stock into which the note is convertible.

Preferred Shares.  The Portfolio may invest in preferred
shares.  Preferred shares are equity securities, but they
have many characteristics of fixed income securities, such
as a fixed dividend payment rate and/or a liquidity
preference over the issuer's common shares. However, because
preferred shares are equity securities, they may be more
susceptible to risks traditionally associated with equity
investments than the Portfolio's fixed income securities.

Warrants.  The Portfolio may purchase warrants.  Warrants
acquired by the Portfolio entitle it to buy common stock
from the issuer at a specified price and time.  Warrants are
subject to the same market risk as stocks, but may be more
volatile in price.  The 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.

Real Estate Investment Trusts ("REITs") and Associated Risk
Factors.  REITs are pooled investment vehicles which invest
primarily in income producing real estate or real estate
related loans or interests. REITs are generally classified
as equity REITs, mortgage REITs or a combination of equity
and mortgage REITs. Equity REITs invest the majority of
their assets directly in real property and derive income
primarily from the collection of rents. Equity REITs can
also realize capital gains by selling properties that have
appreciated in value. Mortgage REITs invest the majority of
their assets in real estate mortgages and derive income from
the collection of interest payments. REITs are not taxed on
income distributed to shareholders provided they comply with
the applicable requirements of the Internal Revenue Code of
1986, as amended (the "Code"). Debt securities issued by
REITs, for the most part, are general and unsecured
obligations and are subject to risks associated with REITs.

Investing in REITs involves certain unique risks in addition
to those risks associated with investing in the real estate
industry in general. An equity REIT may be affected by
changes in the value of the underlying properties owned by
the REIT. A mortgage REIT may be affected by changes in
interest rates and the ability of the issuers of its
portfolio mortgages to repay their obligations. REITs are
dependent upon the skills of their managers and are not
diversified. REITs are generally dependent upon maintaining
cash flows to repay borrowings and to make distributions to
shareholders and are subject to the risk of default by
lessees or borrowers. REITs whose underlying assets are
concentrated in properties used by a particular industry,
such as health care, are also subject to risks associated
with such industry.

REITs (especially mortgage REITs) are also subject to
interest rate risks. When interest rates decline, the value
of a REIT's investment in fixed rate obligations can be
expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can
be expected to decline. If the REIT invests in adjustable
rate mortgage loans the interest rates on which are reset
periodically, yields on a REIT's investments in such loans
will gradually align themselves to reflect changes in market
interest rates. This causes the value of such investments to
fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate
obligations.

REITs may have limited financial resources, may trade less
frequently and in a limited volume and may be subject to
more abrupt or erratic price movements than larger company
securities. Historically REITs have been more volatile in
price than the larger capitalization stocks included in
Standard & Poor's 500 Stock Index (the "S&P 500").

Other Investment Companies.  The Portfolio may invest in the
securities of other investment companies to the extent that
such investments are consistent with the Portfolio's
investment objective and policies and permissible under the
Investment Company Act of 1940, as amended (the "1940 Act").
Under the 1940 Act, the Portfolio may not acquire the
securities of other domestic or foreign investment companies
if, as a result, (i) more than 10% of the Portfolio's total
assets would be invested in securities of other investment
companies, (ii) such purchase would result in more than 3%
of the total outstanding voting securities of any one
investment company being held by the Portfolio, or (iii)
more than 5% of the Portfolio's total assets would be
invested in any one investment company. These limitations do
not apply to the purchase of shares of any investment
company in connection with a merger, consolidation,
reorganization or acquisition of substantially all the
assets of another investment company. The Portfolio will not
invest in other investment companies for which the
investment advisers or any of their affiliates act as an
investment adviser or distributor.

The Portfolio may invest up to 10% of its assets in
securities of other investment companies, including shares
in a portfolio of securities that seeks to track the
performance of an underlying equity index or a portion of an
equity index ("exchange traded funds").

The Portfolio, as a holder of the securities of other
investment companies, will bear its pro rata portion of the
other investment companies' expenses, including advisory
fees. These expenses are in addition to the direct expenses
of the Portfolio's own operations.

Risks of Non-U.S. Investments.  To the extent that the
Portfolio invests in the securities of non-U.S. issuers,
those investments involve considerations and risks not
typically associated with investing in the securities of
issuers in the U.S.  These risks are heightened with respect
to investments in countries with emerging markets and
economies.  The risks of investing in securities of non-U.S.
issuers or issuers with significant exposure to non-U.S.
markets may be related, among other things, to (i)
differences in size, liquidity and volatility of, and the
degree and manner of regulation of, the securities markets
of certain non-U.S. markets compared to the securities
markets in the U.S.; (ii) economic, political and social
factors; and (iii) foreign exchange matters, such as
restrictions on the repatriation of capital, fluctuations in
exchange rates between the U.S. dollar and the currencies in
which the Portfolio's portfolio securities are quoted or
denominated, exchange control regulations and costs
associated with currency exchange. The political and
economic structures in certain non-U.S. countries,
particularly emerging markets, are expected to undergo
significant evolution and rapid development, and such
countries may lack the social, political and economic
stability characteristic of more developed countries.
Unanticipated political or social developments may affect
the values of the Portfolio's investments in such countries.
The economies and securities and currency markets of many
emerging markets have experienced significant disruption and
declines. There can be no assurances that these economic and
market disruptions will not continue.

Foreign Securities Markets and Regulations.  There may be
less publicly available information about non-U.S. markets
and issuers than is available with respect to U.S.
securities and issuers. Non-U.S. companies generally are not
subject to accounting, auditing and financial reporting
standards, practices and requirements comparable to those
applicable to U.S. companies. The trading markets for most
non-U.S. securities are generally less liquid and subject to
greater price volatility than the markets for comparable
securities in the U.S. The markets for securities in certain
emerging markets are in the earliest stages of their
development. Even the markets for relatively widely traded
securities in certain non-U.S. markets, including emerging
countries, may not be able to absorb, without price
disruptions, a significant increase in trading volume or
trades of a size customarily undertaken by institutional
investors in the U.S. Additionally, market making and
arbitrage activities are generally less extensive in such
markets, which may contribute to increased volatility and
reduced liquidity. The less liquid a market, the more
difficult it may be for the Portfolio to accurately price
its portfolio securities or to dispose of such securities at
the times determined by the investment adviser to be
appropriate. The risks associated with reduced liquidity may
be particularly acute in situations in which the Portfolio's
operations require cash, such as in order to meet
redemptions and to pay its expenses.

Economic, Political and Social Factors.  Certain non-U.S.
countries, including emerging markets, may be subject to a
greater degree of economic, political and social instability
than is the case in the U.S. and Western European countries.
Such instability may result from, among other things:
(i) authoritarian governments or military involvement in
political and economic decision making; (ii) popular unrest
associated with demands for improved economic, political and
social conditions; (iii) internal insurgencies; (iv) hostile
relations with neighboring countries; and (v) ethnic,
religious and racial disaffection and conflict. Such
economic, political and social instability could
significantly disrupt the financial markets in such
countries and the ability of the issuers in such countries
to repay their obligations. Investing in emerging countries
also involves the risk of expropriation, nationalization,
confiscation of assets and property or the imposition of
restrictions on foreign investments and on repatriation of
capital invested. In the event of such expropriation,
nationalization or other confiscation in any emerging
country, the Portfolio could lose its entire investment in
that country. Certain emerging market countries restrict or
control foreign investment in their securities markets to
varying degrees.  These restrictions may limit the
Portfolio's investment in those markets and may increase the
expenses of the Portfolio.  In addition, the repatriation of
both investment income and capital from certain markets in
the region is subject to restrictions such as the need for
certain governmental consents.  Even where there is no
outright restriction on repatriation of capital, the
mechanics of repatriation may affect certain aspects of the
Portfolio's operation.

Economies in individual non-U.S. countries may differ
favorably or unfavorably from the U.S. economy in such
respects as growth of gross domestic product, rates of
inflation, currency valuation, capital reinvestment,
resource self-sufficiency and balance of payments positions.
Many non-U.S. countries have experienced substantial, and in
some cases extremely high, rates of inflation for many
years. Inflation and rapid fluctuations in inflation rates
have had, and may continue to have, very negative effects on
the economies and securities markets of certain emerging
countries.

Economies in emerging countries generally are dependent
heavily upon international trade and, accordingly, have been
and may continue to be affected adversely by trade barriers,
exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or
negotiated by the countries with which they trade. These
economies also have been, and may continue to be, affected
adversely by economic conditions in the countries with which
they trade.

Currency Risks.  The value of the securities quoted or
denominated in international currencies may be adversely
affected by fluctuations in the relative currency exchange
rates and by exchange control regulations. The Portfolio's
investment performance may be negatively affected by a
devaluation of a currency in which the Portfolio's
investments are quoted or denominated. Further, the
Portfolio's investment performance may be significantly
affected, either positively or negatively, by currency
exchange rates because the U.S. dollar value of securities
quoted or denominated in another currency will increase or
decrease in response to changes in the value of such
currency in relation to the U.S. dollar.

Custodian Services and Related Investment Costs.  Custodial
services and other costs relating to investment in
international securities markets generally are more
expensive than in the U.S. Such markets have settlement and
clearance procedures that differ from those in the U.S. 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.  The inability of the Portfolio to make
intended securities purchases due to settlement problems
could cause the Portfolio to miss attractive investment
opportunities. Inability to dispose of a portfolio security
caused by settlement problems could result either in losses
to the Portfolio due to a subsequent decline in value of the
portfolio security or could result in possible liability to
the Portfolio. In addition, security settlement and
clearance procedures in some emerging countries may not
fully protect the Portfolio against loss or theft of its
assets.

Withholding and Other Taxes.  The Portfolio will be subject
to taxes, including withholding taxes, on income (possibly
including, in some cases, capital gains) that are or may be
imposed by certain non-U.S. countries with respect to the
Portfolio's investments in such countries. These taxes will
reduce the return achieved by the Portfolio. Treaties
between the U.S. and such countries may not be available to
reduce the otherwise applicable tax rates.

ADRs, EDRs and GDRs. The Portfolios may purchase American
Depository Receipts ("ADRs"), European Depository Receipts
("EDRs") and Global Depository Receipts ("GDRs") 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 depository's transaction fees,
whereas under an unsponsored arrangement, the foreign issuer
assumes no obligation and the depository'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.  The Portfolio may invest
in ADRs through both sponsored and unsponsored arrangements.

Economic Monetary Union ("EMU"). On January 1, 1999, 11
European countries adopted a single currency - the Euro.
The conversion to the Euro is being phased in over a three-
year period.  For participating countries, EMU will mean
sharing a single currency and single official interest rate
and adhering to agreed-upon limits on government borrowing.
Budgetary decisions will remain in the hands of each
participating country, but will be subject to each country's
commitment to avoid "excessive deficits" and other more
specific budgetary criteria.  A European Central Bank 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.

Fixed Income Securities.  The market value of fixed income
obligations of the Portfolio will be affected by general
changes in interest rates which will result in increases or
decreases in the value of the obligations held by the
Portfolio.  The market value of the obligations held by the
Portfolio can be expected to vary inversely to changes in
prevailing interest rates.  Investors also should recognize
that, in periods of declining interest rates, the
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.
Also, when interest rates are falling, the inflow of net new
money to the Portfolio from the continuous sale of its
shares will tend to be invested in instruments producing
lower yields than the balance of its portfolio, thereby
reducing the Portfolio's current yield.  In periods of
rising interest rates, the opposite can be expected to
occur.  In addition, securities in which the Portfolio may
invest may not yield as high a level of current income as
might be achieved by investing in securities with less
liquidity, less creditworthiness or longer maturities.

Debt Securities Rating Criteria.  Investment grade debt
securities are those rated "BBB" or higher by Standard &
Poor's Ratings Group ("Standard & Poor's"), the equivalent
rating of other national statistical rating organizations or
determined to be of equivalent credit quality by the
investment adviser.  Debt securities rated BBB are
considered medium grade obligations with speculative
characteristics, and adverse economic conditions or changing
circumstances may weaken the issuer's ability to pay
interest and repay principal.

Below investment grade debt securities are those rated "BB"
and below by Standard & Poor's or the equivalent rating of
other national statistical rating organizations.  Below
investment grade debt securities or comparable unrated
securities are commonly referred to as "junk bonds" and are
considered predominantly speculative and may be questionable
as to principal and interest payments. Changes in economic
conditions are more likely to lead to a weakened capacity to
make principal payments and interest payments. The amount of
junk bond securities outstanding has proliferated as an
increasing number of issuers have used junk bonds for
corporate financing.  An economic downturn could severely
affect the ability of highly leveraged issuers to service
their debt obligations or to repay their obligations upon
maturity. Factors having an adverse impact on the market
value of lower quality securities will have an adverse
effect on the Portfolio's net asset value to the extent that
it invests in such securities. In addition, the Portfolio
may incur additional expenses to the extent it is required
to seek recovery upon a default in payment of principal or
interest on its portfolio holdings.

The secondary market for junk bond securities, which is
concentrated in relatively few market makers, may not be as
liquid as the secondary market for more highly rated
securities, a factor which may have an adverse effect on the
Portfolio's ability to dispose of a particular security when
necessary to meet its liquidity needs. Under adverse market
or economic conditions, the secondary market for junk bond
securities could contract further, independent of any
specific adverse changes in the condition of a particular
issuer. As a result, the Portfolio could find it more
difficult to sell these securities or may be able to sell
the securities only at prices lower than if such securities
were widely traded. Prices realized upon the sale of such
lower rated or unrated securities, under these
circumstances, may be less than the prices used in
calculating the Portfolio's net asset value.

Since investors generally perceive that there are greater
risks associated with lower quality debt securities of the
type in which the Portfolio may invest a portion of its
assets, the yields and prices of such securities may tend to
fluctuate more than those for higher rated securities. In
the lower quality segments of the debt securities market,
changes in perceptions of issuers' creditworthiness tend to
occur more frequently and in a more pronounced manner than
do changes in higher quality segments of the debt securities
market, resulting in greater yield and price volatility.

Lower rated and comparable unrated debt securities tend to
offer higher yields than higher rated securities with the
same maturities because the historical financial condition
of the issuers of such securities may not have been as
strong as that of other issuers.  However, lower rated
securities generally involve greater risks of loss of income
and principal than higher rated securities.  The investment
advisers will attempt to reduce these risks through
portfolio diversification and by analysis of each issuer and
its ability to make timely payments of income and principal,
as well as broad economic trends and corporate developments.

Currency Exchange Rates.  The Portfolio's share value may
change significantly when the currencies, other than the
U.S. dollar, in which the Portfolio's investments are quoted
or denominated, strengthen or weaken against the U.S.
dollar.  Currency exchange rates generally are determined by
the forces of supply and demand in the foreign exchange
markets and the relative merits of investments in different
countries as seen from an international perspective.
Currency exchange rates can also be affected unpredictably
by intervention by U.S. or foreign governments or central
banks or by currency controls or political developments in
the United States or abroad.

Forward Currency Contracts.  The Portfolio may invest in
securities quoted or denominated in foreign currencies, may
hold currencies to meet settlement requirements for foreign
securities and may engage in currency exchange transactions
in order to protect against uncertainty in the level of
future exchange rates between a particular foreign currency
and the U.S. dollar or between foreign currencies in which
the Portfolio's securities are or may be quoted or
denominated.  Forward currency contracts are agreements to
exchange one currency for another, for example, to exchange
a certain amount of U.S. dollars for a certain amount of
French francs at a future date.  The date (which may be any
agreed upon fixed number of days in the future), the amount
of currency to be exchanged and the price at which the
exchange will take place will be negotiated with a currency
trader and fixed for the term of the contract at the time
that the Portfolio enters into the contract.  To assure that
the Portfolio's forward currency contracts are not used to
achieve investment leverage, the Portfolio will segregate
cash or high grade securities with its custodian in an
amount at all times equal to or exceeding the Portfolio's
commitment with respect to these contracts.

Forward currency contracts (i) are traded in an interbank
market conducted directly between currency traders
(typically commercial banks or other financial institutions)
and their customers, (ii) generally have no deposit
requirements and (iii) are typically consummated without
payment of any commissions. The Portfolio, however, may
enter into forward currency contracts containing either or
both deposit requirements and commissions.

At or before the maturity of a forward currency contract,
the Portfolio may either sell a portfolio security and make
delivery of the currency, or retain the security and offset
its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the Portfolio
will obtain, on the same maturity date, the same amount of
the currency that it is obligated to deliver. If the
Portfolio retains the portfolio security and engages in an
offsetting transaction, the Portfolio, at the time of
execution of the offsetting transaction, will incur a gain
or a loss to the extent that movement has occurred in
forward currency contract prices. Should forward prices
decline during the period between the Portfolio's entering
into a forward currency contract for the sale of a currency
and the date it enters into an offsetting contract for the
purchase of the currency, the Portfolio will realize a gain
to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to
purchase. Should forward prices increase, the Portfolio will
suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has
agreed to sell.

In hedging specific portfolio positions, the Portfolio may
enter into a forward contract with respect to either the
currency in which the positions are denominated or another
currency deemed appropriate by the Portfolio's investment
adviser.  The amount the Portfolio may invest in forward
currency contracts is limited to the amount of the
Portfolio's aggregate investments in foreign currencies.
Risks associated with entering into forward currency
contracts include the possibility that the market for
forward currency contracts may be limited with respect to
certain currencies and, upon a contract's maturity, the
inability of the Portfolio to negotiate with the dealer to
enter into an offsetting transaction.  Forward currency
contracts may be closed out only by the parties entering
into an offsetting contract.  In addition, the correlation
between movements in the prices of those contracts and
movements in the price of the currency hedged or used for
cover will not be perfect.  There is no assurance that an
active forward currency contract market will always exist.
These factors will restrict the Portfolio's ability to hedge
against the risk of devaluation of currencies in which the
Portfolio holds a substantial quantity of securities and are
unrelated to the qualitative rating that may be assigned to
any particular security.  In addition, although forward
currency contracts limit the risk of loss owing to a decline
in the value of the hedged currency, at the same time, they
limit any potential gain that might result should the value
of the currency increase. If a devaluation is generally
anticipated, the Portfolio may not be able to contract to
sell currency at a price above the devaluation level it
anticipates.  The successful use of forward currency
contracts as a hedging technique draws upon special skills
and experience with respect to these instruments and usually
depends on the ability of the Portfolio's investment adviser
to forecast interest rate and currency exchange rate
movements correctly. Should interest or exchange rates move
in an unexpected manner, the Portfolio may not achieve the
anticipated benefits of forward currency contracts or may
realize losses and thus be in a worse position than if those
strategies had not been used. Many forward currency
contracts are subject to no daily price fluctuation limits
so that adverse market movements could continue with respect
to those contracts to an unlimited extent over a period of
time.

Options on Securities and Securities Indices.  The Portfolio
may purchase put and call options on any security in which
it may invest or options on any securities index based on
securities in which it may invest. The Portfolio would also
be able to enter into closing sale transactions in order to
realize gains or minimize losses on options it has
purchased.

Writing Covered Call and Put Options on Securities.  A call
option written by the Portfolio obligates the Portfolio to
sell specified securities to the holder of the option at a
specified price if the option is exercised at any time
before the expiration date. Call options covered means that
the Portfolio will own the securities subject to the options
as long as the options are outstanding, or the Portfolio
will use the other methods described below.  The Portfolio's
purpose in writing covered call options is to realize
greater income than would be realized on portfolio
securities transactions alone. However, the Portfolio may
forego the opportunity to profit from an increase in the
market price of the underlying security.

A covered put option written by the Portfolio would obligate
the Portfolio to purchase specified securities from the
option holder at a specified price if the option is
exercised at any time before the expiration date.  Put
options that are covered, means that the Portfolio would
have segregated assets with a value at least equal to the
exercise price of the put option.  The purpose of writing
such options is to generate additional income for the
Portfolio. However, in return for the option premium, the
Portfolio accepts the risk that it may be required to
purchase the underlying security at a price in excess of its
market value at the time of purchase.

Call and put options written by the Portfolio will also be
considered to be covered to the extent that the Portfolio's
liabilities under such options are wholly or partially
offset by its rights under call and put options purchased by
the Portfolio. In addition, a written call option or put may
be covered by entering into an offsetting forward contract
and/or by purchasing an offsetting option or any other
option which, by virtue of its exercise price or otherwise,
reduces the Portfolio's net exposure on its written option
position.

Writing Covered Call and Put Options on Securities Indices.
The Portfolio may also write (sell) covered call and put
options on any securities index composed of securities in
which it may invest. Options on securities indices are
similar to options on securities, except that the exercise
of securities index options requires cash payments and does
not involve the actual purchase or sale of securities. In
addition, securities index options are designed to reflect
price fluctuations in a group of securities or segments of
the securities market rather than price fluctuations in a
single security.

The Portfolio may cover call options on a securities index
by owning securities whose price changes are expected to be
similar to those of the underlying index, or by having an
absolute and immediate right to acquire such securities
without additional cash consideration (or for additional
consideration if cash in such amount is segregated) upon
conversion or exchange of other securities in its portfolio.
The Portfolio may cover call and put options on a securities
index by segregated assets with a value equal to the
exercise price.

Writing Uncovered Call and Put Options on Securities an
Securities Indices.  The Portfolio may write options that
are not covered by portfolio securities.  This is regarded
as a speculative investment technique that could expose the
Portfolio to substantial losses.  The Portfolio will
designate liquid securities in the amount of its potential
obligation under uncovered options, and increase or decrease
the amount of designated assets daily based on the amount of
the then-current obligation under the option.  This
designation of liquid assets will not eliminate the risk of
loss from writing the option but it will ensure that the
Portfolio can satisfy its obligations under the option.

Purchasing Call and Put Options.  The Portfolio would
normally purchase call options in anticipation of an
increase in the market value of securities of the type in
which it may invest. The purchase of a call option would
entitle the Portfolio, in return for the premium paid, to
purchase specified securities at a specified price during
the option period. The Portfolio would ordinarily realize a
gain if, during the option period, the value of such
securities exceeded the sum of the exercise price, the
premium paid and transaction costs; otherwise the Portfolio
would realize either no gain or a loss on the purchase of
the call option.

The Portfolio would normally purchase put options in
anticipation of a decline in the market value of securities
in its portfolio ("protective puts") or in securities in
which it may invest. The purchase of a put option would
entitle the Portfolio, in exchange for the premium paid, to
sell specified securities at a specified price during the
option period. The purchase of protective puts is designed
to offset or hedge against a decline in the market value of
the Portfolio's securities. Put options may also be
purchased by the Portfolio for the purpose of affirmatively
benefiting from a decline in the price of securities which
it does not own. The Portfolio would ordinarily realize a
gain if, during the option period, the value of the
underlying securities decreased below the exercise price
sufficiently to more than cover the premium and transaction
costs; otherwise the Portfolio would realize either no gain
or a loss on the purchase of the put option. Gains and
losses on the purchase of protective put options would tend
to be offset by countervailing changes in the value of the
underlying portfolio securities.

Risks of Trading Options.  There is no assurance that a
liquid secondary market on an options exchange will exist
for any particular exchange-traded option, or at any
particular time. If the Portfolio is unable to effect a
closing purchase transaction with respect to covered options
it has written, the Portfolio will not be able to sell the
underlying securities or dispose of its segregated assets
until the options expire or are exercised. Similarly, if the
Portfolio is unable to effect a closing sale transaction
with respect to options it has purchased, it will have to
exercise the options in order to realize any profit and will
incur transaction costs upon the purchase or sale of
underlying securities.

Reasons for the absence of a liquid secondary market on an
exchange include the following: (i) there may be
insufficient trading interest in certain options;
(ii) restrictions may be imposed by an exchange on opening
or closing transactions or both; (iii) trading halts,
suspensions or other restrictions may be imposed with
respect to particular classes or series of options; (iv)
unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange
or the Options Clearing Corporation (the "OCC") may not at
all times be adequate to handle current trading volume; or
(vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to
discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on
that exchange (or in that class or series of options) would
cease to exist, although outstanding options on that
exchange, if any, that had been issued by the OCC as a
result of trades on that exchange would continue to be
exercisable in accordance with their terms.

The Portfolio may terminate its obligations under an
exchange-traded call or put option by purchasing an option
identical to the one it has written.  Obligations under
over-the-counter options may be terminated only by entering
into an offsetting transaction with the counterparty to such
option.  Such purchases are referred to as "closing purchase
transactions."

The Portfolio may purchase and sell both options that are
traded on U.S. and foreign exchanges and options traded over
the counter with broker-dealers who make markets in these
options. The ability to terminate over-the-counter options
is more limited than with exchange-traded options and may
involve the risk that broker-dealers participating in such
transactions will not fulfill their obligations. Until such
time as the staff of the Securities and Exchange Commission
(the "SEC") changes its position, the Portfolio will treat
purchased over-the-counter options and all assets used to
cover written over-the-counter options as illiquid
securities, except that with respect to options written with
primary dealers in U.S. Government securities pursuant to an
agreement requiring a closing purchase transaction at a
formula price, the amount of illiquid securities may be
calculated with reference to the formula.

Transactions by the Portfolio in options on securities and
indices will be subject to limitations established by each
of the exchanges, boards of trade or other trading
facilities governing the maximum number of options in each
class which may be written or purchased by a single investor
or group of investors acting in concert. Thus, the number of
options which the Portfolio may write or purchase may be
affected by options written or purchased by other investment
advisory clients of Smith Barney Fund Management LLC ("SBFM"
or the "manager") (formerly known as SSB Citi Fund
Management LLC) and/or investment advisers. An exchange,
board of trade or other trading facility may order the
liquidations of positions found to be in excess of these
limits, and it may impose certain other sanctions.

The writing and purchase of options is a highly specialized
activity which involves investment techniques and risks
different from those associated with ordinary portfolio
securities transactions. The successful use of protective
puts for hedging purposes depends in part on a investment
adviser's ability to predict future price fluctuations and
the degree of correlation between the options and securities
markets.

The hours of trading for options may not conform to the
hours during which the underlying securities are traded. To
the extent that the options markets close before the markets
for the underlying securities, significant price movements
can take place in the underlying markets that cannot be
reflected in the options markets.

In addition to the risks of imperfect correlation between
the Portfolio's portfolio and the index underlying the
option, the purchase of securities index options involves
the risk that the premium and transaction costs paid by the
Portfolio in purchasing an option will be lost. This could
occur as a result of unanticipated movements in the price of
the securities comprising the securities index on which the
option is based.

Futures Contracts and Related Options. The Portfolio may
enter into futures contracts and purchase and write (sell)
options on these contracts, including but not limited to
interest rate, securities index and foreign currency futures
contracts and put and call options on these futures
contracts.  These contracts will be entered into only upon
the concurrence of the manager that such contracts are
necessary or appropriate in the management of the
Portfolio's assets.  These contracts will be entered into on
exchanges designated by the Commodity Futures Trading
Commission ("CFTC") or, consistent with CFTC regulations, on
foreign exchanges.  These transactions may be entered into
for bona fide hedging and other permissible risk management
purposes including protecting against anticipated changes in
the value of securities the Portfolio intends to purchase.

The Portfolio will not enter into futures contracts and
related options for which the aggregate initial margin and
premiums exceed 5% of the fair market value of the
Portfolio's assets after taking into account unrealized
profits and unrealized losses on any contracts it has
entered into.  All futures and options on futures positions
will be covered by owning the underlying security or
segregation of assets.  With respect to long positions in a
futures contract or option (e.g., futures contracts to
purchase the underlying instrument and call options
purchased or put options written on these futures contracts
or instruments), the underlying value of the futures
contract at all times will not exceed the sum of cash,
short-term U.S. debt obligations or other high quality
obligations set aside for this purpose.

The Portfolio may lose the expected benefit of these futures
or options transactions and may incur losses if the prices
of the underlying commodities move in an unanticipated
manner.  In addition, changes in the value of the
Portfolio's futures and options positions may not prove to
be perfectly or even highly correlated with changes in the
value of its portfolio securities.  Successful use of
futures and related options is subject to a investment
adviser's ability to predict correctly movements in the
direction of the securities markets generally, which ability
may require different skills and techniques than predicting
changes in the prices of individual securities.  Moreover,
futures and options contracts may only be closed out by
entering into offsetting transactions on the exchange where
the position was entered into (or a linked exchange), and as
a result of daily price fluctuation limits there can be no
assurance that an offsetting transaction could be entered
into at an advantageous price at any particular time.
Consequently, the Portfolio may realize a loss on a futures
contract or option that is not offset by an increase in the
value of its portfolio securities that are being hedged or
the Portfolio may not be able to close a futures or options
position without incurring a loss in the event of adverse
price movements.

The Portfolio will incur brokerage costs whether or not its
hedging is successful and will be required to post and
maintain "margin" as a good-faith deposit against
performance of its obligations under futures contracts and
under options written by the Portfolio. Futures and options
positions are marked to the market daily and the Portfolio
may be required to make subsequent "variation" margin
payments depending upon whether its positions increase or
decrease in value. In this context margin payments involve
no borrowing on the part of the Portfolio.

U.S. Government Securities.  The U.S. Government Securities
in which the Portfolio may invest include debt obligations
of varying maturities issued by the U.S. Treasury or issued
or guaranteed by an agency or instrumentality of the U.S.
government, including the Federal Housing Administration,
Federal Financing Bank, Farmers Home Administration, Export-
Import Bank of the U.S., Small Business Administration,
Government National Mortgage Association ("GNMA"), General
Services Administration, Central Bank for Cooperatives,
Federal Farm Credit Banks, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation ("FHLMC"), Federal National
Mortgage Association ("FNMA"), Maritime Administration,
Tennessee Valley Authority, District of Columbia Armory
Board, Student Loan Marketing Association, Resolution Trust
Corporation and various institutions that previously were or
currently are part of the Farm Credit System (which has been
undergoing reorganization since 1987).  Some U.S. Government
Securities, such as U.S. Treasury bills, Treasury notes and
Treasury bonds, which differ only in their interest rates,
maturities and times of issuance, are supported by the full
faith and credit of the United States.  Others are supported
by: (i) the right of the issuer to borrow from the U.S.
Treasury, such as securities of the Federal Home Loan Banks;
(ii) the discretionary authority of the U.S. Government to
purchase the agency's obligations, such as securities of the
FNMA; or (iii) only the credit of the issuer, such as
securities of the Student Loan Marketing Association.  No
assurance can be given that the U.S. Government will provide
financial support in the future to U.S. Government agencies,
authorities or instrumentalities that are not supported by
the full faith and credit of the United States.  Securities
guaranteed as to principal and interest by the U.S.
Government, its agencies, authorities or instrumentalities
include: (i) securities for which the payment of principal
and interest is backed by an irrevocable letter of credit
issued by the U.S. Government or any of its agencies,
authorities or instrumentalities; and (ii) participations in
loans made to foreign governments or other entities that are
so guaranteed.  The secondary market for certain of these
participations is limited and, therefore, may be regarded as
illiquid.

U.S. Government Securities may include zero coupon
securities that may be purchased when yields are attractive
and/or to enhance portfolio liquidity.  Zero coupon U.S.
Government Securities are debt obligations that are issued
or purchased at a significant discount from face value.  The
discount approximates the total amount of interest the
security will accrue and compound over the period until
maturity or the particular interest payment date at a rate
of interest reflecting the market rate of the security at
the time of issuance.  Zero coupon U.S. Government
Securities do not require the periodic payment of interest.
These investments benefit the issuer by mitigating its need
for cash to meet debt service, but also require a higher
rate of return to attract investors who are willing to defer
receipt of cash.  These investments may experience greater
volatility in market value than U.S. Government Securities
that make regular payments of interest.  The Portfolio
accrues income on these investments for tax and accounting
purposes, which is distributable to shareholders and which,
because no cash is received at the time of accrual, may
require the liquidation of other portfolio securities to
satisfy the Portfolio's distribution obligations, in which
case the Portfolio will forego the purchase of additional
income producing assets with these funds.  Zero coupon U.S.
Government Securities include STRIPS and CUBES, which are
issued by the U.S. Treasury as component parts of U.S.
Treasury bonds and represent scheduled interest and
principal payments on the bonds.

When-Issued and Delayed Delivery Securities.  The Portfolio
may purchase securities, including U.S. government
securities, on a when-issued basis or may purchase or sell
securities for delayed delivery. In such transactions,
delivery of the securities occurs beyond the normal
settlement period, but no payment or delivery is made by the
Portfolio prior to the actual delivery or payment by the
other party to the transaction. The purchase of securities
on a when-issued or delayed delivery basis involves the risk
that the value of the securities purchased will decline
prior to the settlement date. The sale of securities for
delayed delivery involves the risk that the prices available
in the market on the delivery date may be greater than those
obtained in the sale transaction. When-issued and delayed
delivery transactions will be fully collateralized by
segregated liquid assets.

Repurchase Agreements.  The Portfolio may enter into
repurchase agreements.  Under the terms of a typical
repurchase agreement, the Portfolio would acquire an
underlying debt obligation for a relatively short period
(usually not more than one week) subject to an obligation of
the seller to repurchase, and the Portfolio to resell, the
obligation at an agreed upon price and time, thereby
determining the yield during the Portfolio's holding period.
This arrangement results in a fixed rate of return that is
not subject to market fluctuations during the Portfolio's
holding period.  The Portfolio may enter into repurchase
agreements with respect to U.S. Government Securities with
member banks of the Federal Reserve System and certain
non-bank dealers approved by the Board of Trustees.  Under
each repurchase agreement, the selling institution is
required to maintain the value of the securities subject to
the repurchase agreement at not less than their repurchase
price.  The Portfolio's investment adviser, acting under the
supervision of the Board of Trustees, reviews on an ongoing
basis the value of the collateral and the creditworthiness
of those non-bank dealers with whom the Portfolio enters
into repurchase agreements.  The Portfolio will not invest
in a repurchase agreement maturing in more than seven days
if the investment, together with illiquid securities held by
the Portfolio, exceeds 15% of the Portfolio's total assets.
In entering into a repurchase agreement, the Portfolio bears
a risk of loss in the event that the other party to the
transaction defaults on its obligations and the Portfolio is
delayed or prevented from exercising its rights to dispose
of the underlying securities, including the risk of a
possible decline in the value of the underlying securities
during the period in which the Portfolio seeks to assert its
rights to them, the risk of incurring expenses associated
with asserting those rights and the risk of losing all or a
part of the income from the agreement.

Borrowing.  Leverage increases investment risk as well as
investment opportunity.  If the income and investment gains
on securities purchased with borrowed money exceed the
interest paid on the borrowing, the net asset value of the
Portfolio's shares will rise faster than would otherwise be
the case.  On the other hand, if the income and investment
gains fail to cover the cost, including interest, of the
borrowings, or if there are losses, the net asset value of
the Portfolio's shares will decrease faster than otherwise
would be the case.

Lending Portfolio Securities.  Consistent with applicable
regulatory requirements, the Portfolio, may lend portfolio
securities to brokers, dealers and other financial
organizations. The Portfolio will not lend securities to
Salomon Smith Barney Inc. ("Salomon Smith Barney")  unless
the Portfolio has applied for and received specific
authority to do so from the Securities and Exchange
Commission (the "SEC"). The Portfolio's loan of securities
will be collateralized by cash, letters of credit or U.S.
Government Securities. The Portfolio will maintain the
collateral in an amount at least equal to the current market
value of the loaned securities. From time to time, the
Portfolio may pay a part of the interest earned from the
investment of collateral received for securities loaned to
the borrower and/or a third party that is unaffiliated with
the Portfolio and is acting as a "finder." The Portfolio
will comply with the following conditions whenever it loans
securities: (i) the Portfolio must receive at least 100%
cash collateral or equivalent securities from the borrower;
(ii) the borrower must increase the collateral whenever the
market value of the securities loaned rises above the level
of the collateral; (iii) the Portfolio must be able to
terminate the loan at any time; (iv) the Portfolio must
receive reasonable interest on the loan, as well as any
dividends, interest or other distributions on the loaned
securities and any increase in market value; (v) the
Portfolio may pay only reasonable custodian fees in
connection with the loan; and (vi) voting rights on the
loaned securities may pass to the borrower except that, if a
material event adversely affecting the investment in the
loaned securities occurs, the Trust's Board of Trustees must
terminate the loan and regain the right to vote the
securities.

Illiquid Securities.  The Portfolio will not invest more
than 15% of its net assets in illiquid and other securities
that are not readily marketable. Repurchase agreements
maturing in more than seven days will be included for
purposes of the foregoing limit. Securities subject to
restrictions on resale under the Securities Act of 1933, as
amended (the "1933 Act"), are considered illiquid unless
they are eligible for resale pursuant to Rule 144A or
another exemption from the registration requirements of the
1933 Act and are determined to be liquid by the investment
adviser.  The investment advisers determine the liquidity of
Rule 144A and other restricted securities according to
procedures adopted by the Board of Trustees. The Board of
Trustees monitors the investment advisers' application of
these guidelines and procedures. The inability of the
Portfolio to dispose of illiquid investments readily or at
reasonable prices could impair the Portfolio's ability to
raise cash for redemptions or other purposes.

Temporary Investments.  For temporary defensive purposes
during periods when a investment adviser of the Portfolio,
in consultation with the manager, determines that pursuing
the Portfolio's basic investment strategy may be
inconsistent with the best interests of its shareholders,
the Portfolio may invest its assets in the following money
market instruments: U.S. Government Securities (including
those purchased in the form of custodial receipts),
repurchase agreements, certificates of deposit and bankers'
acceptances issued by U.S. banks or savings and loan
associations having assets of at least $500 million as of
the end of their most recent fiscal year and high quality
commercial paper.  The Portfolio's U.S. dollar-denominated
temporary investments are managed by SBFM.  The Portfolio
also may hold a portion of its assets in money market
instruments or cash in amounts designed to pay expenses, to
meet anticipated redemptions or pending investment in
accordance with its objectives and policies.  Any temporary
investments may be purchased on a when-issued basis.  The
Portfolio's investment in any other short-term debt
instruments would be subject to the Portfolio's investment
objectives and policies, and to approval by the Trust's
Board of Trustees.

INVESTMENT RESTRICTIONS

The investment restrictions below have been adopted by the
Trust as fundamental policies of the Portfolio. Under the
1940 Act, a fundamental policy may not be changed without
the vote of a majority of the outstanding voting securities
of the Portfolio, which is defined in the 1940 Act as the
lesser of (i) 67% or more of the shares present at the
Portfolio meeting, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or
represented by proxy, or (ii) more than 50% of the
outstanding shares of the Portfolio.

	Under the investment restrictions adopted by the
Portfolio:

	1.	The Portfolio will not deviate from the definition
of a "diversified company" as defined in the 1940 Act and
rules thereunder.

	2.	The Portfolio will not invest more than 25% of its
total assets in securities, the issuers of which conduct
their principal business activities in the same industry.
For purposes of this limitation, U.S. government securities
and securities of state or municipal governments and their
political subdivisions are not considered to be issued by
members of any industry.

	3.	A Portfolio will not issue "senior securities" as
defined in the 1940 Act, and the rules, regulations and
orders thereunder, except as permitted under the 1940 Act
and the rules, regulations and orders thereunder.

	4.	The Portfolio will not borrow 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, in an amount not
exceeding 33 1/3% of the value of the Portfolio's total
assets (including the amount borrowed) valued at the lesser
of cost or market, less liabilities (not including the
amount borrowed) and (b) the Portfolio may, to the extent
consistent with its investment policies, enter into reverse
repurchase agreements, short sales, forward roll
transactions and similar investment strategies and
techniques and (c) for short-term purposes to satisfy margin
requirements or calls.

	5.	The Portfolio will not make 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 (including
participation interests in such obligations); (b) repurchase
agreements; and (c) loans of its portfolio securities.

	6.	The Portfolio will not purchase any securities on
margin (except for such short-term credits as are necessary
for the clearance of purchases and sales of Portfolio
securities), except in connection with short-sales of
securities.  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.

	7.	The Portfolio will not purchase or sell real
estate, real estate mortgages, commodities or commodity
contracts, but this restriction shall not prevent the
Portfolio from (a) investing in and selling securities of
issuers engaged in the real estate business and securities
which are secured by real estate or interests therein; (b)
holding or selling real estate received in connection with
securities it holds; (c) trading in futures contracts and
options on futures contracts or (d) investing in or
purchasing real estate investment trust securities.

	8.	The Portfolio will not engage 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.


Portfolio Transactions

Decisions to buy and sell securities for the Portfolio are
made by the investment adviser(s), subject to the overall
review of the manager and the Board of Trustees. Although
investment decisions for the Portfolio are made
independently from those of the other accounts managed by an
investment adviser, investments of the type that the
Portfolio may make also may be made by those other accounts.
When the Portfolio and one or more other accounts managed by
an investment adviser are prepared to invest in, or desire
to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner
believed by the investment adviser to be equitable to each.
In some cases, this procedure may adversely affect the price
paid or received by the Portfolio or the size of the
position obtained or disposed of by the Portfolio.

Transactions on U.S. stock exchanges and some foreign stock
exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are
negotiated, the cost of transactions may vary among
different brokers. On most foreign exchanges, commissions
are generally fixed. No stated commission is generally
applicable to securities traded in U.S. over-the-counter
markets, but the underwriters include an underwriting
commission or concession and the prices at which securities
are purchased from and sold to dealers include a dealer's
mark-up or mark-down. U.S. Government Securities generally
are purchased from underwriters or dealers, although certain
newly issued U.S. Government Securities may be purchased
directly from the U.S. Treasury or from the issuing agency
or instrumentality.

In selecting brokers or dealers to execute securities
transactions on behalf of the Portfolio, each investment
adviser seeks the best overall terms available. In assessing
the best overall terms available for any transaction, the
investment adviser will consider the factors it deems
relevant, including the breadth of the market in the
security, the price of the security, the financial condition
and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In addition, each
Advisory Agreement between the Trust and the investment
adviser authorizes the investment adviser, in selecting
brokers or dealers to execute a particular transaction, and
in evaluating the best overall terms available, to consider
the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of
1934) provided to the Portfolio and/or other accounts over
which the investment adviser or its affiliates exercise
investment discretion. The fees under the investment
management agreement and the investment advisory agreements,
respectively, are not reduced by reason of the Portfolio's
investment advisers receiving brokerage and research
services. The Board of Trustees of the Trust will
periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits
inuring to the Portfolio. Over-the-counter purchases and
sales by the Portfolio are transacted directly with
principal market makers except in those cases in which
better prices and executions may be obtained elsewhere and
in which commissions may be paid. For the fiscal period
ended March 31, 2000, the Portfolio did not direct brokerage
transactions or pay brokerage commissions on such
transactions to brokers because of research services
provided.


To the extent consistent with applicable provisions of the
1940 Act and the rules and exemptions adopted by the SEC
under the 1940 Act, the Board of Trustees has determined
that transactions for the Portfolio may be executed through
Salomon Smith Barney and other affiliated broker-dealers if,
in the judgment of the investment adviser, the use of an
affiliated broker-dealer is likely to result in price and
execution at least as favorable as those of other qualified
broker-dealers, and if, in the transaction, the affiliated
broker-dealer charges the Portfolio a fair and reasonable
rate.  The Portfolio will not purchase any security,
including U.S. Government Securities or Obligations, during
the existence of any underwriting or selling group relating
thereto of which Salomon Smith Barney is a member, except to
the extent permitted by the SEC.

The Portfolio may use Salomon Smith Barney and other
affiliated broker-dealers as a commodities broker in
connection with entering into futures contracts and options
on futures contracts if, in the judgment of the investment
adviser, the use of an affiliated broker-dealer is likely to
result in price and execution at least as favorable as those
of other qualified broker-dealers, and if, in the
transaction, the affiliated broker-dealer charges the
Portfolio a fair and reasonable rate. Salomon Smith Barney
has agreed to charge the Portfolio commodity commissions at
rates comparable to those charged by Salomon Smith Barney to
its most favored clients for comparable trades in comparable
accounts.

The following table sets forth certain information regarding
the Portfolio's payment of brokerage commissions for the
fiscal year ended March 31, 2001 and the fiscal period ended
March 31, 2000:





Fiscal
Year ended
March 31,




Total
Brokerage
Commissio
ns



Commissions
paid to
Salomon
Smith Barney

% of Total
Brokerage
Commissions
paid to
Salomon Smith
Barney
% of Total
Dollar Amount
of
Transactions
Involving
Commissions
Paid to
Salomon Smith
Barney

2001
$181,91
3
$0
0%
0%
2000
$222,19
2
$26,877
12.10%
12.52%

Portfolio Turnover

A Portfolio's turnover rate is calculated by dividing the
lesser of purchases or sales of its portfolio securities for
the year by the monthly average value of the portfolio
securities. Securities or options with remaining maturities
of one year or less on the date of acquisition are excluded
from the calculation. Under certain market conditions, the
Portfolio authorized to engage in transactions in options
may experience increased portfolio turnover as a result of
its investment strategies. For instance, the exercise of a
substantial number of options written by the Portfolio (due
to appreciation of the underlying security in the case of
call options or depreciation of the underlying security in
the case of put options) could result in a turnover rate in
excess of 100%. A portfolio turnover rate of 100% would
occur if all of the Portfolio's securities that are included
in the computation of turnover were replaced once during a
period of one year. For the fiscal year ended March 31, 2001
and the fiscal period ended March 31, 2000, the portfolio
turnover was 317% and 249%, respectively.

Certain practices that may be employed by the Portfolio
could result in high portfolio turnover. For example,
portfolio securities may be sold in anticipation of a rise
in interest rates (market decline) or purchased in
anticipation of a decline in interest rates (market rise)
and later sold. In addition, a security may be sold and
another of comparable quality purchased at approximately the
same time to take advantage of what an investment adviser
believes to be a temporary disparity in the normal yield
relationship between the two securities. These yield
disparities may occur for reasons not directly related to
the investment quality of particular issues or the general
movement of interest rates, such as changes in the overall
demand for, or supply of, various types of securities.
Portfolio turnover rates may vary greatly from year to year
as well as within a particular year and may be affected by
cash requirements for redemptions of the Portfolio's shares
as well as by requirements that enable the Portfolio to
receive favorable tax treatment.

In addition, the Portfolio's use of merger arbitrage
probably will result in high portfolio turnover rates
because of the relatively short period of time that elapses
between the announcement of a reorganization and its
completion or termination.  The majority of mergers and
acquisitions are consummated in less than six months while
tender offers are normally completed in less than two
months.  Such short-term trading involves increased
brokerage commissions which expense is ultimately borne by
the shareholder.

INVESTMENT MANAGEMENT AND OTHER SERVICES

Manager; Investment Advisers; Administrator

The manager serves as investment manager to the Trust
pursuant to an investment management agreement ("Management
Agreement"). Each investment adviser serves as investment
investment adviser to the Portfolio pursuant to separate
written agreements with the Portfolio ("Advisory
Agreements"), SBFM serves as administrator to the Portfolio
pursuant to a written agreement ("Administration
Agreement").

The Portfolio bears its own expenses, which generally
include all costs not specifically borne by the investment
advisers, and SBFM.  Included among the Portfolio's expenses
are: costs incurred in connection with the Portfolio's
organization; investment management and administration fees;
fees for necessary professional and brokerage services; fees
for any pricing service; the costs of regulatory compliance;
and costs associated with maintaining the Trust's legal
existence and shareholder relations.  As administrator, SBFM
generally oversees all aspects of the Trust's administration
and operations including furnishing the Trust with
statistical and research data, clerical help, accounting,
data processing, bookkeeping, internal auditing and legal
services and certain other services required by the Trust,
prepares reports to the Trust's shareholders and prepares
tax returns, reports to and filings with the SEC and state
blue sky authorities. The Portfolio pays SBFM a fee for
these services that is computed daily and paid monthly at
the annual rate of 0.20% of the value of the Portfolio's
average daily net assets.


Under the Management Agreement, the Portfolio pays SBFM a
fee, calculated daily and paid monthly, based on the rates
applied to the value of each Portfolio's average daily net
assets. In addition, SBFM pays each investment adviser,
based on the rates applied to the Portfolio's average daily
net assets on a monthly basis. The management fee paid to
SBFM is 1.80%.  The applicable investment advisory fee paid
by SBFM to each investment adviser and the names of the
investment adviser are indicated below:

Investment Adviser
Investment Advisory Fee
Calamos Asset Management
1.00%
Pegasus Investments, Inc.
1.20%
SSgA Funds Management, Inc.
1.00%


For the fiscal year ended March 31, 2001 and the fiscal
period ended March 31, 2000 the Portfolio incurred
investment management and administration fees as follows:

Fiscal Year
ended March
31,
Management
Fee*
Administration
Fee
2001
$518,069
$75,879
2000
399,404
44,227
*For the fiscal year ended March 31, 2001
and fiscal period ended March 31, 2000,
SBFM waived $57,630 and $165,662,
respectively, of its management fees.

The manager has agreed to waive a portion of the fees
otherwise payable to it by the Portfolio so that the manager
would retain, as its annual management fee, no more than
0.30% of the Portfolio's average daily net assets.

SBFM, through its predecessors, was incorporated on March
12, 1968 under the laws of Delaware and converted to a
Delaware limited company in 1999.  SBFM is a registered
investment adviser. SBFM  renders investment advice to
investment company clients that had aggregate assets under
management as of May 31, 2001 in excess of $129 billion. The
Consulting Group, a division of SBFM, has extensive
experience in providing investment adviser selection
services. The Consulting Group, through its predecessors,
was established in 1973 with the primary objective of
matching the investment needs of institutional and
individual clients with appropriate and qualified money
management organizations throughout the nation. In 1989, the
Consulting Services Division was restructured and its
research and investment advisory evaluation services
functions were segregated and named the Consulting Group.
The Consulting Group's analysts, in the aggregate, have many
years of experience performing asset manager searches for
institutional and individual clients. These analysts rely on
the Consulting Group's comprehensive database of money
management firms, through which the Consulting Group tracks
the historic and ongoing performance of over 800 of the more
than 16,000 registered investment advisors, and conducts
over 300 on-sight evaluation visits annually to advisors.

SBFM and the investment advisers each pays the salaries of
all officers and employees who are employed by it and the
Trust, and the manager maintains office facilities for the
Trust. The manager and the investment advisers bear all
expenses in connection with the performance of their
respective services under the Management Agreement, the
Advisory Agreements, and the Administration Agreement.

As noted in the prospectus, subject to the supervision and
direction of the manager and, ultimately, the Board of
Trustees, each investment adviser manages the securities
held by the Portfolio it serves in accordance with the
Portfolio's stated investment objectives and policies, makes
investment decisions for the Portfolio and places orders to
purchase and sell securities on behalf of the Portfolio.

Subject to the supervision and direction of the Board of
Trustees, the manager provides to the Trust investment
management evaluation services principally by performing
initial due diligence on prospective investment advisers for
the Portfolio and thereafter monitoring investment advisers'
performance through quantitative and qualitative analysis as
well as periodic in-person, telephonic and written
consultations with investment advisers.  In evaluating
prospective investment advisers, the manager considers,
among other factors, each investment adviser's level of
expertise; relative performance and consistency of
performance over a minimum period of five years; level of
adherence to investment discipline or philosophy, personnel
facilities and financial strength; and quality of service
and client communications.  The manager has responsibility
for communicating performance expectations and evaluations
to investment advisers and ultimately recommending to the
Board of Trustees whether investment advisers' contracts
should be renewed, modified or terminated.  The manager
provides written reports to the Board of Trustees regarding
the results of its elevations and monitoring functions.  The
manager is also responsible for conducting all operations of
the Trust except those operations contracted to the
investment adviser, custodian, transfer agent or
administrator.

Investors should be aware that the manager may be subject to
a conflict of interest when making decisions regarding the
retention and compensation of particular investment
advisers.  However, the manager's decisions, including the
identity of the investment adviser and the specific amount
of the manager's compensation to be paid to the investment
adviser are subject to review and approval by a majority of
the Board of Trustees and separately by a majority of the
Trustees who are not affiliated with the manager or any of
its affiliates.

Investors should also be aware that through Smith Barney
Advisory Services the Consulting Group serves as investment
adviser to each participant in such service and receives a
fee from each participant that does not vary based on the
portfolios of the Trust recommended for the participant's
investments.  At the same time, the Consulting Group serves
as the Trust's manager with responsibility for identifying,
retaining, supervising and compensating each portfolio's
investment adviser and receives a fee from each portfolio of
the Trust.  The portion of such fee that is retained by the
manager varies based on the portfolio involved.
Consequently, the Consulting Group, when making asset
allocation recommendations for participants in Smith Barney
Advisory Services, may be presented with a conflict of
interest as to the specific portfolios of the Trust
recommended for investment.  The Consulting Group, however,
is subject to and intends to comply fully with standards of
fiduciary duty that require that it act solely in the best
interest of the participant when making investment
recommendations.

The Trust has received an exemption (the "Exemption") from
certain provisions of the 1940 Act which would otherwise
require the manager to obtain formal shareholder approval
prior to engaging and entering into investment advisory
agreements with investment advisers.  The Exemption is based
on among other things:  (1) the manager will select,
monitor, evaluate and allocate assets to the investment
adviser and ensure that the investment advisers comply with
the Portfolio's investment objective, policies and
restrictions; (2) shares of the Portfolio relying on the
Exemption will not be subject to any sales loads or
redemption fees or other charges for redeeming shares; (3)
the Trust will provide to shareholders certain information
about a new investment adviser and its investment advisory
contract within 90 days of the engagement of  a new
investment adviser; (4) the Trust will disclose in its
prospectus the terms of the Exemption; and (5) the Trustees,
including a majority of the "non-interested" Trustees, must
approve each investment advisory contract in the manner
required under the 1940 Act. Any changes to the Management
Agreement between the Trust and the manager still require
shareholder approval.

Code of Ethics

Pursuant to Rule 17j-1 of the 1940 Act, the Portfolio, its
investment advisers and principal underwriter have adopted
codes of ethics that permit personnel to invest in
securities for their own accounts, including securities that
may be purchased or held by the Portfolio.  All personnel
must place the interests of clients first and avoid
activities, interests and relationships that might interfere
with the duty to make decisions in the best interests of the
clients.  All personal securities transactions by employees
must adhere to the requirements of the codes and must be
conducted in such a manner as to avoid any actual or
potential conflict of interest, the appearance of such a
conflict, or the abuse of an employee's position of Trust
and responsibility.

A copy of the Portfolio's Code of Ethics is on file with the
Securities and Exchange Commission.

Counsel and Auditors

Willkie Farr & Gallagher serves as counsel to the Trust.
Stroock & Stroock & Lavan LLP serves as counsel to the
Trustees who are not interested persons of the Trust.

KPMG LLP, 757 Third Avenue, New York, New York 10017, has
been selected to serve as independent auditors of the
Portfolio and to render an opinion on the Portrfolio's
financial statements for the fiscal year ending March 31,
2002.

Organization of the Trust

The Trust has been organized as an unincorporated business
trust under the laws of the Commonwealth of Massachusetts
pursuant to a Master Trust Agreement dated April 12, 1991,
as amended from time to time (the "Trust Agreement").

In the interest of economy and convenience, certificates
representing shares in the Trust are not physically issued.
PFPC Trust Company ("PFPC Trust"), the Trust's custodian,
maintains a record of each shareholder's ownership of Trust
shares. Shares do not have cumulative voting rights, which
means that holders of more than 50% of the shares voting for
the election of Trustees can elect all Trustees. Shares are
transferable, but have no preemptive, conversion or
subscription rights. Shareholders generally vote on a trust-
wide basis, except with respect to continuation of the
Advisory Agreements, in which case shareholders vote by the
Portfolio.

Massachusetts law provides that shareholders could, under
certain circumstances, be held personally liable for the
obligations of the Trust. The Trust Agreement disclaims
shareholder liability for acts or obligations of the Trust,
however, and requires that notice of the disclaimer be given
in each agreement, obligation or instrument entered into or
executed by the Trust or a Trustee. The Trust Agreement
provides for indemnification from the Trust's property for
all losses and expenses of any shareholder held personally
liable for the obligations of the Trust. Thus, the risk of a
shareholder's incurring financial loss on account of
shareholder liability is limited to circumstances in which
the Trust would be unable to meet its obligations, a
possibility that the Trust's management believes is remote.
Upon payment of any liability incurred by the Trust, the
shareholder paying the liability will be entitled to
reimbursement from the general assets of the Trust. The
Trustees intend to conduct the operations of the Trust in a
manner so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Trust.

As of July 13, 2001, the following shareholders own of
record or beneficially 5% or more of shares of a Portfolio
of the Trust:

	Corman Foundation Inc.
	Attn: Charles R. Dettling
	P.O. Drawer 1268
	Attmore, AL 36504-1268
	owned 350,661.854 shares (5.60%)

PURCHASE OF SHARES

Purchases of shares of the Portfolio through an Advisory
Service must be made through a brokerage account maintained
with Salomon Smith Barney.  Payment for Portfolio shares
must be made by check directly to Salomon Smith Barney or to
a broker that clears securities transactions through Salomon
Smith Barney.  No brokerage account or inactivity fee is
charged in connection with a brokerage account through which
an investor purchases shares of a Portfolio.

Shares of the Portfolio are available to participants in
Advisory Services and are generally designed to relieve
investors of the burden of devising an asset allocation
strategy to meet their individual needs as well as selecting
individual investments within each asset category among the
myriad of choices available. Advisory Services generally
provide investment advice in connection with investments
among the Portfolios of the Trust by identifying the
investor's risk tolerances and investment objectives through
evaluation of an investment questionnaire; identifying and
recommending in writing an appropriate allocation of assets
among the Portfolios that conform to those tolerances and
objectives in a written recommendation; and providing on a
periodic basis, a written monitoring report to the investor
containing an analysis and evaluation of an investor's
account and recommending any appropriate changes in the
allocation of assets among the Portfolios.  Usually under an
Advisory Service, all investment decisions ultimately rest
with the investor and investment discretion is not given to
the investment adviser.  Shares of the Portfolio may be sold
to clients of Salomon Smith Barney or its affiliates that
are not participants in an Advisory Program.

The TRAK(r) Personalized Investment Advisory Service ("TRAK")
sponsored by Salomon Smith Barney is one such advisory
service.  Under the TRAK program the Consulting Group in its
capacity as investment adviser to participants in TRAK
generally directly provides to investors asset allocation
recommendations and related services with respect to the
portfolios based on an evaluation of an investor's
investment objective and risk tolerances.  Shares of the
Portfolio are offered for purchase and redemption at their
respective net asset value next determined, without
imposition of any initial or contingent deferred sales
charge except that the Consulting Group is paid directly by
the investors purchasing Portfolio shares based on the
recommendation of investment investment advisers other than
the Consulting Group, or who contract with the Consulting
Group for services other than those described above, pay, in
lieu of TRAK charges, different fees for different levels of
services as agreed upon with their investment advisers.

REDEMPTION OF SHARES

Detailed information on how to redeem shares of the
Portfolio is included in the prospectus. The right of
redemption of shares of the Portfolio may be suspended or
the date of payment postponed (i) for any periods during
which the New York Stock Exchange, Inc. (the "NYSE") is
closed (other than for customary weekend and holiday
closings), (ii) when trading in the markets the Portfolio
normally utilizes is restricted, or an emergency, as defined
by the rules and regulations of the SEC, exists making
disposal of the Portfolio's investments or determination of
its net asset value not reasonably practicable or (iii) for
such other periods as the SEC by order may permit for the
protection of the Portfolio's shareholders.

REDEMPTIONS IN KIND

If the Board of Trustees determines that it would be
detrimental to the best interests of the Portfolio's
shareholders to make a redemption payment wholly in cash,
the Portfolio may pay, in accordance with rules adopted by
the SEC, any portion of a redemption in excess of the lesser
of $250,000 or 1% of the Portfolio's net assets by a
distribution in kind of readily marketable portfolio
securities in lieu of cash.  Redemptions failing to meet
this threshold must be made in cash. Shareholders receiving
distributions in kind of portfolio securities may incur
brokerage commissions when subsequently disposing of those
securities.

NET ASSET VALUE

The Portfolio's net asset value per share is calculated by
SBFM on each day, Monday through Friday, except days on
which the NYSE is closed.  The NYSE is currently scheduled
to be closed on New Year's Day, Martin Luther King Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas, and on the
preceding Friday when one of those holidays falls on a
Saturday or on the subsequent Monday when one of those
holidays falls on a Sunday.  On those days, securities held
by the Portfolio may nevertheless be actively traded and the
value of the Portfolio's shares could be significantly
affected.

Net asset value per share is determined as of the close of
trading on the NYSE and is computed by dividing the value of
the Portfolio's net assets by the total number of its shares
outstanding.  Securities that are primarily traded on
foreign exchanges are generally valued for purposes of
calculating the Portfolio's net asset value at the preceding
closing values of the securities on their respective
exchanges, except that, when an occurrence subsequent to the
time a value was so established is likely to have changed
that value, the fair market value of those securities will
be determined by consideration of other factors by or under
the direction of the Board of Trustees.  A security that is
primarily traded on a domestic or foreign stock exchange is
valued at the last sale price on that exchange as reported
to the Portfolio or, if no sales occurred during the day,
these investments are quoted at the mean between the current
bid and ask prices.  A security that is listed or traded on
more than one exchange is valued for purposes of calculating
the Portfolio's net asset value at the quotation on the
exchange determined to be the primary market for the
security.  Debt securities of U.S. issuers (other than U.S.
Government Securities and short-term investments) are valued
by SBFM after consultation with an independent pricing
service.  When, in the judgment of the pricing service,
quoted bid prices are available and are representative of
the bid side of the market, these investments are valued at
the mean between the quoted bid and ask prices.  Investments
for which no readily obtainable market quotations are
available, in the judgment of the pricing service, are
carried at fair value as determined by the pricing service.
The procedures of the pricing service are reviewed
periodically by the officers of the Trust under the general
supervision and responsibility of the Board of Trustees.  An
option that is written by the Portfolio is generally valued
at the last sale price or, in the absence of the last sale
price, the last offer price.  An option that is purchased by
the Portfolio is generally valued at the last sale price or,
in the absence of the last sale price, the last bid price.
The value of a futures contract is equal to the unrealized
gain or loss on the contract that is determined by marking
the contract to the current settlement price for a like
contract on the valuation date of the futures contract.  A
settlement price may not be used if the market makes a limit
move with respect to a particular futures contract or if the
securities underlying the futures contract experience
significant price fluctuations after the determination of
the settlement price.  When a settlement price cannot be
used, futures contracts will be valued at their fair market
value as determined by or under the direction of the Board
of Trustees.

All assets and liabilities initially expressed in foreign
currency values will be converted into U.S. dollar values at
the mean between the bid and offered quotations of the
currencies against U.S. dollars as last quoted by a
recognized dealer.  If the bid and offered quotations are
not available, the rate of exchange will be determined in
good faith by the Board of Trustees.  In carrying out the
board's valuation policies, SBFM may consult with an
independent pricing service retained by the Trust.

The valuation of the securities held by the Portfolio in
U.S. dollar-denominated securities with less than 60 days to
maturity are based upon their amortized cost, which does not
take into account unrealized capital gains or losses.
Amortized cost valuation involves initially valuing an
instrument at its cost and, thereafter, assuming a constant
amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method
provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is
higher or lower than the price that the Portfolio would
receive if it sold the instrument.

DETERMINATION OF PERFORMANCE

From time to time, the Trust may quote the Portfolio's total
return in advertisements or in reports and other
communications to shareholders.

Average Annual Total Return

From time to time, the Trust may advertise the Portfolio's
"average annual total return" over various periods of time.
This total return figure shows the average percentage change
in value of an investment in the Portfolio from the
beginning date of the measuring period to the ending date of
the measuring period and is reduced by the maximum Smith
Barney Advisory Service fee during the measuring period.
The figure reflects changes in the price of the Portfolio's
shares and assumes that any income, dividends and/or capital
gains distributions made by the Portfolio during the period
are reinvested in shares of the Portfolio.  Figures will be
given for recent one-, five- and ten-year periods (if
applicable) and may be given for other periods as well (such
as from commencement of the Portfolio's operations or on a
year-by-year basis).  Aggregate total returns also may be
shown by means of schedules, charts or graphs, and may
indicate subtotals of the various components of total return
(that is, the change in value of initial investment, income
dividends and capital gains distributions).

In reports or other communications to shareholders or in
advertising material, the Portfolio may quote total return
figures that do not reflect Smith Barney Advisory Service
fees (provided that these figures are accompanied by
standardized total return figures calculated as described
above), as well as compare its performance with that of
other mutual funds as listed in the rankings prepared by
Lipper Analytical Services, Inc. or similar independent
services that monitor the performance of mutual funds or
with other appropriate indices of investment securities.
The performance information also may include evaluations of
the Portfolio published by nationally recognized ranking
services and by financial publications that are nationally
recognized, such as Barron's, Business Week, CDA Investment
Technologies, Inc., Changing Times, Forbes, Fortune,
Institutional Investor, Investor's Business Daily,
Kiplinger's Personal Finance Magazine, Money, Morningstar
Mutual Fund Values, The New York Times, USA Today and The
Wall Street Journal.


The Portfolio's average annual total return figures are
computed according to a formula prescribed by the SEC,
expressed as follows:

P(1+T)n = ERV

Where:
	P=	a hypothetical initial payment of $1,000
T=	average annual total return, including the
effect of the maximum annual fee for
participation in TRAK.
	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 a
1-, 5- or 10-year period (or fractional
portion thereof), assuming reinvestment of
all dividends and distributions and the
effect of the maximum annual fee for
participation in TRAK.

The ERV assumes complete redemption of the hypothetical
investment at the end of the measuring period

The Portfolio's performance will vary from time to time
depending upon market conditions, the composition of its
portfolio and its operating expenses. Consequently, any
given performance quotation should not be considered
representative of the Portfolio's performance for any
specified period in the future.

The Portfolio's average annual total return without the
effect of the maximum annual fee for participation in TRAK
and with the effect of fee waivers were as follows:

One-Year ended
March 31, 2001
Since Inception
Inception Date
6.68%
7.76%
May 10, 1999

The Portfolio's average annual total return with the effect
of the maximum annual fee for participation in TRAK and with
the effect of fee waivers were as follows:

One-Year ended
March 31, 2001
Since Inception
Inception
Date
6.49%
7.57%
May 10, 1999

TAXES

The following is a summary of certain federal income tax
considerations that may affect the Portfolio and its
shareholders.  In addition to the considerations described
below, there may be other federal, state, local or foreign
tax applications to consider.  The summary does not address
all of the potential federal income tax consequences that
may be applicable to the Portfolio or to all categories of
investors, some of which may be subject to special tax
rules.  The summary is not intended as a substitute for
individual tax advice and investors are urged to consult
their own tax advisors as to the tax consequences of an
investment in the Portfolio.

The Portfolio intends to continue to qualify in each year as
a separate "regulated investment company" under the Code, by
complying with certain requirements regarding the sources
and distribution of its income and the diversification of
its assets.  Provided that the Portfolio (i) qualifies as a
regulated investment company and (ii) distributes to its
shareholders at least 90% of its taxable net investment
income (including, for this purpose, any excess of its net
short-term capital gain over its net long-term capital loss)
for a taxable year and 90% of its tax- exempt interest
income (reduced by certain expenses for that year), it will
not be liable for federal income taxes to the extent its
taxable net investment income and its net realized long-term
and short-term capital gains, if any, are distributed to its
shareholders in compliance with the Code's timing and other
requirements.

As described above and in the prospectus, the Portfolio may
invest in certain types of warrants, foreign currencies,
forward contracts, options and futures contracts. The
Portfolio anticipates that these investment activities will
not prevent it from qualifying as a regulated investment
company.

The Portfolio's transactions in foreign currencies, forward
contracts, options and futures contracts (including options
and futures contracts on foreign currencies) will be subject
to special provisions of the Code that, among other things,
may affect the character of gains and losses realized by the
Portfolio (i.e., may affect whether gains or losses are
ordinary or capital and, if capital, the extent to which
they are long-term or short-term), accelerate recognition of
income to the Portfolio and defer Portfolio losses. These
rules could therefore affect the character, amount and
timing of distributions to shareholders. These provisions
also (i) will require the Portfolio to mark-to-market
certain types of the positions in its portfolio (i.e., treat
them as if they were closed out), and (ii) may cause the
Portfolio to recognize income without receiving cash with
which to pay dividends or make distributions in amounts
necessary to satisfy the distribution requirements for
avoiding the income and excise taxes that are referred to
above.  The Portfolio will monitor its transactions, will
make the appropriate tax elections, if any, and will make
the appropriate entries in its books and records when it
acquires any foreign currency, forward contract, option,
futures contract or hedged investment in order to mitigate
the effect of these rules and seek to prevent
disqualification of the Portfolio as a regulated investment
company.

As a general rule, the Portfolio's gain or loss on a sale or
exchange of an investment will be a long-term capital gain
or loss if the Portfolio has held the investment for more
than one year and will be a short-term capital gain or loss
if it has held the investment for one year or less. Gains or
losses on the sale of debt securities denominated in a
foreign currency may be recharacterized as ordinary income
or losses, as described below.

Dividends or other income (including, in some cases, capital
gains) received by the Portfolio from sources within foreign
countries may be subject to withholding and other taxes
imposed by such countries.  Tax conventions between certain
countries and the United States may reduce or eliminate such
taxes in some cases.  The Portfolio will not be eligible to
elect to treat any foreign taxes paid by it as paid by its
shareholders, who therefore will not be entitled to
deductions or credits for such taxes on their own tax
returns.

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

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

Under Section 988 of the Code, gains or losses attributable
to fluctuations in exchange rates between the time the
Portfolio accrues income or receivables or expenses or other
liabilities denominated in a foreign currency and the time
the Portfolio actually collects such income or pays such
liabilities are generally treated as ordinary income or
ordinary loss.  Similarly, gains or losses on foreign
currency, foreign currency forward contracts, certain
foreign currency options or futures contracts and the
disposition of debt securities denominated in foreign
currency, to the extent attributable to fluctuations in
exchange rates between the acquisition and disposition
dates, are also treated as ordinary income or loss.

The Portfolio is permitted to carry forward any unused
capital losses to be utilized to offset its capital gains
realized during the eight-year period following the year in
which the losses arose, which will reduce the net realized
capital gains (if any) required to be distributed to
shareholders for those years.

Dividends and Distributions

In order to avoid the application of a 4% nondeductible
federal excise tax on certain undistributed amounts of
ordinary income and capital gains, the Portfolio may make an
additional distribution shortly before or shortly after
December 31 in each year of any undistributed ordinary
income or capital gains.  The Portfolio generally will seek
to pay any additional dividends and distributions necessary
to avoid the application of this tax.  For federal income
tax purposes, dividends declared by the Portfolio in
October, November or December as of a record date in such a
month and which are actually paid in January of the
following year will be taxable to shareholders as if they
were paid on December 31 of the year in which they are
declared rather than in the year in which shareholders
actually receive the dividends.

As a general rule, a shareholder's gain or loss on a
redemption or other disposition of Portfolio shares that is
treated as a sale under the Code will be a long-term capital
gain or loss if the shareholder has held his or her
Portfolio shares for more than one year and will be a short-
term capital gain or loss if he or she has held his or her
Portfolio shares for one year or less.

The Portfolio expects to realize a significant amount of net
long-term capital gains that will be distributed as
described in the prospectus. Distributions of the excess of
net long-term capital gain over net short-term capital loss
("capital gain dividends") will be taxable to shareholders
as long-term capital gains, regardless of whether received
in cash or reinvested in additional shares and how long a
shareholder has held Portfolio shares, and will be
designated as capital gain dividends in a written notice
mailed to the shareholders after the close of the
Portfolio's prior taxable year. If a shareholder receives a
capital gain dividend with respect to any share and redeems,
sells or otherwise disposes of the share before it has been
held for more than six months, then any loss, to the extent
of the capital gain dividend, will be treated as a long-term
capital loss. Additionally, any loss realized on a
redemption, exchange or other disposition of Portfolio
shares generally will be disallowed under "wash sale" rules
to the extent the shares disposed of are replaced with
shares of the Portfolio within a period of 61 days beginning
30 days before and ending 30 days after such disposition,
such as pursuant to reinvestment of dividends in Portfolio
shares.

Dividends paid from net investment income and distributions
of any excess of net short-term capital gain over net long-
term capital loss are taxable to shareholders as ordinary
income, regardless of how long shareholders have held their
Portfolio shares and whether such dividends and
distributions are received in cash or reinvested in
additional Portfolio shares.  Dividends paid by the
Portfolio that are declared from net investment income and
are attributable to qualifying dividends received by the
Portfolio from domestic corporations may qualify for the
federal dividends-received deduction for corporations.

The portion of the dividends received from the Portfolio
that qualifies for the dividends-received deduction for
corporations will be reduced to the extent that the
Portfolio holds dividend-paying stock for less than 46 days
(91 days for certain preferred stocks).  The Portfolio's
holding period requirement must be satisfied separately for
each dividend during a prescribed period before and after
the ex-dividend date and will not include any period during
which the Portfolio has reduced its risk of loss from
holding the stock by purchasing an option to sell, granting
an option to buy, or entering into a short sale of
substantially identical stock or securities, such as
securities convertible into the stock.  The holding period
for stock may also be reduced if the Portfolio diminishes
its risk of loss by holding one or more other positions with
respect to substantially similar or related properties.
Dividends-received deductions will be allowed only with
respect to dividends paid on Portfolio shares for which a
corporate shareholder satisfies the same holding period
rules applicable to the Portfolio, and the deduction is
subject to limitations on debt financing at both the
Portfolio and shareholder levels.  Receipt of dividends that
qualify for the dividends-received deduction may increase a
corporate shareholder's liability, if any, for alternative
minimum tax.  Such a shareholder should also consult its tax
adviser regarding the possibility that its federal tax basis
in its Portfolio shares may be reduced by the receipt of
"extraordinary dividends" from the Portfolio, and to the
extent such basis would be reduced below zero, current
recognition of income would be required.

Each shareholder will receive after the close of the
calendar year an annual statement as to the federal income
tax status of his or her dividends and distributions for the
prior calendar year.  Each shareholder will also receive, if
appropriate, various written notices after the close of the
Portfolio's prior taxable year as to the federal income tax
status of the Portfolio during the Portfolio's prior taxable
year. Shareholders should consult their tax advisors as to
any state and local taxes that may apply to these dividends
and distributions and the possible availability of an
exemption for dividends paid by a Portfolio attributable to
interest the Portfolio earns from U.S. Government
obligations.

If the Portfolio is the holder of record of any stock on the
record date for any dividends payable with respect to the
stock, these dividends will be included in the Portfolio's
gross income as of the later of (i) the date the stock
became ex-dividend with respect to the dividends (i.e., the
date on which a buyer of the stock would not be entitled to
receive the declared, but unpaid, dividends) or (ii) the
date the Portfolio acquired the stock. Accordingly, in order
to satisfy its income distribution requirements, the
Portfolio may be required to pay dividends based on
anticipated earnings, and shareholders may receive dividends
in an earlier year than would otherwise be the case.

Investors considering buying shares of the Portfolio on or
just prior to the record date for a taxable dividend or
capital gain distribution should be aware that even if the
net asset value of the Portfolio's shares is reduced below
the investor's cost as a result of the distribution, the
amount of the forthcoming dividend or distribution payment
will be a taxable dividend or distribution payment even
though it may represent a return of invested capital.

If a shareholder fails to furnish a correct taxpayer
identification number, fails to report fully dividend or
interest income, or fails to certify that he or she has
provided a correct taxpayer identification number and that
he or she is not subject to "backup withholding," then the
shareholder may be subject to a 31% "backup withholding" tax
with respect to (i) dividends and distributions and (ii) the
proceeds of any redemptions of Portfolio shares. An
individual's taxpayer identification number is his or her
social security number. The 31% "backup withholding" tax is
not an additional tax and may be credited against a
taxpayer's federal income tax liability. Distributions to
nonresident aliens and foreign entities may be subject to
different tax rules, including other possible withholding
taxes.

The foregoing is only a summary of certain tax
considerations generally affecting the Portfolio and its
shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult
their tax advisors with specific reference to their own tax
situations, including their state and local tax liabilities.

DISTRIBUTOR

Effective June 5, 2000, Salomon Smith Barney, located at 388
Greenwich Street, New York, New York 10013 replaced CFBDS,
Inc. as the Portfolio's distributor. Prior to June 5, 2000,
CFBDS, Inc., located at 20 Milk Street, Boston,
Massachusetts 02109-5408 served as the Portfolio's
distributor. Salomon Smith Barney serves as the Portfolio's
distributor on a best efforts basis pursuant to a written
agreement, which was approved by the Trustees of the Trust.

CUSTODIAN, TRANSFER AGENT AND SUB-TRANSFER AGENT

PFPC Trust Company serves as the custodian for the
Portfolio. The assets of the Portfolio are held under bank
custodianship in accordance with the 1940 Act. Under its
custody agreement with the Trust, PFPC Trust is authorized
to establish separate accounts for foreign securities owned
by the Portfolio to be held with foreign branches of U.S.
banks as well as certain foreign banks and securities
depositories as sub-custodians of assets owned by the
Portfolio.  For its custody services, PFPC Trust receives
monthly fees charged to the Portfolio based upon the month-
end, aggregate net asset value of the Portfolio plus certain
charges for securities transactions. PFPC Trust is also
reimbursed by the Portfolio for out-of-pocket expenses
including the costs of any foreign and domestic sub-
custodians.

Citi Fiduciary Trust Company, located at 125 Broad Street,
New York, New York 10004, serves as the Portfolio's transfer
and dividend-paying agent.  Under the transfer agency
agreement, the transfer agent maintains the shareholder
account records for the Portfolio, handles certain
communications between shareholders and the Portfolio,
distributes dividends and distributions payable by the
Portfolio and produces statements with respect to account
activity for the Portfolio and its shareholders.  For these
services, the transfer agent receives fees from the
Portfolio computed on the basis of the number of shareholder
accounts that the transfer agent maintains for the Portfolio
during the month and is reimbursed for out-of-pocket
expenses.

PFPC Global Fund Services, located at P.O. Box 9699,
Providence, RI 02940-9699, serves as the Portfolio's sub-
transfer agent.  Under the transfer agency agreement, the
sub-transfer agent maintains the shareholder account records
for the Portfolio, handles certain communications between
shareholders and the Portfolio and distributes dividends and
distributions payable by the Portfolio.  For these services,
the sub-transfer agent receives a monthly fee computed on
the basis of the number of shareholder accounts it maintains
for the Portfolio during the month, and is reimbursed for
out-of-pocket expenses.

FINANCIAL STATEMENTS

The Portfolio's Annual Report for the fiscal year ended March
31, 2001 is incorporated herein by reference in its
entirety.  The Annual Report was filed on June 4, 2001,
Accession Number 0000950130-01-502130.
34
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PART C

Item 23.	Exhibits

(a)(1)	Master Trust Agreement is incorporated by reference to
Registrant's Registration Statement on Form N-1A as filed with the
Securities and Exchange Commission (the "Commission") on May
24, 1991 (the "Registration Statement").

(a)(2)	Amendment No. 1 to Master Trust Agreement is
incorporated by reference to the Registration Statement.

(a)(3)	Amendment No. 2 to Master Trust Agreement is
incorporated by reference to Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-1A as
filed with the Commission on July 22, 1991 ("Pre-Effective
Amendment No. 1").

(a)(4)	Amendment No. 3 to Master Trust Agreement is
incorporated by reference to Post-Effective Amendment
No. 6 ("Post-Effective Amendment No. 6") to the Registration
Statement on Form N-1A filed on March 18, 1994.

(b)(1)	By-Laws are incorporated by reference to the
Registration Statement.

(b)(2)	Amended and Restated By-Laws are incorporated by
reference to Pre-Effective Amendment No. 1.

(c)	Not Applicable.

(d)(1)	Investment Management Agreement dated July 30, 1993
between the Registrant and The Consulting Group, a division of Smith,
Barney Advisers, Inc., is incorporated by reference to Post-Effective
Amendment No. 3 ("Post-Effective Amendment No. 3") to the
Registration Statement on Form N-1A filed with the Commission
on October 29, 1993.

(d)(2)	Investment Advisory Agreement dated July 30, 1993
between Smith, Barney Advisers, Inc. and Smith Affiliated Capital Corp.
relating to Registrant's Municipal Bond Investments Portfolio is
incorporated by reference to Post-Effective Amendment No. 3.

(d)(3)	Investment Advisory Agreement dated July 30, 1993
between Smith, Barney Advisers, Inc. and Atlantic Portfolio Analytics &
Management, Inc. relating to Registrant's Mortgage Backed Investments
Portfolio is incorporated by reference to Post-Effective Amendment No. 3.

(d)(4)	Investment Advisory Agreement dated January 4, 1999
between Mutual Management Corp. and Seix Investment Advisors Inc.
relating to Registrant's Balanced Investments Portfolio is incorporated by
reference to Post-Effective Amendment No. 28 ("Post-Effective Amendment No.
28") to the Registration Statement on Form N-1A filed with the Commission
on December 23, 1999.

(d)(4)	Investment Advisory Agreement dated January 4, 1999
between Mutual Management Corp. and Laurel Capital Advisors, LLP
relating to Registrant's Balanced Investments Portfolio is incorporated by
reference to Post-Effective Amendment No. 28.

(d)(6)	Investment Advisory Agreement dated April 1, 1999
between SSBC Fund Management Inc. (formerly Smith, Barney Advisers, Inc.)
and Standish, Ayer & Wood, Inc.
relating to Registrant's Intermediate Fixed Income Investments Portfolio
is incorporated by reference to Post-Effective Amendment No. 27.

(d)(7)	Investment Advisory Agreement dated July 30, 1993
between Smith, Barney Advisers, Inc. and Julius Baer Investment Management
Inc. relating to Registrant's International Fixed Income Investments
Portfolio is incorporated by reference to Post-Effective Amendment No. 3.

(d)(8)	Investment Advisory Agreement dated April 1, 1998
between Mutual Management Corp. and NFJ Investment Group Inc. relating
to Registrant's Small Capitalization Value Equity Investments
Portfolio is incorporated by reference to Post-Effective Amendment No.27.

(d)(9)    Investment Advisory Agreement dated October 1, 1998 between
Mutual Management Corp. (Formerly Smith Barney Mutual Funds
Management Inc.) and The Boston Company
Asset Management LLC relating to Registrant's Large Capitalization Value
Equity Investments Portfolio is incorporated by reference to Post-Effective
Amendment No. 28.

(d)(10)	Investment Advisory Agreement dated March 10, 1995
between Smith Barney Mutual Funds Management Inc. and Parametric Portfolio
Associates, Inc. relating to Registrant's Large Capitalization Value Equity
Investments Portfolio is to be filed by amendment.

(d)(11)	Investment Advisory Agreement
dated January 11, 1999 between Mutual Management Corp. and Provident
Investment Counsel relating to Registrant's Large Capitalization Growth
Investments Portfolio is incorporated by reference to Post-Effective
Amendment No. 28.

(d)(12)	Investment Advisory Agreement dated October 1, 1998
between Mutual Management Corp. and Standish, Ayer & Wood, Inc.
relating to Registrant's Government Money Investments Portfolio is
incorporated by reference to Post-Effective Amendment No. 28.

(d)(13)	Investment Advisory Agreement dated October 1, 1998
between Mutual Management Corp. and Oechsle International Advisors
L.P. relating to Registrant's International Equity Investments Portfolio is
incorporated by reference to Post-Effective Amendment No. 28.

(d)(14)	Investment Advisory Agreement dated March 3, 1994
between Smith, Barney Advisers, Inc. and John Govett & Company, Ltd.
relating to Registrant's Emerging Markets Equity Investments Portfolio
is incorporated by reference to Post-Effective Amendment No. 6.

(d)(15)	  Administration Agreement dated June 2, 1994 between the
Registrant and Smith, Barney Advisers, Inc. is incorporated by
reference to Post-Effective Amendment No. 16.

(d)(16)   Investment Advisory Agreement dated October 1, 1999 between SSB
Citi Fund Management LLC. (formerly Mutual Management Corp. and SSBC Fund
Management Inc.) and Western Asset Management Company relating to
Long-Term Bond Investments is incorporated by reference to
Post-Effective Amendment No. 27.

(d)(17)   Investment Advisory Agreement dated June, 1997 between
Smith Barney Mutual Funds Management Inc. and Wall Street Associates
relating to Small Capitalization Growth Investments is incorporated
by reference to Post-Effective Amendment No. 18 to the Registration
Statement on Form N-1A filed.

(d)(18)   Investment Advisory Agreement dated November 18,1997 between
Smith Barney Mutual Funds Management Inc. and Westpeak Investment
Advisors, LP relating to Small Capitalization Growth Investments is
Incorporated by reference to Post-Effective Amendment No. 19 to the
Registration
Statement on Form N-1A filed.

(d)(19)   Investment Advisory Agreement dated April 1, 1998 between Mutual
Management Corp. and Mellon Capital Management Corporation relating to Small
Capitalization Value Equity Investments is incorporated by reference to
Post-Effective Amendment No. 28.

(d)(20)   Investment Advisory Agreement dated April 1, 1998 between Mutual
Management Corp. and Mellon Capital Management Corporation relating to Small
Capitalization Growth Investments is incorporated by reference to Post-
Effective Amendment No. 28.

(d)(21)   Investment Advisory Agreement dated April 1, 1998 between Mutual
Management Corp. and Barclays Global Fund Advisors relating to Large
Capitalization Growth Investments is incorporated by reference to
Post-Effective Amendment No. 27.

(d)(22)   Investment Advisory Agreement dated January 11, 1999 between
Mutual Management Corp. and Barclays Global Fund Advisors relating to Large
Capitalization Value Equity Investments is incorporated by
 reference to Post-Effective Amendment No.27.

(d)(23) Investment Advisory Agreement dated April 1, 1998 between Mutual
Management Corp. and David L. Babson & Co. Inc. relating to Small
Capitalization Value Equity Investments is incorporated by reference to
Post-Effective Amendment No. 28.

(d)(24)   Investment Advisory Agreement dated June 15, 1998 between Mutual
Management Corp. and Alliance Capital Management L.P. relating to Large
Capitalization Value Equity Investments is incorporated by reference to
Post-Effective Amendment No. 28.

(d)(25)   Investment Advisory Agreement dated October 1, 1998 between Mutual
Management Corp. and State Street Global Advisors relating to International
Equity Investments is incorporated by reference to Post-Effective Amendment
No. 28.

(d)(25)   Investment Advisory Agreement dated July 15, 1998 between Mutual
Management Corp. and State Street Global Advisors relating to Emerging
Markets Equity Investments is incorporated by reference to Post-Effective
Amendment No. 28.

(d)(26)   Investment Advisory Agreement dated August 3, 1998 between Mutual
Management Corp. and Baring Asset Management, Inc. relating to Emerging
Markets Equity Investments is incorporated by reference to Post-Effective
Amendment No. 28.

(d)(27)	Investment Advisory Agreement dated April 15, 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.)
and  Pegasus Investments, Inc.
relating to Registrant's  Multi-Strategy Market Neutral Investments is
incorporated by reference to Post-Effective Amendment No. 27.

(d)(28)	Investment Advisory Agreement dated April 15, 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.)
and  State Street Global Advisors
relating to Registrant's  Multi-Strategy Market Neutral Investments  is
incorporated by reference to Post-Effective Amendment No. 27.

(d)(29)	Investment Advisory Agreement dated April 15, 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.)
and  Calamos Asset Management
relating to Registrant's  Multi-Strategy Market Neutral Investments is
incorporated by reference to Post-Effective Amendment No. 27.

(d)(30)	Investment Advisory Agreement dated October 1 , 1999
between SSB Citi Fund Management LLC (formerly SSBC Fund Management Inc.
and Mutual Management Corp.) and Standish, Ayer & Wood, Inc.
relating to Registrant's Multi-Sector Fixed Income Investments
is incorporated by reference to Post-Effective Amendment No.27.

(d)(31)	Investment Advisory Agreement dated October 1, 1999
between SSB Citi Fund Management LLC (formerly SSBC Fund Management Inc.
and Mutual Management Corp.) and National Asset Management Corp.
relating to Registrant's Multi-Sector Fixed Income Investments
is incorporated by reference to Post-Effective Amendment No. 27.

(d)(32)	Investment Advisory Agreement dated October 1, 1999
between SSB Citi Fund Management LLC (formerly SSBC Fund Management Inc.
and Mutual Management Corp.) and Atlantic Portfolio Analytics and Management
Inc. relating to Registrant's Multi-Sector Fixed Income Investments
is incorporated by reference to Post-Effective Amendment No. 27.

(d)(33)	Investment Advisory Agreement dated October 1, 1999
between SSB Citi Fund Management LLC (formerly SSBC Fund Management Inc.
and Mutual Management Corp.) and Alliance Capital Management, L.P.
relating to Registrant's Multi-Sector Fixed Income Investments
is incorporated by reference to Post-Effective Amendment No. 27.

(d)(34)	Investment Advisory Agreement dated October 1 , 1999
between SSB Citi Fund Management LLC (formerly SSBC Fund Management Inc.
and Mutual Management Corp.) and Barclays Global Fund Advisors
relating to Registrant's S & P 500 Index Investments
is incorporated by reference to Post-Effective Amendment No. 27.

(d)(35)	Investment Advisory Agreement dated April 1, 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.) and
Chartwell Investment Partners relating to Registrant's Large Capitalization
Value Equity Investments Portfolio is incorporated by reference to
Post-Effective Amendment No. 27.

(d)(36)   Investment Advisory Agreement dated April 1, 1999 between
SSBC Fund Management Inc. (formerly Mutual Management Corp.) and Kern
capital Management LLC relating to Small Capitalization Growth Investments
is incorporated by reference to Post-Effective Amendment No.27.

(d)(37)   Investment Advisory Agreement dated April 1, 1999 between SSBC
Fund Management Inc. (formerly Mutual Management Corp.) and  Marvin & Palmer
Associates relating to International Equity Investments is incorporated
by reference to Post-Effective Amendment No.27.

(d)(38)	Investment Advisory Agreement dated April 1, 1999
between SSBC Fund Management Inc. and Pacific Investment Management Co.
relating to Registrant's Intermediate Fixed Income Investments Portfolio
is incorporated by reference to Post-Effective Amendment No. 27.

(e)(1)	Distribution Agreement dated July 30, 1993 between the
Registrant and Smith Barney Shearson Inc. is incorporated by reference to
Post-Effective Amendment No. 3.

(e)(2) Form of Distribution Agreement between the Registrant
and CFBDS Inc. is incorpotated by reference to
Post-Effective Amendment No.23.

(e)(3) Form of Distribution Agreement between the Registrant
and Salomon Smith Barney Inc. is incorporated by reference to
Post-Effective Amendment No. 30 to the Registration Statement
on Form N-1A as filed on July 26, 2000 ("Post-Effective Amendment
No. 30").

(f)	Not Applicable.

(g)(1) Custody Agreements between the Registrant and PNC
Bank and Morgan Guaranty and Trust Company dated March
3, 1995 and August 24, 1995, respectively, are incorporated by reference to
Post-Effective Amendment No. 13 to the Registration Statement
on Form N-1A as filed on November 2, 1995.

(g) (2) Custody Agreement between the Registrant and Chase Manhattan Bank
dated December 6, 1996 is to be filed by amendment.

(h) (1) Transfer Agency and Registrar Agreement between the
Registrant and The Shareholder Services Group, Inc., dated September 26,
1993, is incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, as filed on
December 30, 1993.

(h) (2) Form of Transfer Agency Agreement between the Registrant and Smith
Barney Private Trust Company (Currently known as Citi Fiduciary Trust
Company) is incorporated by reference to Post-Effective Amendment No. 30.

(h) (3) Form of Sub-Transfer Agency Agreement between the First Data
Investor Services Group Inc. (Currently known as PFPC Global Fund Services)
and Smith Barney Private Trust Company (Currently known as Citi Fiducaiary
Trust Company) is incorporated by reference to
Post-Effective Amendment No. 30.


(i)	Opinion of Willkie Farr & Gallagher, including Consent,
is incorporated by reference to Post-Effective Amendment
No. 13 to the Registration Statement on Form N-1A filed
 on November 2, 1995.

(j)	Auditors' Consent is filed herein.

(k)	Not Applicable.

(l)	Purchase Agreement between the Registrant and Shearson
Lehman Brothers Inc. is incorporated by reference to Post-Effective
Amendment No. 1.

(m)	Not Applicable.

(n)	Not Applicable.

(o)	Not Applicable.

(p)(1)Code of Ethics-North America is incorporated by reference to Post-
Effective Amendment No. 30.

(p)(2)Code of Ethics of Sub-Advisers will be filed by amendment.


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

None.

Item 25.	Indemnification

	Incorporated by reference to Pre-Effective Amendment
No. 2 to the Registration Statement on Form N-1A as filed on
January 7, 1993.

Item 26(a)	Business and Other Connections of Investment
Advisors

	Investment Manager - The Consulting Group

	The Consulting Group and its predecessor have been in
the investment counseling business since 1973.  The Consulting Group is a
division of  Smith Barney Fund Management LLC ("SBFM")(formerly known as
SSB Citi Fund Management LLC), which was incorporated in 1968 under the laws
of
the State of Delaware. On September 21, 1999, SBFM was converted into a
Delaware Limited Liability Company.  SBFM  is a wholly owned subsidiary
of Salomon Smith Barney Holdings Inc., which is in turn a wholly owned
subsidiary of Citigroup Inc.

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

Item 26.(b)	Business and Other Connections of Advisors

	Advisors - Standish Mellon Asset Management.

	Standish Mellon Asset Management ("SMAM") serves as investment
advisor to Government Money Investments. SMAM is registered as a commodity
trading adviser with the National Futures Association.  SAW has been
registered as an investment advisor under the Advisers Act since 1940.
SMAM provides investment advisory services to individuals and institutions.
SMAM's principal executive offices are located at One Financial Center,
Boston, Massachusetts 02111.

	The list required by this Item 26 of officers and
directors of SMAM, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by SMAM pursuant to the
Advisers Act (SEC File No. 801-584).


	Advisors - Smith Affiliated Capital Corp.

	Smith Affiliated Capital Corp. ("SACC") serves as
investment advisor to Municipal Bond Investments.  SACC has been registered
as an investment advisor under the Advisers Act since 1982.  SACC provides
investment advisory services to individuals and institutions, and is a
general partner of, and investment advisor to, a limited partnership
primarily investment in municipal bonds.  SAW's principal executive offices
are located at 880 Third Avenue, New York, New York 10022.

	The list required by this Item 26 of officers and
directors of SACC, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by SACC pursuant to the
Advisers Act (SEC File No. 801-17037).

	Advisors - Utendahl Capital Management CFI

	Utendahl Capital Management CFI ("Utendahl")
serves as investment advisor to Mortgage Backed Investments and Multi-Sector
Fixed Income Investments.  Utendahl has been registered as an investment
advisor under the Advisers Act
since 1984. Utendahl serves as an investment advisor to institutions.
Utendahl's principal executive offices are located at 201 East Pine Street,
Suite 600, Orlando, Florida 32801.

	The list required by this Item 26 of officers and
directors of Utendahl, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by Utendahl pursuant to the
Advisers Act (SEC File No. 801-24775).

	Advisors - Western Asset Management Company

	Western Asset Management Company ("Western")
serves as investment advisor to Long-Term Bond Investments and Multi-Sector
Fixed Income Investments.  Western has been registered as an investment
advisor under the Advisers Act
since 1971. Western serves as an investment advisor to institutions
and retail clients. Western's principal executive offices are located at 117
East Colorado Blvd., Pasadena, CA 91105.

	The list required by this Item 26 of officers and
directors of Western, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by Western pursuant to the
Advisers Act (SEC File No. 801-8162).

 	Advisors - Pacific Investment Management Company

	Pacific Investment Management Company ("PIMCO")
serves as an investment advisor to Intermediate Fixed Income Investments.
PIMCO has been registered as an investment advisor under the Advisers Act
since 1971. PIMCO serves as an investment advisor to institutions
and retail clients. PIMCO's principal executive offices are located at 840
Newport Center Drive, Suite 300, Newport Beach, CA 92660.

	The list required by this Item 26 of officers and
directors of PIMCO, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by PIMCO pursuant to the
Advisers Act (SEC File No. 801-48187).

	Advisors - Metropolitan West Asset Management LLC

	 Metropolitan West Asset Management LLC ("MWAM")
serves as an investment advisor to Intermediate Fixed Income Investments
and Multi-Sector Fixed Income Investments. MWAM has been registered as an
investment advisor under the Advisers Act since 1996. MWAM serves as an
investment advisor to institutional clients. MWAM's principal executive
offices are located at 11766 Wilshire Boulevard, Suite 1580, Los Angeles, CA
90025.

	The list required by this Item 26 of officers and
directors of MWAM, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by MWAM pursuant to the
Advisers Act (SEC File No. 801-53332).

	Advisors - BlackRock Financial Management, Inc.

	 BlackRock Financial Management, Inc. ("BlackRock")
serves as an investment advisor to Intermediate Fixed Income Investments.
BlackRock has been registered as an investment advisor under the Advisers
Act since 1988. BlackRock serves as an investment advisor to institutional
and retail clients. BlackRock's principal executive offices are located at
345 Park Avenue, New York, New York 10154.

	The list required by this Item 26 of officers and
directors of BlackRock, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by BlackRock pursuant to
the Advisers Act (SEC File No. 801-48433).

	Advisors - Chartwell Investment Partners

	Chartwell Investment Partners ("Chartwell")
serves as investment advisor to fLArge Capitalization Value Equity
Investments.  Chartwell has been registered as an investment advisor under
the Advisers Act since 1997. Chartwell serves as an investment advisor to
institutions. Chartwell's principal executive offices are located at 1235
Westlakes Drive, Suite330, Berwyn, PA 19312.

	The list required by this Item 26 of officers and
directors of Chartwell, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by Chartwell pursuant to
the Advisers Act (SEC File No. 801-54124).

	Advisors - The Boston Company Asset Management LLC

	The Boston Company Asset Management LLC ("TBCAM") serves as
co-investment advisor to Large Capitalization Value Equity Investments.
TBCAM has been registered as an investment advisor under the Advisers Act
since 1970.  TBCAM's principal executive offices are located at One Boston
Place, Boston, Massachusetts 02108.

	The list required by this Item 26 of officers and
directors of TBCAM, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by TBCAM pursuant to the
Advisers Act (SEC File No.801-6829).

	Advisors - Parametric Portfolio Associates, Inc.

	Parametric Portfolio Associates, Inc. ("PPA") serves as
co-investment advisor to Large Capitalization Value Equity Investments.
PPA has been registered as an investment advisor under the Advisers Act
since 1987.  PPA provides investment advisory services to a number of
individual and institutional clients.  PPA's principal executive offices
are located at 7310 Columbia Center, 701 Fifth Avenue, Seattle, Washington
98104-7090.

	The list required by this Item 26 of officers and
directors of PPA, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by PPA pursuant to the
Advisers Act (SEC File No. 801-29855).

	Advisors - Barclays Global Fund Advisors

	Barclays Global Fund Advisors ("Barclays") serves as an
investment advisor to Large Capitalization Value Equity Investments,
Large Capitalization Growth Investments and S&P 500 Index Investments.
Barclays is registered as an investment advisor under the Advisers Act.
Barclays provides investment advisory services to a number of
individual and institutional clients.  Barclays' principal executive offices
are located at 45 Fremont Street, San Francisco, CA 94105.

	The list required by this Item 26 of officers and
directors of Barclays, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by Barclays pursuant to the
Advisers Act (SEC File No. 801-22609).

	Advisors - TCW Investment Management Company

	TCW Investment Management Company ("TCW") serves as
investment advisor to Large Capitalization Growth Investments.  TCW is
registered as an investment advisor under the Advisers Act. TCW provides
investment advisory services to individual and
institutional clients.  TCW's principal executive offices are located at
865 South Figueroa Street, Suite 1800, Los Angeles, CA  90017.

	The list required by this Item 26 of officers and
directors of TCW, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by TCW pursuant to the
Advisers Act (SEC File No. 801-44088).

	Advisors - Turner Investment Partners, Inc.

	 Turner Investment Partners, Inc. ("Turner") serves as
investment advisor to Large Capitalization Growth Investments.  Turner has
been registered as an investment advisor under the Advisers Act
since 1990.  Turner provides investment advisory services to individual and
institutional clients.  Turner's principal executive offices are located
at 1235 Westlakes Drive, Suite 350, Berwyn, PA 19312.

	The list required by this Item 26 of officers and
directors of Turner, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by Turner pursuant to the
Advisers Act (SEC File No. 801-36220).

Advisors - Mellon Capital Management Corporation

	Mellon Capital Management Corporation ("Mellon") serves as an
investment advisor to Small Capitalization Value Equity Investments
and Small Capitalization Growth Investments. Mellon is registered as an
investment advisor under the Advisors Act.  Mellon provides investment
advisory services to a number of institutional clients.  Mellon's principal
executive offices are located at 595 Market Street, Suite 3000, San
Francisco, CA 94105.

	The list required by this Item 26 of officers and
directors of Mellon, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and  directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by Mellon pursuant to the
Advisers Act (SEC File No. 801-19785).

   	Advisors - NFJ Investment Group, Inc.

	NFJ Investment Group, Inc. ("NFJ") serves as co-
investment advisor to Small Capitalization Value Equity Investments.
NFJ has been registered as an investment advisor under the Advisors
Act since 1989.  NFJ provides investment advisory services to a number
of individual and institutional clients.  NFJ's principal executive offices
are located at 2121 San Jacinto Street, Suite 1440, Dallas, Texas 75201.

	The list required by this Item 26 of officers and
directors of NFJ, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and  directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by NFJ pursuant to the
Advisers Act (SEC File No. 801-42814).

	Advisors - Rutabaga Capital Management LLC

	Rutabaga Capital Management LLC ("Rutabaga") serves as an investment
advisor to Small Capitalization Value Equity Investments.
Rutabaga has been registered as an investment advisor under the Advisors
Act since 1999.  Rutabaga provides investment advisory services to
institutional clients.  Rutabaga's principal executive offices are located
at 2 Oliver Street, Boston, MA 02109.

	The list required by this Item 26 of officers and
directors of Rutabaga, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and  directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by Rutabaga pursuant to the
Advisers Act (SEC File No. 801-56233).

	Advisors - Wall Street Associates

	Wall Street Associates ("WSA") will serve as
co-investment advisor to Small Capitalization Growth Investments.  WSA has
been registered as an investment advisor under the Advisers Act since 1987.
WSA is the investment adviser of various institutional clients.  WSA's
principal executive offices are located at 1200 Prospect Street,
Suite 100, LaJolla, CA 92037.

	The list required by this Item 26 of officers and
directors of WSA, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by WSA pursuant to the
Advisers Act (SEC File No.801-30019).


	Advisors - Westpeak Investment Advisors, LP

	Westpeak Investment Advisors, LP("WSA") will serve as
co-investment advisor to Small Capitalization Growth Investments.  Westpeak
has been registered as an investment advisor under the Advisers Act since
1991. Westpeak is the investment adviser of various institutional clients.
Westpeak's principal executive offices are located at 1011 Walnut Street,
Suite 400, Boulder, CO 80302.

	The list required by this Item 26 of officers and
directors of Westpeak, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Westpeak pursuant to the
Advisers Act (SEC File No.801-39554).

Advisors - Kern Capital Management LLC

	Kern Capital Management LLC ("Kern") serves as an investment advisor
to Small Capitalization Growth Investments.  Kern has been registered as an
investment advisor under the Advisers Act since 1997. Kern is the investment
adviser of various institutional and retail clients.  Kern's
principal executive offices are located at 114 West 47th Street, Suite 1926,
New York, NY 10036.

	The list required by this Item 26 of officers and
directors of Kern, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Kern pursuant to the
Advisers Act (SEC File No.801-54766).

Advisors - Westfield Capital Management Company

	Westfield Capital Management Company ("Westfield")
serves as an investment advisor to Small Capitalization Growth Investments.
Westfield is the investment adviser of various institutional clients.
Westfield's principal executive offices are located One Financial Center,
Boston, MA  02111.

	The list required by this Item 26 of officers and
directors of Westfield, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to _____.

	Advisors - Oechsle International Advisors, L.P.

	Oechsle International Advisors, L.P. ("OIA") serves as
investment advisor to International Equity Investments.  OIA has been
registered as an investment advisor under the Advisers Act since 1986.  OIA
provides investment advisory services to a number of individual and
institutional clients.  OIA's principal executive offices are located at
One International Place, Boston, Massachusetts 02110.

	The list required by this Item 26 of officers and
directors of OIA,  together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by OIA pursuant to the
Advisers Act  (SEC File No. 801-28111).

	Advisors - SSgA Funds Management, Inc.

	SSgA Funds Management, Inc. ("SSgA") serves as an
investment advisor to International Equity Investments, Emerging Markets
Equity Investments and Multi-Strategy Market Neutral Investments. SSgA
provides investment advisory services to a number of individual and
institutional clients.  SSgA's principal executive offices are located at
Two International Place, Boston, Massachusetts 02110.

	The list required by this Item 26 of officers and
directors of SSgA,  together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to _____.

	Advisors - Zurich Scudder Investments, Inc.

	Zurich Scudder Investments, Inc. ("Zurich Scudder") serves as
an investment advisor to International Equity Investments.  Zurich Scudder
is registered as an investment advisor under the Advisers Act.  Zurich
Scudder provides investment advisory services to a number of individual
and institutional clients.  Zurich Scudder's principal executive offices
are located at 345 Park Avenue, New York, NY  10154.

	The list required by this Item 26 of officers and directors of
Zurich Scudder,  together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated
by reference to Schedules A and D of Form ADV filed by Zurich Scudder
pursuant to the Advisers Act  (SEC File No. 801-252).

	Advisors - Julius Baer Investment Management Inc.

	Julius Baer Investment Management Inc. ("JBIM") serves
as investment advisor to International Fixed Income Investments.  JBIM has
been registered as an investment advisor under the Advisers Act
since 1984. Directly and through Julius Baer Securities Inc., JBIM
provides investment advisory services to a wide variety of individual and
institutional clients, including registered investment companies.  JBIM's
principal executive offices are located at 330 Madison Avenue, New
York, New York 10017.

	The list required by this Item 26 of officers and
directors of JBIM together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by JBIM pursuant to the
Advisers Act (SEC File No. 801-18766).


	Advisors - Baring Asset Management, Inc.

	Baring Asset Management, Inc. ("Baring") serves as an
investment advisor to Emerging Markets Equity Investments.  Baring has been
registered as an investment advisor under the Advisers Act since 1967.
Baring is the investment adviser of various institutional clients.  Baring's
principal executive offices are located at 125 High Street, Boston, MA
02110.

	The list required by this Item 26 of officers and
directors of Baring, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Baring pursuant to the
Advisers Act (SEC File No.801-4611).

	Advisors - Foreign & Colonial Emerging Markets Ltd.

	 Foreign & Colonial Emerging Markets Ltd. ("F&C") serves as an
investment advisor to Emerging Markets Equity Investments.  F&C has been
registered as an investment advisor under the Advisers Act since 1987.
Baring is the investment adviser of various institutional clients.  F&C's
principal executive offices are located at 8th Floor, Exchange House,
Primrose Street, London EC2A 2NY England.

	The list required by this Item 26 of officers and
directors of F&C, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by F&C pursuant to the
Advisers Act (SEC File No.801-44724).

	Advisors - Alliance Capital Management L.P.

	Alliance Capital Management L.P. ("Alliance") will serve as
investment advisor to High Yield Investments and Multi-Sector Fixed Income
Investments.  Alliance has been
registered as an investment advisor under the Advisers Act since 1971.
Alliance is the investment adviser of various institutional and individual
clients.  Alliance's principal executive offices are located at 1345 Avenue
of the Americas, New York, New York .

	The list required by this Item 26 of officers and
directors of Alliance, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Alliance pursuant to the
Advisers Act (SEC File No.801-32361).


	Advisors - Laurel Capital Advisors, LLP

	Laurel Capital Advisors, LLP ("Laurel") serves as an
investment advisor to Balanced Investments.  Laurel has been registered as
an investment advisor under the Advisers Act since 1990.  Laurel is the
investment adviser of various institutional and individual clients.
Babson's principal executive offices are located at One Mellon Bank Center,
Suite 151-3925, Pittsburgh, PA 15258.

	The list required by this Item 26 of officers and
directors of Laurel, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Laurel pursuant to the
Advisers Act (SEC File No.801-37598).

	Advisors - Seix Investment Advisors

	Seix Investment Advisors ("Seix") serve as an
investment advisor to Balanced Investments.  Seix has been registered as an
investment advisor under the Advisers Act since 1992.  Seix is the
investment adviser of various institutional clients.  Seix's principal
executive offices are located at 300 Tice Blvd., Woodcliff Lake, NJ 07675.

	The list required by this Item 26 of officers and
directors of Seix, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Seix pursuant to the
Advisers Act (SEC File No.801-42070).

	Advisors - Pegasus Investments, Inc.

	Pegasus Investments, Inc. ("Pegasus") serves as an
investment advisor to Multi-Strategy Market Neutral Investments.  Pegasus
has been registered as an investment advisor under the Advisers Act since
1999.  Pegasus is the investment adviser of various institutional clients.
Pegasus's principal executive offices are located at One Boston Place,
Boston, Massachusetts 02108.

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

	Advisors - Calamos Asset Management

	Calamos Asset Management ("Calamos") serves as an
investment advisor to Multi-Strategy Market Neutral Investments.  Calamos
has been registered as an investment advisor under the Advisers Act since
1977.  Pegasus is the investment adviser of various retail  and
institutional clients.  Calamos's principal executive offices are located at
1111 East Warrenville Road, Naperville, Illinois 60563.

	The list required by this Item 26 of officers and
directors of Calamos, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Calamos pursuant to the
Advisers Act (SEC File No.801-29688).

Item 27.	Principal Underwriters


(a)

 Salomon Smith Barney, Inc., ("Salomon Smith Barney")
the Registrant's Distributor,
is also the distributor for the following Smith Barney
funds: Smith Barney Investment Series (formerly Concert Investment
Series),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 Allocation Series
Inc. (formerly 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 Sector Series Inc., 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.

In addition, Salomon Smith Barney is also the distributor for the
following Salomon Brothers Funds: Salomon Brothers Opportunity Fund
Inc., Salomon Brothers Investors value Fund Inc., Salomon Brothers
Capital Fund Inc., Salomon Brothers Series Funds Inc., Salomon Brothers
Institutional Series Funds Inc., Salomon Brothers Variable Series Funds
Inc. and SSB Citi Funds Inc.

In addition, Salomon Smith Barney is also the distributor for the
CitiFunds Multi-State Tax Free Trust, CitiFunds Premium Trust, CitiFunds
Institutional Trust, CitiFunds Tax Free Reserves and CitiFunds Trust
III.

In addition, Salomon Smith Barney is also the distributor for the
Centurion Funds, Inc.


(b) The information required by
this Item 27 with respect to each director, officer and partner
of Salomon Smith Barney is incorporated by reference
to Schedule A of FORM BD filed by Salomon Smith Barney pursuant to
the Securities Exchange Act of 1934 (SEC File No. 812-8510).


(c)	Not applicable.

Item 28.	Location of Accounts and Records

	Consulting Group Capital Markets Funds
	222 Delaware Avenue
	Wilmington, Delaware  19801

	Smith Barney Fund Management LLC
	7 World Trade Center, 39th Floor
	New York, New York 10048

	PFPC Trust Co.
	8800 Tinicum Boulevard
	Philadelphia, PA  19153

	The Chase Manhattan Bank
	Chase MetroTech Center
	Brooklyn, NY  11245

	Salomon Smith Barney Inc.
	388 Greenwich Street
	New York, New York  10013
   	and
	125 Broad Street
	New York, New York 10004

	Citi Fiduciary Trust Company
	125 Broad Street
	New York, New York 10004

	PFPC Global Fund Services
	P. O. Box 9699
	Providence, RI 02940-9699


Item 29.	Management Services

	Not Applicable.

Item 30.	Undertakings

	Not Applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended
(the"1933 Act") and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b)
under the 1933 Act and the Registrant has duly caused this Post-Effective
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, this Post-Effective Amendment, and where applicable, the true and
lawful attorney-in-fact, thereto duly authorized, in the City of New York and
State of New York on the 30th day of July 2001.

CONSULTING GROUP CAPITAL MARKETS FUNDS

BY /s/ Heath B. McLendon
	(Heath B. McLendon, Chief Executive Officer)

     Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.

	Signature	Title	Date

/s/ Heath B. McLendon
Trustee and Chairman of the Board 			July 30, 2001
Heath B. McLendon  (Chief Executive Officer)

/s/ Lewis E. Daidone
Senior Vice President and Treasurer  		July 30, 2001
Lewis E. Daidone  (Chief Financial and Accounting
Officer)

/s/ Walter E. Auch, Sr.*
    Walter E. Auch, Sr., Trustee 			July 30, 2001

/s/ H. John Ellis**
    H. John Ellis,  Trustee

/s/ Armon E. Kamesar
     Armon E. Kamesar,  Trustee,			July 30, 2001

/s/ Martin Brody*
    Martin Brody, Trustee, 				July 30, 2001

/s/ Stephen E. Kaufman*
    Stephen E. Kaufman, Trustee, 			July 30, 2001

* Signed pursuant to power of attorney filed  October 29, 1993 as an exhibit
  to Post-Effective Amendment No. 3.

/s/ Heath B. McLendon
    Heath B. McLendon					July 30, 2001

** Signed pursuant to power of attorney dated March 1, 2000 filed as an
exhibit to Post-Effective Amendment No. 30.

/s/ Heath B. McLendon
    Heath B. McLendon					July 30, 2001






EXHIBIT INDEX

Exhibit No.			Exhibit

(j)			Auditor's Consent