CONSULTING GROUP CAPITAL MARKETS FUNDS (the "Trust")
Supplement dated November 12, 1997 to the Prospectus dated December 31,
1996
On November 3, 1997 the Trust's Board of Trustees approved the
following:
The hiring of Montgomery Asset Management, LLC ("Montgomery") as an
additional investment adviser to Small Capitalization Growth
Investments ("Small Cap Growth Portfolio"). The Consulting Group, a
division of Smith Barney Mutual Funds Management Inc. ("SBMFM"), the
Trust's Investment Manager, recommended the hiring of an additional
active manager due to the rapid growth in assets experienced by the
Small Cap Growth Portfolio in 1997. The hiring of Montgomery
resulted in the entering into of an investment advisory agreement
dated as of November 7, 1997, between SBMFM and Montgomery. Under
the terms of the agreement, Montgomery will be receiving 0.50% for
its services, a fee that is computed daily and paid monthly based on
the value of the average net assets of the Small Cap Growth Portfolio
allocated to Montgomery. Montgomery, located in San Francisco,
California, is a subsidiary of Commerzbank AG. Montgomery was
founded in 1990 and currently manages $8.9 billion in assets.
Shareholders of the Small Cap Growth Portfolio will soon receive an
information statement regarding Montgomery.
An amendment to the Trust's investment policies to permit each
Portfolio to invest in Real Estate Investment Trusts ("REITS"). REITs
are entities which either own properties or make construction or
mortgage loans. Equity trusts own real estate directly and the value
of, and income earned by, the trust depends upon the income of the
underlying properties and the rental income they earn. Equity trusts
may also include operating or finance companies. Equity trusts can
also realize capital gains by selling properties that have
appreciated in value. A mortgage trust can make construction,
development or long-term mortgage loans, and are sensitive to the
credit quality of the borrower. Mortgage trusts derive their income
from interest payments. Hybrid trusts combine the characteristics of
both equity and mortgage trusts, generally by holding both ownership
interests and mortgage interests in real estate. The value of
securities issued by REITs are affected by tax and regulatory
requirements and by perceptions of management skill. They are also
subject to heavy cash flow dependency, defaults by borrowers or
tenants, self-liquidation, the possibility of failing to qualify for
tax-free status under the Internal Revenue Code of 1986, as amended,
and failing to maintain exemption from the Investment Company Act
1940, as amended.
FD 01357 11/97
