SMITH BARNEY INVESTMENT TRUST, 497, 2000-09-01

SMITH BARNEY INVESTMENT TRUST
497, 2000-09-01

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<PAGE>
Rule 497(c) File Nos. 033-43446 and 811-6444

Citi Nasdaq-100 Index Shares

Citi S&P 500 Index Shares

Citi Small Cap Index Shares

Citi U.S. 1000 Index Shares

Citi U.S. 5000 Index Shares

Citi Global Titans Index Shares

Citi International Index Shares

Citi Financial Services Index Shares

Citi Health Sciences Index Shares

Citi Technology Index Shares

Citi U.S. Bond Index Shares

[graphics omitted]

Prospectus
September 5, 2000

Each of the share classes offered by this prospectus is a class of one of these
corresponding funds: Citi Nasdaq-100 Index Fund, Smith Barney S&P 500 Index
Fund, Citi Small Cap Index Fund, Citi U.S. 1000 Index Fund, Smith Barney U.S.
5000 Index Fund, Citi Global Titans Index Fund, Smith Barney International Index
Fund, Citi Financial Services Index Fund, Citi Health Sciences Index Fund, Citi
Technology Index Fund and Citi U.S. Bond Index Fund.

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.

CITIFUNDS(R)
---------------
INDEX SERIES

INVESTMENT PRODUCTS: NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
<PAGE>

[graphic omitted]

TABLE OF CONTENTS

THE FUNDS ............................................................ 3

Indexing .................................................... 3

Citi Nasdaq-100 Index Shares ................................ 5

Citi S&P 500 Index Shares ................................... 10

Citi Small Cap Index Shares ................................. 16

Citi U.S. 1000 Index Shares ................................. 21

Citi U.S. 5000 Index Shares ................................. 26

Citi Global Titans Index Shares ............................. 31

Citi International Index Shares ............................. 36

Citi Financial Services Index Shares ........................ 42

Citi Health Sciences Index Shares ........................... 48

Citi Technology Index Shares ................................ 54

Citi U.S. Bond Index Shares ................................. 60

YOUR ACCOUNT ......................................................... 65

How To Buy Shares ........................................... 65

Cititrade Investing ......................................... 65

How The Price Of Your Shares Is Calculated .................. 66

How To Sell Shares .......................................... 66

Exchanges ................................................... 67

Dividends ................................................... 68

Tax Matters ................................................. 68

MANAGEMENT OF THE FUNDS .............................................. 69

Distribution Arrangements ................................... 71

APPENDIX ............................................................. 72
<PAGE>

THE FUNDS

INDEXING

The Funds in this Prospectus share the same basic investment strategy. They are
designed to track the performance of a stock or bond market index.

This strategy distinguishes an index fund from an "actively managed" mutual
fund. Instead of choosing investments based on judgment, a portfolio manager
looks to an index to determine which securities the Fund should own. Instead of
trying to outperform the market or segment it tracks, each Fund tries to provide
investment results that match, as closely as possible, the performance of its
Index. And if the securities contained in a Fund's Index are losing value or are
downgraded by investment analysts, the Fund will continue to purchase and hold
those securities, even if the Fund loses money as a result.

The Funds may use replication or sampling techniques to track the performance of
their Indexes. Replication involves a Fund holding each security in its Index in
the same proportion as the security appears in the Index. Sampling techniques
involve investing in a smaller number of securities included in the Index that
are selected to resemble the Index in terms of industry weightings, market
capital-ization, price/earnings ratio, dividend yield or other characteristics.
A Fund may also purchase and sell securities in anticipation of additions or
deletions to its Index.

Each of the Funds attempts to achieve, in rising and falling markets, a
correlation of at least 95% between the total return of its net assets before
fees and expenses and its respective Index. Of course, like most index funds,
there is no guarantee that a Fund will be able to achieve or maintain this level
of correlation. And, like other mutual funds, a Fund will have operating
expenses that affect the Fund's ability to track its Index.

The Funds may use derivatives to track the performance of their Indexes.
Derivatives are financial instruments whose values are derived, at least in
part, from the prices of other securities or specified assets, indexes or rates.
The Funds might use derivatives to simulate full investment in the Fund's Index
while maintaining sufficient liquidity to satisfy redemptions and operating
expenses, to facilitate trading in the securities of companies that comprise the
Index, to reduce transaction costs or to seek higher investment returns when a
contract is priced more attractively than the securities comprising the Fund's
Index.

Because the composition of an Index tends to be compara-tively stable, index
funds historically have experienced lower portfolio turnover than actively
managed funds.
<PAGE>

CITI(SM) NASDAQ-100 INDEX SHARES

The Fund's goal is to provide investment results that, before fees and expenses,
correspond to the performance of the Nasdaq-100 Index(R).

THE INDEX
The Nasdaq-100 Index includes the largest (based on market capitalization) and
most active non-financial domestic and inter-national stocks listed on The
Nasdaq Stock Market. The Nasdaq-100 Index does not show actual investment
returns or reflect payment of management or brokerage fees, which would lower
the Nasdaq-100 Index's performance. The Nasdaq-100 Index is unmanaged and does
not have to maintain liquidity to meet redemption requests or pay expenses.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The Nasdaq-100 Index Fund may use replication or sampling
techniques to track the performance of the Nasdaq-100 Index. The Fund also may
use derivatives and investment techniques such as buying and selling options and
futures contracts, entering into swap agreements and purchasing indexed
securities to track the performance of the Index. The Fund also may enter into
repurchase agreements and lend portfolio securities.

SELECTION PROCESS. The Nasdaq-100 Index Fund is a "pure" index Fund. This means
that the manager does not evaluate individ-ual companies to identify attractive
invest-ment candidates. Instead, the manager attempts to mirror the performance
of the Index as closely as possible by adjusting the Fund's portfolio
periodically to match or sample the Index or its performance. Like most index
funds, the Fund does not mirror the Index exactly because, unlike the Index, the
Fund must maintain a portion of its assets in cash and liquid short-term
securities to meet redemption requests and pay the Fund's expenses. The Fund's
returns are likely to be below those of the Index because of the Fund's
short-term investments and its operating expenses.

[Citi is a service mark of Citicorp.]

WHO MAY WANT TO INVEST
The Nasdaq-100 Index Fund may be an appropriate investment if you:

o Are seeking to participate in the long-term growth potential of U.S. stocks

o Are looking for an investment with potentially greater return but higher
risk than a fund investing primarily in fixed income securities

o Are willing to accept the risks of the stock market, including the potential
for greater volatility of certain companies included in the Nasdaq-100 Index

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

INDEX INVESTING RISK. Because the Fund is managed as an index fund, it will not
ordinarily sell a portfolio security because of the security's poor performance.
The Fund normally buys or sells a portfolio security only to reflect additions
or deletions of stocks that comprise its Index or to adjust their relative
weightings. Although the manager seeks to replicate the performance of the
Index, the Fund may underperform its Index even before deducting fees and
expenses because the Fund must maintain a portion of its assets in liquid
short-term debt securities which historically have generated significantly lower
returns than common stocks. In addition, expenses and transaction costs, the
size of the Fund and the size and frequency of cash flows into and out of the
Fund, and the differences between how and when the Fund and its Index are valued
can also cause differences in performance. Because the Fund may use a sampling
strategy, it may not track its Index perfectly and differences between the
underlying Index and the Fund's portfolio will cause differences in performance.

MARKET RISK. The Fund is exposed to the risks of investing in common stocks. The
Fund may not perform as well as other investments, if, among other things: the
Index declines or performs poorly relative to other related indexes or
individual securities; an adverse event, such as an unfavorable earnings
report, negatively affects the price of an issuer in the Index; or the
securities issued by companies which comprise the Index fall out of favor with
investors.

TECHNOLOGY RISK. Although the composition of the Index changes from time to
time, many of the stocks in the Index may be issued by companies in the
technology sector. Market conditions, interest rates, and economic, regulatory
or financial developments could significantly affect the technology sector and
the securities of companies in that sector could react similarly to these or
other developments. 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 areas, and changes
in governmental policies and the need for regulatory approvals may have a
material adverse effect on the sector. The performance of the technology sector
may differ in direction and degree from that of the overall stock market.

DERIVATIVES. Derivatives may be more sensitive than direct securities to
changes in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value because of their structure or
contract terms. Even a small investment in derivative contracts can have a big
impact on the Fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when stock
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

Certain derivative contracts present the risk that the other party to the
contract may not perform. Derivatives can also make the Fund less liquid and
harder to value, especially in declining markets.

NON-DIVERSIFICATION. The Fund is "non-diversified", which means it may invest a
relatively high percentage of its assets in the securities of a single issuer or
a limited number of issuers. As a result, the Fund may be more sensitive to a
single economic, political or regulatory occurrence than a diversified fund.

SMALLER COMPANIES. The Fund's investments may include smaller capitalization
companies whose stocks tend to have more price volatility than larger
companies.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated
redemptions. The Fund's investments in money market instruments will likely
cause the Fund's returns to differ from those of the Index.

FOREIGN INVESTMENTS. The Fund may purchase common stocks and ADRs of the foreign
companies included in the Nasdaq-100 Index. These securities are traded on The
Nasdaq Stock Market. ADRs are U.S. dollar-denominated securities which represent
an interest in an underlying foreign security. These common stocks and ADRs are
subject to most of the special risks associated with foreign investing,
including currency, political, legal, regulatory and operational risks.

SECURITIES LENDING. If the Fund lends its securities to earn income, it will
receive cash or other securities as collateral for the loan, which must be
returned to the borrower at the completion of the loan. The Fund typically
invests cash collateral received in short-term investments. The Fund could lose
money if the lent securities are not returned by the borrower at the termination
of the loan, or if the value of its short-term investment of the cash collateral
declines over the period of the loan.

INVESTMENT STRUCTURE. The Nasdaq-100 Index Fund invests directly in securities,
but may, in the future, invest in securities through one or more underlying
mutual funds, or portfolios.

FUND PERFORMANCE
Because the Fund is a new fund, performance information for the Fund is not
included in this prospectus.
<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi Nasdaq-100 Index Shares.

--------------------------------------------------------------------------------
FEE TABLE
--------------------------------------------------------------------------------

SHAREHOLDER FEES - fees paid directly from your investment
--------------------------------------------------------------------------------
Redemption fee paid to the Fund, 0.75%
charged only on shares you sell within
180 days of buying them

(1) Based on estimated expenses for the fiscal year ending December 31, 2000.
Even if actual other expenses exceed this amount, management has agreed to
cap the Fund's other expenses at 0.25%. This cap is voluntary and may be
modified or terminated at any time.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
EXPENSES ON A $10,000 INVESTMENT
--------------------------------------------------------------------------------

This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds. The example assumes that:

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year -- the assumption of a 5% return
is required by the SEC for the purpose of this example and is not a
prediction of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same -- the
example does not include voluntary fee caps.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 YEAR 3 YEARS
--------------------------------------------------------------------------------
CITI NASDAQ-100 INDEX SHARES $56 $176
--------------------------------------------------------------------------------
<PAGE>

MORE ABOUT THE INDEX

The chart below sets forth the annual total returns of the Nasdaq-100 Index for
each of the past ten calendar years. The line graph below shows the growth of a
$10,000 investment in the stocks comprising the Index over the past ten
calendar years. The data is provided to illustrate the past performance of the
Fund's Index and does not represent the performance of the Fund. Investors
should not consider this performance data as an indication of future performance
of the Fund. The returns are not intended to predict or suggest the returns that
might be experienced by the Fund or an individual investing in the Fund. In
particular, investors should note the performance of the Index for the past two
calendar years was exceptional and will not likely be repeated.

All returns presented were calculated on a total return basis, which includes
the re-investment of all distributions. Performance of the Fund for the periods
shown below would have been lower because of the Fund's short-term investments
and its operating expenses.

Annual Total Returns -- Nasdaq-100 Index

1990 (10.41)%
1991 64.99%
1992 8.86%
1993 10.58%
1994 1.50%
1995 42.54%
1996 42.54%
1997 20.63%
1998 85.31%
1999 101.95%

NASDAQ-100 INDEX - LINE GRAPH
(in thousands)
DATE GROWTH OF $10,000
------------------------------------------
12/31/89 10,000.00
1/31/90 9,021.82
2/28/90 9,288.76
3/31/90 9,522.41
4/30/90 9,194.93
5/31/90 10,550.17
6/30/90 10,653.37
7/31/90 9,979.89
8/31/90 8,649.87
9/30/90 7,910.05
10/31/90 7,709.00
11/30/90 8,606.98
12/31/90 8,958.80
1/31/91 10,383.73
2/28/91 11,174.04
3/31/91 11,834.79
4/30/91 11,778.94
5/31/91 12,464.49
6/30/91 11,356.31
7/31/91 12,158.69
8/31/91 12,839.99
9/30/91 12,845.79
10/31/91 13,067.83
11/30/91 12,723.16
12/31/91 14,781.14
1/31/92 15,114.42
2/29/92 15,452.40
3/31/92 14,432.46
4/30/92 13,753.83
5/31/92 14,086.00
6/30/92 13,457.64
7/31/92 13,889.43
8/31/92 13,369.62
9/30/92 13,991.73
10/31/92 14,705.20
11/30/92 15,679.36
12/31/92 16,091.49
1/31/93 16,555.00
2/28/93 15,687.41
3/31/93 16,057.32
4/30/93 15,187.27
5/31/93 16,445.56
6/30/93 16,356.89
7/31/93 15,764.49
8/31/93 16,648.39
9/30/93 17,098.05
10/31/93 17,467.52
11/30/93 17,278.76
12/31/93 17,793.43
1/31/94 18,495.29
2/28/94 18,413.98
3/31/94 17,109.00
4/30/94 16,675.21
5/31/94 16,925.38
6/30/94 16,096.65
7/31/94 16,537.15
8/31/94 17,776.46
9/30/94 17,595.53
10/31/94 18,453.30
11/30/94 18,085.61
12/31/94 18,061.04
1/31/95 18,108.39
2/28/95 19,322.23
3/31/95 19,976.74
4/30/95 20,977.91
5/31/95 21,806.20
6/30/95 24,036.87
7/31/95 25,415.12
8/31/95 25,767.60
9/30/95 26,138.86
10/31/95 26,750.93
11/30/95 26,524.85
12/31/95 25,743.48
1/31/96 26,439.97
2/29/96 27,825.38
3/31/96 27,238.34
4/30/96 29,786.66
5/31/96 30,933.02
6/30/96 30,258.87
7/31/96 28,414.20
8/31/96 29,645.47
9/30/96 32,951.92
10/31/96 33,595.70
11/30/96 37,260.02
12/31/96 36,694.86
1/31/97 41,170.93
2/28/97 37,994.93
3/31/97 35,609.22
4/30/97 39,079.63
5/31/97 42,837.29
6/30/97 42,768.02
7/31/97 49,457.33
8/31/97 47,989.28
9/30/97 49,016.83
10/31/97 45,552.22
11/30/97 46,932.27
12/31/97 44,264.69
1/31/98 47,853.49
2/28/98 53,348.61
3/31/98 54,533.85
4/30/98 55,760.65
5/31/98 53,256.55
6/30/98 59,746.60
7/31/98 61,530.04
8/31/98 50,945.64
9/30/98 60,110.46
10/31/98 62,569.39
11/30/98 69,603.13
12/31/98 82,025.27
1/31/99 95,033.99
2/28/99 86,013.46
3/31/99 94,104.66
4/30/99 95,444.90
5/31/99 93,358.95
6/30/99 102,609.98
7/31/99 101,455.52
8/31/99 107,082.04
9/30/99 107,574.83
10/31/99 117,829.72
11/30/99 132,540.17
12/31/99 165,650.30

The Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq(R) are trade or service marks
of The Nasdaq Stock Market, Inc. (which with its affiliates are the
Corporations) and are licensed for use by SSB Citi Fund Management LLC. The Fund
has not been passed on by the Corporations as to their legality or suitability.
The Fund is not issued, endorsed, sold or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND.
For additional information, please see the Appendix.
<PAGE>

CITI(SM) S&P 500 INDEX SHARES

The Fund's goal is to provide investment results that, before fees and expenses,
correspond to the price and yield performance of the S&P 500 Composite Stock
Price Index (S&P 500 Index).

THE INDEX
The S&P 500 Index is one of the most widely used benchmarks of U.S. equity
performance. The S&P 500 Index consists of 500 stocks chosen for market
capitalization, liquidity and industry group representation. The S&P 500 Index
is market-value-weighted, so the larger of the 500 companies generally have a
bigger impact on the performance of the Index. The S&P 500 Index does not show
actual investment returns or reflect payment of management or brokerage fees,
which would lower the S&P 500 Index's performance. The S&P 500 Index is
unmanaged and does not have to maintain liquidity to meet redemption requests or
pay expenses.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The S&P 500 Index Fund will hold a broadly diversified
portfolio of common stocks that is comparable to the S&P 500 Index in terms of
economic sector weightings, market capitalization and liquidity. The Fund
invests at least 80% of its assets in common stocks included in the Index. The
Fund holds stocks of substantially all of the companies which comprise the S&P
500 Index. The Fund also may enter into repurchase agreements, lend portfolio
securities and use certain types of derivative instruments to help implement its
goal.

SELECTION PROCESS. The S&P 500 Index Fund is managed as a "pure" index Fund.
This means that the manager does not evaluate individual companies to identify
attractive investment candidates. Instead, the manager attempts to mirror the
investment performance of the Index as closely as possible by adjusting the
Fund's portfolio daily to reflect the companies included in the Index and their
weightings. Like most index funds, the Fund does not mirror the Index exactly
because, unlike the Index, the Fund must maintain a portion of its assets in
cash and liquid short-term securities to meet redemption requests and pay the
Fund's expenses. The Fund's returns are likely to be below those of the Index
because of the Fund's short-term investments and its operating expenses.

[Citi is a service mark of Citicorp.]

WHO MAY WANT TO INVEST
The S&P 500 Index Fund may be an appropriate investment if you:

o Are seeking to participate in the long-term growth potential of U.S. large
capitalization stocks

o Are seeking an investment which tracks the performance of the S&P 500 Index

o Are looking for an investment with potentially greater return but higher
risk than a fund investing primarily in fixed income securities

o Are willing to accept the risks of the stock market

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

MARKET RISK. The Fund is exposed to the risks of investing in common stocks. The
Fund may not perform as well as other investments, if, among other things: the
Index declines or performs poorly relative to other related indexes or
individual securities; an adverse event, such as an unfavorable earnings report,
negatively affects the price of an issuer in the Index; or the securities issued
by companies which comprise the Index fall out of favor with investors.

DERIVATIVES. Derivatives may be more sensitive than direct securities to changes
in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value because of their structure or
contract terms. Even a small investment in derivative contracts can have a big
impact on the Fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when stock
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated redemptions.
The Fund's investments in money market instruments will likely cause the Fund's
returns to differ from those of the Index.

FOREIGN INVESTMENTS. The Fund may purchase common stocks and ADRs of the foreign
companies included in the S&P 500 Index. These securities are publicly traded on
U.S. securities exchanges or over-the-counter markets. ADRs are U.S.
dollar-denominated securities which represent an interest in an underlying
foreign security. These common stocks and ADRs are subject to most of the
special risks associated with foreign investing, including currency, political,
legal, regulatory and operational risks.

FUND PERFORMANCE
RISK RETURN BAR CHART. This bar chart shows the performance of the Citi S&P 500
Index Shares for the calendar year ended December 31, 1999, and, in the future,
will show changes in the Fund's performance from year to year. Past performance
does not necessarily indicate how the Fund will perform in the future.

Annual Total Returns

1999 20.29%

QUARTERLY RETURNS:
(FOR CALENDAR QUARTERS COVERED BY THE BAR CHART)

Highest: 14.71% in fourth quarter 1999
Lowest: (6.26)% in third quarter 1999

RISK RETURN TABLE. This table compares the average annual total return of the
Citi S&P 500 Index Shares for the periods shown with that of the S&P 500 Index.
This table assumes the redemption of shares at the end of the period and the
reinvestment of distributions and dividends.

AVERAGE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31, 1999

Since Class
1 Year Inception
08/04/98

Citi S&P 500 20.29% 26.25%
Index Shares

S&P 500 21.04% 26.78%
Index

* Citi S&P 500 Index Shares were formerly called Class D shares.
<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi S&P 500 Index Shares.

--------------------------------------------------------------------------------
FEE TABLE
--------------------------------------------------------------------------------

SHAREHOLDER FEES - fees paid directly from your investment
--------------------------------------------------------------------------------
Redemption fee None

(1) For the fiscal year ended November 30, 1999.
(2) Management has agreed to cap the Citi S&P 500 Index Shares' net annual
operating expenses at 0.39%. Management may not discontinue or modify this
cap without the approval of the Fund's trustees.

--------------------------------------------------------------------------------
EXPENSES ON A $10,000 INVESTMENT
--------------------------------------------------------------------------------

This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds. The example assumes that:

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year -- the assumption of a 5% return
is required by the SEC for the purpose of this example and is not a
prediction of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same -- the
example reflects the cap on operating expenses.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Citi S&P 500 Index Shares $44 $138 $241 $542
--------------------------------------------------------------------------------
<PAGE>

MORE ABOUT THE INDEX
The chart below sets forth the annual total returns of the S&P 500 Index for
each of the past ten calendar years. The line graph below shows the growth of a
$10,000 investment in the stocks comprising the Index over the past ten calendar
years. The data is provided to illustrate the past performance of the Fund's
Index and does not represent the performance of the Fund. Investors should not
consider this performance data as an indication of future performance of the
Fund. The returns are not intended to predict or suggest the returns that might
be experienced by the Fund or an individual investing in the Fund.

Annual Total Returns -- S&P 500 Index

1990 (3.10)%
1991 30.47%
1992 7.62%
1993 10.08%
1994 1.32%
1995 37.58%
1996 22.96%
1997 33.36%
1998 28.58%
1999 21.04%

S&P 500 INDEX (LINE GRAPH)
(in thousands)
DATE GROWTH OF $10,000
--------------------------------------------

12/31/89 10,000.00
1/31/90 9,329.03
2/28/90 9,448.98
3/31/90 9,699.17
4/30/90 9,457.56
5/31/90 10,377.85
6/30/90 10,307.89
7/31/90 10,274.95
8/31/90 9,347.34
9/30/90 8,893.10
10/31/90 8,855.50
11/30/90 9,426.79
12/31/90 9,689.13
1/31/91 10,110.03
2/28/91 10,832.16
3/31/91 11,094.21
4/30/91 11,120.59
5/31/91 11,598.68
6/30/91 11,067.71
7/31/91 11,583.13
8/31/91 11,856.75
9/30/91 11,658.25
10/31/91 11,814.65
11/30/91 11,339.90
12/31/91 12,634.62
1/31/92 12,399.46
2/29/92 12,559.97
3/31/92 12,315.99
4/30/92 12,677.21
5/31/92 12,739.20
6/30/92 12,549.74
7/31/92 13,062.01
8/31/92 12,795.18
9/30/92 12,945.59
10/31/92 12,990.02
11/30/92 13,431.12
12/31/92 13,595.90
1/31/93 13,709.45
2/28/93 13,896.23
3/31/93 14,189.24
4/30/93 13,846.28
5/31/93 14,215.75
6/30/93 14,257.25
7/31/93 14,199.84
8/31/93 14,737.44
9/30/93 14,624.42
10/31/93 14,926.74
11/30/93 14,784.47
12/31/93 14,963.21
1/31/94 15,471.44
2/28/94 15,051.89
3/31/94 14,396.93
4/30/94 14,581.37
5/31/94 14,819.74
6/30/94 14,457.08
7/31/94 14,931.47
8/31/94 15,542.23
9/30/94 15,162.48
10/31/94 15,502.64
11/30/94 14,938.75
12/31/94 15,160.05
1/31/95 15,552.93
2/28/95 16,158.46
3/31/95 16,634.50
4/30/95 17,123.96
5/31/95 17,807.34
6/30/95 18,220.23
7/31/95 18,824.18
8/31/95 18,871.17
9/30/95 19,667.12
10/31/95 19,596.85
11/30/95 20,456.15
12/31/95 20,850.19
1/31/96 21,559.01
2/29/96 21,759.57
3/31/96 21,969.07
4/30/96 22,292.67
5/31/96 22,866.61
6/30/96 22,953.78
7/31/96 21,940.25
8/31/96 22,403.74
9/30/96 23,663.56
10/31/96 24,315.96
11/30/96 26,152.33
12/31/96 25,634.27
1/31/97 27,234.92
2/28/97 27,448.73
3/31/97 26,323.01
4/30/97 27,893.07
5/31/97 29,590.03
6/30/97 30,914.93
7/31/97 33,373.41
8/31/97 31,505.17
9/30/97 33,229.63
10/31/97 32,121.10
11/30/97 33,606.83
12/31/97 34,183.57
1/31/98 34,561.29
2/28/98 37,052.55
3/31/98 38,948.44
4/30/98 39,340.10
5/31/98 38,664.83
6/30/98 40,234.22
7/31/98 39,806.88
8/31/98 34,057.55
9/30/98 36,239.41
10/31/98 39,184.53
11/30/98 41,558.46
12/31/98 43,951.69
1/31/99 45,788.91
2/28/99 44,366.05
3/31/99 46,140.61
4/30/99 47,927.38
5/31/99 46,797.24
6/30/99 49,392.29
7/31/99 47,852.33
8/31/99 47,615.42
9/30/99 46,311.70
10/31/99 49,241.08
11/30/99 50,241.99
12/31/99 53,199.30

"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500" and
"500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed
for use by SSB Citi Fund Management LLC. The Fund is not sponsored, endorsed,
sold or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the Fund.

For additional information, please see the Appendix or the Statement of
Additional Information.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
performance of the Citi S&P 500 Index Shares since the Fund's inception. These
shares were formerly called Class D shares. Certain information reflects
financial results for a single share. Total return represents the rate that a
shareholder would have earned (or lost) on a Fund share assuming reinvestment
of all dividends and distributions. The information in the following tables was
audited by KPMG LLP, independent accountants, whose report, along with the
Fund's financial statements, are included in the annual report (available upon
request).

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH YEAR ENDED NOVEMBER 30, EXCEPT WHERE NOTED:
----------------------------------------------------------------------------------------------------------
1999(1)(2) 1999(2) 1998(3)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 14.28 $ 11.99 $ 11.00
----------------------------------------------------------------------------------------------------------
Income from operations:
Net investment income(4) 0.01 0.17 0.03
Net realized and unrealized gain 0.83 2.26 0.96
----------------------------------------------------------------------------------------------------------
Total income from operations 0.84 2.43 0.99
----------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.11) (0.07) --
Net realized gains -- (0.07) --
----------------------------------------------------------------------------------------------------------
Total distributions (0.11) (0.14) --
----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.01 $ 14.28 $ 11.99
----------------------------------------------------------------------------------------------------------
Total return 5.91%++ 20.29% 9.00%++
----------------------------------------------------------------------------------------------------------
Net assets, end of period (000s) $20,626.00 $14,068.00 $ 1,810.00
----------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Expenses(4)(5) 0.36%+ 0.34% 0.36%+
Net investment income 0.90+ 1.08 1.33+
----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 0% 6% 4%
----------------------------------------------------------------------------------------------------------

(1) For the period from December 1, 1999 to December 31, 1999, which reflects a change in the fiscal year end of the Fund.
(2) Per share amounts have been calculated using the monthly average shares method.
(3) For the period from August 4, 1998 (inception date) to November 30, 1998.
(4) The administrator agreed to waive all or a portion of its fees for the period ended December 31, 1999, the year ended
November 30, 1999 and for the period ended November 30, 1998. In addition, the administrator agreed to reimburse expenses
of $15,109 and $177,520 for the periods ended December 31, 1999 and November 30, 1998, respectively. If these fees had not
been waived and expenses not reimbursed, the per share effect on net investment income and the expense ratio would have
been as follows:

<CAPTION>
----------------------------------------------------------------------------------------------------------
PER SHARE DECREASES TO NET EXPENSE RATIOS WITHOUT WAIVER
INVESTMENT INCOME AND REIMBURSEMENT
----------------------------------------------------------------------------------------------------------
1999(1) $0.00 0.53%+
1999 0.01 0.43
1998 0.02 1.18+

(5) As a result of involuntary expense limitations, the ratio of expenses to average net assets will not exceed 0.39%.
++ Total return is not annualized, as it may not be representative of the total return for the year.
+ Annualized.
</TABLE>
<PAGE>

CITI(SM) SMALL CAP INDEX SHARES

The Fund's goal is to provide investment results that, before fees and expenses,
correspond to the performance of the Russell 2000(R) Index.

THE INDEX
The Russell 2000 Index is comprised of the 2,000 smallest companies out of the
3,000 largest U.S. public companies based on total market capitalization. As of
May 31, 2000, the average market capitalization of companies in the Russell 2000
Index was approximately $580 million, and the largest company in the Index had a
market capitalization of approximately $1.5 billion. The Russell 2000 Index
does not show actual investment returns or reflect payment of management or
brokerage fees, which would lower the Russell 2000 Index's performance. The
Russell 2000 Index is unmanaged and does not have to maintain liquidity to meet
redemption requests or pay expenses.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The Small Cap Index Fund may use replication or sampling
techniques to track the performance of the Russell 2000 Index. The Fund also may
use derivatives and investment techniques such as buying and selling options and
futures contracts, entering into swap agreements and purchasing indexed
securities to track the performance of the Index. The Fund also may enter into
repurchase agreements and lend portfolio securities.

SELECTION PROCESS. The Small Cap Index Fund is a "pure" index Fund. This means
that the manager does not evaluate individual companies to identify attractive
investment candidates. Instead, the manager attempts to mirror the performance
of the Index as closely as possible by adjusting the Fund's portfolio
periodically to match or sample the Index or its performance. Like most index
funds, the Fund does not mirror the Index exactly because, unlike the Index, the
Fund must maintain a portion of its assets in cash and liquid short-term
securities to meet redemption requests and pay the Fund's expenses. The Fund's
returns are likely to be below those of the Index because of the Fund's
short-term investments and its operating expenses.

[Citi is a service mark of Citicorp.]

WHO MAY WANT TO INVEST
The Small Cap Index Fund may be an appropriate investment if you:

o Are seeking to participate in the long-term growth potential of U.S. small
capitalization stocks

o Are looking for an investment with potentially greater return but higher
risk than a fund investing primarily in fixed income securities

o Are willing to accept the risks of the stock market, including the greater
volatility that may result from investing in small capitalization stocks

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

MARKET RISK. The Fund is exposed to the risks of investing in common stocks. The
Fund may not perform as well as other investments, if, among other things: the
Index declines or performs poorly relative to other related indexes or
individual securities; an adverse event, such as an unfavorable earnings report,
negatively affects the price of an issuer in the Index; or the securities issued
by companies which comprise the Index fall out of favor with investors.

DERIVATIVES. Derivatives may be more sensitive than direct securities to changes
in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value because of their structure or
contract terms. Even a small investment in derivative contracts can have a big
impact on the Fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when stock
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

SMALLER COMPANIES. The Fund's investments may include smaller capitalization
companies whose stocks tend to have more price volatility than larger companies.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated redemptions.
The Fund's investments in money market instruments will likely cause the Fund's
returns to differ from those of the Index.

INVESTMENT STRUCTURE. Small Cap Index Fund invests directly in securities, but
may, in the future, invest in securities through one or more underlying mutual
funds, or portfolios.

FUND PERFORMANCE
Because the Fund is a new fund, performance information for the Fund is not
included in this prospectus.
<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi Small Cap Index Shares.

--------------------------------------------------------------------------------
FEE TABLE
--------------------------------------------------------------------------------
SHAREHOLDER FEES - fees paid directly from your investment
--------------------------------------------------------------------------------
Redemption fee paid to the Fund, 0.75%
charged only on shares you sell within 180 days of buying them

--------------------------------------------------------------------------------
EXPENSES ON A $10,000 INVESTMENT
--------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds. The example assumes that:

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year - the assumption of a 5% return
is required by the SEC for the purpose of this example and is not a
prediction of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same - the
example does not include voluntary fee caps.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS
--------------------------------------------------------------------------------
CITI SMALL CAP INDEX SHARES $56 $176
--------------------------------------------------------------------------------
<PAGE>

MORE ABOUT THE INDEX
The chart below sets forth the annual total returns of the Russell 2000 Index
over each of the past ten calendar years. The line graph below shows the growth
of a $10,000 investment in the stocks comprising the Index over the past ten
calendar years. The data is provided to illustrate the past performance of the
Fund's Index and does not represent the performance of the Fund. Investors
should not consider this performance data as an indication of future
performance of the Fund. The returns are not intended to predict or suggest the
returns that might be experienced by the Fund or an individual investing in the
Fund.

All returns presented were calculated on a total return basis, which includes
the reinvestment of all distributions. Performance of the Fund for the periods
shown below would have been lower because of the Fund's short-term investments
and its operating expenses.

Annual Total Returns -- Russell 2000 Index

1990 (19.48)%
1991 46.04%
1992 18.41%
1993 18.88%
1994 (1.82)%
1995 28.45%
1996 16.49%
1997 22.36%
1998 (2.55)%
1999 21.26%

RUSSELL 2000 INDEX (LINE GRAPH)
(in thousands)
DATE GROWTH OF $10,000
----------------------------------------
12/31/89 10,000.00
1/31/90 9,126.34
2/28/90 9,409.70
3/31/90 9,775.69
4/30/90 9,456.51
5/31/90 10,125.84
6/30/90 10,146.36
7/31/90 9,700.08
8/31/90 8,408.22
9/30/90 7,664.18
10/31/90 7,196.30
11/30/90 7,745.01
12/31/90 8,052.32
1/31/91 8,780.51
2/28/91 9,759.67
3/31/91 10,446.64
4/30/91 10,420.36
5/31/91 10,917.04
6/30/91 10,280.84
7/31/91 10,641.61
8/31/91 11,035.50
9/30/91 11,121.91
10/31/91 11,416.07
11/30/91 10,888.06
12/31/91 11,759.92
1/31/92 12,712.79
2/29/92 13,083.64
3/31/92 12,640.78
4/30/92 12,197.92
5/31/92 12,360.12
6/30/92 11,775.58
7/31/92 12,185.32
8/31/92 11,841.47
9/30/92 12,114.57
10/31/92 12,499.64
11/30/92 13,456.11
12/31/92 13,924.89
1/31/93 14,396.20
2/28/93 14,063.69
3/31/93 14,520.06
4/30/93 14,121.48
5/31/93 14,746.35
6/30/93 14,838.34
7/31/93 15,043.21
8/31/93 15,693.09
9/30/93 16,135.96
10/31/93 16,551.27
11/30/93 16,006.52
12/31/93 16,553.79
1/31/94 17,072.80
2/28/94 17,011.05
3/31/94 16,112.91
4/30/94 16,208.68
5/31/94 16,026.68
6/30/94 15,482.47
7/31/94 15,736.84
8/31/94 16,613.74
9/30/94 16,558.11
10/31/94 16,492.76
11/30/94 15,826.67
12/31/94 16,251.89
1/31/95 16,046.84
2/28/95 16,714.37
3/31/95 17,002.23
4/30/95 17,380.28
5/31/95 17,679.12
6/30/95 18,596.24
7/31/95 19,667.50
8/31/95 20,074.35
9/30/95 20,432.78
10/31/95 19,518.98
11/30/95 20,338.99
12/31/95 20,875.69
1/31/96 20,853.32
2/29/96 21,503.20
3/31/96 21,940.92
4/30/96 23,114.06
5/31/96 24,025.00
6/30/96 23,038.45
7/31/96 21,026.14
8/31/96 22,246.98
9/30/96 23,116.40
10/31/96 22,760.14
11/30/96 23,697.92
12/31/96 24,318.97
1/31/97 24,804.99
2/28/97 24,203.55
3/31/97 23,061.50
4/30/97 23,125.77
5/31/97 25,698.50
6/30/97 26,799.89
7/31/97 28,046.91
8/31/97 28,688.62
9/30/97 30,788.51
10/31/97 29,435.96
11/30/97 29,245.57
12/31/97 29,757.45
1/31/98 29,287.83
2/28/98 31,453.46
3/31/98 32,750.68
4/30/98 32,931.90
5/31/98 31,158.28
6/30/98 31,223.84
7/31/98 28,696.15
8/31/98 23,123.94
9/30/98 24,933.57
10/31/98 25,950.44
11/30/98 27,310.05
12/31/98 29,000.05
1/31/99 29,385.43
2/28/99 27,005.37
3/31/99 27,426.97
4/30/99 29,884.63
5/31/99 30,321.15
6/30/99 31,692.26
7/31/99 30,822.65
8/31/99 29,681.94
9/30/99 29,688.42
10/31/99 29,808.66
11/30/99 31,588.52
12/31/99 35,164.33

The Russell 2000(R) Index is a trademark/service mark of the Frank Russell
Company. RussellTM is a trademark of the Frank Russell Company. The Fund is not
sponsored, endorsed, sold or promoted by the sponsor of the Index, and the
sponsor of the Index is not in any way affiliated with the Fund. The sponsor of
the Index makes no representation or warranty, implied or express, regarding the
advisability of investing in the Fund. For additional information, please see
the Appendix.
<PAGE>

CITI(SM) U.S. 1000 INDEX SHARES
The Fund's goal is to provide investment results that, before fees and expenses,
correspond to the performance of the Russell 1000(R) Index.

THE INDEX
The Russell 1000 Index measures the performance of the 1,000 largest U.S. public
companies based on total market capitalization. As of May 31, 2000, the average
market capitalization of companies in the Russell 1000 Index was approximately
$14.1 billion, and the smallest company in the Russell 1000 Index had a market
capitalization of approximately $1.6 billion. The Russell 1000 Index does not
show actual investment returns or reflect payment of management or brokerage
fees, which would lower the Russell 1000 Index's performance. The Russell 1000
Index is unmanaged and does not have to maintain liquidity to meet redemption
requests or pay expenses.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The U.S. 1000 Index Fund may use replication or sampling
techniques to track the performance of the Russell 1000 Index. The Fund may use
derivatives and investment techniques such as buying and selling options and
futures contracts, entering into swap agreements and purchasing indexed
securities to track the performance of the Index. The Fund also may enter into
repurchase agreements and lend portfolio securities.

SELECTION PROCESS. The U.S. 1000 Index Fund is a "pure" index Fund. This means
that the manager does not evaluate individual companies to identify attractive
investment candidates. Instead, the manager attempts to mirror the performance
of the Index as closely as possible by adjusting the Fund's portfolio
periodically to match or sample the Index or its performance. Like most index
funds, the Fund does not mirror the Index exactly because, unlike the Index, the
Fund must maintain a portion of its assets in cash and liquid short-term
securities to meet redemption requests and pay the Fund's expenses. The Fund's
returns are likely to be below those of the Index because of the Fund's
short-term investments and its operating expenses.

[Citi is a service mark of Citicorp.]

WHO MAY WANT TO INVEST
The U.S. 1000 Index Fund may be an appropriate investment if you:

o Are seeking to participate in the long-term growth potential of U.S. large
capitalization stocks

o Are looking for an investment with potentially greater return but higher
risk than a fund investing primarily in fixed income securities

o Are willing to accept the risks of the stock market

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

MARKET RISK. The Fund is exposed to the risks of investing in common stocks. The
Fund may not perform as well as other investments, if, among other things: the
Index declines or performs poorly relative to other related indexes or
individual securities; an adverse event, such as an unfavorable earnings report,
negatively affects the price of an issuer in the Index; or the securities issued
by companies which comprise the Index fall out of favor with investors.

DERIVATIVES. Derivatives may be more sensitive than direct securities to changes
in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value because of their structure or
contract terms. Even a small investment in derivative contracts can have a big
impact on the Fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when stock
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated redemptions.
The Fund's investments in money market instruments will likely cause the Fund's
returns to differ from those of the Index.

INVESTMENT STRUCTURE. U.S. 1000 Index Fund invests directly in securities, but
may, in the future, invest in securities through one or more underlying mutual
funds, or portfolios.

FUND PERFORMANCE
Because the Fund is a new fund, performance information for the Fund is not
included in this prospectus.
<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi U.S. 1000 Index Shares.

ANNUAL OPERATING EXPENSES (% of average net assets)
expenses deducted from Fund assets
--------------------------------------------------------------------------------

Management fees 0.25%
Distribution (12b-1) fees None
Other expenses(1) 0.25%
----
Total annual operating expenses 0.50%
--------------------------------------------------------------------------------
(1) Based on estimated expenses for the fiscal year ending December 31, 2000.
Even if actual other expenses exceed this amount, management has agreed to
cap the Fund's other expenses at 0.25%. This cap is voluntary and may be
modified or terminated at any time.
--------------------------------------------------------------------------------

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year - the assumption of a 5% return
is required by the SEC for the purpose of this example and is not a
prediction of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same - the
example does not include voluntary fee caps.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS
--------------------------------------------------------------------------------
CITI U.S. 1000 INDEX SHARES $51 $160
--------------------------------------------------------------------------------
<PAGE>

MORE ABOUT THE INDEX
The chart below sets forth the annual total returns of the Russell 1000 Index
for each of the past ten calendar years. The line graph below shows the growth
of a $10,000 investment in the stocks comprising the Index over the past ten
calendar years. The data is provided to illustrate the past performance of the
Fund's Index and does not represent the performance of the Fund. Investors
should not consider this performance data as an indication of future performance
of the Fund. The returns are not intended to predict or suggest the returns that
might be experienced by the Fund or an individual investing in the Fund.

Annual Total Returns -- Russell 1000 Index

1990 (4.21)%
1991 33.04%
1992 8.93%
1993 10.18%
1994 0.39%
1995 37.77%
1996 22.45%
1997 32.85%
1998 27.02%
1999 20.91%

RUSSELL 1000 INDEX - LINE GRAPH
(in thousands)
DATE GROWTH OF $10,000
-----------------------------------------
12/31/89 10,000.00
1/31/90 9,286.43
2/28/90 9,432.57
3/31/90 9,667.08
4/30/90 9,415.79
5/31/90 10,296.95
6/30/90 10,240.74
7/31/90 10,149.25
8/31/90 9,217.77
9/30/90 8,746.67
10/31/90 8,703.44
11/30/90 9,297.50
12/31/90 9,579.05
1/31/91 10,041.33
2/28/91 10,773.41
3/31/91 11,066.72
4/30/91 11,079.52
5/31/91 11,534.36
6/30/91 11,017.26
7/31/91 11,546.12
8/31/91 11,848.09
9/30/91 11,699.18
10/31/91 11,886.65
11/30/91 11,436.82
12/31/91 12,743.77
1/31/92 12,585.87
2/29/92 12,739.10
3/31/92 12,467.75
4/30/92 12,768.84
5/31/92 12,848.05
6/30/92 12,641.90
7/31/92 13,157.10
8/31/92 12,879.70
9/30/92 13,042.61
10/31/92 13,151.22
11/30/92 13,656.74
12/31/92 13,881.91
1/31/93 13,991.04
2/28/93 14,116.95
3/31/93 14,460.41
4/30/93 14,078.73
5/31/93 14,465.26
6/30/93 14,560.72
7/31/93 14,515.24
8/31/93 15,074.19
9/30/93 15,032.00
10/31/93 15,230.19
11/30/93 15,021.79
12/31/93 15,294.70
1/31/94 15,761.65
2/28/94 15,347.62
3/31/94 14,691.81
4/30/94 14,868.22
5/31/94 15,065.72
6/30/94 14,662.41
7/31/94 15,140.78
8/31/94 15,779.98
9/30/94 15,412.65
10/31/94 15,703.54
11/30/94 15,138.36
12/31/94 15,354.19
1/31/95 15,751.10
2/28/95 16,392.20
3/31/95 16,814.02
4/30/95 17,260.73
5/31/95 17,923.46
6/30/95 18,397.84
7/31/95 19,101.03
8/31/95 19,244.75
9/30/95 20,037.01
10/31/95 19,945.87
11/30/95 20,835.50
12/31/95 21,153.02
1/31/96 21,836.85
2/29/96 22,120.99
3/31/96 22,319.19
4/30/96 22,659.20
5/31/96 23,203.80
6/30/96 23,229.22
7/31/96 22,108.54
8/31/96 22,710.04
9/30/96 23,986.89
10/31/96 24,518.01
11/30/96 26,327.35
12/31/96 25,901.22
1/31/97 27,437.31
2/28/97 27,542.46
3/31/97 26,301.93
4/30/97 27,725.09
5/31/97 29,500.71
6/30/97 30,723.26
7/31/97 33,237.35
8/31/97 31,669.61
9/30/97 33,406.49
10/31/97 32,323.96
11/30/97 33,725.38
12/31/97 34,410.26
1/31/98 34,666.61
2/28/98 37,137.86
3/31/98 39,010.90
4/30/98 39,411.95
5/31/98 38,559.20
6/30/98 39,986.64
7/31/98 39,505.76
8/31/98 33,600.68
9/30/98 35,863.63
10/31/98 38,696.30
11/30/98 41,091.57
12/31/98 43,709.07
1/31/99 45,268.69
2/28/99 43,832.03
3/31/99 45,511.55
4/30/99 47,414.98
5/31/99 46,389.92
6/30/99 48,753.85
7/31/99 47,265.29
8/31/99 46,822.44
9/30/99 45,535.01
10/31/99 48,595.94
11/30/99 49,846.08
12/31/99 52,849.47

The Russell 1000(R) Index is a trademark/service mark of the Frank Russell
Company. Russell(TM) is a trademark of the Frank Russell Company. The Fund is
not sponsored, endorsed, sold or promoted by the sponsor of the Index, and the
sponsor of the Index is not in any way affiliated with the Fund. The sponsor of
the Index makes no representation or warranty, implied or express, regarding the
advisability of investing in the Fund. For additional information, please see
the Appendix.
<PAGE>

CITI(SM) U.S. 5000 INDEX SHARES
The Fund's goal is to provide long-term capital growth by approximating, before
fees and expenses, the performance of the Wilshire 5000 Total Stock Market Index
(Wilshire 5000 Index).

The Fund invests all of its assets in a separate mutual fund, called a Master
Portfolio, that has a substantially identical investment objective. For
simplicity's sake, all discussions of investment objectives, strategies and
risks of the Fund refers also to the objectives, strategies and risks of its
corresponding Master Portfolio, unless otherwise indicated.

THE INDEX
The Wilshire 5000 Index, an unmanaged capitalization-weighted index of over
7,000 U.S. equity securities, consists of all the U.S. stocks regularly traded
on the New York and American Stock Exchanges and The Nasdaq Stock Market for
which daily pricing is available. The Wilshire 5000 Index does not show actual
investment returns or reflect payment of management or brokerage fees, which
would lower the Wilshire 5000 Index's performance. The Wilshire 5000 Index does
not have to maintain liquidity to meet redemption requests or pay expenses.

The Wilshire 5000 Index is comprised of the U.S. stocks in the S&P 500 Index and
the stocks in the Wilshire 4500 Index.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The U.S. 5000 Index Fund invests in a sampling of securities
that are selected and weighted to result in investment characteristics
comparable to, and performance that will correlate with the performance before
fees and expenses of, the Wilshire 5000 Index. The statistical sampling
techniques are based on capitalization, industry exposures, dividend yield,
price/earnings ratio, price/book ratio and earnings growth. Under normal market
conditions, the Fund invests at least 90% of its assets in common stocks
included in the Wilshire 5000 Index.

[Citi is a service mark of Citicorp.]

SELECTION PROCESS. The U.S. 5000 Index Fund follows an indexed or "passively
managed" approach to investing. This means that the Fund's manager determines
how the Fund's assets will be invested to match, to the extent feasible, the
capitalization range and returns of the Index and determines which securities
are to be purchased or sold to match or sample the Index. Also, the Fund's
manager does not evaluate individual companies to identify attractive investment
candidates. Instead, the manager attempts to mirror the performance of the Index
as closely as possible by adjusting the Fund's investments periodically to
reflect a sampling of the companies included in the Wilshire 5000 Index and
their weightings. Like most index funds, the Fund does not mirror the Index
exactly because, unlike the Index, the Fund must maintain a portion of its
assets in cash and liquid short-term securities to meet redemption requests and
pay the Fund's expenses. The Fund's returns are likely to be below those of the
Index because of the Fund's short-term investments and its operating expenses.

INVESTMENT STRUCTURE. U.S. 5000 Index Fund is structured as a feeder fund. The
Fund does not buy individual securities directly. Instead, it invests all of its
assets in a corresponding Master Portfolio, the US Equity Index Master
Portfolio.

The US Equity Index Master Portfolio seeks to achieve its objective by investing
substantially all of its assets in two other Master Portfolios -- the Extended
Index Master Portfolio (which invests substantially all of its assets in a
representative sample of stocks comprising the Wilshire 4500 Index) and the S&P
500 Index Master Portfolio (which invests substantially all of its assets in
stocks comprising the S&P 500 Index). The US Equity Index Portfolio's assets
will be invested in the Extended Index Master Portfolio and the S&P 500 Index
Master Portfolio in proportions adjusted periodically to approximate the
capitalization range of the Wilshire 5000 Index.

As other investors invest their assets in the Master Portfolio, certain economic
efficiencies may be realized with respect to the Master Portfolio. For example,
fixed expenses that otherwise would have been borne solely by the Fund (and the
other existing interestholders in the Master Portfolio) would be spread across a
larger asset base as more funds invest in the Master Portfolio. However, if a
mutual fund or other investor withdraws its investment from the Master
Portfolio, the economic efficiencies that should be available through investment
in the Master Portfolio may not be fully achieved or maintained. In addition,
given the relatively complex nature of the master/feeder structure, accounting
and operational difficulties could occur. For example, coordination of
calculation of net asset value could be affected at the master and/or feeder
level.

U.S. 5000 Index Fund may withdraw its investment in its Master Portfolio,
without a shareholder vote, if the Board of Trustees determines that it is in
the best interests of the Fund and its shareholders to do so. Upon any such
withdrawal, the Board would consider what action might be taken, including the
investment of all the assets of the Fund in another pooled investment entity
having the same investment objective as the Fund or the hiring of a subadviser
to manage the Fund's assets.

WHO MAY WANT TO INVEST
The U.S. 5000 Index Fund may be an appropriate investment if you:

o Are seeking to participate in the long-term growth potential of U.S. stocks

o Are looking for an investment with potentially greater return but higher
risk than a fund investing primarily in fixed income securities

o Are willing to accept the risks of the stock market

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

INDEX INVESTING RISK. Because the Fund is managed as an index fund, it will not
ordinarily sell a portfolio security because of the security's poor performance.
The Fund normally buys or sells a portfolio security only to reflect additions
or deletions of stocks that comprise its Index or to adjust their relative
weightings. Although the manager seeks to replicate the performance of the
Index, the Fund may underperform its Index even before deducting fees and
expenses because the Fund must maintain a portion of its assets in liquid
short-term debt securities which historically have generated significantly lower
returns than common stocks. In addition, expenses and transaction costs, the
size of the Fund and the size and frequency of cash flows into and out of the
Fund, and the differences between how and when the Fund and its Index are valued
can also cause differences in performance. Because the Fund uses a sampling
strategy, it may not track its Index perfectly and differences between the
underlying Index and the Fund's portfolio will cause differences in performance.

MARKET RISK. The Fund is exposed to the risks of investing in common stocks. The
Fund may not perform as well as other investments, if, among other things: the
Index declines or performs poorly relative to other related indexes or
individual securities; an adverse event, such as an unfavorable earnings report,
negatively affects the price of an issuer in the Index; or the securities issued
by companies which comprise the Index fall out of favor with investors.

DERIVATIVES. In seeking to match the performance of their Indexes, the Master
Portfolios may engage in futures and options transactions and other derivative
securities transactions which involve risk. The futures contracts and options on
futures contracts the Master Portfolios may purchase are considered derivatives.
Derivatives may be more sensitive than direct securities to changes in interest
rates or sudden market moves. Some derivatives also may be susceptible to
fluctuations in yield or value because of their structure or contract terms.
Even a small investment in derivative contracts can have a big impact on the
Fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when stock
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated redemptions.
The Fund's investments in money market instruments will likely cause the Fund's
returns to differ from those of the Index.

FUND PERFORMANCE
Because the Fund does not have a full calendar year of performance, performance
information for the Fund is not included in this prospectus.
<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi U.S. 5000 Index Shares.

ANNUAL OPERATING EXPENSES (% of average net assets)
expenses deducted from Fund assets
--------------------------------------------------------------------------------

Management fees(1) 0.23%
Distribution (12b-1) fees None
Other expenses(2)(3) 0.25%
----
Total annual operating expenses(4) 0.48%
--------------------------------------------------------------------------------
(1) The "Management fees" include an investment management fee payable by US
Equity Index Master Portfolio and an administration fee payable by the Fund.
(2) Based on estimated expenses for the fiscal year ending December 31, 2000.
(3) Includes expenses of the Fund and US Equity Index Master Portfolio,
Extended Index Master Portfolio, and S&P 500 Index Master Portfolio.
(4) Management has agreed to cap the Citi U.S. 5000 Index Shares' other
expenses at 0.25%. Management may not discontinue or modify this cap
without the approval of the Fund's trustees.
--------------------------------------------------------------------------------

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year - the assumption of a 5% return
is required by the SEC for the purpose of this example and is not a
prediction of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same - the
example reflects the cap on operating expenses.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS
--------------------------------------------------------------------------------
CITI U.S. 5000 INDEX SHARES $49 $154
--------------------------------------------------------------------------------
<PAGE>

MORE ABOUT THE INDEX
The chart below sets forth the annual total returns of the Wilshire 5000 Index
for each of the past ten calendar years. The line graph below shows the growth
of a $10,000 investment in the stocks comprising the Index over the past ten
calendar years. The data is provided to illustrate the past performance of the
Fund's Index and does not represent the performance of the Fund. Investors
should not consider this performance data as an indication of future performance
of the Fund. The returns are not intended to predict or suggest the returns that
might be experienced by the Fund or an individual investing in the Fund.

Annual Total Returns -- Wilshire 5000 Index

1990 (6.18)%
1991 34.20%
1992 8.97%
1993 11.28%
1994 (0.06)%
1995 36.45%
1996 21.21%
1997 31.29%
1998 23.43%
1999 25.89%

WILSHIRE 5000 INDEX - LINE GRAPH
(in thousands)
DATE GROWTH OF $10,000
------------------------------------------
12/31/89 10,000.00
1/31/90 9,266.03
2/28/90 9,413.21
3/31/90 9,648.42
4/30/90 9,370.53
5/31/90 10,226.15
6/30/90 10,176.81
7/31/90 10,078.46
8/31/90 9,130.11
9/30/90 8,628.53
10/31/90 8,512.94
11/30/90 9,093.29
12/31/90 9,381.90
1/31/91 9,837.66
2/28/91 10,603.01
3/31/91 10,926.03
4/30/91 10,960.66
5/31/91 11,400.13
6/30/91 10,891.06
7/31/91 11,402.47
8/31/91 11,717.36
9/30/91 11,582.84
10/31/91 11,795.63
11/30/91 11,345.19
12/31/91 12,590.93
1/31/92 12,565.99
2/29/92 12,738.97
3/31/92 12,423.20
4/30/92 12,589.14
5/31/92 12,666.25
6/30/92 12,408.05
7/31/92 12,910.52
8/31/92 12,637.68
9/30/92 12,788.64
10/31/92 12,943.84
11/30/92 13,480.55
12/31/92 13,720.02
1/31/93 13,888.66
2/28/93 13,945.78
3/31/93 14,304.22
4/30/93 13,909.37
5/31/93 14,345.00
6/30/93 14,411.67
7/31/93 14,409.83
8/31/93 14,965.78
9/30/93 14,995.13
10/31/93 15,245.21
11/30/93 14,997.78
12/31/93 15,267.83
1/31/94 15,748.72
2/28/94 15,395.32
3/31/94 14,698.51
4/30/94 14,839.46
5/31/94 14,984.53
6/30/94 14,583.75
7/31/94 15,016.57
8/31/94 15,679.78
9/30/94 15,376.26
10/31/94 15,627.37
11/30/94 15,055.05
12/31/94 15,257.97
1/31/95 15,587.63
2/28/95 16,208.51
3/31/95 16,635.75
4/30/95 17,049.08
5/31/95 17,626.59
6/30/95 18,188.81
7/31/95 18,937.22
8/31/95 19,121.81
9/30/95 19,851.11
10/31/95 19,651.80
11/30/95 20,484.47
12/31/95 20,819.29
1/31/96 21,376.93
2/29/96 21,750.76
3/31/96 21,988.61
4/30/96 22,531.96
5/31/96 23,147.93
6/30/96 22,957.54
7/31/96 21,718.96
8/31/96 22,413.74
9/30/96 23,606.99
10/31/96 23,937.11
11/30/96 25,523.02
12/31/96 25,235.31
1/31/97 26,586.19
2/28/97 26,573.93
3/31/97 25,398.65
4/30/97 26,506.36
5/31/97 28,384.45
6/30/97 29,688.26
7/31/97 31,970.78
8/31/97 30,768.90
9/30/97 32,584.43
10/31/97 31,499.21
11/30/97 32,530.57
12/31/97 33,131.73
1/31/98 33,311.75
2/28/98 35,736.88
3/31/98 37,525.40
4/30/98 37,970.81
5/31/98 36,960.44
6/30/98 38,256.45
7/31/98 37,418.25
8/31/98 31,590.99
9/30/98 33,654.59
10/31/98 36,158.38
11/30/98 38,435.28
12/31/98 40,894.81
1/31/99 42,398.30
2/28/99 40,861.38
3/31/99 42,438.28
4/30/99 44,472.40
5/31/99 43,498.67
6/30/99 45,750.64
7/31/99 44,283.87
8/31/99 43,871.15
9/30/99 43,531.14
10/31/99 46,299.29
11/30/99 47,849.85
12/31/99 51,481.66

"Wilshire 5000" is a trademark and "Wilshire" is a service mark of Wilshire
Associates Incorporated. The Fund is not sponsored, endorsed, sold or promoted
by Wilshire Associates Incorporated or any of its subsidiaries or affiliates,
and they make no representation regarding the advisability of investing in the
Fund.
<PAGE>

CITI(SM) GLOBAL TITANS INDEX SHARES
The Fund's goal is to provide investment results that, before fees and expenses,
correspond to the performance of the Dow Jones Global Titans IndexSM (Global
Titans Index).

THE INDEX
The Global Titans Index consists of securities of 50 companies, and includes
some of the world's most well-known and well-established blue-chip companies.
The Global Titans Index includes only the largest of large-cap companies in the
world and currently consists of stocks of companies with capitalizations of at
least $20 billion. The Global Titans Index began to be calculated in July 1999
and consists of securities of companies that are selected based on a global or
multi-national standard and, therefore, (1) may be headquartered anywhere in the
world; (2) are market and industry leaders on a global level, rather than merely
at a local level; and (3) have international exposure either from selling
products outside their home markets or providing services to overseas clients.
The companies whose securities comprise the Global Titans Index are selected
from the 100 largest companies in the world, as measured by assets, book value,
sales/revenue, net profit and foreign sales rankings.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The Global Titans Index Fund may use replication or sampling
techniques to track the performance of the Global Titans Index. The Fund also
may use derivatives and investment techniques such as buying and selling options
and futures contracts, entering into swap agreements and purchasing indexed
securities to track the performance of the Global Titans Index. The Fund also
may enter into repurchase agreements and lend portfolio securities.

[Citi is a service mark of Citicorp.]

SELECTION PROCESS. The Global Titans Index Fund is a "pure" index Fund. This
means that the manager does not evaluate individual companies to identify
attractive investment candidates. Instead, the manager attempts to mirror the
performance of the Index as closely as possible by adjusting the Fund's
portfolio periodically to match or sample the Index or its performance. Like
most index funds, the Fund does not mirror the Index exactly because, unlike the
Index, the Fund must maintain a portion of its assets in cash and liquid
short-term securities to meet redemption requests and pay the Fund's expenses.
The Fund's returns are likely to be below those of the Index because of the
Fund's short-term investments and its operating expenses.

WHO MAY WANT TO INVEST
The Global Titans Index Fund may be an appropriate investment if you:

o Are seeking to participate in the long-term growth potential of U.S. and
foreign large capitalization stocks

o Are looking for an investment with potentially greater return but higher
risk than a fund investing primarily in fixed income securities

o Are willing to accept the risks of the stock markets worldwide, including
the special risks of investing in foreign securities

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

MARKET RISK. The Fund is exposed to the risks of investing in common stocks. The
Fund may not perform as well as other investments, if, among other things: the
Index declines or performs poorly relative to other related indexes or
individual securities; an adverse event, such as an unfavorable earnings report,
negatively affects the price of an issuer in the Index; or the securities issued
by companies which comprise the Index fall out of favor with investors.

DERIVATIVES. Derivatives may be more sensitive than direct securities to changes
in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value because of their structure or
contract terms. Even a small investment in derivative contracts can have a big
impact on the Fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when stock
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

FOREIGN SECURITIES. The Fund may purchase common stocks and ADRs of the foreign
companies included in its Index. ADRs are U.S. dollar-denominated securities
which represent an interest in an underlying foreign security. The Fund is
exposed to the risks of investing in foreign securities, which can be affected
by currency, political, legal, regulatory and operational factors. Foreign
markets can be less liquid and more volatile than the U.S. market because of
increased risks of adverse issuer, political, regulatory, market or economic
developments and can perform differently than the U.S. market. In some foreign
countries, there is also less information available about foreign issuers and
markets because of less rigorous accounting and regulatory standards than in the
U.S. Because the value of ADRs, in which the Fund may invest, is dependent upon
the market price of an underlying foreign security, ADRs are subject to most of
the risks associated with foreign investing. The Fund may lose money if the
currency in which a security is priced declines in value relative to the U.S.
dollar. Currency fluctuations could erase investment gains or add to investment
losses.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated redemptions.
The Fund's investments in money market instruments will likely cause the Fund's
returns to differ from those of the Index.

INVESTMENT STRUCTURE. Global Titans Index Fund invests directly in securities,
but may, in the future, invest in securities through one or more underlying
mutual funds, or portfolios.

FUND PERFORMANCE
Because the Fund is a new fund, performance information for the Fund is not
included in this prospectus.
<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi Global Titans Index Shares.

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year - the assumption of a 5% return
is required by the SEC for the purpose of this example and is not a
prediction of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same - the
example does not include voluntary fee caps.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS
--------------------------------------------------------------------------------
CITI GLOBAL TITANS INDEX SHARES $61 $192
--------------------------------------------------------------------------------
<PAGE>

MORE ABOUT THE INDEX
Dow Jones, the sponsor of the Global Titans Index, calculates the value of the
Index at three different times during the day, based on the close of various
markets world-wide. For the purposes of tracking the performance of its
benchmark Index, the Fund will use the value of the Index calculated at the
close of the U.S. markets.

Performance for the Dow Jones Global Titans Index is not presented because this
Index has been in existence only since July, 1999.

"Dow Jones" and "Dow Jones Global Titans IndexSM" are service marks of Dow Jones
& Company, Inc. and have been licensed for use for certain purposes by SSB Citi
Fund Management LLC. The Fund is based on the Dow Jones Global Titans IndexSM,
is not sponsored, endorsed sold or promoted by Dow Jones, and Dow Jones makes no
representation regarding the advisability of investing in the Fund. For
additional information, please see the Appendix.
<PAGE>

CITI(SM) INTERNATIONAL INDEX SHARES
The Fund's goal is to provide long-term capital growth and diversification by
approximating, before fees and expenses, the performance of the MSCI Europe,
Australasia, and Far East Index (MSCI EAFE(R) Free Index).

THE INDEX
The MSCI EAFE(R) Free Index is a broadly diversified index of approximately 1100
securities that are listed on the stock exchanges of European countries and
Australia, New Zealand, Hong Kong, Japan, and Singapore and that is intended to
represent broadly the performance of foreign stock markets. The Index is
market-value weighted, so the larger of the companies included in the Index have
a greater impact on the performance of the Index than the smaller companies. For
this reason, issuers from certain countries or regions could be
disproportionately represented in the Index from time to time. The MSCI EAFE(R)
Free Index does not show actual investment returns or reflect payment of
management or brokerage fees, which would lower the Index's performance. The
MSCI EAFE(R) Free Index is unmanaged and does not have to maintain liquidity to
meet redemption requests or pay expenses.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The International Index Fund invests in a sampling of
securities that are selected and weighted to result in investment
characteristics comparable to, and performance that will correlate with the
performance before fees and expenses of, the MSCI EAFE(R) Free Index. The
statistical sampling techniques are based on capitalization, industry
exposures, dividend yield, price/earnings ratio, price/book ratio, earnings
growth, country weightings and the effect of foreign taxes. Under normal market
conditions, the Fund invests at least 90% of its assets in common stocks
included in the MSCI EAFE(R) Free Index. The Fund attempts to achieve, in both
rising and falling markets, a correlation of at least 95% between the total
return of its net assets before fees and expenses and the Index.

[Citi is a service mark of Citicorp.]

SELECTION PROCESS. The International Index Fund's manager follows an indexed or
"passively managed" approach to investing. This means that the manager does not
evaluate individual companies to identify attractive investment candidates.
Instead, the manager attempts to mirror the performance of the Index as closely
as possible by adjusting the Fund's portfolio periodically to reflect a sampling
of the companies included in the Index and their weightings. Like most index
funds, the Fund does not mirror the Index exactly because, unlike the Index, the
Fund must maintain a portion of its assets in cash and liquid short-term
securities to meet redemption requests and pay the Fund's expenses. The Fund's
returns are likely to be below those of the Index because of the Fund's
short-term investments and its operating expenses.

INVESTMENT STRUCTURE. International Index Fund is structured as a feeder fund.
The Fund does not buy individual securities directly. Instead, it invests all of
its assets in a corresponding Master Portfolio, International Index Master
Portfolio. The Master Portfolio invests in securities in accordance with
investment goals, policies and limitations that are similar to those of the
Fund.

International Index Fund may withdraw its investment in its Master Portfolio,
without a shareholder vote, if the Board of Trustees determines that it is in
the best interests of the Fund and its shareholders to do so. Upon any such
withdrawal, the Board would consider what action might be taken, including the
investment of all the assets of the Fund in another pooled investment entity
having the same investment objective as the Fund or the hiring of a subadviser
to manage the Fund's assets.

WHO MAY WANT TO INVEST
The International Index Fund may be an appropriate investment if you:

o Are seeking to participate in the long-term growth potential of
international markets

o Currently have exposure to U.S. stock markets and wish to diversify your
investment portfolio by adding non-U.S. stocks that may not move in tandem
with U.S. stocks

o Are comfortable with the risks of the stock market and the special risks of
investing in foreign securities, including emerging market securities

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

MARKET RISK. The Fund is exposed to the risks of investing in common stocks. The
Fund may not perform as well as other investments, if, among other things: the
Index declines or performs poorly relative to other related indexes or
individual securities; an adverse event, such as an unfavorable earnings report,
negatively affects the price of an issuer in the Index; or the securities issued
by companies which comprise the Index fall out of favor with investors.

DERIVATIVES. In seeking to match the performance of its Index, International
Index Master Portfolio may engage in futures and options transactions and other
derivative securities transactions which involve risk. The futures contracts and
options on futures contracts the Master Portfolio may purchase are considered
derivatives.

Derivatives may be more sensitive than direct securities to changes in interest
rates or sudden market moves. Some derivatives also may be susceptible to
fluctuations in yield or value because of their structure or contract terms.
Even a small investment in derivative contracts can have a big impact on the
Fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when stock
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

FOREIGN SECURITIES. The Fund is exposed to the risks of investing in foreign
securities, which can be affected by currency, political, legal, regulatory and
operational factors. Foreign markets can be less liquid and more volatile than
the U.S. market because of increased risks of adverse issuer, political,
regulatory, market or economic developments and can perform differently than
the U.S. market. In some foreign countries, there is also less information
available about foreign issuers and markets because of less rigorous accounting
and regulatory standards than in the U.S. The value of securities of smaller,
less well-known issuers can perform differently than the market as a whole and
other types of stocks and can be more volatile than that of larger issuers.
Because the value of ADRs, in which the Fund may invest, is dependent upon the
market price of an underlying foreign security, ADRs are subject to most of the
risks associated with foreign investing. The Fund may lose money if the currency
in which a security is priced declines in value relative to the U.S. dollar.
Currency fluctuations could erase investment gains or add to investment losses.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated redemptions.
The Fund's investments in money market instruments will likely cause the Fund's
returns to differ from those of the Index.

FUND PERFORMANCE
Because the Fund does not have a full calendar year of performance, performance
information for the Fund is not included in this prospectus.
<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi International Index Shares.

--------------------------------------------------------------------------------
FEE TABLE
--------------------------------------------------------------------------------
SHAREHOLDER FEES - fees paid directly from your investment
--------------------------------------------------------------------------------
Redemption fee paid to the Fund, 1.50%
charged only on shares you sell within 180 days of buying them

ANNUAL OPERATING EXPENSES (% of average net assets)
expenses deducted from Fund assets
--------------------------------------------------------------------------------
Management fees(1) 0.40%
Distribution (12b-1) fees None
Other expenses(2)(3) 0.25%
----
Total annual operating expenses(4) 0.65%
--------------------------------------------------------------------------------
(1) The "Management fees" include an investment management fee payable by the
International Index Master Portfolio and an administration fee payable by
the Fund.
(2) Based on estimated expenses for the fiscal year ending December 31, 2000.
(3) Includes expenses of the Fund and the underlying investment company in which
it invests, International Index Master Portfolio.
(4) Management has agreed to cap the Citi International Index Shares' other
expenses to 0.25%. Management may not discontinue or modify this cap without
the approval of the Fund's trustees.
--------------------------------------------------------------------------------

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year - the assumption of a 5% return
is required by the SEC for the purpose of this example and is not a
prediction of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same - the
example reflects the cap on operating expenses.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 YEAR 3 YEARS
--------------------------------------------------------------------------------
CITI INTERNATIONAL INDEX SHARES $66 $208
--------------------------------------------------------------------------------
<PAGE>

MORE ABOUT THE INDEX
The chart below sets forth the annual total returns of the MSCI EAFE (R) Free
Index for each of the past ten calendar years. The line graph below shows the
growth of a $10,000 investment in the stocks comprising the Index over the past
ten calendar years. The data is provided to illustrate the past performance of
the Fund's Index and does not represent the performance of the Fund. Investors
should not consider this performance data as an indication of future
performance of the Fund. The returns are not intended to predict or suggest the
returns that might be experienced by the Fund or an individual investing in the
Fund.

Annual Total Returns -- MSCI EAFE(R) Free Index

1990 (23.33)%
1991 12.56%
1992 (11.91)%
1993 33.06%
1994 8.04%
1995 11.62%
1996 6.45%
1997 1.83%
1998 20.42%
1999 27.05%

MSCI EAFE(R) FREE INDEX - LINE GRAPH
(in thousands)
DATE GROWTH OF $10,000
--------------------------------------------
12/31/89 10,000.00
1/31/90 9,621.95
2/28/90 8,941.09
3/31/90 7,999.03
4/30/90 7,939.13
5/31/90 8,844.63
6/30/90 8,760.54
7/31/90 8,881.33
8/31/90 8,023.43
9/30/90 6,914.60
10/31/90 8,013.51
11/30/90 7,539.99
12/31/90 7,666.89
1/31/91 7,907.98
2/28/91 8,760.89
3/31/91 8,232.24
4/30/91 8,321.67
5/31/91 8,406.82
6/30/91 7,790.43
7/31/91 8,173.96
8/31/91 8,009.79
9/30/91 8,476.42
10/31/91 8,605.86
11/30/91 8,202.71
12/31/91 8,629.48
1/31/92 8,441.83
2/29/92 8,141.47
3/31/92 7,596.59
4/30/92 7,634.34
5/31/92 8,150.05
6/30/92 7,765.54
7/31/92 7,570.43
8/31/92 8,058.44
9/30/92 7,904.75
10/31/92 7,488.66
11/30/92 7,557.56
12/31/92 7,601.86
1/31/93 7,600.38
2/28/93 7,832.33
3/31/93 8,516.99
4/30/93 9,327.92
5/31/93 9,530.69
6/30/93 9,383.75
7/31/93 9,714.13
8/31/93 10,244.53
9/30/93 10,016.94
10/31/93 10,333.47
11/30/93 9,427.90
12/31/93 10,114.67
1/31/94 10,963.85
2/28/94 10,929.61
3/31/94 10,460.38
4/30/94 10,914.22
5/31/94 10,856.28
6/30/94 11,009.55
7/31/94 11,120.71
8/31/94 11,388.80
9/30/94 11,033.60
10/31/94 11,405.74
11/30/94 10,859.80
12/31/94 10,927.58
1/31/95 10,506.99
2/28/95 10,483.58
3/31/95 11,139.27
4/30/95 11,561.40
5/31/95 11,433.86
6/30/95 11,234.61
7/31/95 11,935.23
8/31/95 11,480.83
9/30/95 11,711.86
10/31/95 11,402.58
11/30/95 11,722.90
12/31/95 12,196.99
1/31/96 12,261.60
2/29/96 12,304.07
3/31/96 12,564.98
4/30/96 12,930.51
5/31/96 12,692.59
6/30/96 12,771.06
7/31/96 12,398.42
8/31/96 12,433.72
9/30/96 12,766.42
10/31/96 12,634.87
11/30/96 13,146.71
12/31/96 12,983.74
1/31/97 12,539.04
2/28/97 12,741.60
3/31/97 12,781.32
4/30/97 12,853.32
5/31/97 13,693.50
6/30/97 14,452.62
7/31/97 14,692.02
8/31/97 13,574.19
9/30/97 14,337.17
10/31/97 13,241.49
11/30/97 13,104.18
12/31/97 13,220.96
1/31/98 13,832.29
2/28/98 14,721.54
3/31/98 15,176.02
4/30/98 15,298.14
5/31/98 15,225.87
6/30/98 15,343.28
7/31/98 15,504.78
8/31/98 13,587.40
9/30/98 13,177.51
10/31/98 14,559.27
11/30/98 15,312.48
12/31/98 15,921.00
1/31/99 15,873.19
2/28/99 15,498.52
3/31/99 16,142.05
4/30/99 16,805.76
5/31/99 15,931.69
6/30/99 16,548.85
7/31/99 17,045.02
8/31/99 17,107.73
9/30/99 17,282.66
10/31/99 17,933.01
11/30/99 18,558.82
12/31/99 20,228.15

MSCI, Morgan Stanley Capital International, EAFE and MSCI EAFE Free Index are
service marks of MSCI and have been licensed for use by SSB Citi Fund Management
LLC. The Citi International Index Shares are not sponsored, endorsed, sold or
promoted by MSCI. Nor does this company make any representation regarding the
advisability of investing in the Citi International Index Shares. For additional
information, please see the Appendix.
<PAGE>

CITI(SM) FINANCIAL SERVICES INDEX SHARES
The Fund's goal is to provide investment results that, before fees and expenses,
correspond to the performance of the Goldman Sachs Sector Index - Financials
(GSSI Financials Index).

THE INDEX
The GSSI Financials Index is an index of common stocks traded on the New York
Stock Exchange, the American Stock Exchange or The Nasdaq Stock Market that is
designed to measure the performance of companies in the financial services
sector. The Index includes stocks issued by the following types of companies:

o Banking services -- regional trust, money center, commercial and consumer
finance services including credit cards, savings and loans, and mortgage
finance

o Brokerage firms and asset managers

o Insurance companies including brokers, life insurance, property and
casualty, disability and reinsurance

o Real estate companies including developers, investors, operating companies
and real estate investment trusts

The GSSI Financials Index includes the stocks of domestic and foreign companies
with a range of market capitalizations, including small and medium market
capitalization companies with market capitalizations under $5 billion. The
Index is modified market capitalization-weighted, meaning that, subject to some
limitations, a company with a larger market capitalization will have a bigger
impact on the performance of the Index. As of July 31, 2000, the GSSI Financials
Index included 256 stocks.

[Citi is a service mark of Citicorp.]

The GSSI Financials Index does not show actual investment returns or reflect
payment of management or brokerage fees, which would lower the Index's
performance. The GSSI Financials Index is unmanaged and does not have to
maintain liquidity to meet redemption requests or pay expenses.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The Fund seeks to achieve its investment goal by investing
substantially all of its assets in the stocks that comprise the GSSI Financials
Index and in derivatives based on the performance of the Index or the market
sector represented by the Index. Normally, the Fund invests at least 80% of its
assets in securities of companies included in the Index and in derivatives based
on the performance of the Index or the market sector represented by the Index.
The Fund may use replication or sampling techniques to track the performance of
its Index.

The Fund's derivatives and investment techniques may include buying and selling
options and futures contracts, entering into swap agreements and purchasing
indexed securities to track the performance of the GSSI Financials Index. The
Fund also may enter into repurchase agreements and lend portfolio securities.

SELECTION PROCESS. The Financial Services Index Fund is a "pure" index Fund.
This means that the manager does not evaluate individual companies to identify
attractive investment candidates. Instead, the manager attempts to mirror the
performance of the Index as closely as possible by adjusting the Fund's
portfolio periodically to match or sample the companies included in the Index
and their weightings. Like most index funds, the Fund will not mirror the Index
exactly because, unlike the Index, the Fund must maintain a portion of its
assets in cash and liquid short-term securities to meet redemption requests and
pay the Fund's expenses. The Fund's returns are likely to be below those of the
Index because of the Fund's short-term investments and its operating expenses.

WHO MAY WANT TO INVEST
The Fund may be an appropriate investment if you:

o Are seeking to participate in the long-term growth potential of the
financial services sector

o Are seeking capital appreciation and can tolerate short-term volatility

o Are comfortable with the risks of the stock market and the special risks of
foreign securities

o Currently have exposure to the stock market and can tolerate concentrated
investment in a single market sector.

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

SECTOR INVESTING RISK. The Fund's investment performance will be closely tied to
the performance of the financial services sector. Market conditions, interest
rates, and economic, regulatory or financial developments could significantly
affect the financial services sector and the securities of companies in that
sector could react similarly to these or other developments. The financial
services industries are subject to extensive government regulation and
relatively rapid change because of increasingly blurred distinctions between
service segments, and can be significantly affected by availability and cost of
capital funds, changes in interest rates, and price competition. The performance
of the financial services sector may differ in direction and degree from that of
the overall stock market.

NON-DIVERSIFICATION AND CONCENTRATION. The Fund is "non-diversified," which
means it may invest a larger percentage of its assets in one issuer than a
diversified fund. To the extent the Fund concentrates its assets in fewer
issuers, the Fund will be more susceptible to negative events affecting those
issuers. Also, the Fund's investments are concentrated in a particular sector of
the economy. This means that the Fund's investments are not as diversified as
most mutual funds, and far less diversified than the broad securities markets.
The Fund's share price is likely to be more volatile than those of other mutual
funds, and the value of your investment in the Fund may rise or fall rapidly.

MARKET RISK. The Fund is exposed to the risks of investing in common stocks. The
Fund may not perform as well as other investments, if, among other things: the
Index declines or performs poorly relative to other related indexes or
individual securities; an adverse event, such as an unfavorable earnings report,
negatively affects the price of an issuer in the Index; or the securities issued
by companies which comprise the Index fall out of favor with investors.

DERIVATIVES. Derivatives may be more sensitive than direct securities to changes
in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value because of their structure or
contract terms. Even a small investment in derivative contracts can have a big
impact on the Fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when stock
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

FOREIGN SECURITIES. The Fund may purchase common stocks of the foreign companies
included in its Index. These securities are publicly traded on the New York
Stock Exchange, the American Stock Exchange or The Nasdaq Stock Market. The Fund
is exposed to the risks of investing in foreign securities, which can be
affected by currency, political, legal, regulatory and operational factors.

SMALLER COMPANIES. The Fund's investments may include smaller capitalization
companies whose stocks tend to have more price volatility than larger companies.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated redemptions.
The Fund's investments in money market instruments will likely cause the Fund's
returns to differ from those of the Index.

INVESTMENT STRUCTURE. The Financial Services Index Fund invests directly in
securities, but may, in the future, invest in securities through one or more
underlying mutual funds, or portfolios.

FUND PERFORMANCE
Because the Fund is a new fund, performance information for the Fund is not
included in this prospectus.
<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi Financial Services Index Shares.

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year - the assumption of a 5% return
is required by the SEC for the purpose of this example and is not a
prediction of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same - the
example does not include voluntary fee caps.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 YEAR 3 YEARS
--------------------------------------------------------------------------------
CITI FINANCIAL SERVICES INDEX SHARES $77 $240
--------------------------------------------------------------------------------
<PAGE>

MORE ABOUT THE INDEX
The chart below sets forth the annual total returns of the GSSI Financials Index
since its inception. The line graph below shows the growth of a $10,000
investment in the stocks comprising the Index since its inception. The data is
provided to illustrate the past performance of the Fund's Index and does not
represent the performance of the Fund. Investors should not consider this
performance data as an indication of future performance of the Fund. The returns
are not intended to predict or suggest the returns that might be experienced by
the Fund or an individual investing in the Fund.

Annual Total Returns -- GSSI Financials Index

1997 48.73%
1998 9.04%
1999 (0.94)%

GOLDMAN SACHS FINANCIALS INDEX (LINE GRAPH)
(in thousands)
DATE GROWTH OF $10,000
-------------------------------------------
12/31/96 10,000.00
1/31/97 10,690.00
2/28/97 11,069.50
3/31/97 10,333.37
4/30/97 11,013.31
5/31/97 11,602.52
6/30/97 12,306.79
7/31/97 13,638.39
8/31/97 12,794.17
9/30/97 13,835.62
10/31/97 13,587.96
11/30/97 14,090.72
12/31/97 14,871.34
1/31/98 14,480.23
2/28/98 15,737.11
3/31/98 16,662.45
4/30/98 16,949.05
5/31/98 16,576.17
6/30/98 17,151.36
7/31/98 16,947.26
8/31/98 13,222.25
9/30/98 13,485.37
10/31/98 14,949.89
11/30/98 15,858.84
12/31/98 16,215.66
1/31/99 16,359.98
2/28/99 16,481.05
3/31/99 17,016.68
4/30/99 18,178.92
5/31/99 17,340.87
6/30/99 17,790.00
7/31/99 16,791.98
8/31/99 15,954.06
9/30/99 15,022.34
10/31/99 17,176.55
11/30/99 16,384.71
12/31/99 16,060.29

"GSSI" and "Goldman Sachs Sector Indices" are trademarks of Goldman Sachs & Co.
and have been licensed for use by SSB Citi Fund Management LLC for use in
connection with the Fund. The Fund is not sponsored, endorsed, sold, or promoted
by Goldman, Sachs & Co. or any of its affiliates. Neither Goldman, Sachs & Co.
nor any of its affiliates make any representation regarding the advisability of
investing in the Fund. For additional information, please see the Appendix.

<PAGE>

CITI(SM) HEALTH SCIENCES INDEX SHARES
The Fund's goal is to provide investment results that, before fees and expenses,
correspond to the performance of the Goldman Sachs Sector Index - Healthcare
(GSSI Healthcare Index).

THE INDEX
The GSSI Healthcare Index is an index of common stocks traded on the New York
Stock Exchange, the American Stock Exchange or The Nasdaq Stock Market that is
designed to measure the performance of companies in the health sciences sector.
The Index includes stocks issued by the following types of companies:

o Providers of healthcare-related services including long-term care and
hospital facilities, healthcare management organizations and continuing care
services

o Researchers, manufacturers, and distributors of pharmaceuticals, drugs and
related sciences, and medical supplies, instruments and products

The GSSI Healthcare Index includes the stocks of domestic and foreign companies
with a range of market capitalizations, including small and medium market
capitalization companies with market capitalizations under $5 billion. The Index
is modified market capitalization-weighted, meaning that, subject to some
limitations, a company with a larger market capitalization will have a bigger
impact on the performance of the Index. As of July 31, 2000, the GSSI
Healthcare Index included 113 stocks.

[Citi is a service mark of Citicorp.]

The GSSI Healthcare Index does not show actual investment returns or reflect
payment of management or brokerage fees, which would lower the Index's
performance. The GSSI Healthcare Index is unmanaged and does not have to
maintain liquidity to meet redemption requests or pay expenses.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The Fund seeks to achieve its investment goal by investing
substantially all of its assets in the stocks that comprise the GSSI Healthcare
Index and in derivatives based on the performance of the Index or the market
sector represented by the Index. Normally, the Fund invests at least 80% of its
assets in securities of companies included in the Index and in derivatives based
on the performance of the Index or the market sector represented by the Index.
The Fund may use replication or sampling techniques to track the performance of
its Index.

The Fund's derivatives and investment techniques may include buying and selling
options and futures contracts, entering into swap agreements and purchasing
indexed securities to track the performance of the GSSI Healthcare Index. The
Fund also may enter into repurchase agreements and lend portfolio securities.

SELECTION PROCESS. The Health Sciences Index Fund is a "pure" index Fund. This
means that the manager does not evaluate individual companies to identify
attractive investment candidates. Instead, the manager attempts to mirror the
performance of the Index as closely as possible by adjusting the Fund's
portfolio periodically to match or sample the companies included in the Index
and their weightings. Like most index funds, the Fund will not mirror the Index
exactly because, unlike the Index, the Fund must maintain a portion of its
assets in cash and liquid short-term securities to meet redemption requests and
pay the Fund's expenses. The Fund's returns are likely to be below those of the
Index because of the Fund's short-term investments and its operating expenses.

WHO MAY WANT TO INVEST
The Fund may be an appropriate investment if you:

o Are seeking to participate in the long-term growth potential of the health
sciences sector

o Are seeking capital appreciation and can tolerate significant short-term
volatility

o Are comfortable with the risks of the stock market and the special risks of
foreign securities

o Currently have exposure to the stock market and can tolerate concentrated
investment in a single market sector.

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

SECTOR INVESTING RISK. The Fund's investment performance will be closely tied to
the performance of the health sciences sector. Market conditions, interest
rates, and economic, regulatory or financial developments could significantly
affect the health sciences sector and the securities of companies in that sector
could react similarly to these or other developments. The health science
industries are subject to government regulation and government approval of
products and services, which could have a significant effect on price and
availability, and can be significantly affected by rapid obsolescence. Lawsuits
or other legal proceedings against the companies in this sector may adversely
affect such companies, the market value of their securities or the Fund's
performance. The performance of the health sciences sector may differ in
direction and degree from that of the overall stock market.

MARKET RISK. The Fund is exposed to the risks of investing in common stocks. The
Fund may not perform as well as other investments, if, among other things: the
Index declines or performs poorly relative to other related indexes or
individual securities; an adverse event, such as an unfavorable earnings report,
negatively affects the price of an issuer in the Index; or the securities issued
by companies which comprise the Index fall out of favor with investors.

DERIVATIVES. Derivatives may be more sensitive than direct securities to changes
in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value because of their structure or
contract terms. Even a small investment in derivative contracts can have a big
impact on the Fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when stock
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

SMALLER COMPANIES. The Fund's investments may include smaller capitalization
companies whose stocks tend to have more price volatility than larger companies.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated redemptions.
The Fund's investments in money market instruments will likely cause the Fund's
returns to differ from those of the Index.

INVESTMENT STRUCTURE. The Health Sciences Index Fund invests directly in
securities, but may, in the future, invest in securities through one or more
underlying mutual funds, or portfolios.

FUND PERFORMANCE
Because the Fund is a new fund, performance information for the Fund is not
included in this prospectus.
<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi Health Sciences Index Shares.

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year - the assumption of a 5% return is
required by the SEC for the purpose of this example and is not a prediction
of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same - the
example does not include voluntary fee caps.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 Year 3 Years
--------------------------------------------------------------------------------
CITI HEALTH SCIENCES INDEX SHARES $77 $240
--------------------------------------------------------------------------------
<PAGE>
MORE ABOUT THE INDEX
The chart below sets forth the annual total returns of the GSSI Healthcare Index
since its inception. The line graph below shows the growth of a $10,000
investment in the stocks comprising the Index since its inception. The data is
provided to illustrate the past performance of the Fund's Index and does not
represent the performance of the Fund. Investors should not consider this
performance data as an indication of future performance of the Fund. The returns
are not intended to predict or suggest the returns that might be experienced by
the Fund or an individual investing in the Fund.

Annual Total Returns -- GSSI Healthcare Index

1997 36.67%
1998 40.26%
1999 (4.04)%

GOLDMAN SACHS HEALTHCARE INDEX (LINE GRAPH)
(in thousands)
DATE GROWTH OF $10,000
------------------------------------------
12/31/96 10,000.00
1/31/97 10,829.00
2/28/97 10,991.44
3/31/97 10,238.52
4/30/97 10,874.33
5/31/97 11,706.22
6/30/97 12,620.48
7/31/97 13,014.24
8/31/97 12,280.23
9/30/97 12,953.19
10/31/97 12,797.75
11/30/97 13,278.95
12/31/97 13,668.02
1/31/98 14,302.22
2/28/98 15,227.57
3/31/98 15,918.90
4/30/98 16,337.57
5/31/98 16,074.53
6/30/98 16,997.21
7/31/98 17,007.41
8/31/98 14,767.53
9/30/98 16,431.83
10/31/98 17,167.98
11/30/98 18,084.75
12/31/98 19,173.45
1/31/99 19,104.43
2/28/99 18,867.53
3/31/99 19,444.88
4/30/99 18,538.75
5/31/99 18,227.30
6/30/99 19,000.13
7/31/99 18,407.33
8/31/99 18,764.43
9/30/99 17,090.65
10/31/99 18,338.26
11/30/99 18,879.24
12/31/99 18,399.71

CITI(SM) TECHNOLOGY INDEX SHARES
The Fund's goal is to provide investment results that, before fees and expenses,
correspond to the performance of the Goldman Sachs Technology (GSTI(TM)
Composite) Index.

THE INDEX
The GSTI Composite Index is an index of common stocks traded on the New York
Stock Exchange, the American Stock Exchange or The Nasdaq Stock Market that is
designed to measure the performance of companies in the technology sector. The
Index includes stocks issued by the following types of companies:

o Producers of sophisticated devices related to the fields of computers,
electronics, networking and Internet services

o Producers of computer and Internet software

o Consultants for information technology

o Providers of computer services

The GSTI Composite Index includes the stocks of domestic and foreign companies
with a range of market capitalizations, including small and medium market
capitalization companies with market capitalizations under $5 billion. The
Index is modified market capitalization-weighted, meaning that, subject to some
limitations, a company with a larger market capitalization will have a bigger
impact on the performance of the Index. As of July 31, 2000, the GSTI Composite
Index included 221 stocks.

[Citi is a service mark of Citicorp.]

The GSTI Composite Index does not show actual investment returns or reflect
payment of management or brokerage fees, which would lower the Index's
performance. The GSTI Composite Index is unmanaged and does not have to maintain
liquidity to meet redemption requests or pay expenses.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The Fund seeks to achieve its investment goal by investing
substantially all of its assets in the stocks that comprise the GSTI Composite
Index and in derivatives based on the performance of the Index or the market
sector represented by the Index. Normally, the Fund invests at least 80% of its
assets in securities of companies included in the Index and in derivatives based
on the performance of the Index or the market sector represented by the Index.
The Fund may use replication or sampling techniques to track the performance of
its Index.

The Fund's derivatives and investment techniques may include buying and selling
options and futures contracts, entering into swap agreements and purchasing
indexed securities to track the performance of the GSTI Composite Index. The
Fund also may enter into repurchase agreements and lend portfolio securities.

SELECTION PROCESS. The Technology Index Fund is a "pure" index Fund. This means
that the manager does not evaluate individual companies to identify attractive
investment candidates. Instead, the manager attempts to mirror the performance
of the Index as closely as possible by adjusting the Fund's portfolio
periodically to match or sample the companies included in the Index and their
weightings. Like most index funds, the Fund will not mirror the Index exactly
because, unlike the Index, the Fund must maintain a portion of its assets in
cash and liquid short-term securities to meet redemption requests and pay the
Fund's expenses. The Fund's returns are likely to be below those of the Index
because of the Fund's short-term investments and its operating expenses.

WHO MAY WANT TO INVEST
The Fund may be an appropriate investment if you:

o Are seeking to participate in the long-term growth potential of the
technology sector

o Are seeking capital appreciation and can tolerate significant short-term
volatility

o Are comfortable with the risks of the stock market and the special risks of
foreign securities

o Currently have exposure to the stock market and can tolerate concentrated
investment in a single market sector.

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

SECTOR INVESTING RISK. The Fund's investment performance will be closely tied to
the performance of the technology sector. Market conditions, interest rates, and
economic, regulatory or financial developments could significantly affect the
technology sector and the securities of companies in that sector could react
similarly to these or other developments. 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 areas, and changes in governmental policies and the need for
regulatory approvals may have a material adverse effect on the sector. The
performance of the technology sector may differ in direction and degree from
that of the overall stock market.

MARKET RISK. The Fund is exposed to the risks of investing in common stocks. The
Fund may not perform as well as other investments, if, among other things: the
Index declines or performs poorly relative to other related indexes or
individual securities; an adverse event, such as an unfavorable earnings report,
negatively affects the price of an issuer in the Index; or the securities issued
by companies which comprise the Index fall out of favor with investors.

DERIVATIVES. Derivatives may be more sensitive than direct securities to changes
in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value because of their structure or
contract terms. Even a small investment in derivative contracts can have a big
impact on the Fund's stock market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when stock
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

SMALLER COMPANIES. The Fund's investments may include smaller capitalization
companies whose stocks tend to have more price volatility than larger companies.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated redemptions.
The Fund's investments in money market instruments will likely cause the Fund's
returns to differ from those of the Index.

INVESTMENT STRUCTURE. The Technology Index Fund invests directly in securities,
but may, in the future, invest in securities through one or more underlying
mutual funds, or portfolios.

FUND PERFORMANCE
Because the Fund is a new fund, performance information for the Fund is not
included in this prospectus.
<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi Technology Index Shares.

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year - the assumption of a 5% return
is required by the SEC for the purpose of this example and is not a
prediction of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same - the
example does not include voluntary fee caps.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 Year 3 Years
--------------------------------------------------------------------------------
CITI TECHNOLOGY INDEX SHARES $77 $240
--------------------------------------------------------------------------------
<PAGE>

MORE ABOUT THE INDEX
The chart below sets forth the annual total returns of the GSTI Composite Index
since its inception. The line graph below shows the growth of a $10,000
investment in the stocks comprising the Index since its inception. The data is
provided to illustrate the past performance of the Fund's Index and does not
represent the performance of the Fund. Investors should not consider this
performance data as an indication of future performance of the Fund. The returns
are not intended to predict or suggest the returns that might be experienced by
the Fund or an individual investing in the Fund. In particular, investors should
note the performance of the Index for the past two calendar years was
exceptional and will likely not be repeated.

Annual Total Returns -- GSTI Composite Index

1997 23.52%
1998 69.16%
1999 88.87%

GOLDMAN SACHS TECHNOLOGY INDEX (LINE GRAPH)
(in thousands)
DATE GROWTH OF $10,000
-------------------------------------------
12/31/96 10,000.00
1/31/97 11,089.00
2/28/97 10,216.30
3/31/97 9,680.96
4/30/97 10,546.44
5/31/97 11,620.07
6/30/97 11,769.97
7/31/97 13,876.79
8/31/97 13,556.24
9/30/97 13,964.28
10/31/97 12,761.95
11/30/97 12,969.97
12/31/97 12,351.31
1/31/98 12,992.34
2/28/98 14,402.01
3/31/98 14,636.76
4/30/98 15,466.67
5/31/98 14,410.29
6/30/98 15,663.99
7/31/98 16,008.60
8/31/98 13,109.44
9/30/98 14,974.91
10/31/98 16,077.07
11/30/98 17,950.04
12/31/98 20,892.06
1/31/99 24,247.32
2/28/99 21,337.64
3/31/99 23,162.01
4/30/99 23,891.61
5/31/99 23,631.19
6/30/99 26,410.22
7/31/99 26,156.68
8/31/99 27,519.45
9/30/99 27,794.64
10/31/99 28,778.57
11/30/99 32,801.82
12/31/99 39,700.00

"GSTI", "GSTI Composite Index", "Goldman Sachs Technology Index", "GSSI" and
"Goldman Sachs Sector Indices" are trademarks of Goldman Sachs & Co. and have
been licensed for use by SSB Citi Fund Management LLC for use in connection with
the Fund. The Fund is not sponsored, endorsed, sold, or promoted by Goldman,
Sachs & Co. or any of its affiliates. Neither Goldman, Sachs & Co. nor any of
its affiliates make any representation regarding the advisability of investing
in the Fund. For additional information, please see the Appendix.
<PAGE>

CITI(SM) U.S. BOND INDEX SHARES
The Fund's goal is to provide investment results that, before fees and expenses,
correspond to the performance of the Lehman Brothers Aggregate Bond Index(R)
(Lehman Bond Index).

THE INDEX
The Lehman Bond Index measures the total universe of public investment-grade
fixed income securities in the U.S., including government, corporate,
mortgage-backed, asset-backed, and international U.S. dollar-denominated bonds,
all with maturities of over 1 year. As of December 31, 1999, the Lehman Bond
Index included more than 5,500 bonds. The Index does not show actual investment
returns or reflect payment of management or brokerage fees, which would lower
the Index's performance. The Index is unmanaged and does not have to maintain
liquidity to meet redemption requests or pay expenses.

PRINCIPAL STRATEGIES
KEY INVESTMENTS. The U.S. Bond Index Fund may use replication or sampling
techniques to track the performance of the Lehman Bond Index. The Fund also may
use derivatives and investment techniques such as buying and selling options and
futures contracts, entering into swap agreements and purchasing indexed
securities to track the performance of the Index. The Fund also may enter into
repurchase agreements and lend portfolio securities.

SELECTION PROCESS. The U.S. Bond Index Fund is a "pure" index Fund. This means
that the manager does not evaluate individual bonds to identify attractive
investment candidates. Instead, the manager attempts to mirror the performance
of the Index as closely as possible by adjusting the Fund's portfolio
periodically to reflect the bonds included in the Index and their weightings.
Like most index funds, the Fund does not mirror the Index exactly because,
unlike the Index, the Fund must maintain a portion of its assets in cash and
liquid short-term securities to meet redemption requests and pay the Fund's
expenses. The Fund's returns are likely to be below those of the Index because
of the Fund's short-term investments and its operating expenses.

[Citi is a service mark of Citicorp.]

WHO MAY WANT TO INVEST
The U.S. Bond Index Fund may be an appropriate investment if you:

o Are seeking to participate in the bond market

o Are willing to accept the risks of the bond market

PRINCIPAL RISKS
As with any mutual fund, you may lose money if you invest in the Fund. The
Fund's principal risks are:

INDEX INVESTING RISK. Because the Fund is managed as an index fund, it will not
ordinarily sell a portfolio security because of the security's poor performance.
The Fund normally buys or sells a portfolio security only to reflect additions
or deletions of securities that comprise its Index or to adjust their relative
weightings. Although the manager seeks to replicate the performance of the
Index, the Fund may underperform its Index even before deducting fees and
expenses because the Fund must maintain a portion of its assets in liquid
short-term debt securities which historically have generated lower returns than
longer term debt securities. In addition, expenses and transaction costs, the
size of the Fund and the size and frequency of cash flows into and out of the
Fund, and the differences between how and when the Fund and its Index are valued
can also cause differences in performance. Because the Fund may use a sampling
strategy, it may not track its Index perfectly and differences between the
underlying Index and the Fund's portfolio will cause differences in performance.

INTEREST RATE RISK. In general, the prices of debt securities rise when interest
rates fall, and fall when interest rates rise. Longer-term obligations are
usually more sensitive to interest rate changes. A change in interest rates
could cause the Fund's share price to go down.

CREDIT RISK. Some issuers may not make payments on debt securities held by the
Fund. Or, an issuer's financial condition may deteriorate, leading to greater
volatility in the price of the security and making the security more difficult
for the Fund to sell.

INCOME RISK. If interest rates decline, the amount of income paid to you by the
Fund as dividends may also decline.

PREPAYMENT AND EXTENSION RISK. The issuers of debt securities held by the Fund
may be able to call a bond or prepay principal due on the securities,
particularly during periods of declining interest rates. The Fund may not be
able to reinvest that principal at attractive rates, and the Fund may lose any
premium paid. On the other hand, rising interest rates may cause prepayments to
occur at slower than expected rates. This makes securities more sensitive to
interest rate changes.

MARKET RISK. The Fund may not perform as well as other investments, if, among
other things, the Index declines or performs poorly relative to other related
indexes or individual securities, or the securities issued by companies which
comprise the Index fall out of favor with investors.

DERIVATIVES. Derivatives may be more sensitive than direct securities to changes
in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value because of their structure or
contract terms. Even a small investment in derivative contracts can have a big
impact on the Fund's bond market exposure. Therefore, using derivatives can
disproportionately increase losses and reduce opportunities for gains when bond
prices are changing. The Fund may not fully benefit from or may lose money on
derivatives if changes in their value do not correspond accurately to changes in
the value of the Fund's holdings. This may adversely affect the Fund's ability
to track its Index.

MORE ON THE FUND'S INVESTMENTS AND RISKS
MONEY MARKET INSTRUMENTS. The Fund may temporarily invest in money market
instruments. The Fund invests in money market instruments pending investment of
proceeds of the sale of shares of the Fund or settlement of purchases of
securities by the Fund or to maintain liquidity to meet anticipated redemptions.
The Fund's investments in money market instruments will likely cause the Fund's
returns to differ from those of the Index.

FOREIGN INVESTMENTS. The Fund may purchase international U.S. dollar-denominated
bonds included in its Index and is therefore exposed to the risks of investing
in foreign securities, including currency, political, legal, regulatory and
operational risks. Foreign countries generally have markets that are less liquid
and more volatile than markets in the U.S. In some foreign countries, there is
also less information available about foreign issuers and markets because of
less rigorous accounting and regulatory standards than in the U.S.

INVESTMENT STRUCTURE. U.S. Bond Index Fund invests directly in securities, but
may, in the future, invest in securities through one or more underlying mutual
funds, or portfolios.

FUND PERFORMANCE
Because the Fund is a new fund, performance information for the Fund is not
included in this prospectus.

<PAGE>

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Citi U.S. Bond Index Shares.

--------------------------------------------------------------------------------
FEE TABLE
--------------------------------------------------------------------------------
SHAREHOLDER FEES - fees paid directly from your investment
--------------------------------------------------------------------------------
Redemption fee paid to the Fund, None
charged only on shares you sell within 180 days of buying them

o you invest $10,000 in the Fund for the time periods indicated;

o you reinvest all dividends;

o you then sell all of your shares at the end of those periods;

o your investment has a 5% return each year - the assumption of a 5% return is
required by the SEC for the purpose of this example and is not a prediction
of the Fund's future performance; and

o the Fund's operating expenses as shown in the table remain the same - the
example does not include voluntary fee caps.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1 Year 3 Years
--------------------------------------------------------------------------------
CITI U.S. BOND INDEX SHARES $41 $128
--------------------------------------------------------------------------------
<PAGE>

MORE ABOUT THE INDEX
The chart below sets forth the annual total returns of the Lehman Brothers
Aggregate Bond Index for each of the past ten calendar years. The line graph
below shows the growth of a $10,000 investment in the bonds comprising the Index
over the past ten calendar years. The data is provided to illustrate the past
performance of the Fund's Index and does not represent the performance of the
Fund. Investors should not consider this performance data as an indication of
future performance of the Fund. The returns are not intended to predict or
suggest the returns that might be experienced by the Fund or an individual
investing in the Fund.

Annual Total Returns -- Lehman Brothers Aggregate Bond Index

1990 8.96%
1991 16.00%
1992 7.40%
1993 9.75%
1994 -2.92%
1995 18.47%
1996 3.63%
1997 9.65%
1998 8.69%
1999 (0.82)%

LEHMAN AGGREGATE BOND INDEX
(in thousands)
DATE GROWTH OF $10,000
--------------------------------------------

12/31/89 10,000.00
1/31/90 9,881.17
2/28/90 9,913.14
3/31/90 9,920.44
4/30/90 9,829.56
5/31/90 10,120.59
6/30/90 10,282.98
7/31/90 10,425.23
8/31/90 10,286.00
9/30/90 10,371.10
10/31/90 10,502.77
11/30/90 10,728.85
12/31/90 10,896.02
1/31/91 11,030.72
2/28/91 11,124.87
3/31/91 11,201.41
4/30/91 11,322.76
5/31/91 11,388.97
6/30/91 11,383.18
7/31/91 11,541.04
8/31/91 11,790.78
9/30/91 12,029.71
10/31/91 12,163.65
11/30/91 12,275.18
12/31/91 12,639.73
1/31/92 12,467.77
2/29/92 12,548.84
3/31/92 12,478.10
4/30/92 12,568.23
5/31/92 12,805.39
6/30/92 12,981.62
7/31/92 13,246.48
8/31/92 13,380.66
9/30/92 13,539.28
10/31/92 13,359.77
11/30/92 13,362.79
12/31/92 13,575.28
1/31/93 13,835.60
2/28/93 14,077.79
3/31/93 14,136.45
4/30/93 14,234.89
5/31/93 14,253.02
6/30/93 14,511.33
7/31/93 14,593.40
8/31/93 14,849.19
9/30/93 14,889.98
10/31/93 14,945.62
11/30/93 14,818.48
12/31/93 14,898.79
1/31/94 15,099.95
2/28/94 14,837.61
3/31/94 14,471.80
4/30/94 14,356.24
5/31/94 14,354.23
6/30/94 14,322.51
7/31/94 14,607.00
8/31/94 14,625.12
9/30/94 14,409.87
10/31/94 14,397.03
11/30/94 14,365.06
12/31/94 14,464.25
1/31/95 14,750.50
2/28/95 15,101.21
3/31/95 15,193.86
4/30/95 15,406.09
5/31/95 16,002.27
6/30/95 16,119.59
7/31/95 16,083.59
8/31/95 16,277.69
9/30/95 16,436.05
10/31/95 16,649.80
11/30/95 16,899.29
12/31/95 17,136.45
1/31/96 17,250.25
2/29/96 16,950.40
3/31/96 16,832.58
4/30/96 16,737.92
5/31/96 16,703.93
6/30/96 16,928.25
7/31/96 16,974.57
8/31/96 16,946.12
9/30/96 17,241.44
10/31/96 17,623.36
11/30/96 17,925.23
12/31/96 17,758.56
1/31/97 17,812.94
2/28/97 17,857.25
3/31/97 17,659.36
4/30/97 17,923.72
5/31/97 18,093.15
6/30/97 18,307.90
7/31/97 18,801.61
8/31/97 18,641.24
9/30/97 18,916.16
10/31/97 19,190.58
11/30/97 19,278.95
12/31/97 19,473.06
1/31/98 19,723.06
2/28/98 19,708.21
3/31/98 19,775.93
4/30/98 19,879.15
5/31/98 20,067.72
6/30/98 20,237.91
7/31/98 20,280.97
8/31/98 20,611.03
9/30/98 21,093.66
10/31/98 20,982.12
11/30/98 21,101.21
12/31/98 21,164.65
1/31/99 21,315.71
2/28/99 20,943.60
3/31/99 21,059.67
4/30/99 21,126.38
5/31/99 20,941.34
6/30/99 20,874.62
7/31/99 20,785.75
8/31/99 20,775.18
9/30/99 21,016.36
10/31/99 21,093.91
11/30/99 21,092.40
12/31/99 20,990.68

"Lehman Brothers Aggregate Bond Index(R)" is a trademark of Lehman Brothers. The
Fund is not sponsored, endorsed, sold or promoted by the Index, and the Index is
not in any way affiliated with the Fund. The sponsor of the Index makes no
representation or warranty, implied or express, regarding the advisability of
investing in the Fund.
<PAGE>
YOUR ACCOUNT

HOW TO BUY SHARES
Shares of the Funds are offered continuously and purchases may be made Monday
through Friday, except on certain holidays. Shares may be purchased from the
Funds' distributor or a broker-dealer, financial intermediary, financial
institution, or the distributor's financial consultants (each called a Service
Agent) that has entered into a sales or service agreement with the distributor
concerning the Funds. Please call 1-800-995-0134 for information. You may also
purchase shares directly from a Fund by calling the Fund's sub-transfer agent at
1-800-995-0134 between the hours of 8:00 a.m. and 4:00 p.m.

The Funds do not, but your Service Agent may, impose a minimum initial or
subsequent investment requirement.

Shares are purchased at net asset value the next time it is calculated after
your order is received in proper form by the Fund. Each Fund has the right to
reject any purchase order or cease offering Fund shares at any time.

To complete a purchase transaction, you must have sufficient funds in your
account. If you transfer funds by check, the funds will not be available in your
account until the check clears.

If you hold your shares through a Service Agent, your Service Agent may
establish and maintain your account and be the shareholder of record. If you
wish to transfer your account, you may transfer it to another financial
institution, or you may set up an account directly with the Fund's sub-transfer
agent.

Each Fund has Systematic Investment Plans which allow you to automatically
invest a specific dollar amount in your account on a periodic basis. For more
information, please contact the Funds' sub-transfer agent or, if you hold your
shares through a Service Agent, your Service Agent. Cititrade customers should
contact a Cititrade account representative at 1-888-663-CITI[2484] for more
information.

CITITRADE(R) INVESTING
Shares may be purchased through the Cititrade Program by customers that have
established a Cititrade Account. For more detailed information on how to open a
Cititrade Account, please visit the Cititrade website at www.mycititrade.com, or
call a Cititrade account representative at 1-888-663-CITI[2484].

Once you open your Cititrade Account, you will be subject to the general account
requirements of the Cititrade Program, as described in the Cititrade account
application, and will have access to all the electronic financial services made
available from time to time over the Internet by the Cititrade Program. This
prospectus is readily available for viewing and printing on the Cititrade
website. Please note that www.mycititrade.com is an inactive textual reference
only, meaning that the information contained on the web-site is not part of this
prospectus and is not incorporated herein by reference.

Investors who have established an account with Cititrade may receive shareholder
information about the Fund they invest in electronically, unless they otherwise
request to receive the information in paper format. Shareholder information
includes prospectuses, financial reports, confirmations, proxy solicitations
and financial statements. Cititrade shareholders may also receive other
Fund-related correspondence through their e-mail account.

You may incur costs imposed by your Internet service provider for on-line access
to shareholder documents and maintaining an e-mail account. The Funds reserve
the right to deliver paper-based documents to investors in certain
circumstances, at no cost to you.

Cititrade is a registered service mark of Citicorp.

HOW THE PRICE OF YOUR SHARES IS CALCULATED
You may buy, exchange or redeem shares at their net asset value next determined
after receipt of your request in good order. Each Fund's net asset value is the
value of its assets minus its liabilities. Net asset value is calculated
separately for Citi Index Shares. Each Fund calculates its net asset value every
day the New York Stock Exchange is open. This calculation is done when regular
trading closes on the Exchange (normally 4:00 p.m., Eastern time). The Exchange
is closed on certain holidays listed in the Statement of Additional Information.

For foreign securities the values are translated from the local currency into
U.S. dollars using current exchange rates. If trading in the currency is
restricted, a Fund uses a rate believed to reflect the currency's fair value in
U.S. dollars. When reliable market prices or quotations are not readily
available, or when the value of a security has been materially affected by
events occurring after a foreign exchange closes, a Fund may price those
securities at fair value. Fair value is determined in accordance with procedures
approved by the Funds' Board of Trustees. Each 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 on days when U.S. markets are closed and the
value of foreign securities owned by a Fund could change on days when you cannot
buy or redeem shares.

HOW TO SELL SHARES
You may sell (redeem) your shares Monday through Friday, except on certain
holidays. You may make redemption requests in writing through the Funds'
transfer agent or, if you hold your shares through a Service Agent, through your
Service Agent. If your account application permits, you may also make redemption
requests by telephone. Cititrade customers may redeem shares by contacting a
Cititrade account representative at 1-888-663-CITI[2484]. All redemption
requests must be in proper form, as determined by the transfer agent. Each
Service Agent is responsible for promptly submitting redemption requests to the
Funds' transfer agent. For your protection, the Funds may request documentation
for large redemptions or other unusual activity in your account.

Each Fund has a Systematic Withdrawal Plan which allows you to automatically
withdraw a specific dollar amount from your account without a redemption fee on
a regular basis. You must have at least $10,000 in your account to participate
in this program. For more information, please contact the Funds' sub-transfer
agent at 1-800-995-0134 or, if you hold your shares through a Service Agent,
your Service Agent. Cititrade customers should contact a Cititrade account
representative at 1-888-663-CITI [2484] for more information.

The price of any redemption of Fund shares will be the NAV the next time it is
calculated after your redemption request has been received in proper form by the
Fund. Fund shares are redeemed without a sales charge, but your redemption may
be subject to a redemption fee. As indicated in each Fund's fee table, excluding
the S&P 500 Index Fund and the U.S. Bond Index Fund, each Fund charges a
redemption fee, payable to the Fund, on the sale or exchange of any shares that
have been held for less than 180 days. In attempting to minimize this fee, a
Fund will first sell any shares in your account that are not subject to the fee.
If you own your shares through a 401(k) plan or an IRA account, you will not be
charged a fee when you redeem your shares, unless otherwise provided by the
terms of your plan or account. The Funds reserve the right to change the
redemption fee criteria.

Your account will be credited with your redemption proceeds in federal funds
normally on the third business day after you sell your shares but, in any event,
within seven days. Your redemption proceeds may be delayed for up to ten days if
your purchase was made by check. Your redemption proceeds may also be delayed,
or your right to receive redemption proceeds suspended, if the New York Stock
Exchange is closed (other than on weekends or holidays) or trading is
restricted, or if an emergency exists. Each Fund has the right to pay your
redemption proceeds by giving you securities instead of cash. In that case, you
may incur costs (such as brokerage commissions) converting the securities into
cash. You should be aware that you may have to pay taxes on your redemption
proceeds.

Your account balance with a Fund may be subject to a $500 minimum. If so, the
Fund reserves the right to close your account if it falls below $500 because of
redemptions. You will have 60 days to make an additional investment. If you do
not increase your balance, a Fund may close your account and send the proceeds
to you. Your shares will be sold at NAV on the day your account was closed.

EXCHANGES
Shares may be exchanged for shares of any other Fund offered in the no-load
family of CitiFunds. CitiFunds is a registered service mark of Citicorp. If the
Fund shares you are exchanging were held for less than 180 days, your Fund may
charge a redemption fee as set forth in the Fund's fee table. You may place
exchange orders through the transfer agent or, if you hold your shares through a
Service Agent, through your Service Agent. You may place exchange orders by
telephone if your account application permits. The transfer agent or your
Service Agent can provide you with more information.

Cititrade customers may exchange Fund shares by contacting a Cititrade account
representative at 1-888-663-CITI [2484].

There is no sales charge on Fund shares you get through an exchange.

The exchange privilege may be changed or terminated at any time. You should be
aware that you may have to pay taxes on your exchange.

DIVIDENDS
Each Fund's dividend policies are described below. Unless you choose to receive
your dividends in cash, you will receive them as full and fractional additional
Fund shares of the same class of shares that you hold.

NASDAQ-100 INDEX FUND
SMALL CAP INDEX FUND
U.S. 1000 INDEX FUND
GLOBAL TITANS INDEX FUND

Each Fund pays substantially all of its net income (if any) from dividends and
interest to its shareholders of record as a dividend semi-annually during the
months of June and December.

Each Fund's net realized short-term and long-term capital gains, if any, will be
distributed to Fund shareholders at least annually, in December. Each Fund may
also make additional distributions to shareholders to the extent necessary to
avoid the application of the 4% non-deductible excise tax on certain
undistributed income and net capital gains of mutual funds.

S&P 500 INDEX FUND
U.S. 5000 INDEX FUND
INTERNATIONAL INDEX FUND
FINANCIAL SERVICES INDEX FUND
HEALTH SCIENCES INDEX FUND
TECHNOLOGY INDEX FUND

Each Fund generally pays dividends, if any, and makes capital gains
distributions, if any, once a year, typically in December. Each Fund may pay
additional distributions and dividends at other times if necessary for the Fund
to avoid a federal tax. Each Fund expects distributions to be primarily from
capital gains.

U.S. BOND INDEX FUND. The U.S. Bond Index Fund pays substantially all of its net
income (if any) from dividends and interest to its shareholders of record as a
dividend monthly.

The U.S. Bond Index Fund's net realized short-term and long-term capital gains,
if any, will be distributed to Fund shareholders at least annually, in December.
The Fund may also make additional distributions to shareholders to the extent
necessary to avoid the application of the 4% non-deductible excise tax on
certain undistributed income and net capital gains of mutual funds.

TAX MATTERS
This discussion of taxes is very general. You should consult your own tax
adviser about your particular situation.

TAXATION OF DISTRIBUTIONS: You will normally have to pay federal income taxes on
the distributions you receive from a Fund, whether you take the distributions in
cash or reinvest them in additional shares. Distributions designated by a Fund
as capital gain dividends are taxable as long-term capital gains. Other
distributions are generally taxable as ordinary income. Some distributions paid
in January may be taxable to you as if they had been paid the previous December.
Each year the Funds will make available to you a report of your distributions
for the prior year and how they are treated for federal tax purposes.

Fund distributions will reduce a Fund's net asset value per share. As a result,
if you buy shares just before a Fund makes a distribution, you may pay the full
price for the shares and then effectively receive a portion of the purchase
price back as a taxable distribution.

BACKUP WITHHOLDING: The account application asks each new investor to certify
that the investor's Social Security or taxpayer identification number is correct
and that the shareholder is not subject to 31% backup withholding for failing to
report income to the IRS. A Fund may be required to withhold (and pay over to
the IRS for your credit) 31% of certain distributions it pays you if you fail to
provide this information or otherwise violate IRS regulations.

FOREIGN SHAREHOLDERS: Each Fund will withhold U.S. federal income tax payments
at the rate of 30% (or any lower applicable treaty rate) on taxable dividends
and other payments subject to withholding taxes that are made to persons who are
not citizens or residents of the United States. Distributions received from a
Fund by non-U.S. persons also may be subject to tax under the laws of their own
jurisdictions.

TAXATION OF TRANSACTIONS: If you sell your shares of a Fund, or exchange them
for shares of another Fund, it is considered a taxable event. Depending on your
purchase price and the sales price of the shares you sell or exchange, you may
have a gain or loss on the transaction. You are responsible for any tax
liabilities generated by your transaction.

MANAGEMENT OF THE FUNDS
S&P 500 INDEX FUND
MANAGER. The S&P 500 Index Fund's manager is The Travelers Investment Management
Company (TIMCO). TIMCO's address is One Tower Square, Hartford, Connecticut
06183-2030. TIMCO and SSB Citi Fund Management LLC (SSB Citi), the Fund's
administrator, are subsidiaries of Citigroup Inc. Citigroup businesses produce a
broad range of financial services - asset management, banking and consumer
finance, credit and charge cards, insurance, investments, investment banking and
trading - and use diverse channels to make them available to consumer and
corporate customers around the world.

MANAGEMENT FEES. For its services, TIMCO received a fee during the S&P 500 Index
Fund's last fiscal year equal on an annual basis to 0.15%, of the Fund's average
daily net assets.

ADMINISTRATOR. The Fund's administrator is SSB Citi whose address is 388
Greenwich Street, New York, New York 10013.

ADMINISTRATION FEES. For its services, SSB Citi receives a fee equal on an
annual basis to 0.10% of the S&P 500 Index Fund's average daily net assets. The
administrator waived all of its fees during the S&P 500 Index Fund's last fiscal
year.

NASDAQ-100 INDEX FUND
SMALL CAP INDEX FUND
U.S. 1000 INDEX FUND
GLOBAL TITANS INDEX FUND
FINANCIAL SERVICES INDEX FUND
HEALTH SCIENCES INDEX FUND
TECHNOLOGY INDEX FUND
U.S. BOND INDEX FUND

MANAGER. SSB Citi supervises the overall management of each Fund. SSB Citi is
responsible for recommending the hiring, termination or replacement of any
subadviser and for supervising and monitoring the performance of any subadviser.
State Street Bank and Trust Company (State Street), through its State Street
Global Advisors division, serves as the subadviser to the Funds. As of December
31, 1999, State Street managed approximately $672 billion in assets. State
Street's principal address is Two International Place, Boston, Massachusetts
02110.

MANAGEMENT FEES. Each Fund pays SSB Citi and the subadviser an aggregate
management fee at the annual rates noted below:

-------------------------------------------------------------------------------
FEE, AS PERCENTAGE OF
FUND AVERAGE DAILY NET ASSETS
-------------------------------------------------------------------------------
Nasdaq-100 Index Fund 0.30%
-------------------------------------------------------------------------------
Small Cap Index Fund 0.30%
-------------------------------------------------------------------------------
U.S. 1000 Index Fund 0.25%
-------------------------------------------------------------------------------
Global Titans Index Fund 0.35%
-------------------------------------------------------------------------------
Financial Services Index Fund 0.50%
-------------------------------------------------------------------------------
Health Sciences Index Fund 0.50%
-------------------------------------------------------------------------------
Technology Index Fund 0.50%
-------------------------------------------------------------------------------
U.S. Bond Index Fund 0.15%
-------------------------------------------------------------------------------

U.S. 5000 INDEX FUND
INTERNATIONAL INDEX FUND

MANAGER. U.S. 5000 Index Fund and International Index Fund are feeder funds in a
master/feeder structure. Accordingly, these funds do not buy individual
securities directly. Barclays Global Fund Advisors (BGFA) is the manager of each
of the Master Portfolios in which the Funds invest. BGFA is a wholly owned
direct subsidiary of Barclays Global Investors, N.A. (which is an indirect
subsidiary of Barclays Bank PLC) and is located at 45 Fremont Street, San
Francisco, CA 94105. BGFA has provided asset management, administration and
advisory services for over 25 years.

MANAGEMENT FEES. For the U.S. 5000 Index Fund, BGFA receives a monthly advisory
fee from the Master Portfolio at an annual rate equal to 0.01% of the US Equity
Index Master Portfolio's average daily net assets, 0.08% of the average daily
net assets of the Extended Index Master Portfolio and 0.05% of the average daily
net assets of the S&P 500 Index Master Portfolio. For the International Index
Fund, BGFA receives a monthly advisory fee from the International Index Master
Portfolio at an annual rate equal to 0.15% of the first $1 billion, and 0.10%
thereafter, of the International Index Master Portfolio's average daily net
assets. From time to time, BGFA may waive such fees in whole or in part.

Each Fund bears a pro rata portion of the investment advisory fees paid by the
Master Portfolio as well as certain other fees paid by the Master Portfolio,
such as accounting, legal and Securities and Exchange Commission registration
fees.

ADMINISTRATOR. The Funds' administrator is SSB Citi.

ADMINISTRATION FEES. For its services, SSB Citi receives a fee equal on an
annual basis to 0.15% of each of the U.S. 5000 Index and International Index
Funds' average daily net assets.

DISTRIBUTION ARRANGEMENTS
The Funds offer two classes of shares, Citi Index Shares and Smith Barney Index
Shares. These classes have different expense levels. Only Citi Index Shares are
offered in this prospectus. The Funds do not charge any sales loads, deferred
sales loads or other fees in connection with the purchase of Citi Index Shares.

The distributor may make payments for distribution and/or shareholder servicing
activities out of its past profits and other available sources. The distributor
may also make payments for marketing, promotional or related expenses to
dealers. The amount of these payments is determined by the distributor and may
be substantial. SSB Citi or an affiliate may make similar payments under similar
arrangements.
<PAGE>

APPENDIX

NASDAQ-100 INDEX SHARES
The Fund is not sponsored, endorsed, sold or promoted by The Nasdaq Stock
Market, Inc. (including its affiliates) (Nasdaq, with its affiliates, are
referred to as the Corporations). The Corporations have not passed on the
legality or suitability of, or the accuracy or adequacy of descriptions and
disclosures relating to, the Fund. The Corporations make no representation or
warranty, express or implied, to the owners of the Fund or any member of the
public regarding the advisability of investing in securities generally or in
the Fund particularly, or the ability of the Nasdaq-100 Index(R) to track
general stock market performance. The Corporations' only relationship to SSB
Citi Fund Management LLC is in the licensing of the Nasdaq-100(R), Nasdaq-100
Index(R), and Nasdaq(R) trademarks or service marks, and certain trade names of
the Corporations and the use of the Nasdaq-100 Index(R) which is determined,
composed and calculated by Nasdaq without regard to SSB Citi or the Fund. Nasdaq
has no obligation to take the needs of SSB Citi or the owners of the Fund into
consideration in determining, composing or calculating the Nasdaq-100 Index(R).
The Corporations are not responsible for and have not participated in the
determination of the timing of, prices at, or quantities of the Fund to be
issued or in the determination or calculation of the equation by which the Fund
is to be converted into cash. The Corporations have no liability in connection
with the administration, marketing or trading of the Fund.

THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION
OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE
NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY SSB CITI,
OWNERS OF THE NASDAQ-100 INDEX FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE
OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE
NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE ANY LIABILITY FOR ANY LOST
PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES,
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

S&P 500 INDEX SHARES
The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no representation
or warranty, express or implied, to the owners of the Fund or any member of the
public regarding the advisability of investing in securities generally or in the
Fund particularly or the ability of the S&P 500 Index to track general stock
market performance. S&P's only relationship to SSB Citi is the licensing of
certain trademarks and trade names of S&P and of the S&P 500 Index which is
determined, composed and calculated by S&P without regard to SSB Citi or the
Fund. S&P has no obligation to take the needs of SSB Citi or the owners of the
Fund into consideration in determining, composing or calculating the S&P 500
Index. S&P is not responsible for and has not participated in the determination
of the prices and amount of the Fund's shares or the timing of the issuance or
sale of the Fund's shares or in the determination or calculation of the equation
by which Fund shares are to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of Fund
shares.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX
OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE FUND, OWNERS OF THE FUND, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN.
S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

SMALL CAP INDEX SHARES
U.S. 1000 INDEX SHARES
Neither the U.S. 1000 Index Fund nor the Small Cap Index Fund is promoted,
sponsored or endorsed by, nor in any way affiliated with Frank Russell Company.
Frank Russell Company is not responsible for and has reviewed neither such Fund
nor any associated literature or publications and Frank Russell Company makes no
representation or warranty, express or implied, as to their accuracy, or
completeness, or otherwise.

Frank Russell Company reserves the right, at any time and without notice, to
alter, amend, terminate or in any way change its indexes. Frank Russell Company
has no obligation to take the needs of any particular fund or its participants
or any other product or person into consideration in determining, composing or
calculating the indexes. Frank Russell Company's publication of the indexes in
no way suggests or implies an opinion by Frank Russell Company as to the
attractiveness or appropriateness of investment in any or all securities upon
which the indexes are based.

FRANK RUSSELL COMPANY MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO THE
ACCURACY, COMPLETENESS, RELIABILITY, OR OTHERWISE OF THE INDEXES OR ANY DATA
INCLUDED IN THE INDEXES. FRANK RUSSELL COMPANY MAKES NO REPRESENTATION OR
WARRANTY REGARDING THE USE, OR THE RESULTS OF USE, OF THE INDEXES OR ANY DATA
INCLUDED THEREIN, OR ANY SECURITY (OR COMBINATION THEREOF) COMPRISING THE
INDEXES. FRANK RUSSELL COMPANY MAKES NO OTHER EXPRESS OR IMPLIED WARRANTY, AND
EXPRESSLY DISCLAIMS ANY WARRANTY, OF ANY KIND, INCLUDING, WITHOUT MEANS OF
LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO THE INDEXES OR ANY DATA OR ANY SECURITY (OR COMBINATION THEREOF)
INCLUDED THEREIN.
<PAGE>

GLOBAL TITANS INDEX SHARES
"Dow Jones" and "Dow Jones Global Titans IndexSM" are service marks of Dow Jones
& Company, Inc. Dow Jones has no relationship to SSB Citi, other than the
licensing of the Dow Jones Global Titans Index and its service marks for use
with the Global Titans Index Fund.

DOW JONES DOES NOT:

[] Sponsor, endorse, sell or promote the Fund.

[] Recommend that any person invest in the Fund or any other securities.

[] Have any responsibility for or make any decisions about the timing, amount or
pricing of the Fund.

[] Have any responsibility for the administration, management or marketing of
the Fund.

[] Consider the needs of the Fund or the owners of the Fund in determining,
composing or calculating the Global Titans Index or have any obligation to do
so.

-------------------------------------------------------------------------------
DOW JONES WILL NOT HAVE ANY LIABILITY IN CONNECTION WITH THE FUND. SPECIFICALLY,

o DOW JONES DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AND DOW JONES
DISCLAIMS ANY WARRANTY ABOUT:

o THE RESULTS TO BE OBTAINED BY THE FUND, THE OWNERS OF THE FUND OR ANY
OTHER PERSON IN CONNECTION WITH THE USE OF THE GLOBAL TITANS INDEX AND THE
DATA INCLUDED IN THE GLOBAL TITANS INDEX;

o THE ACCURACY OR COMPLETENESS OF THE GLOBAL TITANS INDEX AND ITS DATA;

o THE MERCHANTABILITY AND THE FITNESS FOR A PARTICULAR PURPOSE OR USE OF THE
GLOBAL TITANS INDEX AND ITS DATA;

o DOW JONES WILL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS
IN THE GLOBAL TITANS INDEX OR ITS DATA;

o UNDER NO CIRCUMSTANCES WILL DOW JONES BE LIABLE FOR ANY LOST PROFITS OR
INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOSSES, EVEN IF DOW
JONES KNOWS THAT THEY MIGHT OCCUR.

THE LICENSING AGREEMENT BETWEEN SSB CITI AND DOW JONES IS SOLELY FOR THEIR
BENEFIT AND NOT FOR THE BENEFIT OF THE OWNERS OF THE FUND OR ANY OTHER THIRD
PARTIES.
-------------------------------------------------------------------------------
<PAGE>

INTERNATIONAL INDEX SHARES
International Index Fund is not sponsored, endorsed, sold or promoted by MSCI or
any affiliate of MSCI. Neither MSCI nor any other party makes any representation
or warranty, express or implied, to the owners of the Fund or any member of the
public regarding the advisability of investing in funds generally or in the Fund
particularly or the ability of the MSCI EAFE(R) Free Index to track general
stock market performance. MSCI is the licensor of certain trademarks, service
marks, and trade names of MSCI and the MSCI EAFE(R) Free Index which is
determined, composed and calculated by MSCI without regard to the issuer of the
Fund or the Fund. MSCI has no obligation to take the needs of the issuer of the
Fund or the owners of the Fund into consideration in determining, composing or
calculating the MSCI EAFE(R) Free Index. MSCI is not responsible for and has not
participated in the determination of the timing of, prices at, or quantities of
the Fund to be issued or in the determination or calculation of the equation by
which the Fund is redeemable for cash. Neither MSCI nor any other party has any
obligation or liability to owners of the Fund in connection with the
administration, marketing or trading of the Fund.

ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN THE
CALCULATION OF THE INDEX FROM SOURCES WHICH MSCI CONSIDERS RELIABLE, NEITHER
MSCI NOR ANY OTHER PARTY GUARANTEES THE ACCURACY AND/OR THE COMPLETENESS OF THE
INDEX OR ANY DATA INCLUDED THEREIN. NEITHER MSCI NOR ANY OTHER PARTY MAKES ANY
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY SSB CITI, SSB
CITI'S CUSTOMERS AND COUNTERPARTIES, OWNERS OF THE INTERNATIONAL INDEX FUND, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA INCLUDED
THEREIN IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY OTHER USE.
NEITHER MSCI NOR ANY OTHER PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND
MSCI HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MSCI OR ANY OTHER PARTY
HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR
ANY OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.

FINANCIAL SERVICES INDEX SHARES
HEALTH SCIENCES INDEX SHARES
TECHNOLOGY INDEX SHARES
The Funds are not sponsored, endorsed, sold or promoted by Goldman, Sachs & Co.
Goldman Sachs makes no representation or warranty, express or implied, to the
shareholders of the Funds or any member of the public regarding the advisability
of investing in securities generally or in the Funds particularly or the ability
of the GSTI Composite Index, GSSI Healthcare Index and GSSI Financials Index to
track the appropriate sector stock market performance. Goldman Sachs' only
relationship to SSB Citi, the subadviser or the Funds is the licensing of
certain trademarks and trade names of Goldman Sachs and of the Indexes which are
determined, composed and calculated by Goldman Sachs without regard to SSB Citi,
the subadviser or the Funds. Goldman Sachs has no obligation to take the needs
of SSB Citi, the subadviser, the Funds, or their shareholders into consideration
in determining, composing or calculating the Indexes. Goldman Sachs is not
responsible for and has not participated in the determination of the prices and
the amount of the Funds or the timing of the issuance or sale of shares of the
Funds or in the determination or calculation of the redemption price per share.
Goldman Sachs has no obligation or liability in connection with the
administration, marketing or trading of the Funds.

Goldman Sachs does not guarantee the accuracy and/or the completeness of the
Indexes or any data included therein, and Goldman Sachs hereby expressly
disclaims any and all liability for any errors, omissions or interruptions
therein. Goldman Sachs makes no warranty, express or implied, as to results to
be obtained by the Funds, their shareholders, or any other person or entity from
the use of the Indexes or any data included therein. Goldman Sachs makes no
express or implied warranties, and expressly disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to the
Indexes or any data included therein. Without limiting any of the foregoing,
Goldman Sachs hereby expressly disclaims any and all liability for any special,
punitive, indirect or consequential damages (including lost profits), even if
notified of the possibility of such damages.
<PAGE>

This page intentionally left blank.
<PAGE>

The Statement of Additional Information (SAI) provides more details about the
Funds and their policies. The SAI is incorporated by reference into this
Prospectus and is legally part of it.

Additional information about a Fund's investments is included in the Fund's
Annual and Semi-Annual Reports to Shareholders, once available. In a Fund's
Annual Report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's performance.

The Annual and Semi-Annual Reports for a Fund list its portfolio holdings and
describe its performance.

To obtain free copies of the Funds' SAI and the Funds' Annual and Semi-Annual
Reports, when available, or to make other inquiries, please call 1-800-995-0134
toll-free. Cititrade customers should contact a Cititrade account representative
at 1-888-663-CITI [2484]. The S&P 500 Index Fund, the U.S. 5000 Index Fund, and
the International Index Fund send only one report to a household if more than
one account has the same address. Contact your Service Agent or the transfer
agent if you do not want this policy to apply to you.

The SAI is also available from the Securities and Exchange Commission. You can
find it on the EDGAR Database on the SEC Internet site at http://www.sec.gov.
Information about the Funds (including the SAI) can also be reviewed and copied
at the SEC's Public Reference Room in Washington, DC. You can get information on
the operation of the Public Reference Room by calling the SEC at:
(202) 942-8090. Copies may also be obtained upon payment of a duplicating fee by
electronic request to [email protected], or by writing to the SEC's Public
Reference Section, Washington, DC 20549-0102.

SEC File Number

Citi Nasdaq-100 Index Shares (a class of Citi Nasdaq-100
Index Fund)
Citi Small Cap Index Shares (a class of Citi Small Cap
Index Fund)
Citi U.S. 1000 Index Shares (a class of Citi U.S. 1000
Index Fund)
Citi Global Titans Index Shares (a class of Citi Global
Titans Index Fund)
Citi Financial Services Index Shares (a class of Citi
Financial Services Index Fund)
Citi Health Sciences Index Shares (a class of Citi Health
Sciences Index Fund)
Citi Technology Index Shares (a class of Citi Technology
Index Fund)
Citi U.S. Bond Index Shares (a class of Citi U.S. Bond
Index Fund) 811-4006

Citi S&P 500 Index Shares (a class of Smith Barney S&P 500
Index Fund)
Citi U.S. 5000 Index Shares (a class of Smith Barney U.S.
5000 Index Fund)
Citi International Index Shares (a class of Smith Barney
International Index Fund) 811-06444

CIT0021
<PAGE>

April 28, 2000
(as amended September 5, 2000)

STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY INVESTMENT TRUST

Smith Barney S&P 500 Index Fund

388 Greenwich Street
New York, New York 10013
(800) 451-2010

Smith Barney S&P 500 Index Fund (the "fund") is a
separate investment series of Smith Barney Investment
Trust (the "trust"), an open-end management investment
company. The fund offers two classes of shares -
Smith Barney S&P 500 Index Shares and Citi S&P 500
Index Shares. This Statement of Additional
Information ("SAI") is meant to be read in conjunction
with the prospectus dated April 28, 2000, as amended
from time to time, by which the Smith Barney S&P 500
Index Shares of the fund are offered, or the
prospectus dated September 5, 2000, as amended from
time to time, by which the Citi S&P 500 Index Shares
of the fund are offered, and is incorporated by
reference in its entirety into the prospectuses.
Additional information about the fund's investments is
available in the fund's annual and semi-annual reports
to shareholders which are incorporated herein by
reference. Please call 1-800-451-2020 toll free to
obtain a prospectus for the Smith Barney Index Shares.
Please call 1-800-995-0134 toll free to obtain a
prospectus for the Citi Index Shares.

TABLE OF CONTENTS

Investment Objective and Management Policies 2
Investment Restrictions...... ......................... 8
Trustees of the Trust and Executive Officers of the
Fund......... ...................................... 9
Investment Management and Other Services 13
Portfolio Transactions... ..............................16
Portfolio Turnover.................. .........................18
Purchase of Shares .............................................19
Redemption of Shares 21
Exchange Privilege 23
Valuation of Shares 24
Performance Data 24
Dividends, Distributions and Taxes 27
Additional Information 32
Financial Statements ...................................................33

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

The prospectus discusses the fund's investment
objective and policies. On September 5, the Class A
Shares and Class D Shares of the Fund were renamed
Smith Barney S&P 500 Index Shares ("Smith Barney
Shares") and Citi S&P 500 Index Shares ("Citi Index
Shares"), respectively. This section contains
supplemental information concerning the types of
securities and other instruments in which the fund may
invest, the investment policies and portfolio
strategies the fund may utilize and certain risks
associated with these investments, policies and
strategies. Travelers Investment Management Company
("TIMCO" or the "manager") serves as investment
manager to the fund. SSB Citi Fund Management LLC
("SSB Citi" or the "administrator"), serves as the
fund's administrator.

The fund seeks to achieve its objective by investing,
under normal circumstances, at least 80% of its total
assets in common stocks included in the S&P 500 Index
in approximately the same weightings as the S&P 500
Index. The fund intends to invest in substantially all
of the stocks that comprise the S&P 500 Index. The
fund operates as a "pure" index fund and will not be
actively managed; as such, adverse performance of a
security will ordinarily not result in the elimination
of the security from the fund's portfolio. The fund
will be reviewed daily and adjusted, when necessary,
to maintain security weightings as close to those of
the S&P 500 Index as possible, given the amount of
assets in the fund at that time.

Repurchase Agreements. The fund may agree to purchase
securities from a bank or recognized securities dealer
and simultaneously commit to resell the securities to
the bank or dealer at an agreed-upon date and price
reflecting a market rate of interest unrelated to the
coupon rate or maturity of the purchased securities
("repurchase agreements"). The fund would maintain
custody of the underlying securities prior to their
repurchase; thus, the obligation of the bank or dealer
to pay the repurchase price on the date agreed to
would be, in effect, secured by such securities. If
the value of such securities were less than the
repurchase price, plus interest, the other party to
the agreement would be required to provide additional
collateral so that at all times the collateral is at
least 102% of the repurchase price plus accrued
interest. Default by or bankruptcy of a seller would
expose the fund to possible loss because of adverse
market action, expenses and/or delays in connection
with the disposition of the underlying obligations.
The financial institutions with which the fund may
enter into repurchase agreements will be banks and
non-bank dealers of U.S. government securities on the
Federal Reserve Bank of New York's list of reporting
dealers, if such banks and non-bank dealers are deemed
creditworthy by the fund's manager. The manager will
continue to monitor creditworthiness of the seller
under a repurchase agreement, and will require the
seller to maintain during the term of the agreement
the value of the securities subject to the agreement
to equal at least 102% of the repurchase price
(including accrued interest). In addition, the
manager will require that the value of this
collateral, after transaction costs (including loss of
interest) reasonably expected to be incurred on a
default, be equal to 102% or greater than the
repurchase price (including accrued premium) provided
in the repurchase agreement or the daily amortization
of the difference between the purchase price and the
repurchase price specified in the repurchase
agreement. The manager will mark-to-market daily the
value of the securities. Repurchase agreements are
considered to be loans by the fund under the
Investment Company Act of 1940, as amended ("1940
Act").

Lending of Portfolio Securities. Consistent with
applicable regulatory requirements, the fund may lend
portfolio securities to brokers, dealers and other
financial organizations that meet capital and other
credit requirements or other criteria established by
the Board. The fund will not lend portfolio
securities to affiliates of the manager unless they
have applied for and received specific authority to do
so from the Securities and Exchange Commission
("SEC"). Loans of portfolio securities will be
collateralized by cash, letters of credit or U.S.
government securities, which are maintained at all
times in an amount equal to at least 102% of the
current market value of the loaned securities. Any
gain or loss in the market price of the securities
loaned that might occur during the term of the loan
would be for the account of the fund. From time to
time, the fund may return 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 fund and that is acting
as a "finder."
By lending its securities, the fund can increase its
income by continuing to receive interest and any
dividends on the loaned securities as well as by
either investing the collateral received for
securities loaned in short-term instruments or
obtaining yield in the form of interest paid by the
borrower when U.S. government securities are used as
collateral. Although the generation of income is not
the primary investment goal of the fund, income
received could be used to pay the fund's expenses and
would increase an investor's total return. The fund
will adhere to the following conditions whenever its
portfolio securities are loaned: (i) the fund must
receive at least 102% cash collateral or equivalent
securities of the type discussed in the preceding
paragraph from the borrower; (ii) the borrower must
increase such collateral whenever the market value of
the securities rises above the level of such
collateral; (iii) the fund must be able to terminate
the loan at any time; (iv) the fund 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 fund may pay only reasonable custodian fees in
connection with the loan; and (vi) voting rights on
the loaned securities may pass to the borrower,
provided, however, that if a material event adversely
affecting the investment occurs, the Board must
terminate the loan and regain the right to vote the
securities. Loan agreements involve certain risks in
the event of default or insolvency of the other party
including possible delays or restrictions upon the
fund's ability to recover the loaned securities or
dispose of the collateral for the loan.
Foreign Securities. The fund may purchase common
stocks of foreign corporations represented in the S&P
500 Index (such securities are publicly traded on
securities exchanges or over-the-counter in the United
States). The fund's investment in common stock of
foreign corporations represented in the S&P 500 Index
may also be in the form of American Depository
Receipts (ADRs). ADRs are receipts typically issued by
a United States bank or trust company evidencing
ownership of the underlying securities and are
designated for use in the U.S. Securities markets.

Investing in the securities of foreign companies
involves special risks and considerations not
typically associated with investing in U.S. companies.
These include differences in accounting, auditing and
financial reporting standards, the possibility of
expropriation or confiscatory taxation, adverse
changes in investment or exchange control regulations,
political instability which could affect U.S.
investments in foreign countries, and potential
restrictions on the flow of international capital.
Investments in foreign securities may be affected by
changes in governmental administration or economic
policy (in the United Stated and abroad) or changed
circumstances in dealings between nations. Foreign
companies may be subject to less governmental
regulation than U.S. companies. Securities of foreign
companies may be more volatile than securities of U.S.
companies. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy
in such respects as growth of gross domestic product,
rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.

Money Market Instruments. The fund may invest up to
20% of its assets in corporate and government bonds
and notes and money market instruments. Money market
instruments include: obligations issued or guaranteed
by the United States government, its agencies or
instrumentalities ("U.S. government securities");
certificates of deposit, time deposits and bankers'
acceptances issued by domestic banks (including their
branches located outside the United States and
subsidiaries located in Canada), domestic branches of
foreign banks, savings and loan associations and
similar institutions; high grade commercial paper; and
repurchase agreements with respect to the foregoing
types of instruments. Certificates of deposit ("CDs")
are short-term, negotiable obligations of commercial
banks. Time deposits ("TDs") are non-negotiable
deposits maintained in banking institutions for
specified periods of time at stated interest rates.
Bankers' acceptances are time drafts drawn on
commercial banks by borrowers, usually in connection
with international transactions.

Futures and Options. The fund may enter into futures
contracts, options, and options on futures contracts,
subject to the limitation that the value of these
futures contracts and options will not exceed 20% of
the fund's total assets. Also, the fund will not
purchase options to the extent that more than 5% of
the value of the fund's total assets would be invested
in premiums on open put option positions. These
futures contracts and options will be used for the
following reasons: to simulate full investment in the
S&P 500 Index while retaining a cash balance for fund
management purposes, to facilitate trading, to reduce
transaction costs or to seek higher investment returns
when a futures contract is priced more attractively
than stocks comprising the S&P 500 Index. The fund
will only enter into futures contracts and options on
futures contracts that are traded on a domestic
exchange and board of trade. The fund will not use
futures or options for speculative purposes.

A call option gives a holder the right to purchase a
specific security at a specified price referred to as
the "exercise price," within a specified period of
time. A put option gives a holder the right to sell a
specific security at a specified price within a
specified period of time. The initial purchaser of a
call option pays the "writer" a premium, which is paid
at the time of purchase and is retained by the writer
whether or not such option is exercised.
Institutions, such as the fund, that sell (or "write")
call options against securities held in their
investment portfolios retain the premium. The fund
may purchase put options to hedge its portfolio
against the risk of a decline in the market value of
securities held, and may purchase call options to
hedge against an increase in the price of securities
it is committed to purchase. The fund may write put
and call options along with a long position in options
to increase its ability to hedge against a change in
the market value of the securities it holds or is
committed to purchase.

Futures contracts provide for the future sale by one
party and purchase by another party of a specified
amount of a specific security at a specified future
time and at a specified price. Stock index futures
contracts are based on indices that reflect the market
value of common stock of the firms included in the
indices. The fund may enter into futures contracts to
purchase securities when the manager anticipates
purchasing the underlying securities and believes
prices will rise before the purchase will be made.
Assets committed to futures contracts will be
segregated at the fund's custodian to the extent
required by law.

There are several risks accompanying the utilization
of futures contracts and options on futures contracts.
First, positions in futures contracts and options on
futures contracts may be closed only on an exchange or
board of trade that furnishes a secondary market for
such contracts. While the fund plans to utilize
future contracts only if there exists an active market
for such contracts, there is no guarantee that a
liquid market will exist for the contracts at a
specified time. Furthermore, because, by definition,
futures contracts look to projected price levels in
the future and not to current levels of valuation,
market circumstances may result in there being a
discrepancy between the price of the stock index
future and the movement in the stock index. The
absence of a perfect price correlation between the
futures contract and its underlying stock index could
stem from investors choosing to close futures
contracts by offsetting transactions, rather than
satisfying additional margin requirements. This could
result in a distortion of the relationship between the
index and futures market. In addition, because the
futures market imposes less burdensome margin
requirements than the securities market, an increased
amount of participation by speculators in the futures
market could result in price fluctuations.

In view of these considerations, the fund will comply
with the following restrictions when purchasing and
selling futures contracts. First, the fund will not
participate in futures transactions if the sum of its
initial margin deposits on open contracts will exceed
5% of the market value of the fund's total assets,
after taking into account the unrealized profits and
losses on those contracts which it has entered.
Second, the fund will not enter into these contracts
for speculative purposes. Third, the fund will limit
transactions in futures and options on futures to the
extent necessary to prevent the fund from being deemed
a "commodity pool" under regulations of the Commodity
Futures Trading Commission.

No consideration will be paid or received by the fund
upon entering into a futures contract. Initially, the
fund will be required to deposit with the broker an
amount of cash or cash equivalents equal to
approximately 1% to 10% of the contract amount (this
amount is subject to change by the board of trade on
which the contract is traded and members of such board
of trade may charge a higher amount). This amount,
known as "initial margin," is in the nature of a
performance bond or good faith deposit on the contract
and is returned to the fund upon termination of the
futures contract, assuming all contractual obligations
have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker will be
made daily as the price of the index underlying the
futures contract fluctuates, making the long and short
positions in the futures contract more or less
valuable, a process known as "marking-to-market." At
any time prior to expiration of a futures contract,
the fund may elect to close the position by taking an
opposite position, which will operate to terminate the
fund's existing position in the contract.

Although the fund intends to enter into futures
contracts only if there is an active market for such
contracts, there is no assurance that an active market
will exist for the contracts at any particular time.
Most U.S. futures exchanges and boards of trade limit
the amount of fluctuation permitted in futures
contract prices during a single trading day. Once the
daily limit has been reached in a particular contract,
no trades may be made that day at a price beyond that
limit. It is possible that futures contract prices
could move to the daily limit for several consecutive
trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses.
In such event, and in the event of adverse price
movements, the fund would be required to make daily
cash payments of variation margin, and an increase in
the value of the portion of the fund being hedged, if
any, may partially or completely offset losses on the
futures contract. As described above, however, there
is no guarantee that the price of the securities being
hedged will, in fact, correlate with the price
movements in a futures contract and thus provide an
offset to losses on the futures contract.

If the fund hedges against the possibility of a change
in market conditions adversely affecting the value of
securities held in its portfolio and market conditions
move in a direction opposite to that which has been
anticipated, the fund will lose part or all of the
benefit of the increased value of securities that it
has hedged because it will have offsetting losses in
its futures positions. In addition, in such
situations, if the fund had insufficient cash, it may
have to sell securities to meet daily variation margin
requirements at a time when it may be disadvantageous
to do so. These sales of securities may, but will not
necessarily, be at increased prices that reflect the
change in interest rates, market conditions or
currency values, as the case may be.

Options on Futures Contracts. An option on a futures
contract, as contrasted with the direct investment in
such a contract, gives the purchaser the right, in
return for the premium paid, to assume a position in
the underlying futures contract at a specified
exercise price at any time prior to the expiration
date of the option. Upon exercise of an option, the
delivery of the futures position by the writer of the
option to the holder of the option will be accompanied
by delivery of the accumulated balance in the writer's
futures margin account, which represents the amount by
which the market price of the futures contract
exceeds, in the case of a call, or is less than, in
the case of put, the exercise price of the option on
the futures contract. The potential for loss related
to the purchase of an option on a futures contract is
limited to the premium paid for the option plus
transaction costs. Because the value of the option is
fixed at the point of sale, there are no daily cash
payments to reflect changes in the value of the
underlying contract; however, the value of the option
does change daily and that change would be reflected
in the net asset value of the fund.

The fund may purchase and write put and call options
on futures contracts that are traded on a U.S.
exchange or board of trade as a hedge against changes
in the value of its portfolio securities, or in
anticipation of the purchase of securities, and may
enter into closing transactions with respect to such
options to terminate existing positions. There is no
guarantee that such closing transactions can be
effected.

Several risks are associated with options on futures
contracts. The ability to establish and close out
positions on such options will be subject to the
existence of a liquid market. In addition, the
purchase of put or call options will be based upon
predictions by the manager as to anticipated trends,
which predictions could prove to be incorrect. Even
if the expectations of the manager are correct, there
may be an imperfect correlation between the change in
the value of the options and of the portfolio
securities being hedged.

Stock Index Options. As described generally above,
the fund may purchase put and call options and write
call options on the S&P 500 Index in order to realize
its investment objective of capital appreciation or
for the purpose of hedging its portfolio. A stock
index fluctuates with changes in the market values of
the stocks included in the index.

Options on stock indexes are generally similar to
options on stock except that the delivery requirements
are different. Instead of giving the right to take or
make delivery of stock at a specified price, an option
on a stock index gives the holder the right to receive
a cash "exercise settlement amount" equal to (a) the
amount, if any, by which the fixed exercise price of
the option exceeds (in the case of a put) or is less
than (in the case of a call) the closing value of the
underlying index on the date of exercise, multiplied
by (b) a fixed "index multiplier." Receipt of this
cash amount will depend upon the closing level of the
stock index upon which the option is based being
greater than, in the case of a call, or less than, in
the case of a put, the exercise price of the option.
The amount of cash received will be equal to such
difference between the closing price of the index and
the exercise price of the option expressed in dollars
or a foreign currency, as the case may be, times a
specified multiple. The writer of the option is
obligated, in return for the premium received, to make
delivery of this amount. The writer may offset its
position in stock index options prior to expiration by
entering into a closing transaction on an exchange or
it may let the option expire unexercised.

The effectiveness of purchasing or writing stock index
options as a hedging technique will depend upon the
extent to which price movements in the portion of the
securities portfolio of the fund correlate with price
movements of the S&P 500 Index. Because the value of
an index option depends upon movements in the level of
the index rather than the price of a particular stock,
whether the fund will realize a gain or loss from the
purchase or writing of options on the index depends
upon movements in the level of stock prices in the
stock market generally, rather than movements in the
price of a particular stock. Accordingly, successful
use by the fund of options on the S&P 500 Index will
be subject to the manager's ability to predict
correctly movements in the direction of the stock
market generally or of a particular industry. This
requires different skills and techniques than
predicting changes in the price of individual stocks.

INVESTMENT RESTRICTIONS

The fund has adopted the following investment
restrictions for the protection of shareholders.
Restrictions 1 through 7 below cannot be changed
without approval by the holders of a majority of the
outstanding shares of the fund, defined as the lesser
of (a) 67% or more of the fund's shares present at a
meeting, if the holders of more than 50% of the
outstanding shares are present in person or by proxy
or (b) more than 50% of the fund's outstanding shares.
The remaining restrictions may be changed by the
fund's board of trustees at any time. In accordance
with these restrictions, the fund will not:

1. Invest in a manner that would cause it to
fail to be a "diversified company" under the 1940 Act
and the rules, regulations and orders thereunder.

2. Issue "senior securities" as defined in
the 1940 Act, and the rules, regulations and orders
thereunder, except as permitted under the 1940 Act and
the rules, regulations and orders thereunder.

3. Invest more than 25% of its total assets
in securities, the issuers of which conduct their
principal business activities in the same industry.
For purposes of this limitation, securities of the
U.S. government (including its agencies and
instrumentalities) and securities of state or
municipal governments and their political subdivisions
are not considered to be issued by members of any
industry.

4. Borrow money, except that (a) the fund
may borrow from banks for temporary or emergency (not
leveraging) purposes, including the meeting of
redemption requests which might otherwise require the
untimely disposition of securities, and (b) the fund
may, to the extent consistent with its investment
policies, enter into reverse repurchase agreements,
forward roll transactions and similar investment
strategies and techniques. To the extent that it
engages in transactions described in (a) and (b), the
fund will be limited so that no more than 33 1/3% of
the value of its total assets (including the amount
borrowed), valued at the lesser of cost or market,
less liabilities (not including the amount borrowed),
is derived from such transactions.

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

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

7. Purchase or sell real estate, real estate
mortgages, commodities or commodity contracts, but
this restriction shall not prevent the fund from: (a)
investing in securities of issuers engaged in the real
estate business or the business of investing in real
estate (including interests in limited partnerships
owning or otherwise engaging in the real estate
business or the business of investing in real estate)
and securities which are secured by real estate or
interests therein; (b) holding or selling real estate
received in connection with securities it holds or
held; (c) trading in futures contracts and options on
futures contracts (including options on currencies to
the extent consistent with the fund's investment
objective and policies); or (d) investing in real
estate investment trust securities.

8. Purchase any securities on margin (except
for such short-term credits as are necessary for the
clearance of purchases and sales of portfolio
securities) or sell any securities short (except
"against the box"). For purposes of this restriction,
the deposit or payment by the fund of underlying
securities and other assets in escrow and collateral
agreements with respect to initial or maintenance
margin in connection with futures contracts and
related options and options on securities, indexes or
similar items is not considered to be the purchase of
a security on margin.

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

10. Purchase or otherwise acquire any security
if, as a result, more than 15% of its net assets would
be invested in securities that are illiquid.

11. Invest for the purpose of exercising
control of management.

If any percentage restriction described above is
complied with at the time of an investment, a later
increase or decrease in percentage resulting from a
change in values or assets will not constitute a
violation of such restriction.

TRUSTEES OF THE TRUST AND EXECUTIVE OFFICERS OF THE
FUND

The names of the trustees of the trust and executive
officers of the fund, together with information as to
their principal business occupations, are set forth
below. The executive officers of the fund are
employees of organizations that provide services to
the fund. Each trustee who is an "interested person"
of the trust, as defined in the 1940 Act, is indicated
by an asterisk. The address of the "non-interested"
trustees and the executive officers of the fund is 388
Greenwich Street, New York, New York 10013, unless
otherwise indicated.

Herbert Barg, Trustee (Age 76). Private Investor.
His address is 273 Montgomery Avenue, Bala Cynwyd,
Pennsylvania 19004. Director/Trustee of sixteen
investment companies associated with Citigroup Inc.
("Citigroup")

*Alfred J. Bianchetti Trustee (Age 77). Retired;
formerly Senior Consultant to Dean Witter Reynolds
Inc. His address is 19 Circle End Drive, Ramsey, New
Jersey 07466. Director/Trustee of eleven investment
companies associated with Citigroup.

Martin Brody Trustee (Age 78). Consultant, HMK
Associates; Retired Vice Chairman of the Board of
Restaurant Associates Corp. His address is c/o HMK
Associates, 30 Columbia Turnpike, Florham Park, New
Jersey 07932. Director/Trustee of twenty-one
investment companies associated with Citigroup.

Dwight B. Crane Trustee (Age 62). Professor, Harvard
Business School. His address is c/o Harvard Business
School, Soldiers Field Road, Boston, Massachusetts
02163. Director/Trustee of twenty-four investment
companies associated with Citigroup.

Burt N. Dorsett Trustee (Age 69). Managing Partner of
Dorsett McCabe Management. Inc., an investment
counseling firm; Director of Research Corporation
Technologies, Inc., a nonprofit patent clearing and
licensing firm. His address is 201 East 62nd Street,
New York, New York 10021. Director/Trustee of eleven
investment companies associated with Citigroup.

Stephen E. Kaufman Trustee (Age 68). Attorney. His
address is 277 Park Avenue, New York, New York 10172.
Director/Trustee of thirteen investment companies
associated with Citigroup.

Joseph J. McCann Trustee (Age 69). Financial
Consultant; Retired Financial Executive, Ryan Homes,
Inc. His address is 200 Oak Park Place, Pittsburgh,
Pennsylvania 15243. Director/Trustee of eleven
investment companies associated with Citigroup.

*Heath B. McLendon Trustee (Age 67). Chairman of the
Board, President and Chief Executive Officer; Managing
Director of Salomon Smith Barney; President of SSB
Citi and Travelers Investment Adviser, Inc. ("TIA");
Chairman or Co-Chairman of the Board of seventy-one
investment companies associated with Salomon Smith
Barney. His address is 7 World Trade Center, New York,
New York 10048.

Cornelius C. Rose, Jr. Trustee (Age 66). President,
Cornelius C. Rose Associates, Inc., financial
consultants, and Chairman and Director of Performance
Learning Systems, an educational consultant. His
address is Meadowbrook Village, Building 4, Apt 6,
West Lebanon, New Hampshire 03784. Director/Trustee
of eleven investment companies associated with
Citigroup.

Lewis E. Daidone (Age 42). Senior Vice President and
Treasurer; Managing Director of Salomon Smith Barney;
Chief Financial Officer of the Smith Barney Mutual
funds; Treasurer and Senior Vice President or
Executive Vice President of sixty-one investment
companies associated with Citigroup; Director and
Senior Vice President of SSB Citi and TIA. His address
is 125 Broad Street, New York, New York 10004.

Sandip Bhagat, (Age 38). Vice President and Investment
Officer President of TIMCO; prior to 1995, Senior
Portfolio Manager of TIMCO; Managing Director of
Salomon Smith Barney. His address is One Tower Square,
Hartford, Connecticut, 06183-2030.

John Lau (Age 33). Vice President and Investment
Officer; Portfolio Manager of TIMCO; prior to 1995,
Lead Engineer of knowledge-based engineering projects
at United Technologies, Pratt and Whitney Aircraft
Engine Division. His address is One Tower Square,
Hartford, Connecticut, 06183-2030.

Paul Brook (Age 46). Controller; Director of Salomon
Smith Barney; Controller or Assistant Treasurer of
forty-three investment companies associated with
Citigroup; from 1997-1998 Managing Director of AMT
Capital Services Inc.; prior to 1997 Partner with
Ernst & Young LLP. His address is 125 Broad Street,
New York, New York 10004.

Christina T. Sydor (Age 49) Secretary; Managing
Director of Salomon Smith Barney; Secretary of sixty-
one investment companies associated with Citigroup;
General Counsel and Secretary of SSB Citi and TIA.

As of April 10, 2000, the trustees and officers owned,
in the aggregate, less than 1% of the outstanding
shares of the fund. No officer, director or employee
of Salomon Smith Barney or any of its affiliates
receives any compensation from the trust for serving
as an officer of the fund or trustee of the trust.
The trust pays each trustee who is not an officer,
director or employee of Salomon Smith Barney or any of
its affiliates a fee of $12,000 per annum plus $1000
per in-person meeting and $100 per telephonic meeting.
Each trustee emeritus who is not an officer, director
or employee of Salomon Smith Barney or its affiliates
receives a fee of $6,000 per annum plus $500 per in-
person meeting and $50 per telephonic meeting. All
trustees are reimbursed for travel and out-of-pocket
expenses incurred to attend such meetings. The total
expense reimbursement for the last fiscal year was
$14,437.

For the fiscal year ended November 30, 1999, the
Trustees of the trust were paid the following
compensation:

Name of Person

Aggregate
Compensat
ion
from
Trust

Total
Pension or
Retirement
Benefits
Accrued
As part of
Trust
Expenses

Compensation
From Trust
And Fund
Complex
Paid to
Trustees

Number of
Funds for Which DirecD
Trustee Serves Within
Fund Complex

Herbert Barg**
Alfred
Bianchetti* **
Martin Brody**
Dwight B.
Crane**
Burt N.
Dorsett**
Elliot S.
Jaffe**
Stephen E.
Kaufman**
Joseph J.
McCann**
Heath B.
McLendon*
Cornelius C.
Rose, Jr.**

$15,600
14,600
13,600
15,500
15,500
12,600
15,600
15,600
-----
14,600

$ 0
0
0
0
0
0
0
0
0
0

$114,288
53,900
138,600
155,363
57,950
45,100
110,650
58,050
-----------
53,500

16
11
21
24
11
11
13
11
71
11

_________________
* Designated an "interested" trustee.
** Designates member of Audit Committee.

Upon attainment of age 80, fund trustees are required
to change to emeritus status. Trustees emeritus are
entitled to serve in emeritus status for a maximum of
10 years. A trustee emeritus may attend meetings but
has no voting rights.

The following table contains a list of shareholders of
record or who beneficially owned at least 5% of the
outstanding shares of a particular class of shares of
the fund as of April 10, 2000.

SMITH BARNEY SHARES
PERCENTAGE OF SHARES

Travelers Insurance
Company
Separate Account QPN
401(k)-TIC
Travelers Insurance
Company
Atn: Roger Ferland
One Tower Square
Hartford, CT 06183
Owned 3,301,129.864
(15.58%) shares

Jack M Eckerd TR Jack M
Eckerd
REV TR 12/18/69
Amended & Restated
8/28/81
P.O. Box 5165
Clearwater, FL 33758-
5165
Owned 1,606,473.666
(7.58%) shares

CITI SHARES
PERCENTAGE OF SHARES

Smith Barney
401(k)Advisor Group
Smith Barney Corporate
Trust
Two Tower Square
P.O. Box 1063
East Brunswick, NJ 08816
Owned 1,928,013.789
(100%) shares

INVESTMENT MANAGEMENT AND OTHER SERVICES

Investment Manager - TIMCO

TIMCO serves as investment adviser to the fund
pursuant to an investment advisory agreement (the
"Investment Advisory Agreement") with the trust which
was approved by the board of trustees, including a
majority of trustees who are not "interested persons"
of the trust or the manager. The manager is a wholly
owned subsidiary of Citigroup Inc. Subject to the
supervision and direction of the board of trustees,
the manager manages the fund's portfolio in accordance
with the fund's stated investment objective and
policies, makes investment decisions for the fund,
places orders to purchase and sell securities, and
employs professional portfolio managers and securities
analysts who provide research services to the fund.
The manager pays the salary of any officer and
employee who is employed by both it and the trust. The
manager bears all expenses in connection with the
performance of its services. TIMCO has been in the
investment counseling business since 1967 and renders
investment advice to a wide variety of individual,
institutional and investment company clients that had
aggregate assets under management as of March 2000 in
excess of $4.8 billion.

As compensation for investment advisory services, the
fund pays the manager a fee computed daily and payable
monthly at the annual rate of 0.15% of the value of
the fund's average daily net assets. The management
fee paid by the fund in fiscal period ended November
30, 1998 was $36,394. The management fee paid by the
fund for the year ended November 30, 1999 was
$233,127. The management fee paid by the fund for the
period from December 1, 1999 to December 31, 1999
(which reflects a change in the fiscal year end of the
fund) was $34,480.

Administrator - SSB Citi

SSB Citi serves as administrator to the fund pursuant
to a written agreement (the "Administration
Agreement"). SSB Citi is a wholly owned subsidiary of
Salomon Smith Barney Holdings Inc. ("Holdings"), which
in turn, is a wholly owned subsidiary of Citigroup
Inc. The administrator will pay the salary of any
officer and employee who is employed by both it and
the fund and bears all expenses in connection with the
performance of its services.

As administrator SSB Citi: (a) assists in supervising
all aspects of the Fund's operations except those
performed by the fund's investment manager under its
investment advisory agreement; (b) supplies the fund
with office facilities (which may be in SSB Citi's own
offices), statistical and research data, data
processing services, clerical, accounting and
bookkeeping services, including, but not limited to,
the calculation of (i) the net asset value of shares
of the fund, (ii) applicable contingent deferred sales
charges ("deferred sales charge") and similar fees and
charges and (iii) distribution fees, internal auditing
and legal services, internal executive and
administrative services, and stationary and office
supplies; and (c) prepares reports to shareholders of
the fund, tax returns and reports to and filings with
the SEC and state blue sky authorities.

As compensation for administrative services rendered
to the fund, the administrator will receive a fee
computed daily and paid monthly at the annual rate of
0.10% of the value of the fund's average daily net
assets. The administration fee was waived by the
administrator in the fiscal period ended November 30,
1998. The administration fee for the year ended
November 30, 1999 was $155,418, of which $122,303 was
waived. The administration fee for the period from
December 1, 1999 to December 31, 1999 (which reflects
a change in the fiscal year end of the fund) was
waived by the administrator, and in addition, the fund
was reimbursed $15,109 for other expenses.

The fund bears expenses incurred in its operation,
including: taxes, interest, brokerage fees and
commissions, if any; fees of trustees who are not
officers, trustees, shareholders or employees of the
manager or the administrator or their affiliates; SEC
fees and state Blue Sky qualification fees; charges of
custodians; transfer and dividend disbursing agent's
fees; certain insurance premiums; outside auditing and
legal expenses; costs of maintaining corporate
existence; investor services (including allocated
telephone and personnel expenses); costs of
preparation and printing of prospectuses and
statements of additional information for regulatory
purposes and for distribution to existing
shareholders; costs of shareholders' reports and
shareholder meetings; and meetings of the officers or
board of trustees of the fund.

Auditors

KPMG LLP, independent auditors, 757 Third Avenue, New
York, New York 10017, have been selected to serve as
auditors of the trust and to render opinions on the
fund's financial statements for the fiscal year ending
December 31, 2000.

Counsel

Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019, serves as counsel to the fund.

Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New
York, New York, serves as counsel to the trustees who
are not "interested persons" of the fund.

Custodian, Transfer Agent and Sub-Transfer Agent

PNC Bank, National Association ("PNC" or "custodian"),
located at 17th and Chestnut Streets, Philadelphia,
Pennsylvania, 19103, serves as the custodian of the
fund. Under its custody agreement with the fund, PNC
holds the fund's securities and keeps all necessary
accounts and records. For its services, PNC receives a
monthly fee based upon the month-end market value of
securities held in custody and also receives
securities transactions charges. The assets of the
fund are held under bank custodianship in compliance
with the 1940 Act.

Citi Fiduciary Trust Company, located at 125 Broad
Street, New York, New York 1004, serves as the fund's
transfer and dividend-paying agent (the "transfer
agent"). Under the transfer agency agreement, the
transfer agent maintains the shareholder account
records for the fund, handles certain communications
between shareholders and the fund, distributes
dividends and distributions payable by the fund and
produces statements with respect to account activity
for the fund and its shareholders. For these
services, the transfer agent receives fees from the
fund computed on the basis of the number of
shareholder accounts that the transfer agent maintains
for the fund during the month and is reimbursed for
out-of-pocket expenses.

Boston Financial Data Services ("BFDS" or "sub-
transfer agent") located at P.O. Box 9083, Boston,
Massachusetts 02205-9083, serves as the trust's sub-
transfer agent. Under the sub-transfer agency
agreement, the sub-transfer agent maintains the
shareholder account records for the trust, handles
certain communications between shareholders and the
trust and distributes dividends and distributions
payable by the trust. 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 trust during the month, and is
reimbursed for out-of-pocket expenses.

Code of Ethics. Pursuant to Rule 17j-1 of the 1940
Act, the fund, it's investment adviser and principal
underwriter has adopted a code of ethics that permits
personnel to invest in securities for their own
accounts, including securities that may be purchased
or held by the fund. 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 code
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 fund's Code of Ethics is on file with the
Securities and Exchange Commission.

Distributor

Salomon Smith Barney, Inc., located at 388 Greenwich
Street, New York, New York 10013 serves as distributor
of the fund's shares pursuant to a distribution
agreement with the trust (the "Distribution
Agreement").

Shareholding Servicing Arrangements

To compensate Salomon Smith Barney for the services it
provides to fund shareholders with respect to Smith
Barney Shares, the fund has adopted a services plan
(the "plan") pursuant to Rule 12b-1 under the 1940
Act. Under the Plan, the fund pays a service fee with
respect to Smith Barney Shares that is accrued daily
and paid monthly, calculated at the annual rate of
0.20% of the value of the fund's average daily net
assets attributable to Smith Barney Shares. Citi
shares are not subject to a service fee.

For the fiscal period ended November 30, 1998, the
distributor reimbursed plan fees totaling $47,919.
For the period from December 1, 1999 to December 31,
1999 (which reflects a change in the fiscal year end
of the fund) and for the year ended November 30, 1999
the fund paid distribution fees to Salomon Smith
Barney totaling $40,031 and $292,236, respectively.

Under its terms, the plan continues from year to year,
provided such continuance is approved annually by vote
of the board of trustees, including a majority of the
trustees who are not interested persons of the trust
and who have no direct or indirect financial interest
in the operation of the Plan (the "independent
trustees"). The Plan may not be amended to increase
the amount of the service fees without shareholder
approval, and all amendments of the Plan also must be
approved by the trustees including all of the
independent trustees in the manner described above.
The Plan may be terminated at any time, without
penalty, by vote of a majority of the independent
trustees or by vote of a majority of the outstanding
voting securities representing the Smith Barney Shares
of the fund (as defined in the 1940 Act). Pursuant to
the Plan, Salomon Smith Barney will provide the board
of trustees with periodic reports of amounts expended
under the Plan and the purpose for which such
expenditures were made.

PORTFOLIO TRANSACTIONS

The manager arranges for the purchase and sale of the
fund's securities and selects brokers and dealers
(including Salomon Smith Barney) which in its best
judgment provide prompt and reliable execution at
favorable prices and reasonable commission rates. The
manager may select brokers and dealers that provide it
with research services and may cause the fund to pay
such brokers and dealers commissions which exceed
those other brokers and dealers may have charged, if
it views the commissions as reasonable in relation to
the value of the brokerage and/or research services.
In selecting a broker, including Salomon Smith Barney,
for a transaction, the primary consideration is prompt
and effective execution of orders at the most
favorable prices. Subject to that primary
consideration, dealers may be selected for research,
statistical or other services to enable the manager to
supplement its own research and analysis.

Decisions to buy and sell securities for the fund are
made by the manager, subject to the overall
supervision and review of the trust's board of
trustees. Portfolio securities transactions for the
fund are effected by or under the supervision of the
manager.

Transactions on stock exchanges involve the payment of
negotiated brokerage commissions. There is generally
no stated commission in the case of securities traded
in the over-the-counter market, but the price of those
securities includes an undisclosed commission or mark-
up. Over-the-counter purchases and sales are
transacted directly with principal market makers
except in those cases in which better prices and
executions may be obtained elsewhere. The cost of
securities purchased from underwriters includes 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.

In executing portfolio transactions and selecting
brokers or dealers, it is the fund's policy to seek
the best overall terms available. The manager, in
seeking the most favorable price and execution,
considers all factors it deems relevant, including,
for example, the price, the size of the transaction,
the reputation, experience and financial stability of
the broker-dealer involved and the quality of service
rendered by the broker-dealer in other transactions.
The manager receives research, statistical and
quotation services from several broker-dealers with
which it places the fund's portfolio transactions. It
is possible that certain of the services received
primarily will benefit one or more other accounts for
which the manager exercises investment discretion.
Conversely, the fund may be the primary beneficiary of
services received as a result of portfolio
transactions effected for other accounts. The
manager's fee under the Investment Advisory Agreement
is not reduced by reason of its receiving such
brokerage and research services. The trust's board of
trustees, in its discretion, may authorize the manager
to cause the fund to pay a broker that provides
brokerage and research services to the manager a
commission in excess of that which another qualified
broker would have charged for effecting the same
transaction. Salomon Smith Barney will not participate
in commissions from brokerage given by the fund to
other brokers or dealers and will not receive any
reciprocal brokerage business resulting therefrom.

In accordance with Section 17(e) of the 1940 Act and
Rule 17e-1 thereunder, the trust's board of trustees
has determined that any portfolio transaction for the
fund may be executed through Salomon Smith Barney or
an affiliate of Salomon Smith Barney if, in the
manager's judgment, the use of Salomon Smith Barney or
an affiliate is likely to result in price and
execution at least as favorable as those of other
qualified brokers and if, in the transaction, Salomon
Smith Barney or the affiliate charges the fund a
commission rate consistent with those charged by
Salomon Smith Barney or an affiliate to comparable
unaffiliated customers in similar transactions. In
addition, under SEC rules Salomon Smith Barney may
directly execute such transactions for the fund on the
floor of any national securities exchange, provided:
(a) the board of trustees has expressly authorized
Salomon Smith Barney to effect such transactions; and
(b) Salomon Smith Barney annually advises the fund of
the aggregate compensation it earned on such
transactions.

Even though investment decisions for the fund are made
independently from those of the other accounts managed
by the manager, investments of the kind made by the
fund also may be made by those other accounts. When
the fund and one or more accounts managed by the
manager 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 manager to be equitable. In
some cases, this procedure may adversely affect the
price paid or received by the fund or the size of the
position obtained for or disposed of by the fund.

The fund will not purchase securities during the
existence of any underwriting or selling group
relating to the securities, of which the manager is a
member, except to the extent permitted by the SEC.
Under certain circumstances, the fund may be at a
disadvantage because of this limitation in comparison
with other funds that have similar investment
objectives but that are not subject to a similar
limitation.

The fund has paid the following in brokerage
commissions for portfolio transactions

Fiscal Period
Fiscal Year Fiscal Period
Ended 12/31/99 1
Ended 11/30/99 Ended
11/30/982

Total Brokerage Commissions $7,233
$86,196 $24,665

Total Brokerage Commissions
paid to Salomon Smith Barney $ 0
$ 0 $ 0

% of Total Brokerage Commissions
paid to Salomon Smith Barney 0%
0% 0%

% of Total Transactions involving
Commissions paid to Salomon
Smith Barney 0%
0% 0%
_____________________________

1 For the period from December 1, 1999 to December
31, 1999, which reflects a change in the fiscal year
end
of the fund.
2 For the period from January 5, 1998
(commencement of operations) to November 30, 1998.

PORTFOLIO TURNOVER

Although the fund generally seeks to invest for the
long term, the fund retains the right to sell
securities irrespective of how long they have been
held. Ordinarily, securities will be sold from the
fund only to reflect certain administrative changes in
the S&P 500 Index (including mergers or changes in the
composition of the Index) or to accommodate cash flows
into and out of the fund while maintaining the
similarity of the fund to the index. Generally, an
index fund sells securities only to respond to
redemption requests or to adjust the number of shares
held to reflect a change in the fund's target index.
Because of this, the turnover rate for the fund will
be relatively low. The fund's portfolio turnover rate
for the fiscal period ended November 30, 1998 was 4%.
The fund's portfolio turnover rate for the fiscal
period from December 1, 1999 to December 31, 1999
(which reflects a change in the fiscal year end of the
fund), and the year ended November 30, 1999 was 0% and
6%, respectively.

PURCHASE OF SHARES

Detailed information about the purchase, redemption
and exchange of fund shares appears in the prospectus.

General

The fund offers two classes of shares, Smith Barney
Shares and Citi Shares. Shares of each class are
offered at net asset value without an initial sales
charge.

Smith Barney Shares may be purchased from Salomon
Smith Barney, or a broker-dealer, financial
intermediary or financial institution (each called a
"Service Agent"). In addition, certain investors,
including qualified retirement plans purchasing
through certain Service Agents, may purchase shares
directly from the fund. Salomon Smith Barney and
Service Agents may charge their customers an annual
account maintenance fee in connection with a brokerage
account through which an investor purchases or holds
Smith Barney Shares. Smith Barney Shares held
directly at the sub-transfer agent are not subject to
a maintenance fee.

Citi Shares may be purchased from the Distributor or a
Service Agent. Citi Shares also may be purchased
through the Cititrade Program by customers that have
established a Cititrade Account. For more detailed
information on how to open a Cititrade Account, please
visit the Cititrade website at www.mycititrade.com or
call a Cititrade account representative at 1-888-663-
CITI [2484].

During periods of drastic economic or market changes
or severe weather or other emergencies, shareholders
may experience difficulties implementing a telephone
or Internet exchange or redemption. In such an event,
another method of instruction, if available, should be
considered. The fund will employ reasonable
procedures to confirm that instructions communicated
by telephone are genuine. These procedures may
include recording of the telephone instructions and
verification of a shareholder's identity by asking for
the shareholder's name, address, telephone number,
Social Security number, account number, or password
identification number. If these or other reasonable
procedures are not followed, the fund or its transfer
agent may be liable for any losses to a shareholder
due to unauthorized or fraudulent instructions.
Otherwise, the shareholders will bear all risk of loss
relating to a redemption or exchange by telephone.

Investors may open an account in the fund by making an
initial investment of at least $1,000 for each
account, or $250 for an IRA or a Self-Employed
Retirement Plan. Subsequent investments of at least
$50 may be made for each Class. For shareholders
purchasing shares of the fund through the Systematic
Investment Plan on a monthly basis, the minimum
initial investment requirement and subsequent
investment requirement for each Class is $25. For
shareholders purchasing shares of the fund through the
Systematic Investment Plan on a quarterly basis, the
minimum initial investment required for and the
subsequent investment requirement for each Class is
$50. There are no minimum investment requirements for
employees of Citigroup and its subsidiaries, including
Salomon Smith Barney, unitholders who invest
distributions from a Unit Investment Trust ("UIT")
sponsored by Salomon Smith Barney, and
Directors/Trustees of any of the Smith Barney Mutual
Funds, and their spouses and children. The fund
reserves the right to waive or change minimums, to
decline any order to purchase its shares and to
suspend the offering of shares from time to time.
Shares purchased will be held in the shareholder's
account by the sub-transfer agent. Share certificates
are issued only upon a shareholder's written request
to the sub-transfer agent.

Purchase orders received by the fund or a Salomon
Smith Barney financial consultant prior to the close
of regular trading on The New York Stock Exchange,
Inc. (the "NYSE"), on any day the fund calculates its
net asset value, are priced according to the net asset
value determined on that day (the ''trade date'').
Orders received by a Service Agent prior to the close
of regular trading on the NYSE on any day the fund
calculates its net asset value, are priced according
to the net asset value determined on that day,
provided the order is received by the fund or the
fund's agent prior to its close of business. For
shares purchased through Salomon Smith Barney or a
Service Agent purchasing through Salomon Smith Barney,
payment for shares of the fund is due on the third
business day after the trade date. In all other cases,
payment must be made with the purchase order.

When payment is made by an investor through a Salomon
Smith Barney brokerage account before the settlement
date, unless otherwise noted by the investor, the
funds will be held as a free credit balance in the
investor's brokerage account and Salomon Smith Barney
may benefit from the temporary use of the funds. The
fund's board of trustees has been advised of the
benefits to Salomon Smith Barney resulting from these
settlement procedures and will take such benefits into
consideration when reviewing the Investment Advisory,
Administration and Distribution Agreements for
continuance.

Systematic Investment Plan. Shareholders may make
additions to their accounts at any time by purchasing
shares through a service known as the Systematic
Investment Plan. Under the Systematic Investment
Plan, Salomon Smith Barney, your Service Agent or the
sub-transfer agent is authorized through preauthorized
transfers of at least $25 on a monthly basis or at
least $50 on a quarterly basis to charge the
shareholder's account held with a bank or other
financial institution on a monthly or quarterly basis
as indicated by the shareholder, to provide for
systematic additions to the shareholder's fund
account. A shareholder who has insufficient funds to
complete the transfer may be charged a fee of up to
$25 by Salomon Smith Barney, your Service Agent or the
sub-transfer agent. The Systematic Investment Plan
also authorizes the fund to apply cash held in the
shareholder's brokerage account or redeem the
shareholder's shares of a Smith Barney money market
fund to make additions to the Smith Barney Shares
account. For Cititrade customers, the Systematic
Investment Plan authorizes the fund to apply cash held
in a shareholder's Cititrade Account to make additions
to the Citi Shares account. For additional
information, please contact the fund's sub-transfer
agent, or if you hold your shares through a Service
Agent, your Service Agent. Additional information is
available from the fund, a Salomon Smith Barney
Financial Consultant or your Service Agent.

Citi Shares are offered to a limited group of
investors who participate in certain investment
programs which charge a fee for participation,
including the Smith Barney 401(k) Platform program.
In addition, Citi Shares shares are offered to tax-
exempt employee benefit and retirement plans of
Salomon Smith Barney and its affiliates. For more
information about these programs, contact a Salomon
Smith Barney Financial Consultant or a Service Agent.

Retirement Plans. You may be able to invest in the
fund under one of several tax-sheltered plans. Such
plans include IRAs, Keogh or Corporate Profit-Sharing
and Money-Purchase Plans, 403(b) Custodian Accounts,
and certain other qualified pension and profit-sharing
plans. You should consult with the Transfer Agent and
your tax and retirement advisers.

REDEMPTION OF SHARES

The right of redemption of shares of the fund may be
suspended or the date of payment postponed (a) for any
periods during which the NYSE is closed (other than
for customary weekend and holiday closings), (b) when
trading in the markets the fund normally utilizes is
restricted, or an emergency exists, as determined by
the SEC, so that disposal of the fund's investments or
determination of its net asset value is not reasonably
practicable or (c) for any other periods as the SEC by
order may permit for the protection of the fund's
shareholders.

If the shares to be redeemed were issued in
certificate form, the certificates must be endorsed
for transfer (or be accompanied by an endorsed stock
power) and must be submitted to BFDS together with the
redemption request. Any signature appearing on a
share certificate, stock power or written redemption
request in excess of $50,000 must be guaranteed by an
eligible guarantor institution such as a domestic
bank, savings and loan institution, domestic credit
union, member bank of the Federal Reserve System or
member firm of a national securities exchange.
Written redemption requests of $50,000 or less do not
require a signature guarantee unless more than one
such redemption request is made in any 10-day period
or the redemption proceeds are to be sent to an
address other than the address of record. Unless
otherwise directed, redemption proceeds will be mailed
to an investor's address of record. The transfer
agent may require additional supporting documents for
redemptions made by corporations, executors,
administrators, trustees or guardians. A redemption
request will not be deemed properly received until the
transfer agent receives all required documents in
proper form.

If a shareholder holds shares in more than one Class,
any request for redemption must specify the Class
being redeemed. In the event of a failure to specify,
or if the investor owns fewer shares of the Class than
specified, the redemption request will be delayed
until the transfer agent receives further instructions
from Salomon Smith Barney, or if the shareholder's
account is not with Salomon Smith Barney, from the
shareholder directly. The redemption proceeds will be
remitted on or before the third business day following
receipt of proper tender, except on any days on which
the NYSE is closed or as permitted under the 1940 Act,
in extraordinary circumstances. Generally, if the
redemption proceeds are remitted to a Salomon Smith
Barney brokerage account, these funds will not be
invested for the shareholder's benefit without
specific instruction and Salomon Smith Barney will
benefit from the use of temporarily uninvested funds.
Redemption proceeds for shares purchased by check,
other than a certified or official bank check, will be
remitted upon clearance of the check, which may take
up to fifteen days or more.
Distribution in Kind

If the board of trustees of the trust determines that
it would be detrimental to the best interests of the
remaining shareholders to make a redemption payment
wholly in cash, the fund may pay, in accordance with
SEC rules, any portion of a redemption in excess of
the lesser of $250,000 or 1.00% of the fund's net
assets by a distribution in kind of portfolio
securities in lieu of cash. Shareholders may incur
brokerage commissions when they subsequently sell
those securities

Automatic Cash Withdrawal Plan

The Smith Barney Index Shares' Withdrawal Plan is
available to shareholders of the fund who own Smith
Barney Index Shares with a value of at least $10,000
and who wish to receive specific amounts of cash
monthly or quarterly. Withdrawals of at least $50 may
be made without a redemption fee under the Withdrawal
Plan by redeeming as many Smith Barney Index Shares of
the fund as may be necessary to cover the stipulated
withdrawal payment. As it generally would not be
advantageous to a shareholder to make additional
investments in Smith Barney Index Shares at the same
time he or she is participating in the Withdrawal
Plan, purchases by such shareholders in amounts of
less than $5,000 ordinarily will not be permitted.

Smith Barney Index shareholders who wish to
participate in the Withdrawal Plan and who hold their
shares in certificate form must deposit their share
certificates with the sub-transfer agent as agent for
Withdrawal Plan members. All dividends and
distributions on shares in the Withdrawal Plan are
reinvested automatically at net asset value in
additional Smith Barney Index Shares of the fund. A
shareholder who purchases shares directly through the
sub-transfer agent may continue to do so and
applications for participation in the Withdrawal Plan
must be received by the sub-transfer agent no later
than the eighth day of the month to be eligible for
participation beginning with that month's withdrawal.
For additional information, shareholders should
contact their Service Agent.

The Citi Index Shares' Systematic Withdrawal Plan
permits you to have a specified dollar amount (minimum
of $100 per withdrawal) automatically withdrawn from
your account without a redemption fee on a regular
basis if you have at least $10,000 in your fund
account at the time of enrollment. You are limited to
one withdrawal per month under the Plan. You may
receive your withdrawals by check, or have the monies
transferred directly into your bank account. Or you
may direct that payments be made directly to a third
party. To participate in the Plan, you must complete
the appropriate forms provided by the sub-transfer
agent or, if you hold your shares through a Service
Agent, by your Service Agent. Cititrade customers
should contact a Cititrade account representative at
1-888-663-CITI[2484] for more information.

To the extent withdrawals exceed dividends,
distributions and appreciation of a shareholder's
investment in the fund, continued withdrawal payments
will reduce the shareholder's investment, and may
ultimately exhaust it. Withdrawal payments should not
be considered as income from investment in the Fund.

Additional Information Regarding Telephone Redemption
And Exchange Program

Neither the fund nor its agents will be liable for
following instructions communicated by telephone that
are reasonably believed to be genuine. The fund and
its agents will employ procedures designed to verify
the identity of the caller and legitimacy of
instructions (for example, a shareholder's name and
account number will be required and phone calls may be
recorded). The fund reserves the right to suspend,
modify or discontinue the telephone redemption and
exchange program or to impose a charge for this
service at any time following at least seven (7) days'
prior notice to shareholders.

EXCHANGE PRIVILEGE

Shares of each Class may only be exchanged for Shares
of the same Class of:

1. Smith Barney U.S. 5000 Index Fund
2. Smith Barney International Index Fund
(formerly EAFE Index Fund)
3. Citi Nasdaq-100 Index Fund
4. Citi Small Cap Index Fund
5. Citi U.S.1000 Index Fund
6. Citi Global Titans Fund
7. Citi U.S. Bond Index Fund

Exchanges can be made to the extent shares are offered
for sale in the shareholder's state of residence.
Exchanges of are subject to minimum investment
requirements and to the other requirements of the fund
into which exchanges are made.

Holders of Smith Barney Shares and Citi Shares who
wish to exchange all or a portion of their shares for
the respective Class in any of the funds identified
above may do so without imposition of any charge.

Additional Information Regarding the Exchange
Privilege

Although the exchange privilege is an important
benefit, excessive exchange transactions can be
detrimental to the fund's performance and its
shareholders. The manager may determine that a pattern
of frequent exchanges is excessive and contrary to the
best interests of the fund's other shareholders. In
this event, the fund may, at its discretion, decide to
limit additional purchases and/or exchanges by the
shareholder. Upon such a determination, the fund will
provide notice in writing or by telephone to the
shareholder at least 15 days prior to suspending the
exchange privilege and during the 15 day period the
shareholder will be required to (a) redeem his or her
shares in the fund or (b) remain invested in the fund
or exchange into any of the funds of the Smith Barney
mutual funds ordinarily available, which position the
shareholder would be expected to maintain for a
significant period of time. All relevant factors will
be considered in determining what constitutes an
abusive pattern of exchanges.

Certain shareholders may be able to exchange shares by
telephone. See ''Redemption of Shares-Additional
Information Regarding Telephone Redemptions and
Exchange Program.'' Exchanges will be processed at the
net asset value next determined. Redemption
procedures discussed below are also applicable for
exchanging shares, and exchanges will be made upon
receipt of all supporting documents in proper form.
If the account registration of the shares of the fund
being acquired is identical to the registration of the
shares of the fund exchanged, no signature guarantee
is required. An exchange involves a taxable
redemption of shares, subject to the tax treatment
described in "Dividend, Distributions and Taxes"
below, followed by a purchase of shares of a different
fund. Before exchanging shares, investors should read
the current prospectus describing the shares to be
acquired. The fund reserves the right to modify or
discontinue exchange privileges upon 60 days' prior
notice to shareholders.

VALUATION OF SHARES

The net asset value per share of the fund's Classes is
calculated on each day, Monday through Friday, except
days on which the NYSE is closed. The NYSE currently
is 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 or subsequent Monday when one of these holidays
falls on a Saturday or Sunday, respectively. Because
of the differences in distribution fees and Class
specific expenses, the per share new asset value of
each Class will differ. The following is a
description of the procedures used by the trust in
valuing its assets.

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 fund'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 fund's
board of trustees. Amortized cost involves valuing an
instrument at its original cost to the fund 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 fund will be valued at fair value
as determined in good faith by the fund's board of
trustees.

PERFORMANCE DATA

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

Average Annual Total Return

A fund's "average annual total return," as described
below, is computed according to a formula prescribed
by the SEC. The formula can be expressed as follows:

P(1 + T)n = ERV

Where: P = a hypothetical
initial payment of $1,000.

T = average annual
total return.

n = number of years.

ERV = Ending Redeemable
Value of a
hypothetical
$1,000 investment
made at the
beginning of a 1-,
5- or 10-year
period at the end
of a 1-, 5- or 10-
year period (or
fractional portion
thereof), assuming
reinvest-ment of
all dividends and
distributions.

The ERV assumes complete redemption of the
hypothetical investment at the end of the measuring
period. A fund's net investment income changes in
response to fluctuations in interest rates and the
expenses of the fund.

Average Annual Total Return

Class of Shares
1-Year
5-Year
10-
Year
Life
of
fund 3

1999 1
1999 2

Smith Barney Shares
5.88%
19.96%
N/A
N/A
23.53%
Citi Shares
5.91%
20.29%
N/A
N/A
26.25%
_________________________________
1 For the period from December 1, 1999 to December
31, 1999 which reflects a change in the fiscal
year end of the fund. Total return is not
annualized, as it may not be representative of
the total return for the year.
2 For the fiscal year ended November 30, 1999.
3 Smith Barney Shares and Citi Shares commenced
operations on January 5, 1998 and August 4,
1998, respectively. Prior to September 5, 2000,
the Classes were named Class A and Class D
shares, respectively.

Aggregate Total Return

The fund's "aggregate total return," as described
below, represents the cumulative change in the value
of an investment in the fund for the specified period
and is computed by the following formula:

ERV - P
P

Where: P = a hypothetical initial
payment of $10,000.

ERV = Ending Redeemable Value
of a hypothetical
$10,000 investment made
at the beginning of the
1-, 5- or 10-year period
at the end of the 1-, 5-
or 10-year period (or
fractional portion
thereof), assuming
reinvestment of all
dividends and
distributions.

The ERV assumes complete redemption of the
hypothetical investment at the end of the measuring
period.

Aggregate Total Return

Class of Shares
1-Year

5-Year
10-
Year
Life
of
fund 3

1999 1
1999 2

Smith Barney Shares
20.03%
19.96%
N/A
N/A
52.16%
Citi Shares
20.29%
20.29%
N/A
N/A
38.85%
__________________________
1 For the period from December 1, 1999 to December
31, 1999 which reflects a change in the fiscal
year end of the fund. Total return is not
annualized, as it may not be representative of
the total return for the year.
2 For the fiscal year ended November 30, 1999.
3 Smith Barney Shares and Citi Shares commenced
operations on January 5, 1998 and August 4,
1998, respectively. Prior to September 5, 2000,
the Classes were named Class A and Class D
shares, respectively.

Performance will vary from time to time depending upon
market conditions, the composition of the fund's
portfolio and operating expenses and the expenses
exclusively attributable to the Class. Consequently,
any given performance quotation should not be
considered representative of the Class' performance
for any specified period in the future. Because
performance will vary, it may not provide a basis for
comparing an investment in the Class with certain bank
deposits or other investments that pay a fixed yield
for a stated period of time. Investors comparing a
Class' performance with that of other mutual funds
should give consideration to the quality and maturity
of the respective investment companies' portfolio
securities.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Taxes

The following is a summary of the material United
States federal income tax considerations regarding the
purchase, ownership and disposition of shares of a
fund. Each prospective shareholder is urged to consult
his own tax adviser with respect to the specific
federal, state, local and foreign tax consequences of
investing in a fund. The summary is based on the laws
in effect on the date of this SAI, which are subject
to change.

The Fund and Its Investments

The fund intends to continue to qualify to be treated
as a regulated investment company each taxable year
under the Internal Revenue Code of 1986, as amended
(the "Code"). To so qualify, the fund must, among
other things: (a) derive at least 90% of its gross
income in each taxable year from dividends, interest,
payments with respect to securities loans and gains
from the sale or other disposition of stock or
securities or foreign currencies, or other income
(including, but not limited to, gains from options,
futures or forward contracts) derived with respect to
its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at
the end of each quarter of the fund's taxable year,
(i) at least 50% of the market value of the fund's
assets is represented by cash, securities of other
regulated investment companies, United States
government securities and other securities, with such
other securities limited, in respect of any one
issuer, to an amount not greater than 5% of the fund's
assets and not greater than 10% of the outstanding
voting securities of such issuer and (ii) not more
than 25% of the value of its assets is invested in the
securities (other than United States government
securities or securities of other regulated investment
companies) of any one issuer or any two or more
issuers that the fund controls and which are
determined to be engaged in the same or similar trades
or businesses or related trades or businesses.

As a regulated investment company, the fund will not
be subject to United States federal income tax on its
net investment company taxable income (i.e., income
other than any excess of its net realized long-term
capital gains over its net realized short-term capital
losses, ("net realized capital gains") or on its net
realized capital gains if any, that it distributes to
its shareholders, provided an amount equal to at least
90% of its investment company taxable income, plus or
minus certain other adjustments as specified in the
Code's and 90% of its net tax-exempt income for the
taxable year is distributed in compliance with the
Code's timing and other requirements but will be
subject to tax at regular corporate rates on any
taxable income or gains it does not distribute.

The Code imposes a 4% nondeductible excise tax on the
fund to the extent it does not distribute by the end
of any calendar year at least 98% of its net
investment income for that year and 98% of the net
amount of its capital gains (both long-and short-term)
for the one-year period ending, as a general rule, on
October 31 of that year. For this purpose, however,
any income or gain retained by the fund that is
subject to corporate income tax will be considered to
have been distributed by year-end. In addition, the
minimum amounts that must be distributed in any year
to avoid the excise tax will be increased or decreased
to reflect any underdistribution or overdistribution,
as the case may be, from the previous year. The fund
anticipates that it will pay such dividends and will
make such distributions as are necessary in order to
avoid the application of this tax.

If, in any taxable year, the fund 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 fund in computing its taxable
income. In addition, in the event of a failure to
qualify, the fund's distributions, to the extent
derived from the fund'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 might
otherwise (at least in part) have been treated in the
shareholders' hands as long-term capital gains. If
the fund 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 fund failed to qualify as a regulated
investment company for a period greater than one
taxable year, the fund may be required to recognize
any net built-in gains (the excess of the aggregate
gains, including items of income, over aggregate
losses that would have been realized if it had been
liquidated) with respect to certain of its assets in
order to qualify as a regulated investment company in
a subsequent year.

The fund'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
(including provisions relating to "hedging
transactions" and "straddles") that, among other
things, may affect the character of gains and losses
realized by the fund (i.e., may affect whether gains
or losses are ordinary or capital), accelerate
recognition of income to the fund and defer fund
losses. These rules could therefore affect the
character, amount and timing of distributions to
shareholders. These provisions also (a) will require
the fund to mark-to-market certain types of the
positions in its portfolio (i.e., treat them as if
they were closed out) and (b) may cause the fund 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. The fund will
monitor its transactions, will make the appropriate
tax elections 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 prevent disqualification of the
fund as a regulated investment company.

The fund's investment in Section 1256 contracts, such
as regulated futures contracts, most forward currency
forward contracts traded in the interbank market and
options on most stock indices, are subject to special
tax rules. All section 1256 contracts held by the
fund at the end of its taxable year are required to be
marked to their market value, and any unrealized gain
or loss on those positions will be included in the
fund's income as if each position had been sold for
its fair market value at the end of the taxable year.
The resulting gain or loss will be combined with any
gain or loss realized by the fund from positions in
section 1256 contracts closed during the taxable year.
Provided such positions were held as capital assets
and were not part of a "hedging transaction" nor part
of a "straddle," 60% of the resulting net gain or loss
will be treated as long-term capital gain or loss, and
40% of such net gain or loss will be treated as short-
term capital gain or loss, regardless of the period of
time the positions were actually held by the fund.

Foreign Investments. Dividends or other income
(including, in some cases, capital gains) received by
the fund from investments in foreign securities may be
subject to withholding and other taxes imposed by
foreign countries. Tax conventions between certain
countries and the United States may reduce or
eliminate such taxes in some cases. The fund 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 credits for such taxes on their own
tax returns. Foreign taxes paid by the fund will
reduce the return from the fund's investments.

Passive Foreign Investment Companies. If the fund
purchases shares in certain foreign investment
entities, called "passive foreign investment
companies" (a "PFIC"), it may be subject to United
States federal income tax on a portion of any "excess
distribution" or gain from the disposition of such
shares even if such income is distributed as a taxable
dividend by the fund to its shareholders. Additional
charges in the nature of interest may be imposed on
the fund in respect of deferred taxes arising from
such distributions or gains. If the fund were to
invest in a PFIC and elected to treat the PFIC as a
"qualified electing fund" under the Code, in lieu of
the foregoing requirements, the fund might be required
to include in income each year a portion of the
ordinary earnings and net capital gains of the
qualified electing fund, even if not distributed to
the fund, and such amounts would be subject to the 90%
and excise tax distribution requirements described
above. In order to make this election, the fund would
be required to obtain certain annual information from
the passive foreign investment companies in which it
invests, which may be difficult or not possible to
obtain.

Alternatively, the fund may make a mark-to-market
election that would result in the fund being treated
as if it had sold and repurchased all of the PFIC
stock at the end of each year. In this case, the fund
would report gains as ordinary income and would deduct
losses as ordinary losses to the extent of previously
recognized gains. The election, once made, would be
effective for all subsequent taxable years of the
fund, unless revoked with the consent of the IRS. By
making the election, the fund could potentially
ameliorate the adverse tax consequences with respect
to its ownership of shares in a PFIC, but in any
particular year may be required to recognize income in
excess of the distributions it receives from PFICs and
its proceeds from dispositions of PFIC stock. The
fund may have to distribute this "phantom" income and
gain to satisfy its distribution requirement and to
avoid imposition of the 4% excise tax. The fund will
make the appropriate tax elections, if possible, and
take any additional steps that are necessary to
mitigate the effect of these rules.

Taxation of United States Shareholders

Dividends and Distributions. Any dividend declared by
the fund in October, November or December of any
calendar year and payable to shareholders of record on
a specified date in such a month shall be deemed to
have been received by each shareholder on December 31
of such calendar year and to have been paid by the
fund not later than such December 31, provided such
dividend is actually paid by the fund during January
of the following calendar year. The fund intends to
distribute annually to its shareholders substantially
all of its investment company taxable income, and any
net realized long-term capital gains in excess of net
realized short-term capital losses (including any
capital loss carryovers). The fund currently expects
to distribute any excess annually to its shareholders.
However, if the fund retains for investment an amount
equal to all or a portion of its net long-term capital
gains in excess of its net short-term capital losses
and capital loss carryovers, it will be subject to a
corporate tax (currently at a rate of 35%) on the
amount retained. In that event, the fund will
designate such retained amounts as undistributed
capital gains in a notice to its shareholders who (a)
will be required to include in income for United
Stares federal income tax purposes, as long-term
capital gains, their proportionate shares of the
undistributed amount, (b) will be entitled to credit
their proportionate shares of the 35% tax paid by the
fund on the undistributed amount against their United
States federal income tax liabilities, if any, and to
claim refunds to the extent their credits exceed their
liabilities, if any, and (c) will be entitled to
increase their tax basis, for United States federal
income tax purposes, in their shares by an amount
equal to 65% of the amount of undistributed capital
gains included in the shareholder's income.
Organizations or persons not subject to federal income
tax on such capital gains will be entitled to a refund
of their pro rata share of such taxes paid by the fund
upon filing appropriate returns or claims for refund
with the Internal Revenue Service (the "IRS").

Dividends of net investment income and distributions
of net realized short-term capital gains are taxable
to a United States shareholder as ordinary income,
whether paid in cash or in shares. Distributions of
net-long-term capital gains, if any, that the fund
designates as capital gains dividends are taxable as
long-term capital gains, whether paid in cash or in
shares and regardless of how long a shareholder has
held shares of the fund. Dividends and distributions
paid by the fund attributable to dividends on stock of
U.S. corporations received by the fund, with respect
to which the fund meets certain holding period
requirements, will be eligible for the deduction for
dividends received by corporations. Distributions in
excess of the fund's current and accumulated earnings
and profits will, as to each shareholder, be treated
as a tax-free return of capital to the extent of a
shareholder's basis in his shares of the fund, and as
a capital gain thereafter (if the shareholder holds
his shares of the fund as capital assets).

Shareholders receiving dividends or distributions in
the form of additional shares should be treated for
United States federal income tax purposes as receiving
a distribution in the amount equal to the amount of
money that the shareholders receiving cash dividends
or distributions will receive, and should have a cost
basis in the shares received equal to such amount.

Investors considering buying shares just prior to a
dividend or capital gain distribution should be aware
that, although the price of shares just purchased at
that time may reflect the amount of the forthcoming
distribution, such dividend or distribution may
nevertheless be taxable to them. If the fund is the
holder of record of any stock on the record date for
any dividends payable with respect to such stock, such
dividends are included in the fund's gross income not
as of the date received but as of the later of (a) the
date such stock became ex-dividend with respect to
such dividends (i.e., the date on which a buyer of the
stock would not be entitled to receive the declared,
but unpaid, dividends) or (b) the date the fund
acquired such stock. Accordingly, in order to satisfy
its income distribution requirements, the fund 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.

Sales of Shares. Upon the sale or exchange of his
shares, a shareholder will realize a taxable gain or
loss equal to the difference between the amount
realized and his basis in such shares. Such gain or
loss will be treated as capital gain or loss, if the
shares are capital assets in the shareholder's hands,
and will be long-term capital gain or loss if the
shares are held for more than one year and short-term
capital gain or loss if the shares are held for one
year or less. Any loss realized on a sale or exchange
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 fund, within a 61-day period
beginning 30 days before and ending 30 days after the
disposition of the shares. In such a case, the basis
of the shares acquired will be increased to reflect
the disallowed loss. Any loss realized by a
shareholder on the sale of a fund share held by the
shareholder for six months or less will be treated for
United States federal income tax purposes as a long-
term capital loss to the extent of any distributions
or deemed distributions of long-term capital gains
received by the shareholder with respect to such
share. If a shareholder incurs a sales charge in
acquiring shares of the fund, disposes of those shares
within 90 days and then acquires shares in a mutual
fund for which the otherwise applicable sales charge
is reduced by reason of a reinvestment right (e.g., an
exchange privilege), the original sales charge will
not be taken into account in computing gain/loss on
the original shares to the extent the subsequent sales
charge is reduced. Instead, the disregarded portion
of the original sales charge will be added to the tax
basis in the newly acquired shares. Furthermore, the
same rule also applies to a disposition of the newly
acquired shares made within 90 days of the second
acquisition. This provision prevents a shareholder
from immediately deducting the sales charge by
shifting his or her investment in a family of mutual
funds.

Backup Withholding. The fund may be required to
withhold, for United States federal income tax
purposes, 31% of the dividends, distributions and
redemption proceeds payable to shareholders who fail
to provide the fund with their correct taxpayer
identification number or to make required
certifications, or who have been notified by the IRS
that they are subject to backup withholding. Certain
shareholders are exempt from backup withholding.
Backup withholding is not an additional tax and any
amount withheld may be credited against a
shareholder's United States federal income tax
liabilities.

Notices. Shareholders will be notified annually by
the fund as to the United States federal income tax
status of the dividends, distributions and deemed
distributions attributable to undistributed capital
gains (discussed above in "Taxes- Taxation of United
States Shareholders - Dividends and Distributions")
made by the fund to its shareholders. Furthermore,
shareholders will also receive, if appropriate,
various written notices after the close of the fund's
taxable year regarding the United States federal
income tax status of certain dividends, distributions
and deemed distributions that were paid (or that are
treated as having been paid) by the fund to its
shareholders during the preceding taxable year.

Other Taxation

Distributions also may be subject to additional state,
local and foreign taxes depending on each
shareholder's particular situation.

The foregoing is only a summary of certain material
tax consequences affecting the fund and its
shareholders. Shareholders are advised to consult
their own tax advisers with respect to the particular
tax consequences to them of an investment in the fund.

ADDITIONAL INFORMATION

The trust was organized on October 17, 1991 under the
laws of the Commonwealth of Massachusetts and is a
business entity commonly known as a "Massachusetts
business trust." The trust offers shares of
beneficial interest of seven separate funds with a par
value of $.001 per share. The fund offers shares of
beneficial interest currently classified into two
Classes - Smith Barney Shares and Citi Shares. Each
Class of the fund represents an identical interest in
the fund's investment portfolio. As a result, the
Classes have the same rights, privileges and
preferences, except with respect to: (a) the
designation of each Class; (b) the service fees borne
by the Smith Barney Share Class pursuant to the Plan;
(c) the expenses allocable exclusively to each Class;
(d) voting rights on matters exclusively affecting a
single Class; and (e) the exchange privilege of each
Class. The trust's board of trustees does not
anticipate that there will be any conflicts among the
interests of the holders of the fund's two Classes.
The trustees, on an ongoing basis, will consider
whether any such conflict exists and, if so, take
appropriate action.

Under Massachusetts's law, shareholders could, under
certain circumstances, be held personally liable for
the obligations of the fund. The Master Trust
Agreement disclaims shareholder liability for acts or
obligations of the fund, however, and requires that
notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by
the fund or a trustee. The Master Trust Agreement
provides for indemnification from fund property for
all losses and expenses of any shareholder held
personally liable for the obligations of the fund.
Thus, the risk of a shareholder's incurring financial
loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable
to meet its obligations, a possibility which
management of the fund believes is remote. Upon
payment of any liability incurred by the fund, a
shareholder paying such liability will be entitled to
reimbursement from the general assets of the fund.
The trustees intend to conduct the operation of the
fund in such a way so as to avoid, as far as possible,
ultimate liability of the shareholders for liabilities
of the fund.

The Master Trust Agreement of the fund permits the
trustees of the fund to issue an unlimited number of
full and fractional shares of a single Class and to
divide or combine the shares into a greater or lesser
number of shares without thereby changing the
proportionate beneficial interests in the fund. Each
share in the fund represents an equal proportional
interest in the fund with each other share.
Shareholders of the fund are entitled upon its
liquidation to share pro rata in its net assets
available for distribution. No shareholder of the
fund has any preemptive or conversion rights. Shares
of the fund are fully paid and non-assessable.

Pursuant to the Master Trust Agreement, the fund's
trustees may authorize the creation of additional
series of shares (the proceeds of which would be
invested in separate, independently managed
portfolios) and additional classes of shares within
any series (which would be used to distinguish among
the rights of different categories of shareholders, as
might be required by future regulations or other
unforeseen circumstances).

The fund does not hold annual shareholder meetings.
There normally will be no meetings of shareholders for
the purpose of electing trustees unless and until such
time as less than a majority of the trustees holding
office have been elected by shareholders, at which
time the trustees then in office will call a
shareholders' meeting for the election of trustees.
Shareholders of record of no less than two-thirds of
the outstanding shares of the trust may remove a
trustee through a declaration in writing or by vote
cast in person or by proxy at a meeting called for
that purpose. The trustees will call a meeting for
any purpose upon written request of shareholders
holding at least 10% of the trust's outstanding shares
and the trust will assist shareholders in calling such
a meeting as required by the 1940 Act.

When matters are submitted for shareholder vote,
shareholders of each Class will have one vote for each
full share owned and a proportionate, fractional vote
for any fractional share held of that Class.
Generally, shares of the fund will be voted on a fund-
wide basis on all matters except matters affecting
only the interests of one Class, in which case only
shares of the affected would be entitled to vote.

The trust was organized as an unincorporated
Massachusetts business trust on October 17, 1991 under
the name Shearson Lehman Brothers Intermediate-Term
Trust. On October 14, 1994 and August 16, 1995, the
trust's name was changed Smith Barney Income Trust and
Smith Barney Investment Trust, respectively.

Annual and Semi-annual Reports. The fund sends its
shareholders a semi-annual report and an audited
annual report, which include listings of investment
securities held by the fund at the end of the period
covered. In an effort to reduce the fund's printing
and mailing costs, the fund consolidates the mailing
of its semi-annual and annual reports by household.
This consolidation means that a household having
multiple accounts with the identical address of record
will receive a single copy of each report. In
addition, the fund also consolidates the mailing of
its prospectus so that a shareholder having multiple
accounts (that is, individual, IRA and/or Self-
Employed Retirement Plan accounts) will receive a
single Prospectus annually. Shareholders who do not
want this consolidation to apply to their accounts
should contact their Salomon Smith Barney Financial
Consultant or the transfer agent.

FINANCIAL STATEMENTS

The fund's annual report for the fiscal year ended
November 30, 1999 and for the period from December 1,
1999 to December 31, 1999, which reflects a change in
the fiscal year end of the fund, is incorporated
herein by reference in its entirety. The annual
report for the year ended November 30, 1999 was filed
on February 15, 2000, Accession Number 91155-00-
000110. The annual report for the year ended December
31, 1999 was filed on March 2, 2000, Accession Number
91155-00-000172.

Styles of Fund Management: In an industry where the
average portfolio manager has seven years of
experience (source: ICI, 1998), the portfolio managers
of Smith Barney mutual funds average 21 years in the
industry and 15 years with the firm.

Smith Barney mutual funds offers more than 60 mutual
funds. We understand that many investors prefer an
active role in allocating the mix of funds in their
portfolio, while others want the asset allocation
decisions to be made by experienced managers.

That's why we offer four "styles" of fund management
that can be tailored to suit each investor's unique
financial goals.

Style Pure Series - Our style Pure Series funds stay
fully invested within their asset class and investment
style, enabling investors to make asset allocation
decisions in conjunction with their Salomon Smith
Barney Financial Consultant or Service Agent.

Classic Investor Series - Our Classic Investor Series
funds offer a range of equity and fixed income
strategies that seek to capture opportunities across
asset classes and investment styles using disciplined
investment approaches.

The Concert Allocation Series - As a fund of funds,
investors can select a Concert Portfolio that may help
their investment needs. As needs change, investors
can easily choose another long-term, diversified
investment from our Concert family.

Special Discipline Series - Our Special Discipline
Series funds are designed for investors who are
looking beyond more traditional market categories:
from natural resources to a roster of state-specific
municipal funds.

SMITH BARNEY
INVESTMENT TRUST

S&P 500 Index Fund

April 28, 2000
(as amended September 5,
2000)

SMITH BARNEY INVESTMENT TRUST
388 Greenwich Street
New York, NY 10013

SALOMON SMITH BARNEY
A Member of Citigroup [Symbol]

April 28, 2000
(as amended September 5, 2000)
STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY INVESTMENT TRUST

Smith Barney U.S. 5000 Index Fund
Smith Barney International Index Fund

388 Greenwich Street
New York, New York 10013
(800) 451-2010

Smith Barney U.S. 5000 Index Fund (the "U.S. 5000
Index Fund") and the Smith Barney International Index
Fund (the "International Index Fund") (each a "fund"
and collectively, the "funds") are each a separate
investment series of Smith Barney Investment Trust
(the "trust"), an open-end management investment
company. The trust offers two classes of shares of
each fund - Smith Barney Index Shares and Citi Index
Shares. This Statement of Additional Information
("SAI") is meant to be read in conjunction with the
prospectus dated April 28, 2000 by which the Smith
Barney Index Shares of the funds are offered, or the
prospectus dated September 5, 2000 by which the Citi
Shares of the funds are offered, and is incorporated
by reference in its entirety into the prospectuses.
Additional information about each fund's investments
is available in the fund's annual and semi-annual
reports to shareholders, which are incorporated herein
by reference. Please call 1-800-451-2020 toll free to
obtain a prospectus for the Smith Barney Index Shares.
Please call 1-800-995-0134 toll free to obtain a
prospectus for the Citi Index Shares.

TABLE OF CONTENTS

Investment Objective and Management
Policies................................................ 2
Portfolio Securities........................................ 9
Investment Restrictions of the
Fund.............................................................. 27
Risk Considerations.............................................. 33
Trustees of the Trust and Executive Officers of the
Fund..................................... 35
Investment Management and Other
Services.................................................... 37
Portfolio Transactions and
Turnover............................................................. 42
Purchase of Shares.................................................. 43
Redemption of Shares.................................................. 46
Exchange Privilege.................................................... 48
Valuation of
Shares................................................................ 49
Performance
Data........................................................ 50
Dividends, Distributions and
Taxes............................................................... 53
Additional
Information............................................................... 58
Financial
Statements................................................................ 61
Other
Information................................................. 61

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES tc
"INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES"

General

The prospectus discusses the funds' investment
objective and policies. On September 5, the Class A
Shares and Class D Shares of the U.S. 5000 Index Fund
were renamed Smith Barney U.S 5000 Index Shares
("Smith Barney Shares") and Citi U.S. 5000 Index
Shares ("Citi Index Shares"), respectively. The Class
A Shares and Class D Shares of the International Index
Fund were renamed Smith Barney International Index
Shares ("Smith Barney Shares") and Citi International
Index Shares ("Citi Index Shares"), respectively.
Effective September 5, 2000, the EAFE Index Fund was
renamed Smith Barney International Index Fund.

In order to take advantage of the economies of scale
offered by a larger pool of assets, each fund is
structured as a "feeder" fund. A feeder fund seeks to
achieve its investment objective by investing its
assets in a "Master Portfolio" managed by Barclays
Global Fund Advisors, N.A. ("BGFA"). The Master
Portfolio invests substantially all of its assets in
securities in accordance with investment objectives,
policies, and limitations that are substantially
similar to those of the fund. In other words, the
fund "feeds" shareholder investments into its
corresponding Master Portfolio.

The prospectus discusses each fund's and each Master
Portfolio's investment objective and policies. This
section contains supplemental information concerning
the types of securities and other instruments in which
each fund and each Master Portfolio may invest, the
investment policies and portfolio strategies each fund
and each Master Portfolio may utilize and certain
risks associated with these investments, policies and
strategies. SSB Citi Fund Management LLC ("SSB Citi"
or the "administrator") serves as the fund's
administrator.

Master Investment Portfolio ("MIP") is an open-end,
management investment company, organized on October
21, 1993 as a business trust under the laws of the
State of Delaware. MIP is a "series fund," which is a
mutual fund divided into separate portfolios. The
U.S. Equity Index Master Portfolio and the
International Index Portfolio are diversified
portfolios of MIP. Each Master Portfolio is treated
as a separate entity for certain matters under the
Investment Company Act of 1940, as amended (the "1940
Act"), and for other purposes, and an interestholder
of the Master Portfolio is not deemed to be an
interestholder of any other portfolio of MIP.

Beneficial interests in the Master Portfolios are
issued solely in private placement transactions which
do not involve any "public offering" within the
meaning of Regulation D under the Securities Act of
1933, as amended (the "1933 Act"). Investments in the
Master Portfolios may be made only by investment
companies or certain other entities, which are
"accredited investors" within the meaning of
Regulation D under the 1933 Act. Investment companies
that hold units of beneficial interest ("interests")
in the Master Portfolios are sometimes referred to
herein as "feeder funds."

Master/Feeder Fund Structure

Unlike mutual funds that directly acquire and managed
their own portfolio of securities, each fund is a
"feeder" fund in a "master/feeder" structure. This
means that each fund invests in a larger "master"
portfolio of securities that has investment objectives
and policies substantially identical to those of that
fund. The investment performance of each fund depends
on the investment performance of its Master Portfolio.
If the investment policies of the fund and the Master
Portfolio become inconsistent, the board of trustees
of the fund can decide what actions to take. Actions
the board of trustees may recommend include withdrawal
of the fund's assets from the Master Portfolio. The
board of trustees would then consider whether it
should hire its own investment adviser, invest in a
different master portfolio, or take other action.

The U.S. 5000 Index Fund seeks to offer long-term
capital growth by approximating the performance,
before expenses, of the Wilshire 5000 Index.

The U.S. 5000 Index Fund's Master Portfolio, the U.S.
Equity Index Master Portfolio, invests substantially
all of its assets in two other Master Portfolios of
BGFA. One of these Master Portfolios invests
substantially all of its assets in a representative
sample of stocks comprising the Wilshire 4500 Index
(the "Extended Index Portfolio"). The other Master
Portfolio invests substantially all of it assets in
stocks comprising the S&P 500 Index (the "S&P 500
Index Portfolio") (together, the "Underlying
Portfolios"). The Master Portfolio's assets will be
invested in the Underlying Portfolios in proportions
adjusted periodically to maintain the capitalization
range of the Wilshire 5000 Index.

The International Index Fund seeks to offer long-term
capital growth and diversification by approximating
the performance, before expenses, of the Morgan
Stanley Capital International Europe, Australia, and
Far East Free Index (the " EAFE Index").

Because it can be very expensive to buy and sell all
of the securities in a target benchmark, the Master
Portfolio employs "sampling" techniques to approximate
benchmark characteristics such as capitalization and
industry weight using fewer securities than contained
in the benchmark. Therefore, the performance of the
Master Portfolio versus its benchmark can be expected
to deviate more than that of funds investing in all of
the securities contained in a benchmark.

The International Index Fund and the International
Index Master Portfolio maintain equity exposure for
cash balances by purchasing appropriate futures
contracts. Futures contracts are not used for
leverage. The International Index Fund and the
International Index Master Portfolio seek to remain
fully invested at all times, without significant cash
balances.

INVESTMENT OBJECTIVE-U.S. Equity Index Master
Portfolio.

? The U.S. Equity Index Master Portfolio
seeks to match as closely as practicable,
before fees and expenses, the performance
of the Wilshire 5000 Equity Index (the
"Wilshire 5000 Index"). The U.S. Equity
Index Master Portfolio uses a "fund of
funds" structure to track the Wilshire
5000 Index, which is comprised of the
stocks in the Standard & Poor's 500 Stock
Index ("S&P 500 Index"), except for a
small number of foreign stocks that
represent approximately 3% of the S&P 500
Index, and the stocks in the Wilshire 4500
Equity Index (the "Wilshire 4500 Index").
In this regard, the U.S. Equity Index
Master Portfolio seeks to achieve its
objective by investing substantially all
of its assets in two other portfolios of
MIP-the Extended Index Portfolio (which
invests substantially all of its assets in
a representative sample of stocks
comprising the Wilshire 4500 Index) and
the S&P 500 Index Portfolio (which invests
substantially all of its assets in stocks
comprising the S&P 500 Index). The U.S.
Equity Index Master Portfolio's assets
will be invested in the Underlying
Portfolios of MIP in proportions adjusted
periodically to maintain the
capitalization range of the Wilshire 5000
Index. The performance of the U.S. Equity
Index Master Portfolio will correspond
directly to the performance of the
Underlying Portfolios. The Master
Portfolio and the fund may not track the
corresponding index perfectly, as
differences between the index and the
Master Portfolio's Underlying Portfolios
may cause differences in performance. The
U.S. Equity Index Master Portfolio's
investment objective can be changed by
MIP's board of trustees without
interestholder approval. The objective
and policies of the Master Portfolio
determine the types of portfolio
securities in which it invests, the degree
of risk to which it is subject and,
ultimately, its performance. There can be
no assurance that the Master Portfolio's
investment objective will be achieved.

INVESTMENT OBJECTIVES-Underlying Portfolios

? The S&P 500 Index Portfolio seeks to
provide investment results, before fees
and expenses, that correspond to the total
return performance of publicly traded
common stocks in the aggregate, as
represented by the Standard & Poor's 500
Stock Index.

? The Extended Index Portfolio seeks to
approximate, before fees and expenses, the
capitalization range and performance of
the Wilshire 4500 Index.

ABOUT THE INDICES The Wilshire 5000 Index was created
December 31, 1980. It measures the performance of all
U.S. headquartered equity securities with readily
available price data. Over 7,000 capitalization
weighted security returns are used to adjust the
index.

? The Wilshire 4500 Index was created
December 31, 1983. It is the Wilshire
5000 Index with most of the companies in
the S&P 500 Index removed. Over 6,500
capitalization weighted security returns
are used to adjust the index.

? The S&P 500 Index was created March 5,
1957. It is composed of 500 selected
common stocks, most of which are listed on
the NYSE.

The securities comprising the S&P 500 Index represent
the stocks of primarily large-cap companies. The
securities comprising the Wilshire 4500 Index
represent the smaller- and medium-sized companies of
the Wilshire 5000 Index. In order for the U.S. Equity
Index Master Portfolio to maintain a capitalization
weighted representative sample of the Wilshire 5000
Index, it will invest in the Underlying Portfolios in
proportion to the overall capitalization of their
respective indices. Based on their relative overall
capitalizations as of the date of this SAI, roughly
two thirds of the U.S. Equity Index Master Portfolio's
portfolio will be invested in the S&P 500 Index
Portfolio and the other third in the Extended Index
Portfolio. Historically, the overall capitalization
of the indices have varied, and as a result, the U.S.
Equity Index Master Portfolio's portfolio is also
likely to vary.

INVESTMENT POLICIES- U.S. Equity Index Master
Portfolio.

? The U.S. Equity Index Master Portfolio
seeks to match the total return
performance of the Wilshire 5000 Index,
which is composed of over 7,000 selected
common stocks traded on the New York Stock
Exchange, American Stock Exchange and
Nasdaq Stock Market. The weightings of
stocks in the Wilshire 5000 Index are
based on each stock's relative total
market capitalization; that is, its market
price per share times the number of shares
outstanding. The percentage of the U.S.
Equity Index Master Portfolio's assets
invested in the Underlying Portfolios is
approximately the same as the percentage
such Portfolios are invested in stocks
represented in the Wilshire 5000 Index.
Securities are selected for investment by
the Underlying Portfolios as indicated
below.

INVESTMENT POLICIES - Underlying Portfolios.

? The Extended Index Portfolio seeks to
match the total return performance of U.S.
stocks, excluding the large-cap stocks
included in the S&P 500 Index. The fund
defines these stocks as those comprising
the Wilshire 4500 Index, which is composed
of over 6,500 equity stocks of issuers
headquartered in the United States. The
Index is almost entirely comprised of
common stocks listed on the New York Stock
Exchange, American Stock Exchange or
Nasdaq Stock Market. The weightings of
stocks in the Wilshire 4500 Index are
based on each stock's relative total
market capitalization, that is, its market
price per share times the number of shares
outstanding. The Extended Index Portfolio
invests in a representative sample of
these securities. Securities are selected
for investment by the Extended Index
Portfolio in accordance with their
capitalization, industry sector and
valuation, among other factors.

? The S&P 500 Index Portfolio seeks to match
the total return performance of the S&P
500 Index, which is composed of 500
selected common stocks, most of which are
listed on the New York Stock Exchange.
The weightings of stocks in the S&P 500
Index are based on each stock's relative
total market capitalization; that is, its
market price per share times the number of
shares outstanding. The percentage of the
S&P 500 Index Portfolio's assets invested
in a given stock is approximately the same
as the percentage such stock represents in
the S&P 500 Index

Unlike the Extended Index Portfolio, which invests in
a representative sample of the over 6,500 stocks
represented by its benchmark, the Wilshire 4500 Index,
the S&P 500 Index Portfolio invests in all 500 of the
stocks represented by its benchmark, the S&P 500
Index.

No attempt is made to manage the portfolio of the U.S.
Equity Index Master Portfolio using economic,
financial or market analysis. The U.S. Equity Index
Master Portfolio is managed by determining which
proportion of its assets will be invested in each
Underlying Portfolio to match, to the extent feasible,
the capitalization range and returns of the Wilshire
5000 Index. The Underlying Portfolios determine which
securities are to be purchased or sold to match or
sample their respective benchmarks. Under normal
market conditions, at least 90% of the value of the
U.S. Equity Index Master Portfolio's total assets is
invested, through the Underlying Portfolios, in
securities comprising the Wilshire 5000 Index. The
U.S. Equity Index Master Portfolio's ability to match
its investment performance to the investment
performance of the Wilshire 5000 Index may be affected
by, among other things, the U.S. Equity Index Master
Portfolio's and Underlying Portfolios' expenses, the
amount of cash and cash equivalents held by the U.S.
Equity Index Master Portfolio and the Underlying
Portfolios, the manner in which the total returns of
the Wilshire 5000 Index, the Wilshire 4500 Index and
the S&P 500 Index are calculated; the size of the U.S.
Equity Index Master Portfolio's investment portfolio;
and the timing, frequency and size of shareholder
purchases and redemptions.

The Underlying Portfolios use cash flows from
interestholder purchase and redemption activity to
maintain, to the extent feasible, the similarity of
their portfolio to the securities comprising their
respective benchmarks. The U.S. Equity Index Master
Portfolio uses cash flows from its interestholder
purchase and redemption activity to periodically
adjust its investment in the Underlying Portfolios to
maintain, to the extent feasible, the similarity of
its capitalization range and returns to those of the
securities comprising the Wilshire 5000 Index. BGFA
regularly monitors the U.S. Equity Index Master
Portfolio's correlation to the Wilshire 5000 Index and
adjusts the U.S. Equity Index Master Portfolio's
investment in the Underlying Portfolios to the extent
necessary. Inclusion of a security in an Index in no
way implies an opinion by the sponsor of the Index as
to its attractiveness as an investment.

The sampling techniques utilized by the U.S. Equity
Index Master Portfolio and the Extended Index
Portfolio are designed to allow said portfolios to
substantially duplicate the investment performance of
their respective benchmarks. However, the U.S. Equity
Index Master Portfolio is not expected to track the
Wilshire 5000 Index with the same degree of accuracy
that complete replication of such Index would provide.
In addition, at times, the portfolio composition of
the U.S. Equity Index Master Portfolio may be altered
(or "rebalanced") to reflect changes in the
characteristics of the Wilshire 5000 Index, primarily
by adjusting the U.S. Equity Index Master Portfolio's
investment in the Underlying Portfolios. The S&P 500
Index seeks to replicate completely the investments
and capitalization range of the S&P 500 Index

The investment policies, strategies, techniques and
restrictions employed by the U.S. Equity Index Master
Portfolio in pursuing its investment objective vis-a
vis the Wilshire 5000 Index are substantially similar
to those employed by the Underlying Portfolios in
pursuing their respective investment objectives vis-a
vis their respective benchmarks. Unless otherwise
indicated, references to the investment policies,
strategies, techniques and restrictions of the U.S.
Equity Index Master Portfolio also are references to
the investment policies, strategies, techniques and
restrictions of the Underlying Portfolios in which the
U.S. Equity Index Master Portfolio invests
substantially all of its assets.

In seeking to match the performance of the Wilshire
5000 Index, the U.S. Equity Index Master Portfolio
also may engage in futures and options transactions
and other derivative securities transactions and lend
its portfolio securities, each of which involves risk.
The U.S. Equity Index Master Portfolio attempts to be
fully invested at all times in securities comprising
the Wilshire 5000 Index and in futures contracts and
options on futures contracts, although the U.S. Equity
Index Master Portfolio may invest up to 10% of its
assets in high-quality money market instruments to
provide liquidity. The U.S. Equity Index Master
Portfolio also may invest up to 15% of the value of
its net assets in illiquid securities, including
repurchase agreements providing for settlement in more
than seven days.

INVESTMENT OBJECTIVE - International Index Master
Portfolio

? The International Index Master Portfolio
seeks to match as closely as practicable,
before fees and expenses, the performance of
an international portfolio of common stocks
represented by the Morgan Stanley Capital
International Europe, Australia, Far East
Free Index (the "EAFE Free Index").

The International Index Master Portfolio's investment
objective can be changed by MIP's board of trustees
without interestholder approval. The objective and
policies of the Master Portfolio determines the types
of portfolio securities in which it invests, the
degree of risk to which it is subject and, ultimately,
its performance. There can be no assurance that the
Master Portfolio's investment objective will be
achieved.

PRINCIPAL STRATEGIES - International Index Master
Portfolio

? The International Index Master Portfolio seeks to
match the total return performance of foreign stock
markets by investing in common stocks included in
the EAFE Free Index. The EAFE Free Index is a
capitalization-weighted index that currently
includes stocks of companies located in 15 European
countries (Austria, Belgium, Denmark, Finland,
France, Germany, Ireland, Italy, the Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland and
the United Kingdom), Australia, New Zealand, Hong
Kong, Japan and Singapore The EAFE Free Index
broadly represents the performance of foreign stock
markets. The weightings of stocks in the EAFE Free
Index are based on each stock's relative total
market capitalization, that is, its market price
per share times the number of shares outstanding.
The Master Portfolio invests in a representative
sample of these securities. Securities are
selected for investment by the Master Portfolio in
accordance with their capitalization, industry
sector and valuation, among other factors.

No attempt is made to manage the portfolio of the
Master Portfolio using economic, financial and market
analysis. The Master Portfolio is managed by
determining which securities are to be purchased or
sold to match, to the extent feasible, the
capitalization range and returns of the EAFE Free
Index. Under normal market conditions, at least 90%
of the value of the Master Portfolio's total assets is
invested in securities comprising the EAFE Free Index.
The Master Portfolio attempts to achieve, in both
rising and falling markets, a correlation of at least
95% between the total return of its net assets before
expenses and the total return of the EAFE Free Index.
The Master Portfolio's ability to match its investment
performance to the investment performance of the EAFE
Free Index may be affected by, among other things: the
Master Portfolio's expenses; the amount of cash and
cash equivalents held by the Master Portfolio; the
manner in which the total return of the EAFE Free
Index is calculated; the size of the Master
Portfolio's investment portfolio; and the timing,
frequency and size of interestholder purchases and
redemptions. The Master Portfolio uses cash flows
from interestholder purchase and redemption activity
to maintain, to the extent feasible, the similarity of
its capitalization range and returns to those of the
securities comprising the EAFE Free Index. BGFA
regularly monitors the Master Portfolio's correlation
to the EAFE Free Index and adjusts the Master
Portfolio's portfolio to the extent necessary.
Inclusion of a security in the EAFE Free Index in no
way implies an opinion by MSCI as to its
attractiveness as an investment.

BGFA may use statistical sampling techniques to
attempt to replicate the returns of the EAFE Free
Index using a smaller number of securities.
Statistical sampling techniques attempt to match the
investment characteristics of the index and the fund
by taking into account such factors as capitalization,
industry exposures, dividend yield, price/earnings
ratio, price/book ratio, earnings growth, country
weightings and the effect of foreign taxes. The
sampling techniques utilized by the Master Portfolio
are designed to allow the Master Portfolio to
substantially duplicate the investment performance of
the EAFE Free Index. However, the Master Portfolio is
not expected to track the EAFE Free Index with the
same degree of accuracy that complete replication of
such Index would provide. In addition, at times, the
portfolio composition of the Master Portfolio may be
altered (or "rebalanced") to reflect changes in the
characteristics of the EAFE Free Index.

In seeking to match the performance of the EAFE Free
Index, the Master Portfolio also may engage in futures
and options transactions and other derivative
securities transactions and lend its portfolio
securities, each of which involves risk. The Master
Portfolio attempts to be fully invested at all times
in securities comprising the EAFE Free Index and in
futures contracts and options on futures contracts,
although the Master Portfolio may invest up to 10% of
its assets in high-quality money market instruments to
provide liquidity. The Master Portfolio may invest up
to 15% of the value of its net assets in illiquid
securities, including repurchase agreements providing
for settlement in more than seven days.

PORTFOLIO SECURITIES

U.S. Equity Index Master Portfolio

The U.S. Equity Index Master Portfolio may invest in
the securities described below.

The investment policies, strategies, techniques and
restrictions employed by the Master Portfolio in
pursuing its investment objective vis-a-vis the
Wilshire 5000 Index are substantially similar to those
employed by the Underlying Portfolios in pursuing
their respective investment objectives vis-a-vis their
respective benchmarks. Unless otherwise indicated,
references to the investment policies, strategies,
techniques and restrictions of the U.S Equity Index
Master Portfolio also are references to the investment
policies, strategies, techniques and restrictions of
the Underlying Portfolios in which the U.S, Equity
Index Master Portfolio invests substantially all of
its assets.

Futures Contracts and Options Transactions-The U.S.
Equity Index Master Portfolio may use futures as a
substitute for a comparable market position in the
underlying securities.

A futures contract is an agreement between two
parties, a buyer and a seller, to exchange a
particular commodity or financial statement at a
specific price on a specific date in the future. An
option transaction generally involves a right, which
may or may not be exercised, to buy or sell a
commodity or financial instrument at a particular
price on a specified future date. Futures contracts
and options are standardized and traded on exchanges,
where the exchange serves as the ultimate counterparty
for all contracts. Consequently, the primary credit
risk on futures contracts is the creditworthiness of
the exchange. Futures contracts are subject to market
risk (i.e., exposure to adverse price changes).

Although the U.S. Equity Index Master Portfolio
intends to purchase or sell futures contracts only if
there is an active market for such contracts, no
assurance can be given that a liquid market will exist
for any particular contract at any particular time.
Many futures exchanges and boards of trade limit the
amount of fluctuation permitted in futures contract
prices during a single trading day. Once the daily
limit has been reached in a particular contract, no
trades may be made that day at a price beyond that
limit or trading may be suspended for specified
periods during the trading day. Futures contract
prices could move to the limit for several consecutive
trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and
potentially subjecting the U.S. Equity Index Master
Portfolio to substantial losses. If it is not
possible, or if the U.S. Equity Index Master Portfolio
determines not to close a futures position in
anticipation of adverse price movements, the U.S.
Equity Index Master Portfolio will be required to make
daily cash payments on variation margin.

Stock Index Futures and Options on Stock Index
Futures-The U.S. Equity Index Master Portfolio may
invest in stock index futures and options on stock
index futures as a substitute for a comparable market
position in the underlying securities. A stock index
future obligates the seller to deliver (and the
purchaser to take), effectively, an amount of cash
equal to a specific dollar amount times the difference
between the value of a specific stock index at the
close of the last trading day of the contract and the
price at which the agreement is made. No physical
delivery of the underlying stocks in the index is
made. With respect to stock indices that are
permitted investments, the U.S. Equity Index Master
Portfolio intends to purchase and sell futures
contracts on the stock index for which it can obtain
the best price with consideration also given to
liquidity. There can be no assurance that a liquid
market will exist at the time when the U.S. Equity
Index Master Portfolio seeks to close out a futures
contract or a futures option position. Lack of a
liquid market may prevent liquidation of an
unfavorable position.

Index Swaps-The U.S. Equity Index Master Portfolio may
enter into index swaps in pursuit of its investment
objective. Index swaps involve the exchange by the
U.S. Equity Index Master Portfolio with another party
of cash flows based upon the performance of an index
of securities or a portion of an index of securities
that usually include dividends or income. In each
case, the exchange commitments can involve payments to
be made in the same currency or in different
currencies. The U.S. Equity Index Master Portfolio
will usually enter into swaps on a net basis. In so
doing, the two payment streams are netted out, with
the U.S. Equity Index Master Portfolio receiving or
paying, as the case may be, only the net amount of the
two payments. If the U.S. Equity Index Master
Portfolio enters into a swap, it will maintain a
segregated account on a gross basis, unless the
contract provides for a segregated account on a net
basis. If there is a default by the other party to
such a transaction, the U.S. Equity Index Master
Portfolio will have contractual remedies pursuant to
the agreements related to the transaction.

The use of index swaps is a highly specialized
activity which involves investment techniques and
risks different from those associated with ordinary
portfolio security transactions. There is no limit,
except as provided below, on the amount of swap
transactions that may be entered into by the U.S.
Equity Index Master Portfolio. These transactions
generally do not involve the delivery of securities or
other underlying assets or principal. Accordingly,
the risk of loss with respect to swaps generally is
limited to the net amount of payments that the U.S.
Equity Index Master Portfolio is contractually
obligated to make. There is also a risk of a default
by the other party to a swap, in which case the U.S.
Equity Index Master Portfolio may not receive net
amount of payments that the U.S. Equity Index Master
Portfolio contractually is entitled to receive.

Borrowing Money-As a fundamental policy, the U.S.
Equity Index Master Portfolio is permitted to borrow
to the extent permitted under the 1940 Act. However,
the U.S. Equity Index Master Portfolio currently
intends to borrow money only for temporary or
emergency (not leveraging) purposes, and may borrow up
to one-third of the value of its total assets
(including the amount borrowed) valued at the lesser
of cost or market, less liabilities (not including the
amount borrowed) at the time the borrowing is made.

International Index Master Portfolio

The International Index Master Portfolio may invest in
the securities described below.

Foreign Currency Futures Contracts.

In General. A foreign currency futures contract is an
agreement between two parties for the future delivery
of a specified currency at a specified time and at a
specified price. A "sale" of a futures contract means
the contractual obligation to deliver the currency at
a specified price on a specified date, or to make the
cash settlement called for by the contract. Futures
contracts have been designed by exchanges which have
been designated "contract markets" by the Commodity
Futures Trading Commission ("CFTC") and must be
executed through a brokerage firm, known as a futures
commission merchant, which is a member of the relevant
contract market. Futures contracts trade on these
markets, and the exchanges, through their clearing
organizations, guarantee that the contracts will be
performed as between the clearing members of the
exchange.

While futures contracts based on currencies do provide
for the delivery and acceptance of a particular
currency, such deliveries and acceptances are very
seldom made. Generally, a futures contract is
terminated by entering into an offsetting transaction.
The International Index Master Portfolio will incur
brokerage fees when it purchases and sells futures
contracts. At the time such a purchase or sale is
made, the International Index Master Portfolio must
provide cash or money market securities as a deposit
known as "margin." The initial deposit required will
vary, but may be as low as 2% or less of a contract's
face value. Daily thereafter, the futures contract is
valued through a process known as "marking to market,"
and the International Index Master Portfolio may
receive or be required to pay "variation margin" as
the futures contract becomes more or less valuable.

Purchase and Sale of Currency Futures Contracts. In
order to hedge its portfolio and to protect it against
possible variations in foreign exchange rates pending
the settlement of securities transactions, the
International Index Master Portfolio may buy or sell
currency futures contracts. If a fall in exchange
rates for a particular currency is anticipated, the
International Index Master Portfolio may sell a
currency futures contract as a hedge. If it is
anticipated that exchange rates will rise, the
International Index Master Portfolio may purchase a
currency futures contract to protect against an
increase in the price of securities denominated in a
particular currency the International Index Master
Portfolio intends to purchase. These futures
contracts will be used only as a hedge against
anticipated currency rate changes.

A currency futures contract sale creates an obligation
by the International Index Master Portfolio, as
seller, to deliver the amount of currency called for
in the contract at a specified future time for a
specified price. A currency futures contract purchase
creates an obligation by the International Index
Master Portfolio, as purchaser, to take delivery of an
amount of currency at a specified future time at a
specified price. Although the terms of currency
futures contracts specify actual delivery or receipt,
in most instances the contracts are closed out before
the settlement date without the making or taking of
delivery of the currency. Closing out of a currency
futures contract is effected by entering into an
offsetting purchase or sale transaction.

In connection with transactions in foreign currency
futures, the International Index Master Portfolio will
be required to deposit as "initial margin" an amount
of cash or short-term government securities equal to
from 5% to 8% of the contract amount. Thereafter,
subsequent payments (referred to as "variation
margin") are made to and from the broker to reflect
changes in the value of the futures contract.

Risk Factors Associated with Futures Transactions.
The effective use of futures strategies depends on,
among other things, the International Index Master
Portfolio's ability to terminate futures positions at
times when BGFA deems it desirable to do so. Although
the International Index Master Portfolio will not
enter into a futures position unless BGFA believes
that a liquid secondary market exists for such future,
there is no assurance that the International Index
Master Portfolio will be able to effect closing
transactions at any particular time or at an
acceptable price. The International Index Master
Portfolio generally expects that its futures
transactions will be conducted on recognized US. and
foreign securities and commodity exchanges.

Futures markets can be highly volatile and
transactions of this type carry a high risk of loss.
Moreover, a relatively small adverse market movement
with respect to these transactions may result not only
in loss of the original investment but also in
unquantifiable further loss exceeding any margin
deposited.

The use of futures involves the risk of imperfect
correlation between movements in futures prices and
movements in the price of currencies which are the
subject of the hedge. The successful use of futures
strategies also depends on the ability of BGFA to
correctly forecast interest rate movements, currency
rate movements and general stock market price
movements.

In addition to the foregoing risk factors, the
following sets forth certain information regarding the
potential risks associated with the International
Index Master Portfolio's futures transactions.

Risk of Imperfect Correlation. The International
Index Master Portfolio's ability effectively to hedge
currency risk through transactions in foreign currency
futures depends on the degree to which movements in
the value of the currency underlying such hedging
instrument correlate with movements in the value of
the relevant securities held by the International
Index Master Portfolio. If the values of the
securities being hedged do not move in the same amount
or direction as the underlying currency, the hedging
strategy for the International Index Master Portfolio
might not be successful and the International Index
Master Portfolio could sustain losses on its hedging
transactions which would not be offset by gains on its
portfolio. It is also possible that there may be a
negative correlation between the currency underlying a
futures contract and the portfolio securities being
hedged, which could result in losses both on the
hedging transaction and the portfolio securities. In
such instances, the International Index Master
Portfolio's overall return could be less than if the
hedging transactions had not been undertaken.

Under certain extreme market conditions, it is
possible that the International Index Master Portfolio
will not be able to establish hedging positions, or
that any hedging strategy adopted will be insufficient
to completely protect the International Index Master
Portfolio.

The International Index Master Portfolio will purchase
or sell futures contracts only if, in BGFA's judgment,
there is expected to be a sufficient degree of
correlation between movements in the value of such
instruments and changes in the value of the relevant
portion of the International Index Master Portfolio's
portfolio for the hedge to be effective. There can be
no assurance that BGFA's judgment will be accurate.

Potential Lack of a Liquid Secondary Market. The
ordinary spreads between prices in the cash and
futures markets, due to differences in the natures of
those markets, are subject to distortions. First, all
participants in the futures market are subject to
initial deposit and variation margin requirements.
This could require the International Index Master
Portfolio to post additional cash or cash equivalents
as the value of the position fluctuates. Further,
rather than meeting additional variation margin
requirements, investors may close futures contracts
through offsetting transactions which could distort
the normal relationship between the cash and futures
markets. Second, the liquidity of the futures market
may be lacking. Prior to exercise or expiration, a
futures position may be terminated only by entering
into a closing purchase or sale transaction, which
requires a secondary market on the exchange on which
the position was originally established. While the
International Index Master Portfolio will establish a
futures position only if there appears to be a liquid
secondary market therefor, there can be no assurance
that such a market will exist for any particular
futures contract at any specific time. In such event
it may not be possible to close out a position held by
the International Index Master Portfolio, which could
require the International Index Master Portfolio to
purchase or sell the instrument underlying the
position, make or receive a cash settlement or meet
ongoing variation margin requirements. The inability
to close out futures positions also could have an
adverse impact on the International Index Master
Portfolio's ability effectively to hedge its
securities, or the relevant portion thereof.

The liquidity of a secondary market in a futures
contract may be adversely affected by "daily price
fluctuation limits" established by the exchanges,
which limit the amount of fluctuation in the price of
a contract during a single trading day and prohibit
trading beyond such limits once they have been
reached. The trading of futures contracts also is
subject to the risk of trading halts, suspensions,
exchange or clearing house equipment failures,
government intervention, insolvency of the brokerage
firm or clearing house or other disruptions of normal
trading activity, which could at times make it
difficult or impossible to liquidate existing
positions or to recover excess variation margin
payments.

Trading and Position Limits. Each contract market on
which futures contracts are traded has established a
number of limitations governing the maximum number of
positions which may be held by a trader, whether
acting alone or in concert with others. "Shares"
means the equal proportionate transferable units of
interest into which the beneficial interest of each
Series or Class is divided from time to time
(including whole Shares and fractions of Shares).
BGFA does not believe that these trading and position
limits will have an adverse impact on the hedging
strategies regarding the International Index Master
Portfolio's investments.

Regulations on the Use of Futures Contracts.
Regulations of the CFTC require that the International
Index Master Portfolio enter into transactions in
futures contracts for hedging purposes only, in order
to assure that it is not deemed to be a "commodity
pool" under such regulations. In particular, CFTC
regulations require that all short futures positions
be entered into for the purpose of hedging the value
of investment securities held by the International
Index Master Portfolio, and that all long futures
positions either constitute bona fide hedging
transactions, as defined in such regulations, or have
a total value not in excess of an amount determined by
reference to certain cash and securities positions
maintained for the International Index Master
Portfolio, and accrued profits on such positions. In
addition, the International Index Master Portfolio
may not purchase or sell such instruments if,
immediately thereafter, the sum of the amount of
initial margin deposits on its existing futures
positions and premiums paid for options on futures
contracts would exceed 5% of the market value of the
International Index Master Portfolio's total assets.

When the International Index Master Portfolio
purchases a futures contract, an amount of cash or
cash equivalents or high quality debt securities will
be segregated with the International Index Master
Portfolio's custodian so that the amount so
segregated, plus the initial deposit and variation
margin held in the account of its broker, will at all
times equal the value of the futures contract, thereby
insuring that the use of such futures is unleveraged.

The International Index Master Portfolio's ability to
engage in the hedging transactions described herein
may be limited by the policies and concerns of various
Federal and state regulatory agencies.

BGFA uses a variety of internal risk management
procedures to ensure that derivatives use is
consistent with the International Index Master
Portfolio's investment objective, does not expose the
International Index Master Portfolio to undue risk and
is closely monitored. These procedures include
providing periodic reports to the board of trustees
concerning the use of derivatives.

Foreign Obligations and Securities.

The foreign securities in which the International
Index Master Portfolio may invest include common
stocks, preferred stocks, warrants, convertible
securities and other securities of issuers organized
under the laws of countries other than the United
States. Such securities also include equity interests
in foreign investment funds or trusts, real estate
investment trust securities and any other equity or
equity-related investment whether denominated in
foreign currencies or U.S. dollars.

The International Index Master Portfolio may invest in
foreign securities through American Depository
Receipts ("ADRs"), Canadian Depository Receipts
(''CDRs''), European Depository Receipts ("EDRs"),
International Depository Receipts ("IDRs") and Global
Depository Receipts ("GDRs") or other similar
securities convertible into securities of foreign
issuers. These securities may not necessarily be
denominated in the same currency as the securities
into which they may be converted. ADRs (sponsored or
unsponsored) are receipts typically issued by a U.S.
bank or trust company and traded on a U.S. stock
exchange, and CDRs are receipts typically issued by a
Canadian bank or trust company that evidence ownership
of underlying foreign securities. Issuers of
unsponsored ADRs are not contractually obligated to
disclose material information in the U.S. and,
therefore, such information may not correlate to the
market value of the unsponsored ADR. EDRs and IDRs
are receipts typically issued by European banks and
trust companies, and GDRs are receipts issued by
either a U.S. or non-U.S. banking institution, that
evidence ownership of the underlying foreign
securities. Generally, ADRs in registered form are
designed for use in US. securities markets and EDRs
and IDRs in bearer form are designed primarily for use
in Europe.

For temporary defensive purposes, the International
Index Master Portfolio may invest in fixed income
securities of non-U.S. governmental and private
issuers. Such investments may include bonds, notes,
debentures and other similar debt securities,
including convertible securities.

Investments in foreign obligations involve certain
considerations that are not typically associated with
investing in domestic securities. There may be less
publicly available information about a foreign issuer
than about a domestic issuer. Foreign issuers also
are not generally subject to the same accounting,
auditing and financial reporting standards or
governmental supervision as domestic issuers. In
addition, with respect to certain foreign countries,
taxes may be withheld at the source under foreign tax
laws, and there is a possibility of expropriation or
confiscatory taxation, political, social and monetary
instability or diplomatic developments that could
adversely affect investments in, the liquidity of, and
the ability to enforce contractual obligations with
respect to, securities of issuers located in those
countries.

From time to time, investments in other investment
companies may be the most effective available means by
which the International Index Master Portfolio may
invest in securities of issuers in certain countries.
Investment in such investment companies may involve
the payment of management expenses and, in connection
with some purchases, sales loads, and payment of
substantial premiums above the value of such
companies' portfolio securities. At the same time,
the International Index Master Portfolio would
continue to pay its own management fees and other
expenses.

Investment income on certain foreign securities in
which the International Index Master Portfolio may
invest may be subject to foreign withholding or other
taxes that could reduce the return on these
securities. Tax treaties between the United States
and foreign countries, however, may reduce or
eliminate the amount of foreign taxes to which the
International Index Master Portfolio would be subject.

The International Index Master Portfolio's investments
in foreign securities involve currency risks. The
U.S. dollar value of a foreign security tends to
decrease when the value of the U.S. dollar rises
against the foreign currency in which the security is
denominated, and tends to increase when the value of
the U.S. dollar falls against such currency. To
attempt to minimize risks to the International Index
Master Portfolio from adverse changes in the
relationship between the U.S. dollar and foreign
currencies, the International Index Master Portfolio
may engage in foreign currency transactions on a spot
(i.e., cash) basis and may purchase or sell forward
foreign currency exchange contracts ("forward
contracts"). A forward contract is an obligation to
purchase or sell a specific currency for an agreed
price at a future date that is individually negotiated
and privately traded by currency traders and their
customers. The International Index Master Portfolio
may also purchase and sell foreign currency futures
contracts (see "Purchase and Sale of Currency Futures
Contracts").

Forward contracts establish an exchange rate at a
future date. These contracts are transferable in the
interbank market conducted directly between currency
traders (usually large commercial banks) and their
customers. A forward contract generally has no
deposit requirement and is traded at a net price
without commission. The International Index Master
Portfolio will direct its custodian, to the extent
required by applicable regulations, to segregate high
grade liquid assets in an amount at least equal to its
obligations under each forward contract. Neither spot
transactions nor forward contracts eliminate
fluctuations in the prices of the International Index
Master Portfolio's portfolio securities or in foreign
exchange rates, or prevent loss if the prices of these
securities should decline.

The International Index Master Portfolio may enter
into a forward contract, for example, when it enters
into a contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock
in" the U.S. dollar price of the security (a
"transaction hedge"). In addition, when BGFA believes
that a foreign currency may suffer a substantial
decline against the U.S. dollar, it may enter into a
forward sale contract to sell an amount of that
foreign currency approximating the value of some or
all of the International Index Master Portfolio's
securities denominated in such foreign currency, or
when BGFA believes that the U.S. dollar may suffer a
substantial decline against the foreign currency, it
may enter into a forward purchase contract to buy that
foreign currency for a fixed dollar amount (a
"position hedge').

The International Index Master Portfolio may, in the
alternative, enter into a forward contract to sell a
different foreign currency for a fixed U.S. dollar
amount where BGFA believes that the U.S. dollar value
of the currency to be sold pursuant to the forward
contract will fall whenever there is a decline in the
U.S. dollar value of the currency in which the
portfolio securities are denominated (a "cross-
hedge").

Foreign currency hedging transactions are an attempt
to protect the International Index Master Portfolio
against changes in foreign currency exchange rates
between the trade and settlement dates of specific
securities transactions or changes in foreign currency
exchange rates that would adversely affect a portfolio
position or an anticipated portfolio position.
Although these transactions tend to minimize the risk
of loss due to a decline in the value of the hedged
currency, at the same time they tend to limit any
potential gain that might be realized should the value
of the hedged currency increase. The precise matching
of the forward contract amount and the value of the
securities involved will not generally be possible
because the future value of these securities in
foreign currencies will change as a consequence of
market movements in the value of those securities
between the date the forward contract is entered into
and date it matures.

The International Index Master Portfolio's custodian
will, to the extent required by applicable
regulations, segregate cash, U.S. Government
securities or other high-quality debt securities
having a value equal to the aggregate amount of the
International Index Master Portfolio's commitments
under forward contracts entered into with respect to
position hedges and cross-hedges. If the value of the
segregated securities declines, additional cash or
securities will be segregated on a daily basis so that
the value of the segregated securities will equal the
amount of the International Index Master Portfolio's
commitments with respect to such contracts.

The cost to the International Index Master Portfolio
of engaging in currency transactions varies with
factors such as the currency involved, the length of
the contract period and the market conditions then
prevailing. Because transactions in currency exchange
usually are conducted on a principal basis, no fees or
commissions are involved. BGFA considers on an
ongoing basis the creditworthiness of the institutions
with which the International Index Master Portfolio
enters into foreign currency transactions. The use of
forward currency exchange contracts does not eliminate
fluctuations in the underlying prices of the
securities, but it does establish a rate of exchange
that can be achieved in the future. If a devaluation
generally is anticipated, the International Index
Master Portfolio may not be able to contract to sell
the currency at a price above the devaluation level it
anticipates.

Hedging and Related Strategies.

The International Index Master Portfolio may attempt
to protect the U.S. dollar equivalent value of one or
more of its investments (hedge) by purchasing and
selling foreign currency futures contracts and by
purchasing and selling currencies on a spot (i.e.,
cash) or forward basis. Foreign currency futures
contracts are bilateral agreements pursuant to which
one party agrees to make, and the other party agrees
to accept, delivery of a specified type of currency at
a specified future time and at a specified price.
Although such futures contracts by their terms call
for actual delivery or acceptance of currency, in most
cases the contracts are closed out before the
settlement date without the making or taking of
delivery. A forward currency contract involves an
obligation to purchase or sell a specific currency at
a specified future date, which may be any fixed number
of days from the contract date agreed upon by the
parties, at a price set at the time the contract is
entered into.

The International Index Master Portfolio may enter
into forward currency contracts for the purchase or
sale of a specified currency at a specified future
date either with respect to specific transactions or
with respect to portfolio positions. For example, the
International Index Master Portfolio may enter into a
forward currency contract to sell an amount of a
foreign currency approximating the value of some or
all of the Master Portfolio's securities denominated
in such currency. The International Index Master
Portfolio may use forward contracts in one currency or
a basket of currencies to hedge against fluctuations
in the value of another currency when BGFA anticipates
there will be a correlation between the two and may
use forward currency contracts to shift the
International Index Master Portfolio's exposure to
foreign currency fluctuations from one country to
another. The purpose of entering into these contracts
is to minimize the risk to the International Index
Master Portfolio from adverse changes in the
relationship between the U.S. dollar and foreign
currencies.

BGFA might not employ any of the strategies described
above, and there can be no assurance that any strategy
used will succeed. If BGFA incorrectly forecasts
exchange rates, market values or other economic
factors in utilizing a strategy for the International
Index Master Portfolio, the Master Portfolio might
have been in a better position had it not hedged at
all. The use of these strategies involves certain
special risks, including (1) the fact that skills
needed to use hedging instruments are different from
those needed to select the International Index Master
Portfolio's securities, (2) possible imperfect
correlation, or even no correlation, between price
movements of hedging instruments and price movements
of the investments being hedged, (3) the fact that,
while hedging strategies can reduce the risk of loss,
they can also reduce the opportunity for gain, or even
result in losses, by offsetting favorable price
movements in hedged investments and (4) the possible
inability of the International Index Master Portfolio
to purchase or sell a portfolio security at a time
that otherwise would be favorable for it to do so, or
the possible need for the International Index Master
Portfolio to sell a portfolio security at a
disadvantageous time, due to the need for the
International Index Master Portfolio to maintain
"cover" or to segregate securities in connection with
hedging transactions and the possible inability of the
International Index Master Portfolio to close out or
to liquidate its hedged position.

New financial products and risk management techniques
continue to be developed. The International Index
Master Portfolio may use these instruments and
techniques to the extent consistent with its
investment objectives and regulatory and tax
considerations.

Privately Issued Securities.

The International Index Master Portfolio may invest in
privately issued securities, including those which may
be resold only in accordance with Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"). Rule
144A Securities are restricted securities that are not
publicly traded. Accordingly, the liquidity of the
market for specific Rule 144A Securities may vary.
Delay or difficulty in selling such securities may
result in a loss to the International Index Master
Portfolio. Privately issued or Rule 144A securities
that are determined by BGFA to be "illiquid" are
subject to the International Index Master Portfolio's
policy of not investing more than 15% of its net
assets in illiquid securities. BGFA, under guidelines
approved by board of trustees of MIP, will evaluate
the liquidity characteristics of each Rule 144A
Security proposed for purchase by the International
Index Master Portfolio on a case-by-case basis and
will consider the following factors, among others, in
their evaluation: (1) the frequency of trades and
quotes for the Rule 144A Security; (2) the number of
dealers willing to purchase or sell the Rule 144A
Security and the number of other potential purchasers;
(3) dealer undertakings to make a market in the Rule
144A Security; and (4) the nature of the Rule 144A
Security and the nature of the marketplace trades
(e.g., the time needed to dispose of the Rule 144A
Security, the method of soliciting offers and the
mechanics of transfer).

U.S. Equity Index and International Index Master
Portfolios

The U.S. Equity Index Master Portfolio and the
International Index Master Portfolio (each, a "Master
Portfolio") may invest in the securities described
below.

Short-Term Instruments and Temporary
Investments.

The Master Portfolios may invest in high-quality money
market instruments on an ongoing basis to provide
liquidity, for temporary purposes when there is an
unexpected level of interestholder purchases or
redemptions or when "defensive" strategies are
appropriate. The instruments in which the Master
Portfolio may invest include: (i) short-term
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities
(including government-sponsored enterprises); (ii)
negotiable certificates of deposit ("CDs"), bankers'
acceptances, fixed time deposits and other obligations
of domestic banks (including foreign branches) that
have more than $1 billion in total assets at the time
of investment and that are members of the Federal
Reserve System or are examined by the Comptroller of
the Currency or whose deposits are insured by the
Federal Deposit Insurance Company (the "FDIC"); (iii)
commercial paper rated at the date of purchase "Prime-
1" by Moody's or "A-1+" or "A-1" by S&P, or, if
unrated, of comparable quality as determined by BGFA;
(iv) non-convertible corporate debt securities (e.g.,
bonds and debentures) with remaining maturities at the
date of purchase of not more than one year that are
rated at least "Aa" by Moody's or "AA" by S&P; (v)
repurchase agreements; and (vi) short-term, U.S.
dollar-denominated obligations of foreign banks
(including U.S. branches) that at the time of
investment have more than $10 billion, or the
equivalent in other currencies, in total assets and in
the opinion of BGFA are of comparable quality to
obligations of U.S. banks which may be purchased by
the Master Portfolio.

Bank Obligations. The Master Portfolio may invest in
bank obligations, including certificates of deposit,
time deposits, bankers' acceptances and other
short-term obligations of domestic banks, foreign
subsidiaries of domestic banks, foreign branches of
domestic banks, and domestic and foreign branches of
foreign banks, domestic savings and loan associations
and other banking institutions. Certificates of
deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it
for a specified period of time. Time deposits are
non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated
interest rate. Time deposits which may be held by the
Master Portfolio will not benefit from insurance from
the Bank Insurance Fund or the Savings Association
Insurance Fund administered by the FDIC. Bankers'
acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a
customer. These instruments reflect the obligation
both of the bank and of the drawer to pay the face
amount of the instrument upon maturity. The other
short-term obligations may include uninsured, direct
obligations, bearing fixed, floating- or variable-
interest rates.

Domestic commercial banks organized under Federal law
are supervised and examined by the Comptroller of the
Currency and are required to be members of the Federal
Reserve System and to have their deposits insured by
the FDIC. Domestic banks organized under state law
are supervised and examined by state banking
authorities but are members of the Federal Reserve
System only if they elect to join. In addition, state
banks whose CDs may be purchased by the Master
Portfolio are insured by the FDIC (although such
insurance may not be of material benefit to the Master
Portfolio, depending on the principal amount of the
CDs of each bank held by the Master Portfolio) and are
subject to Federal examination and to a substantial
body of Federal law and regulation. As a result of
Federal or state laws and regulations, domestic
branches of domestic banks whose CDs may be purchased
by the Master Portfolio generally are required, among
other things, to maintain specified levels of
reserves, are limited in the amounts which they can
loan to a single borrower and are subject to other
regulation designed to promote financial soundness.
However, not all of such laws and regulations apply to
the foreign branches of domestic banks.

Obligations of foreign branches of domestic banks,
foreign subsidiaries of domestic banks and domestic
and foreign branches of foreign banks, such as CDs and
time deposits ("TDs"), may be general obligations of
the parent bank in addition to the issuing branch, or
may be limited by the terms of a specific obligation
and governmental regulation. Such obligations are
subject to different risks than are those of domestic
banks. These risks include foreign economic and
political developments, foreign governmental
restrictions that may adversely affect payment of
principal and interest on the obligations, foreign
exchange controls and foreign withholding and other
taxes on interest income. These foreign branches and
subsidiaries are not necessarily subject to the same
or similar regulatory requirements that apply to
domestic banks, such as mandatory reserve
requirements, loan limitations, and accounting,
auditing and financial record keeping requirements.
In addition, less information may be publicly
available about a foreign branch of a domestic bank or
about a foreign bank than about a domestic bank

Obligations of United States branches of foreign banks
may be general obligations of the parent bank in
addition to the issuing branch, or may be limited by
the terms of a specific obligation or by Federal or
state regulation as well as governmental action in the
country in which the foreign bank has its head office.
A domestic branch of a foreign bank with assets in
excess of $1 billion may be subject to reserve
requirements imposed by the Federal Reserve System or
by the state in which the branch is located if the
branch is licensed in that state.

In addition, Federal branches licensed by the
Comptroller of the Currency and branches licensed by
certain states ("State Branches") may be required to:
(1) pledge to the regulator by depositing assets with
a designated bank within the state, a certain
percentage of their assets as fixed from time to time
by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to
a specified percentage of the aggregate amount of
liabilities of the foreign bank payable at or through
all of its agencies or branches within the state. The
deposits of Federal and State Branches generally must
be insured by the FDIC if such branches take deposits
of less than $100,000.

In view of the foregoing factors associated with the
purchase of CDs and TDs issued by foreign branches of
domestic banks, by foreign subsidiaries of domestic
banks, by foreign branches of foreign banks or by
domestic branches of foreign banks, BGFA carefully
evaluates such investments on a case-by-case basis.

The Master Portfolio may purchase CDs issued by banks,
savings and loan associations and similar thrift
institutions with less than $1 billion in assets,
which are members of the FDIC, provided such Master
Portfolio purchases any such CD in a principal amount
of not more than $100,000, which amount would be fully
insured by the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the FDIC.
Interest payments on such a CD are not insured by the
FDIC. No Master Portfolio will own more than one such
CD per such issuer.

Commercial Paper and Short-Term Corporate Debt
Instruments. The Master Portfolio may invest in
commercial paper (including variable amount master
demand notes), which consists of short-term, unsecured
promissory notes issued by corporations to finance
short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the
time of issuance not exceeding nine months. Variable
amount master demand notes are demand obligations that
permit the investment of fluctuating amounts at
varying market rates of interest pursuant to
arrangements between the issuer and a commercial bank
acting as agent for the payee of such notes whereby
both parties have the right to vary the amount of the
outstanding indebtedness on the notes. BGFA monitors
on an ongoing basis the ability of an issuer of a
demand instrument to pay principal and interest on
demand.

The Master Portfolio also may invest in
non-convertible corporate debt securities (e.g., bonds
and debentures) with not more than one year remaining
to maturity at the date of settlement. The Master
Portfolio will invest only in such corporate bonds and
debentures that are rated at the time of purchase at
least "Aa" by Moody's or "AA" by S&P. Subsequent to
its purchase by the Master Portfolio, an issue of
securities may cease to be rated or its rating may be
reduced below the minimum rating required for purchase
by the Master Portfolio. BGFA will consider such an
event in determining whether the Master Portfolio
should continue to hold the obligation. To the extent
the Master Portfolio continues to hold such
obligations, it may be subject to additional risk of
default.

U.S. Government Obligations. The Master Portfolio may
invest in various types of U.S. Government
obligations. U.S. Government obligations include
securities issued or guaranteed as to principal and
interest by the U.S. Government its agencies or
instrumentalities. Payment of principal and interest
on U.S. Government obligations (i) may be backed by
the full faith and credit of the United States (as
with U.S. Treasury obligations and GNMA certificates)
or (ii) may be backed solely by the issuing or
guaranteeing agency or instrumentality itself (as with
FNMA notes). In the latter case, the investor must
look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate
repayment, which agency or instrumentality may be
privately owned. There can be no assurance that the
U.S. Government would provide financial support to its
agencies or instrumentalities where it is not
obligated to do so. As a general matter, the value of
debt instruments, including U.S. Government
obligations, declines when market interest rates
increase and rises when market interest rates
decrease. Certain types of U.S. Government
obligations are subject to fluctuations in yield or
value due to their structure or contract terms.

Repurchase Agreements

The Master Portfolio may engage in a repurchase
agreement with respect to any security in which it is
authorized to invest, although the underlying security
may mature in more than thirteen months. The Master
Portfolio may enter into repurchase agreements wherein
the seller of a security to the Master Portfolio
agrees to repurchase that security from the Master
Portfolio at a mutually agreed-upon time and price
that involves the acquisition by the Master Portfolio
of an underlying debt instrument, subject to the
seller's obligation to repurchase, and the Master
Portfolio's obligation to resell, the instrument at a
fixed price usually not more than one week after its
purchase. The Master Portfolio's custodian has
custody of, and holds in a segregated account,
securities acquired as collateral by the Master
Portfolio under a repurchase agreement. Repurchase
agreements are considered by the staff of the
Securities and Exchange Commission (the "SEC") to be
loans by the Master Portfolio. The Master Portfolio
may enter into repurchase agreements only with respect
to securities of the type in which it may invest,
including government securities and mortgage-related
securities, regardless of their remaining maturities,
and requires that additional securities be deposited
with the custodian if the value of the securities
purchased should decrease below resale price. BGFA
monitors on an ongoing basis the value of the
collateral to assure that it always equals or exceeds
the repurchase price. Certain costs may be incurred
by the Master Portfolio in connection with the sale of
the underlying securities if the seller does not
repurchase them in accordance with the repurchase
agreement. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the
securities, disposition of the securities by the
Master Portfolio may be delayed or limited. While it
does not presently appear possible to eliminate all
risks from these transactions (particularly the
possibility of a decline in the market value of the
underlying securities, as well as delay and costs to
the Master Portfolio in connection with insolvency
proceedings), it is the policy of the Master Portfolio
to limit repurchase agreements to selected
creditworthy securities dealers or domestic banks or
other recognized financial institutions. The Master
Portfolio considers on an ongoing basis the
creditworthiness of the institutions with which it
enters into repurchase agreements. Repurchase
agreements are considered to be loans by the Master
Portfolio under the 1940 Act.

Floating- and Variable-Rate Obligations.

The Master Portfolio may purchase floating- and
variable-rate obligations. The Master Portfolio may
purchase floating- and variable-rate demand notes and
bonds, which are obligations ordinarily having stated
maturities in excess of thirteen months, but which
permit the holder to demand payment of principal at
any time, or at specified intervals not exceeding
thirteen months. Variable rate demand notes include
master demand notes that are obligations that permit
the Master Portfolio to invest fluctuating amounts,
which may change daily without penalty, pursuant to
direct arrangements between the Master Portfolio, as
lender, and the borrower. The interest rates on these
notes fluctuate from time to time. The issuer of such
obligations ordinarily has a corresponding right after
a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus
accrued interest upon a specified number of days'
notice to the holders of such obligations. The
interest rate on a floating-rate demand obligation is
based on a known lending rate, such as a bank's prime
rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable-
rate demand obligation is adjusted automatically at
specified intervals. Frequently, such obligations are
secured by letters of credit or other credit support
arrangements provided by banks. Because these
obligations are direct lending arrangements between
the lender and borrower, it is not contemplated that
such instruments generally will be traded, and there
generally is no established secondary market for these
obligations, although they are redeemable at face
value. Accordingly, where these obligations are not
secured by letters of credit or other credit support
arrangements, the Master Portfolio's right to redeem
is dependent on the ability of the borrower to pay
principal and interest on demand. Such obligations
frequently are not rated by credit rating agencies and
the Master Portfolio may invest in obligations, which
are not so rated, only if BGFA determines that at the
time of investment the obligations are of comparable
quality to the other obligations in which each Master
Portfolio may invest. BGFA, on behalf of the Master
Portfolio, considers on an ongoing basis the
creditworthiness of the issuers of the floating- and
variable-rate demand obligations in the Master
Portfolio's portfolio. Each Master Portfolio will not
invest more than 10% of the value of its total net
assets in floating- or variable-rate demand
obligations whose demand feature is not exercisable
within seven days. Such obligations may be treated as
liquid, provided an active secondary market exists.

Illiquid Securities.

The Master Portfolio may invest up to 15% of the value
of its net assets in securities as to which a liquid
trading market does not exist, provided such
investments are consistent with its investment
objective. Such securities may include securities
that are not readily marketable, such as privately
issued securities and other securities that are
subject to legal or contractual restrictions on
resale, floating- and variable-rate demand obligations
as to which the Master Portfolio cannot exercise a
demand feature on not more than seven days' notice and
as to which there is no secondary market and
repurchase agreements providing for settlement more
than seven days after notice.

Investment Company Securities.

The Master Portfolio may invest in securities issued
by other open-end, management investment companies to
the extent permitted under the 1940 Act. As a general
matter, under the 1940 Act investment in such
securities is limited to: (i) 3% of the total voting
stock of any one investment company, (ii) 5% of the
Master Portfolio's net assets with respect to any one
investment company and (iii) 10% of the Master
Portfolio's net assets with respect to all such
companies in the aggregate. Investments in the
securities of other investment companies generally
will involve duplication of advisory fees and certain
other expenses. The Master Portfolio may also
purchase interests of exchange-listed closed-end funds
to the extent permitted under the 1940 Act.

Loans of Portfolio Securities.

The Master Portfolio may lend securities from its
portfolio to brokers, dealers and financial
institutions (but not individuals) if cash, U.S.
Government securities or other high quality debt
obligations equal to at least 100% of the current
market value of the securities loaned (including
accrued interest thereon) plus the interest payable to
the Master Portfolio with respect to the loan is
maintained with the Master Portfolio. In determining
whether or not to lend a security to a particular
broker, dealer or financial institution, the BGFA
considers all relevant facts and circumstances,
including the size, creditworthiness and reputation of
the broker, dealer, or financial institution. Any
loans of portfolio securities are fully collateralized
based on values that are marked to market daily. The
Master Portfolio does not enter into any portfolio
security lending arrangements having a duration longer
than one year. Any securities that the Master
Portfolio receives as collateral do not become part of
its portfolio at the time of the loan and, in the
event of a default by the borrower, the Master
Portfolio will, if permitted by law, dispose of such
collateral except for such part thereof that is a
security in which the Master Portfolio is permitted to
invest. During the time securities are on loan, the
borrower will pay the Master Portfolio any accrued
income on those securities, and the Master Portfolio
may invest the cash collateral and earn income or
receive an agreed-upon fee from a borrower that has
delivered cash-equivalent collateral. The Master
Portfolio will not lend securities having a value that
exceeds one-third of the current value of its
respective total assets. Loans of securities by the
Master Portfolio are subject to termination at the
Master Portfolio or the borrower's option. The Master
Portfolio may pay reasonable administrative and
custodial fees in connection with a securities loan
and may pay a negotiated portion of the interest or
fee earned with respect to the collateral to the
borrower or the placing broker. Borrowers and placing
brokers are not permitted to be affiliated, directly
or indirectly, with the Master Portfolio or BGFA.

Forward Commitments, When-Issued Purchases and
Delayed-Delivery Transactions.

The Master Portfolio may purchase or sell securities
on a when-issued or delayed-delivery basis and make
contracts to purchase or sell securities for a fixed
price at a future date beyond customary settlement
time. Securities purchased or sold on a when-issued,
delayed-delivery or forward commitment basis involve a
risk of loss if the value of the security to be
purchased declines, or the value of the security to be
sold increases, before the settlement date. Although
the Master Portfolio will generally purchase
securities with the intention of acquiring them, the
Master Portfolio may dispose of securities purchased
on a when-issued, delayed-delivery or a forward
commitment basis before settlement when deemed
appropriate by the adviser. Securities purchased on a
when-issued or forward commitment basis may expose the
Master Portfolio to risk because they may experience
such fluctuations prior to their actual delivery.
Purchasing securities on a when-issued or forward-
commitment basis can involve the additional risk that
the yield available in the market when the delivery
takes place actually may be higher than that obtained
in the transaction itself.

The Master Portfolio will segregate cash, U.S.
Government obligations or other high-quality debt
instruments in an amount at least equal in value to
the Master Portfolio's commitments to purchase when-
issued securities. If the value of these assets
declines, the Master Portfolio will segregate
additional liquid assets on a daily basis so that the
value of the segregated assets is equal to the amount
of such commitments.

Future Developments.

The Master Portfolio may take advantage of
opportunities in the area of options and futures
contracts and options on futures contracts and any
other derivative investments which are not presently
contemplated for use by the Master Portfolio or which
are not currently available but which may be
developed, to the extent such opportunities are both
consistent with the Master Portfolio's investment
objective and legally permissible for the Master
Portfolio. Before entering into such transactions or
making any such investment, the Master Portfolio will
provide appropriate disclosure in its prospectus.

Portfolio Characteristics and Policies

Each of the funds and the Master Portfolios are
diversified under the federal securities laws and
regulations.

Because the structures of the Master Portfolios are
based on the relative market capitalizations of
eligible holdings, it is possible that a Master
Portfolio might include at least 5% of the outstanding
voting securities of one or more issuers. In such
circumstances, the Master Portfolio and the issuer
would be deemed affiliated persons and certain
requirements under the federal securities laws and
regulations regulating dealings between mutual funds
and their affiliates might become applicable.
However, based on the present capitalizations of the
groups of companies eligible for inclusion in the
Master Portfolios and the anticipated amount of the
assets intended to be invested in such securities,
management does not anticipate that the Master
Portfolios will include as much as 5% of the voting
securities of any issuer.

The fund will not incur any brokerage or other costs
in connection with their purchase or redemption of
shares of the Master Portfolio, except if the fund
receives securities or currencies from a Master
Portfolio to satisfy the fund's redemption request.

INVESTMENT LIMITATIONS

Futures Contracts

The Master Portfolio may enter into futures contracts
and options on futures contracts only for the purpose
of remaining fully invested and to maintain liquidity
to pay redemptions. Futures contracts provide for the
future sale by one party and purchase by another party
of a specified amount of defined securities at a
specified future time and at a specified price.
Futures contracts that are standardized as to maturity
date and underlying financial instruments are traded
on national futures exchanges. A Master Portfolio
will be required to make a margin deposit in cash or
government securities with a broker or custodian to
initiate and maintain positions in futures contracts.
Minimal initial margin requirements are established by
the futures exchange and brokers may establish margin
requirements that are higher than the exchange
requirements. After a futures contract position is
opened, the value of the contract is marked to market
daily. If the futures contract price changes, to the
extent that the margin on deposit does not satisfy
margin requirements, payment of additional "variation"
margin will be required. Conversely, reduction in the
contract value may reduce the required margin
resulting in a repayment of excess margin to a Master
Portfolio. Variation margin payments are made to and
from the futures broker for as long as the contract
remains open. The Master Portfolios expect to earn
income on their margin deposits. To the extent a
Master Portfolio invests in futures contracts and
options thereon for other than bona fide hedging
purposes, no Master Portfolio will enter into such
transactions if, immediately thereafter, the sum of
the amount of initial margin deposits and premiums
paid for open futures options would exceed 5% of the
Master Portfolio's net assets, after taking into
account unrealized profits and unrealized losses on
such contracts it has entered into; provided, however,
that, in the case of an option that is in-the-money at
the time of purchase, the in-the-money amount may be
excluded in calculating the 5%. Pursuant to published
positions of the SEC, the Master Portfolios may be
required to maintain segregated accounts consisting of
liquid assets, such as cash or liquid securities (or,
as permitted under applicable regulation, enter into
offsetting positions) in connection with their futures
contract transactions in order to cover their
obligations with respect to such contracts.

Positions in futures contracts may be closed out only
on an exchange that provides a secondary market.
However, there can be no assurance that a liquid
secondary market will exist for any particular futures
contract at any specific time. Therefore, it might
not be possible to close a futures position and, in
the event of adverse price movements, a Master
Portfolio would continue to be required to make
variation margin deposits. In such circumstances, if
a Master Portfolio has insufficient cash, it might
have to sell portfolio securities to meet daily margin
requirements at a time when it might be
disadvantageous to do so. Management intends to
minimize the possibility that it will be unable to
close out a futures contract by only entering into
futures which are traded on national futures exchanges
and for which there appears to be a liquid secondary
market.

Cash Management Practices

Each fund and the Master Portfolios engage in cash
management practices in order to earn income on
uncommitted cash balances. Generally, cash is
uncommitted pending investment in other obligations,
payment of redemptions or in other circumstances where
BGFA believes liquidity is necessary or desirable.
For example, cash investments may be made for
temporary defensive purposes during periods in which
market, economic or political conditions warrant. All
the Portfolios and Master Funds may invest cash in
short-term repurchase agreements.

The aggregate amount of expenses for the fund and the
Master Portfolio may be greater than it would be if
the fund were to invest directly in the securities
held by the Master Portfolios. However, the total
expense ratios for the fund and the Master Portfolios
are expected to be less over time than such ratios
would be if the fund were to invest directly in the
underlying securities. This arrangement enables
institutional investors, including the fund, to pool
their assets, which may be expected to result in
economies by spreading certain fixed costs over a
larger asset base. Each shareholder in a Master
Portfolio, including the fund, will pay its
proportionate share of the expenses of that Master
Portfolio.

The shares of the Master Portfolio will be offered to
institutional investors for the purpose of increasing
the funds available for investment, to reduce expenses
as a percentage of total assets and to achieve other
economies that might be available at higher asset
levels. Investment in a Master Portfolio by other
institutional investors offers potential benefits to
the Master Portfolio and through their investment in
the Master Portfolio, the fund also. However, such
economies and expense reductions might not be
achieved, and additional investment opportunities,
such as increased diversification, might not be
available if other institutions do not invest in the
Master Portfolio. Also, if an institutional investor
were to redeem its interest in a Master Portfolio, the
remaining investors in that Master Portfolio could
experience higher pro rata operating expenses, thereby
producing lower returns, and the Master Portfolio's
security holdings may become less diverse, resulting
in increased risk. Institutional investors that have a
greater pro rata ownership interest in a Master
Portfolio than the corresponding Feeder Fund could
have effective voting control over the operation of
the Master Portfolio.

If the board of trustees of the fund determines that
it is in the best interest of the fund, the fund may
withdraw its investment in the Master Portfolio at any
time. Upon any such withdrawal, the board would
consider what action the fund might take, including
either seeking to invest its assets in another
registered investment company with the same investment
objective as the fund, which might not be possible, or
retaining an investment advisor to manage the fund's
assets in accordance with its own investment
objective, possibly at increased cost. Shareholders
of the fund will receive written notice thirty days
prior to the effective date of any changes in the
investment objective of its corresponding Master
Portfolio. A withdrawal by a fund of its investment
in the corresponding Master Portfolio could result in
a distribution in kind of portfolio securities (as
opposed to a cash distribution) to the fund. Should
such a distribution occur, the fund could incur
brokerage fees or other transaction costs in
converting such securities to cash in order to pay
redemptions. In addition, a distribution in kind to a
fund could result in a less diversified portfolio of
investments and could affect adversely the liquidity
of the fund. Moreover, a distribution in kind by a
Master Portfolio to a fund may constitute a taxable
exchange for federal income tax purposes resulting in
gain or loss to such fund. Any net capital gains so
realized will be distributed to that fund's
shareholders.

Shareholder Rights

Whenever the fund, as an investor in its corresponding
Master Portfolio, is asked to vote on a shareholder
proposal, the respective fund will solicit voting
instructions from the fund's shareholders with respect
to the proposal. The trustees of the trust will then
vote the fund's shares in the Master Portfolio in
accordance with the voting instructions received from
the fund's shareholders. The trustees of the trust
will vote shares of the fund for which they receive no
voting instructions in accordance with their best
judgment.

INVESTMENT RESTRICTIONS OF THE FUNDS

Each fund has adopted the following investment
restrictions for the protection of shareholders.
Although the fund currently will invest all of its
assets in the Master Portfolio, the board of trustees
intends to maintain the following additional
investment restrictions. To the extent that the
fund's restrictions listed are inconsistent with the
Master Portfolios, the Master Portfolios restrictions
are controlling. Restrictions 1 through 7 below
cannot be changed without approval by the holders of a
majority of the outstanding shares of the fund,
defined as the lesser of (a) 67% or more of the fund's
shares present at a meeting, if the holders of more
than 50% of the outstanding shares are present in
person or by proxy or (b) more than 50% of the fund's
outstanding shares. The remaining restrictions may be
changed by the fund's board of trustees at any time.
In accordance with these restrictions, the fund will
not:

1. Invest in a manner that would cause it to fail
to be a "diversified company" under the 1940 Act
and the rules, regulations and orders
thereunder.

2. Issue "senior securities" as defined in the 1940
Act, and the rules, regulations and orders
thereunder, except as permitted under the 1940
Act and the rules, regulations and orders
thereunder.

3. Invest more than 25% of its total assets in
securities, the issuers of which conduct their
principal business activities in the same
industry. For purposes of this limitation,
securities of the U.S. government (including its
agencies and instrumentalities) and securities
of state or municipal governments and their
political subdivisions are not considered to be
issued by members of any industry.

4. Borrow money, except that (a) the fund may
borrow from banks for temporary or emergency
(not leveraging) purposes, including the meeting
of redemption requests which might otherwise
require the untimely disposition of securities,
and (b) the fund may, to the extent consistent
with its investment policies, enter into reverse
repurchase agreements, forward roll transactions
and similar investment strategies and
techniques. To the extent that it engages in
transactions described in (a) and (b), the fund
will be limited so that no more than 33 1/3% of
the value of its total assets (including the
amount borrowed), valued at the lesser of cost
or market, less liabilities (not including the
amount borrowed), is derived from such
transactions.

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

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

7. Purchase or sell real estate, real estate
mortgages, commodities or commodity contracts,
but this restriction shall not prevent the fund
from: (a) investing in securities of issuers
engaged in the real estate business or the
business of investing in real estate (including
interests in limited partnerships owning or
otherwise engaging in the real estate business
or the business of investing in real estate) and
securities which are secured by real estate or
interests therein; (b) holding or selling real
estate received in connection with securities it
holds or held; (c) trading in futures contracts
and options on futures contracts (including
options on currencies to the extent consistent
with the fund's investment objective and
policies); or (d) investing in real estate
investment trust securities.

8. Purchase any securities on margin (except for
such short-term credits as are necessary for the
clearance of purchases and sales of portfolio
securities) or sell any securities short (except
"against the box"). For purposes of this
restriction, the deposit or payment by the fund
of underlying securities and other assets in
escrow and collateral agreements with respect to
initial or maintenance margin in connection with
futures contracts and related options and
options on securities, indexes or similar items
is not considered to be the purchase of a
security on margin.

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

10. Purchase or otherwise acquire any security if,
as a result, more than 15% of its net assets
would be invested in securities that are
illiquid.

11. Invest for the purpose of exercising control of
management.

INVESTMENT RESTRICTIONS OF THE U.S. EQUITY INDEX
MASTER PORTFOLIO

The U.S. Equity Index Master Portfolio has adopted the
following investment restrictions as fundamental
policies. These restrictions cannot be changed, as to
the Master Portfolio, without approval by the holders
of a majority (as defined in the 1940 Act) of the
Master Portfolio's outstanding voting securities. The
Master Portfolio may not:

1. Invest more than 5% of its assets in the
obligations of any single issuer, except that up
to 25% of the value of its total assets may be
invested, and securities issued or guaranteed by
the U.S. Government or its agencies or
instrumentalities may be purchased, without
regard to any such limitation.

2. Hold more than 10% of the outstanding voting
securities of any single issuer. This
Investment Restriction applies only with respect
to 75% of its total assets.

3. Invest in commodities, except that the Master
Portfolio may purchase and sell (i.e., write)
options, forward contracts, futures contracts,
including those relating to indexes, and options
on futures contracts or indexes.

4. Purchase, hold or deal in real estate, or oil,
gas or other mineral leases or exploration or
development programs, but the Master portfolio
may purchase and sell securities that are
secured by real estate or issued by companies
that invest or deal in real estate.

5. Borrow money, except to the extent permitted
under the 1940 Act provided that the Master
Portfolio may borrow up to 20% of the current
value of its net assets for temporary purposes
only in order to meet redemptions, and these
borrowings may be secured by the pledge of up to
20% of the current value of its net assets. For
purposes of this investment restriction, the
Master Portfolio's entry into options, forward
contracts, futures contracts, including those
relating to indexes, and options on futures
contracts or indexes shall not constitute
borrowing to the extent certain segregated
accounts are established and maintained by the
Master Portfolio.

6. Make loans to others, except through the
purchase of debt obligations and the entry into
repurchase agreements. However, the Master
Portfolio may lend its portfolio securities in
an amount not to exceed one-third of the value
of its total assets. Any loans of portfolio
securities will be made according to guidelines
established by the Securities and Exchange
Commission and the MIP's board of trustees.

7. Act as an underwriter of securities of other
issuers, except to the extent the Master
Portfolio may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of
disposing of portfolio securities.

8. Invest 25% or more of its total assets in the
securities of issuers in any particular industry
or group of closely related industries except
that there shall be no limitation with respect
to investments in (i) obligations of the U.S.
Government, its agencies or instrumentalities
(ii) any industry in which the Wilshire 4500
Index becomes concentrated to the same degree
during the same period, the Master Portfolio
will be concentrated as specified above only to
the extent the percentage of its assets invested
in those categories of investments is
sufficiently large that 25% or more of its total
assets would be invested in a single industry.

9. Issue any senior security (as such term is
defined in Section 18(f) of the 1940 Act),
except to the extent the activities permitted in
Investment Restriction Nos. 3 and 5 may be
deemed to give rise to a senior security.

The U.S. Equity Index Master Portfolio has adopted the
following investment restrictions as non-fundamental
policies. These restrictions may be changed without
shareholder approval by a vote of a majority of the
trustees of MIP, at any time. The Master Portfolio is
subject to the following investment restrictions, all
of which are non-fundamental policies.

1. The Master Portfolio may invest in shares of
other open-end management investment companies,
subject to the limitations of Section 12(d)(1)
of the 1940 Act. Under the 1940 Act, the Master
Portfolio's investment in such securities
currently is limited, subject to certain
exceptions, to (i) 3% of the total voting stock
of any one investment company, (ii) 5% of the
Master Portfolio's net assets with respect to
any one investment company and (iii) 10% of the
Master Portfolio's net assets in the aggregate.
Other investment companies in which the Master
Portfolio invests can be expected to charge fees
for operating expenses, such as investment
advisory and administration fees, that would be
in addition to those charged by the Master
Portfolio.

2. The Master Portfolio may not invest more than
15% of the Master Portfolio's net assets in
illiquid securities. For this purpose, illiquid
securities include, among others, (a) securities
that are illiquid by virtue of the absence of a
readily available market or legal or contractual
restrictions on resale, (b) fixed time deposits
that are subject to withdrawal penalties and
that have maturities of more than seven days,
and (c) repurchase agreements not terminable
within seven days.

3. The Master Portfolio may lend securities from
its portfolio to brokers, dealers and financial
institutions, in amounts not to exceed (in the
aggregate) one-third of the fund's total assets.
Any such loans of portfolio securities will be
fully collateralized based on values that are
marked to market daily. The Master Portfolio
will not enter into any portfolio security
lending arrangement having a duration of longer
than one year.

INVESTMENT RESTRICTIONS OF THE INTERNATIONAL INDEX
MASTER PORTFOLIO

The International Index Master Portfolio has adopted
the following investment restrictions as fundamental
policies. These restrictions cannot be changed, as to
the Master Portfolio, without approval by the holders
of a majority (as defined in the 1940 Act) of the
Master Portfolio's outstanding voting securities. The
Master Portfolio may not:

1. Invest more than 5% of its assets in the
obligations of any single issuer, except that up
to 25% of the value of its total assets may be
invested, and securities issued or guaranteed by
the US. Government or its agencies or
instrumentalities may be purchased, without
regard to any such limitation. This limitation
does not apply to foreign currency transactions
including without limitation forward currency
contracts.

2. Hold more than 10% of the outstanding voting
securities of any single issuer. This
Investment Restriction applies only with respect
to 75% of its total assets.

4. Purchase, hold or deal in real estate, or oil,
gas or other mineral leases or exploration or
development program, but the Master Portfolio
may purchase and sell securities that are
secured by real estate or issued by companies
that invest or deal in real estate.

5. Borrow money, except to the extent permitted
under the 1940 Act provided that the Master
Portfolio may borrow up to 20% of the current
value of its net assets for temporary purposes
only in order to meet redemptions, and these
borrowings may be secured by the pledge of up to
20% of the current value of its net assets. For
purposes of this investment restriction, the
Master Portfolio's entry into options, forward
contracts, futures contracts, including those
relating to indices, and options on futures
contracts or indices shall not constitute
borrowing to the extent certain segregated
accounts are established and maintained by the
Master Portfolio.

7. Act as an underwriter of securities of other
issuers, except to the extent the Master
Portfolio may be deemed an underwriter under the
1933 Act, as amended, by virtue of disposing of
portfolio securities.

8. Invest 25% or more of its total assets in the
securities of issuers in any particular industry
or group of closely related industries except
that there shall be no limitation with respect
to investments in (i) obligations of the US.
Government, its agencies or instrumentalities
(ii) any industry in which the EAFE Free Index
becomes concentrated to the same degree during
the same period, the Master Portfolio will be
concentrated as specified above only to the
extent the percentage of its assets invested in
those categories of investments is sufficiently
large that 25% or more of its total assets would
be invested in a single industry.

The International Index Master Portfolio has adopted
the following investment restrictions as non-
fundamental policies. These restrictions may be
changed without shareholder approval by a vote of a
majority of the trustees of MIP, at any time. The
Master Portfolio is subject to the following
investment restrictions, all of which are non-
fundamental policies.

1. The Master Portfolio may invest in shares of
other open-end management investment companies,
subject to the limitations of Section 12(d)(1)
of the 1940 Act. Under the 1940 Act, the Master
Portfolio's investment in such securities
currently is limited, subject to certain
exceptions, to (i) 3% of the total voting stock
of any one investment company, (ii) 5% of the
Master Portfolio's net assets with respect to
any one investment company, and (iii) 10% of the
Master Portfolio's net assets in the aggregate.
Other investment companies in which the Master
Portfolio invests can be expected to charge fees
for operating expenses, such as investment
advisory and administration fees, that would be
in addition to those charged by the Master
Portfolio.

2. The Master Portfolio may not invest more than
15% of its net assets in illiquid securities.
For this purpose, illiquid securities include,
among others, (a) securities that are illiquid
by virtue of the absence of a readily available
market or legal or contractual restrictions on
resale, (b) fixed time deposits that are subject
to withdrawal penalties and that have maturities
of more than seven days, and (c) repurchase
agreements not terminable within seven days.

3. The Master Portfolio may lend securities from
its portfolio to brokers, dealers and financial
institutions, in amounts not to exceed (in the
aggregate) one-third of the Master Portfolio's
total assets. Any such loans of portfolio
securities will be fully collateralized based on
values that are marked to market daily. The
Master Portfolio will not enter into any
portfolio security lending arrangement having a
duration of longer than one year.

RISK CONSIDERATIONS

U.S. EQUITY INDEX MASTER PORTFOLIO

General-The value of the U.S. Equity Index Master
Portfolio's interests is neither insured nor
guaranteed, is not fixed and should be expected to
fluctuate.

Equity Securities-The stock investments of the Master
Portfolio are subject to equity market risk. Equity
market risk is the possibility that common stock
prices will fluctuate or decline over short or even
extended periods. The U.S. stock market tends to be
cyclical, with periods when stock prices generally
rise and periods when prices generally decline. In
addition, many of the companies whose securities
comprise the Wilshire 4500 Index are small- to medium-
sized companies which, historically, have been more
susceptible to market fluctuations than securities of
larger capitalization companies such as those
comprising the S&P 500 Index. As of the date of this
registration statement, the U.S. stock market, as
measured by the Wilshire 5000 Index and other commonly
used indices, was trading at or close to record
levels. There can be no assurance that these record
levels will continue.

Debt Securities-The debt instruments in which the
Master Portfolio may invest are subject to credit and
interest rate risk. Credit risk is the risk that
issuers of debt instruments may default on the payment
of principal and/or interest. Interest-rate risk is
the risk that increases in market interest rates may
adversely affect the value of debt instruments. The
value of debt instruments generally changes inversely
to market interest rates. Debt securities with longer
maturities, which tend to produce higher yields, are
subject to potentially greater capital appreciation
and depreciation than obligations with shorter
maturities. Changes in the financial strength of an
issuer or changes in the ratings of any particular
security may also affect the value of debt
instruments. Although some debt instruments are
guaranteed by the U.S. Government, its agencies or
instrumentalities, such instruments are subject to
interest rate risk and the market value of these
instruments will fluctuate. No assurance can be given
that the U.S. Government, would provide financial
support to the agencies or instrumentalities that
issue or guarantee these instruments where it is not
obligated to do so.

INTERNATIONAL INDEX MASTER PORTFOLIO

General-The value of the International Index Master
Portfolio's interests is neither insured nor
guaranteed, is not fixed and should be expected to
fluctuate.

Foreign Investment Risk-The Master Portfolio invests
substantially all of its assets in foreign securities.
This means the Master Portfolio can be affected by the
risks of foreign investing, including changes in
currency exchange rates and the costs of converting
currencies; foreign government controls on foreign
investment; repatriation of capital, and currency and
exchange; foreign taxes; inadequate supervision and
regulation of some foreign markets; volatility from
lack of liquidity; different settlement practices or
delayed settlements in some markets; difficulty in
getting complete and accurate information about
foreign companies; less strict accounting, auditing
and financial reporting standards than those in the
U.S.; political, economic and social instability, and
difficulty enforcing legal rights outside the U.S.

In addition, many foreign countries are less prepared
than the United States to properly process and
calculate information related to dates from and after
January 1, 2000, which could result in difficulty
pricing foreign investments and failure by foreign
issuers to pay timely dividends, interest or
principal. All of these factors can make foreign
investments, especially those in emerging markets,
more volatile and potentially less liquid than U.S.
investments.

Issuer-Specific Changes-Changes in the financial
condition of an issuer, changes in specific economic
or political conditions that affect a particular type
of security or issuer, and changes in general economic
or political conditions can affect the value of an
issuer's securities.

Small Company Investing-The value of securities of
smaller, less well-known issuers can be more volatile
than that of larger issuers and can react differently
to issuer, political, market and economic developments
than the market as a whole and other types of stocks.
Smaller issuers can have more limited product lines,
markets and financial resources.

Other Investment Considerations-The Master Portfolio
may enter into transactions in futures contracts and
options on futures contracts, each of which involves
risk. The futures contracts and options on futures
contracts that the Master Portfolio may purchase may
be considered derivatives. Derivatives are financial
instruments whose values are derived, at least in
part, from the prices of other securities or specified
assets, indices or rates. The Master Portfolio
intends to use futures contracts and options as part
of its short-term liquidity holdings and/or
substitutes for comparable market positions in the
underlying securities. Some derivatives may be more
sensitive than direct securities to changes in
interest rates or sudden market moves. Some
derivatives also may be susceptible to fluctuations in
yield or value due to their structure or contract
terms.

Securities Loans

The Master Portfolios are authorized to lend
securities to qualified brokers, dealers, banks and
other financial institutions for the purpose of
earning additional income. While the Master
Portfolios may earn additional income from lending
securities, such activity is incidental to their
investment objectives. The value of securities loaned
may not exceed 33 1/3% of the value of each Master
Portfolio's total assets. In connection with such
loans, the Master Portfolio will receive collateral
consisting of cash or U.S. government securities,
which will be maintained at all times in an amount
equal to at least 100% of the current market value of
the loaned securities. In addition, the Master
Portfolio will be able to terminate the loan at any
time, will receive reasonable compensation on the
loan, as well as amounts equal to any dividends,
interest or other distributions on the loaned
securities. In the event of the bankruptcy of the
borrower, a Master Portfolio could experience delay in
recovering the loaned securities. Management believes
that this risk can be controlled through careful
monitoring procedures.

The funds and the trust bear all of their own costs
and expenses, including: services of its independent
accountants, legal counsel, brokerage commissions and
transfer taxes in connection with the acquisition and
disposition of portfolio securities, taxes, insurance
premiums, costs incidental to meetings of its
shareholders and trustees, the cost of filing its
registration statements under federal securities laws
and the cost of any filings required under state
securities laws, reports to shareholders, and transfer
and dividend disbursing agency, administrative
services and custodian fees. Expenses allocable to a
particular fund or Master Portfolio are so allocated.

TRUSTEES OF THE TRUST AND EXECUTIVE OFFICERS OF THE
FUND

Herbert Barg, Trustee (Age 77). Private Investor.
His address is 273 Montgomery Avenue, Bala Cynwyd,
Pennsylvania 19004. Director/Trustee of sixteen
investment companies associated with Citigroup, Inc.
("Citigroup")

Elliot S. Jaffe Trustee (Age 73). Chairman of the
Board and President of The Dress Barn, Inc. His
address is 30 Dunnigan Drive, Suffern, New York 10901.
Director/Trustee of eleven investment companies
associated with Citigroup.
Stephen E. Kaufman Trustee (Age 68). Attorney. His
address is 277 Park Avenue, New York, New York 10172.
Director/Trustee of thirteen investment companies
associated with Citigroup.

*Heath B. McLendon Trustee (Age 66). Chairman of the
Board, President and Chief Executive Officer; Managing
Director of Salomon Smith Barney; President of SSB
Citi and Travelers Investment Adviser, Inc. ("TIA");
Chairman or Co-Chairman of the Board of seventy-one
investment companies associated with Salomon Smith
Barney. His address is 7 World Trade Center, New York,
New York 10048.

Lewis E. Daidone (Age 42). Senior Vice President and
Treasurer; Managing Director of Salomon Smith Barney;
Chief Financial Officer of the Smith Barney mutual
funds; Treasurer and Senior Vice President or
Executive Vice President of sixty-one investment
companies associated with Citigroup; Director and
Senior Vice President of SSB Citi and TIA. His
address is 125 Broad Street, New York, New York 10004.

Irving David (Age 39). Controller
Director of Salomon Smith Barney; Controller or
Assistant Treasurer of fifty-three investment
companies associated with Citigroup. His address is
125 Broad Street, New York, New York 10004.

Christina T. Sydor (Age 49). Secretary
Managing Director of Salomon Smith Barney; Secretary
of sixty-one investment companies associated with
Citigroup; General Counsel and Secretary of SSB Citi
and TIA.

No officer, trustee or employee of Salomon Smith
Barney or any of its affiliates receives any
compensation from the trust for serving as an officer
of the funds or trustee of the trust. The trust pays
each trustee who is not an officer, director or
employee of Salomon Smith Barney or any of its
affiliates a fee of $12,000 per annum plus $1000 per
in-person meeting and $100 per telephonic meeting.
Each Trustee emeritus who is not an officer, director
or employee of Salomon Smith Barney or its affiliates
receives a fee of $6,000 per annum plus $500 per in-
person meeting and $50 per telephonic meeting. All
Trustees are reimbursed for travel and out-of-pocket
expenses incurred to attend such meetings. The total
expense reimbursement for the last fiscal year was
$14,437.

For the fiscal year ended November 30, 1999, the
trustees of the trust were paid the following
compensation:

Name of Person

Aggregate
Compensat
ion
from
Trust

Total
Pension or
Retirement
Benefits
Accrued
As part of
Trust
Expenses

Compensation
From Trust
and Fund
Complex
Paid to
Trustees

Number of
Funds for Which DirecD
Trustee Serves Within
Fund Complex

Herbert Barg**
Alfred
Bianchetti*
Martin Brody**
Dwight B.
Crane**
Burt N.
Dorsett**
Elliot S.
Jaffe**
Stephen E.
Kaufman**
Joseph J.
McCann**
Heath B.
McLendon*
Cornelius C.
Rose, Jr.**

$15,600
14,600
13,600
15,500
15,500
12,600
15,600
15,600
-----
14,600

$ 0
0
0
0
0
0
0
0
0
0

$114,288
53,900
138,600
155,363
57,950
45,100
110,650
58,050
------
53,500

16
11
21
24
11
11
13
11
71
11

_________________
* Designated an "interested" trustee.
** Designates member of Audit Committee.

INVESTMENT MANAGEMENT AND OTHER SERVICES

Master Portfolio Adviser

Each Master Portfolio has substantially the same
investment objectives as the corresponding fund.
Consequently, the funds do not have their own
investment adviser. BGFA serves as the Master
Portfolios' Investment Adviser and provides investment
guidance and policy direction for the Master
Portfolios.

BGFA makes no attempt to apply economic, financial or
market analysis when managing the Master Portfolios.
BGFA selects securities because they will help the
Master Portfolios achieve returns corresponding to the
returns of the applicable index. The process reflects
BGFA's commitment to an objective and consistent
investment management structure.

BGFA serves as investment adviser to the Master
Portfolios and the Underlying Portfolios. BGFA is a
direct subsidiary of Barclays Global Investors, N.A.
(which, in turn, is an indirect subsidiary of Barclays
Bank PLC) and is located at 45 Fremont Street San
Francisco, CA 94105. As of December 31, 1999, BGFA
and its affiliates provided investment advisory
services for approximately $782 billion of assets
under management.

BGFA provides the Master Portfolios and the Underlying
Portfolios with investment guidance and policy
direction in connection with the daily portfolio
management of each, subject to the supervision of
MIP's board of trustees and in conformity with
Delaware law and the stated policies of each such
portfolio. BGFA furnishes to MIP's board of trustees
periodic reports on the investment strategy and
performance of the Master Portfolios and the
Underlying Portfolios.

BGFA is entitled to receive monthly fees at the annual
rate of 0.01% of the average daily net assets of the
U.S. Equity Index Master Portfolio, 0.08% of the
average daily net assets of the Extended Index
Portfolio and 0.05% of the average daily net assets of
the S&P 500 Index Portfolio as compensation for its
advisory services. The U.S. Equity Index Master
Portfolio bears its pro rata share of the advisory
fees of the Underlying Portfolios. Based on these fee
levels and the expected allocation of assets between
the two Underlying Portfolios, the advisory fees
payable to BGFA by the Master Portfolio on a combined
basis will be approximately 0.07% of the average daily
net assets of the Master Portfolio. As compensation
for its advisory services to the International Index
Master Portfolio, BGFA is entitled to receive fees at
an annual rate of 0.15% of the first $1 billion and
0.10% thereafter, of the International Index Master
Portfolio's average daily net assets. From time to
time, BGFA may waive such fees in whole or in part.
Any such waiver will reduce the expenses of the Master
Portfolio and, accordingly, have a favorable impact on
its performance.

Purchase and sale orders for portfolio securities of
the Master Portfolios may be combined with those of
other accounts that BGFA manages or advises, and for
which it has brokerage placement authority, in the
interest of seeking the most favorable overall net
results. When BGFA, subject to the supervision and
the overall authority of MIP's board of trustees,
determines that a particular security should be bought
or sold for a Master Portfolio and other accounts
managed by BGFA, it undertakes to allocate those
transactions among the participants equitably.

BGFA may deal, trade and invest for its own account in
the types of securities in which the Master Portfolio
may invest. BGFA has informed MIP that in making its
investment decisions it does not obtain or use
material inside information in its possession.

Administrator - SSB Citi

SSB Citi serves as administrator to each fund pursuant
to a written agreement (the "Administration
Agreement"). SSB Citi is a wholly owned subsidiary of
Salomon Smith Barney Holdings Inc. ("Holdings"), which
in turn, is a wholly owned subsidiary of Citigroup
Inc. The administrator will pay the salary of any
officer and employee who is employed by both it and
the funds and bears all expenses in connection with
the performance of its services.

As administrator SSB Citi: (a) assists in supervising
all aspects of each fund's operations except those
performed by other parties pursuant to written
agreements; (b) supplies each fund with office
facilities (which may be in SSB Citi's own offices),
statistical and research data, data processing
services, clerical, accounting and bookkeeping
services, including, but not limited to, the
calculation of (i) the net asset value of shares of
the fund, (ii) service fees, internal auditing and
legal services, internal executive and administrative
services, and stationary and office supplies; and (c)
prepares reports to shareholders of each fund, tax
returns and reports to and filings with the SEC and
state blue sky authorities.

As compensation for administrative services rendered
to each fund, the administrator will receive a fee
computed daily and paid monthly at the annual rate of
0.15% of the value of each fund's average daily net
assets.

Each fund bears expenses incurred in its operation,
including: taxes, interest, brokerage fees and
commissions, if any; fees of trustees who are not
officers, directors/trustees, shareholders or
employees of the administrator or its affiliates; SEC
fees and state Blue Sky qualification fees; charges of
custodians; transfer and dividend disbursing agent's
fees; certain insurance premiums; outside auditing and
legal expenses; costs of maintaining corporate
existence; investor services (including allocated
telephone and personnel expenses); costs of
preparation and printing of prospectuses and
statements of additional information for regulatory
purposes and for distribution to existing
shareholders; costs of shareholders' reports and
shareholder meetings; and meetings of the officers or
board of trustees of the fund.

Auditors

KPMG LLP, independent auditors, 757 Third Avenue, New
York, New York 100174, have been selected to serve as
auditors of the trust and to render opinions on each
fund's financial statements for the fiscal year ending
December 31, 2000. The Master Investment Portfolio
has been audited by KPMG LLP, independent auditors, 3
Embarcadero Center, 21st Floor, San Francisco,
California 94111.

Counsel

Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019, serves as counsel to each fund.

Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New
York, New York 10038 serves as counsel to the trustees
who are not "interested persons" of each fund.

Custodian, Fund Accounting Services Agent and Sub-
administrator of the Master Portfolio

Investors Bank & Trust Company ("IBT"), 200 Clarendon
Street, Boston, MA 02116, serves as custodian of
the assets of the funds and the Master Portfolio. As
a result, IBT has custody of all securities and cash
of the funds and the Master Portfolio, delivers and
receives payment for securities sold, receives and
pays for securities purchased, collects income from
investments, and performs other duties, all as
directed by the officers of the funds and the Master
Portfolio. The custodian has no responsibility for any
of the investment policies or decisions of the funds
and the Master Portfolio. IBT also acts as the
fund's Accounting Services Agent.

Custodial fees of up to 0.10% are payable after the
first two years of the Master Portfolio's operations.
The Master Portfolio was launched on February 22, 1998
therefore, the initial two year period expires on
February 22, 2001. Thereafter IBT will be entitled to
receive custodial fees from the Master Portfolio
(after waivers). This will increase the total
operating expense of the Master Portfolio by 0.10%.
Transfer Agent and Sub-Transfer Agent

Citi Fiduciary Trust Company, located at 125 Broad
Street, New York, New York 1004, serves as the funds'
transfer and dividend-paying agent (the "transfer
agent"). Under the transfer agency agreement, the
transfer agent maintains the shareholder account
records for the funds, handles certain communications
between shareholders and the funds, distributes
dividends and distributions payable by the funds and
produces statements with respect to account activity
for the funds and their shareholders. For these
services, the transfer agent receives fees from the
funds computed on the basis of the number of
shareholder accounts that the transfer agent maintains
for the funds during the month and is reimbursed for
out-of-pocket expenses.

Code of Ethics Pursuant to Rule 17j-1 of the 1940
Act, the funds, their investment advisers and
principal underwriter have adopted a code of ethics
that permits personnel to invest in securities for
their own accounts, including securities that may be
purchased or held by the funds. 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 code 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 funds' code of ethics is
on file with the Securities and Exchange Commission.

Distributor tc "DISTRIBUTOR"

When payment is made by the investor before the
settlement date, unless otherwise noted by the
investor, the funds will be held as a free credit
balance in the investor's brokerage account and
Salomon Smith Barney may benefit from the temporary
use of the funds. The funds' board of trustees has
been advised of the benefits to Salomon Smith Barney
resulting from these settlement procedures and will
take such benefits into consideration when reviewing
the Administration and Distribution Agreements for
continuance.

Shareholding Servicing Arrangements

To compensate Salomon Smith Barney for the services it
provides to fund shareholders, each fund has adopted a
service plan (the "Plan") pursuant to Rule 12b-1 under
the 1940 Act. Under the Plan, the fund pays a service
fee with respect to the Smith Barney Shares that is
accrued daily and paid monthly, calculated at the
annual rate of 0.20 % of the value of the fund's
average daily net assets attributable to Smith Barney
Shares. Citi Shares are not subject to a service fee.

Under its terms, the Plan continues from year to year,
provided such continuance is approved annually by vote
of the board of trustees, including a majority of the
trustees who are not interested persons of the trust
and who have no direct or indirect financial interest
in the operation of the Plan (the "Independent
Trustees"). The Plan may not be amended to increase
the amount of the service fees without shareholder
approval, and all amendments of the Plan also must be
approved by the trustees including all of the
Independent Trustees in the manner described above.
The Plan may be terminated with respect to the Smith
Barney Shares at any time, without penalty, by vote of
a majority of the Independent Trustees or, with
respect to any fund, by vote of a majority of the
outstanding voting securities of the fund. Pursuant
to the Plan, Salomon Smith Barney will provide the
board of trustees with periodic reports of amounts
expended under the Plan and the purpose for which such
expenditures were made.

Co-Administrators and Placement Agent of the Master
Portfolios

Stephens, Inc. ("Stephens"), and Barclays Global
Investors, N.A. ("BGI") serve as co-administrators on
behalf of the Master Portfolios. Under the Co-
Administration Agreement between Stephens, BGI and the
Master Portfolios, Stephens and BGI provide the Master
Portfolios with administrative services, including:
(i) general supervision of the Master Portfolios' non-
investment operations, coordination of the other
services provided to the Master Portfolios; (ii)
compilation of information for reports to, and filings
with, the SEC and state securities commissions; and
preparation of proxy statements and shareholder
reports for the Master Portfolios; and (iii) general
supervision relative to the compilation of data
required for the preparation of periodic reports
distributed to MIP's officers and board. Stephens also
furnishes office space and certain facilities required
for conducting the business of the Master Portfolios
and compensates MIP's trustees, officers and employees
who are affiliated with Stephens. In addition,
Stephens and BGI will be responsible for paying all
expenses incurred by the U.S. Equity Index Master
Portfolio other than the fees payable to BGFA and
other than custodial fees of up to 0.01% payable after
the first two years of the Master Portfolio's
operations. Stephens and BGI are entitled to receive a
monthly fee, in the aggregate, at an annual rate of
0.02% of the average daily net assets of the U.S.
Equity Index Master Portfolio for providing
administrative services and assuming expenses.

As compensation for administration services to
International Index Master Portfolio, Stephens and BGI
are entitled to receive a monthly fee, in the
aggregate, at an annual rate of 0.10% of the first $1
billion and 0.07% thereafter of the Master Portfolio
average daily net assets.

Stephens also acts as the placement agent of Master
Portfolio's shares pursuant to a Placement Agency
Agreement with the Master Portfolio.

PORTFOLIO TRANSACTIONS AND TURNOVER

BGFA assumes general supervision over placing orders
on behalf of the Master Portfolios for the purchase or
sale of portfolio securities. Allocation of brokerage
transactions, including their frequency, is made in
the best judgment of BGFA and in a manner deemed fair
and reasonable to interestholders. In executing
portfolio transactions and selecting brokers or
dealers, BGFA seeks to obtain the best overall terms
available for the Master Portfolios. In assessing the
best overall terms available for any transaction, BGFA
considers factors deemed 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, both for the
specific transaction and on a continuing basis. The
primary consideration is prompt execution of orders at
the most favorable net price. Certain of the brokers
or dealers with whom the Master Portfolios may
transact business offer commission rebates to the
Master Portfolios. BGFA considers such rebates in
assessing the best overall terms available for any
transaction. The overall reasonableness of brokerage
commissions paid is evaluated by BGFA based upon its
knowledge of available information as to the general
level of commissions paid by other institutional
investors for comparable services. Brokers also are
selected because of their ability to handle special
executions such as are involved in large block trades
or broad distributions, provided the primary
consideration is met. Portfolio turnover may vary
from year to year, as well as within a year. High
turnover rates over 100% are likely to result in
comparatively greater brokerage expenses.

The Master Portfolios have no obligation to deal with
any dealer or group of dealers in the execution of
transactions in portfolio securities. Subject to
policies established by the Master Portfolios' board
of trustees, BGFA as advisor is responsible for the
Master Portfolios' investment portfolio decisions and
the placing of portfolio transactions. In placing
orders, it is the policy of the Master Portfolios to
obtain the best results taking into account the
broker/dealer's general execution and operational
facilities, the type of transaction involved and
other factors such as the broker/dealer's risk in
positioning the securities involved. While BGFA
generally seeks reasonably competitive spreads or
commissions, the Master Portfolios will not
necessarily be paying the lowest spread or commission
available.

Purchase and sale orders of the securities held by the
Master Portfolios may be combined with those of other
accounts that BGFA manages, and for which it has
brokerage placement authority, in the interest of
seeking the most favorable overall net results. When
BGFA determines that a particular security should be
bought or sold for the Master Portfolios and other
accounts managed by BGFA, BGFA undertakes to allocate
those transactions among the participants equitably.

Under the 1940 Act, persons affiliated with the Master
Portfolios such as Stephens, BGFA and their affiliates
are prohibited from dealing with the Master Portfolios
as a principal in the purchase and sale of securities
unless an exemptive order allowing such transactions
is obtained from the SEC or an exemption is otherwise
available.
Except in the case of equity securities purchased by
the Master Portfolios, purchases and sales of
securities usually will be principal transactions.
Portfolio securities normally will be purchased or
sold from or to dealers serving as market makers for
the securities at a net price. The Master Portfolios
also will purchase portfolio securities in
underwritten offerings and may purchase securities
directly from the issuer. Generally, money market
securities, adjustable rate mortgage securities
("ARMS"), municipal obligations, and collateralized
mortgage obligations ("CMOs") are traded on a net
basis and do not involve brokerage commissions.
The cost of executing the Master Portfolios'
investment portfolio securities transactions will
consist primarily of dealer spreads and underwriting
commissions.

Purchases and sales of equity securities on a
securities exchange are effected through brokers who
charge a negotiated commission for their services.
Orders may be directed to any broker including,
to the extent and in the manner permitted by
applicable law, Stephens or BGI. In the over-the-
counter market, securities are generally traded
on a "net" basis with dealers acting as principal
for their own accounts without a stated commission,
although the price of the security usually includes
a profit to the dealer. In underwritten offerings,
securities are purchased at a fixed price that
includes an amount of compensation to the
underwriter, generally referred to as the
underwriter's concession or discount.

In placing orders for portfolio securities of the
Master Portfolio, BGFA is required to give primary
consideration to obtaining the most favorable price
and efficient execution. This means that BGFA seeks to
execute each transaction at a price and commission, if
any, that provides the most favorable total cost or
proceeds reasonably attainable in the circumstances.
While BGFA generally seeks reasonably competitive
spreads or commissions, the Master Portfolios will not
necessarily be paying the lowest spread or commission
available. In executing portfolio transactions and
selecting brokers or dealers, BGFA seeks to obtain
the best overall terms available for the Master
Portfolios. In assessing the best overall terms
available for any transaction, BGFA considers factors
deemed 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, both for the specific transaction
and on a continuing basis. Rates are established
pursuant to negotiations with the broker based on
the quality and quantity of execution services
provided by the broker in the light of generally
prevailing rates. The allocation of orders among
brokers and the commission rates paid are reviewed
periodically by the Master Portfolios' board of
trustees.

Certain of the brokers or dealers with whom the Master
Portfolios may transact business offer commission
rebates to the Master Portfolios. BGFA considers such
rebates in assessing the best overall terms available
for any transaction. The overall reasonableness of
brokerage commissions paid is evaluated by BGFA based
upon its knowledge of available information as to the
general level of commission paid by other
institutional

PURCHASE OF SHARES tc "PURCHASE OF SHARES"

Detailed information about the purchase, redemption
and exchange of shares of each Fund appears in the
prospectus.
General

The funds offer two classes of shares, Smith Barney
Shares and Citi Shares. Both Smith Barney Shares and
Citi Shares of the funds are sold at net asset value
without an initial sales charge. There are no deferred
sales charges when you sell your shares. However, as
indicated in the funds' Prospectuses, each fund
charges a redemption fee, payable to the fund, on the
sale or exchange of any shares that have been held for
less than 180 days.

During periods of drastic economic or market changes
or severe weather or other emergencies, shareholders
may experience difficulties implementing a telephone
or Internet exchange or redemption. In such an event,
another method of instruction, if available, should be
considered. The funds will employ reasonable
procedures to confirm that instructions communicated
by telephone are genuine. These procedures may
include recording of the telephone instructions and
verification of a shareholder's identity by asking for
the shareholder's name, address, telephone number,
Social Security number, account number, or password
identification number. If these or other reasonable
procedures are not followed, the funds or their
transfer agent may be liable for any losses to a
shareholder due to unauthorized or fraudulent
instructions. Otherwise, the shareholders will bear
all risk of loss relating to a redemption or exchange
by telephone.

Investors may open an account in each fund by making
an initial investment of at least $1,000 for each
account, or $250 for an IRA or a Self-Employed
Retirement Plan, in the fund. Subsequent investments
of at least $50 may be made for each Class. For
shareholders purchasing shares of a fund through the
Systematic Investment Plan on a monthly basis, the
minimum initial investment requirement and subsequent
investment requirement for each Class is $25. For
shareholders purchasing shares of a fund through the
Systematic Investment Plan on a quarterly basis, the
minimum initial investment required and the subsequent
investment requirement for each Class is $50. There
are no minimum investment requirements for employees
of Citigroup and its subsidiaries, including Salomon
Smith Barney, unitholders who invest distributions
from a Unit Investment Trust ("UIT") sponsored by
Salomon Smith Barney, and Directors/Trustees of any of
the Smith Barney mutual funds, and their spouses and
children. The funds reserve the right to waive or
change minimums, to decline any order to purchase
their shares and to suspend the offering of shares
from time to time. Shares purchased will be held in
the shareholder's account by the sub-transfer agent.
Share certificates are issued only upon a
shareholder's written request to the sub-transfer
agent.

Purchase orders received by a fund or a Salomon Smith
Barney financial consultant prior to the close of
regular trading on The New York Stock Exchange, Inc.
(the "NYSE"), on any day the fund calculates its net
asset value, are priced according to the net asset
value determined on that day (the ''trade date'').
Orders received by a Service Agent prior to the close
of regular trading on the NYSE on any day the fund
calculates its net asset value, are priced according
to the net asset value determined on that day,
provided the order is received by the fund or the
fund's agent prior to its close of business. For
shares purchased through Salomon Smith Barney or a
Service Agent purchasing through Salomon Smith Barney,
payment for shares of a fund is due on the third
business day after the trade date. In all other cases,
payment must be made with the purchase order.

When payment is made by an investor through a Salomon
Smith Barney brokerage account before the settlement
date, unless otherwise noted by the investor, the
funds will be held as a free credit balance in the
investor's brokerage account and Salomon Smith Barney
may benefit from the temporary use of the funds. The
funds' board of trustees has been advised of the
benefits to Salomon Smith Barney resulting from these
settlement procedures and will take such benefits into
consideration when reviewing the Investment Advisory,
Administration and Distribution Agreements for
continuance.

Systematic Investment Plan. Shareholders may make
additions to their accounts at any time by purchasing
shares through a service known as the Systematic
Investment Plan. Under the Systematic Investment
Plan, Salomon Smith Barney, your Service Agent or the
sub-transfer agent is authorized through preauthorized
transfers of at least $25 on a monthly basis or at
least $50 on a quarterly basis to charge the
shareholder's account held with a bank or other
financial institution on a monthly or quarterly basis
as indicated by the shareholder, to provide for
systematic additions to the shareholder's fund
account. A shareholder who has insufficient funds to
complete the transfer may be charged a fee of up to
$25 by Salomon Smith Barney, your Service Agent or the
sub-transfer agent. The Systematic Investment Plan
also authorizes the funds to apply cash held in the
shareholder's brokerage account or redeem the
shareholder's shares of a Smith Barney money market
fund to make additions to the Smith Barney Shares
account. For Cititrade customers, the Systematic
Investment Plan authorizes the funds to apply cash
held in a shareholder's Cititrade Account to make
additions to the Citi Shares account. For additional
information, please contact the funds' sub-transfer
agent, or if you hold your shares through a Service
Agent, your Service Agent. Additional information is
available from the fund, a Salomon Smith Barney
Financial Consultant or your Service Agent.

REDEMPTION OF SHARES tc "REDEMPTION OF SHARES"

Redemption Fee. The U.S. 5000 Index Fund will deduct
a redemption fee equal to 0.75% of the net asset value
of Smith Barney Shares and Citi Shares redeemed and
the International Index Fund will deduct a redemption
fee equal to 1.50% of the net asset value of Smith
Barney Shares and Citi Shares redeemed where the
redemption occurs within 180 days following the
opening of a fund account. The redemption fee will be
deducted from the redemption proceeds and retained by
the fund and used primarily to offset portfolio
transaction costs. It is expected that, as a result of
this fee, the fund will be able to track its Index
more closely. The redemption fee may be waived,
modified or discontinued and reintroduced at any time
or from time to time. No redemption fee will be
charged on the redemption or exchange of shares (1)
through the fund's Automatic Withdrawal Plan, (2)
through accounts reflected on the records of the
transfer agent as omnibus accounts approved by Salomon
Smith Barney or (3) acquired through the reinvestment
of dividends or capital gains distributions. The
redemption fee may be waived, modified or terminated
at anytime.

The right of redemption of shares of each fund may be
suspended or the date of payment postponed (a) for any
periods during which the NYSE is closed (other than
for customary weekend and holiday closings), (b) when
trading in the markets the fund normally utilizes is
restricted, or an emergency exists, as determined by
the SEC, so that disposal of the fund's investments or
determination of its net asset value is not reasonably
practicable or (c) for any other periods as the SEC by
order may permit for the protection of the fund's
shareholders.

If the shares to be redeemed were issued in
certificate form, the certificates must be endorsed
for transfer (or be accompanied by an endorsed stock
power) and must be submitted to the sub-transfer agent
together with the redemption request. Any signature
appearing on a share certificate, stock power or
written redemption request in excess of $10,000 must
be guaranteed by an eligible guarantor institution
such as a domestic bank, savings and loan institution,
domestic credit union, member bank of the Federal
Reserve System or member firm of a national securities
exchange. Written redemption requests of $10,000 or
less do not require a signature guarantee unless more
than one such redemption request is made in any 10-day
period or the redemption proceeds are to be sent to an
address other than the address of record. Unless
otherwise directed, redemption proceeds will be mailed
to an investor's address of record. The transfer
agent may require additional supporting documents for
redemptions made by corporations, executors,
administrators, trustees or guardians. A redemption
request will not be deemed properly received until the
transfer agent receives all required documents in
proper form.

If the investor owns fewer shares of shares than
specified, the redemption request will be delayed
until the transfer agent receives further instructions
from Salomon Smith Barney, or if the shareholder's
account is not with Salomon Smith Barney, from the
shareholder directly. The redemption proceeds will be
remitted on or before the third business day following
receipt of proper tender, except on any days on which
the NYSE is closed or as permitted under the 1940 Act,
in extraordinary circumstances. Generally, if the
redemption proceeds are remitted to a Salomon Smith
Barney brokerage account, these funds will not be
invested for the shareholder's benefit without
specific instruction and Salomon Smith Barney will
benefit from the use of temporarily uninvested funds.
Redemption proceeds for shares purchased by check,
other than a certified or official bank check, will be
remitted upon clearance of the check, which may take
up to fifteen days or more.

Distribution in Kind

Automatic Cash Withdrawal Plan

The Smith Barney Index Shares' Withdrawal Plan is
available to shareholders of each fund who own Smith
Barney Index Shares with a value of at least $10,000
and who wish to receive specific amounts of cash
monthly or quarterly. Withdrawals of at least $50 may
be made without a redemption fee under the Withdrawal
Plan by redeeming as many Smith Barney Index Shares of
the fund as may be necessary to cover the stipulated
withdrawal payment. As it generally would not be
advantageous to a shareholder to make additional
investments in Smith Barney Index Shares at the same
time he or she is participating in the Withdrawal
Plan, purchases by such shareholders in amounts of
less than $5,000 ordinarily will not be permitted.

Smith Barney Index shareholders who wish to
participate in the Withdrawal Plan and who hold their
shares in certificate form must deposit their share
certificates with the sub-transfer agent as agent for
Withdrawal Plan members. All dividends and
distributions on shares in the Withdrawal Plan are
reinvested automatically at net asset value in
additional Smith Barney Index Shares of the fund
involved. A shareholder who purchases shares directly
through the sub-transfer agent may continue to do so
and applications for participation in the Withdrawal
Plan must be received by the sub-transfer agent no
later than the eighth day of the month to be eligible
for participation beginning with that month's
withdrawal. For additional information, shareholders
should contact their Service Agent.

To the extent withdrawals exceed dividends,
distributions and appreciation of a shareholder's
investment in a fund, continued withdrawal payments
will reduce the shareholder's investment, and may
ultimately exhaust it. Withdrawal payments should not
be considered as income from investment in a fund.

Additional Information Regarding Telephone Redemption
And Exchange Program

Neither the funds nor their agents will be liable for
following instructions communicated by telephone that
are reasonably believed to be genuine. The funds and
their agents will employ procedures designed to verify
the identity of the caller and legitimacy of
instructions (for example, a shareholder's name and
account number will be required and phone calls may be
recorded). The funds reserve the right to suspend,
modify or discontinue the telephone redemption and
exchange program or to impose a charge for this
service at any time following at least seven (7) days'
prior notice to shareholders.

EXCHANGE PRIVILEGE

Shares of each Class of the Smith Barney U.S. 5000
Index Fund and Smith Barney International Index Fund
are exchangeable for each other as well as
exchangeable for shares of the same Class of:

1. Smith Barney S&P 500 Index Fund
2. Citi Nasdaq-100 Index Fund
3. Citi Small Cap Index Fund
4. Citi U.S.1000 Index Fund
5. Citi Global Titans Fund
6. Citi U.S. Bond Index Fund

Exchanges can be made to the extent shares are offered
for sale in the shareholder's state of residence.
Exchanges are subject to minimum investment
requirements and to the other requirements of the fund
into which exchanges are made.

Smith Barney Shares and Citi Shares shareholders of
the fund who wish to exchange all or a portion of
their shares for the respective Class in any of the
funds identified above may do so without imposition of
any charge.

Additional Information Regarding the Exchange
Privilege

Certain shareholders may be able to exchange shares by
telephone. See ''Redemption of Shares-Additional
Information Regarding Telephone Redemptions and
Exchange Program.'' Exchanges will be processed at the
net asset value next determined. Redemption
procedures discussed below are also applicable for
exchanging shares, and exchanges will be made upon
receipt of all supporting documents in proper form.
If the account registration of the shares of the fund
being acquired is identical to the registration of the
shares of the fund exchanged, no signature guarantee
is required. An exchange involves a taxable
redemption of shares, subject to the tax treatment
described in "Dividends, Distributions and Taxes"
below, followed by a purchase of shares of a different
fund. Before exchanging shares, investors should read
the current prospectus describing the shares to be
acquired. The fund reserves the right to modify or
discontinue exchange privileges upon 60 days' prior
notice to shareholders.

VALUATION OF SHARES tc "VALUATION OF SHARES"

The net asset value per share of each fund's Classes
is calculated on each day, Monday through Friday,
except days on which the NYSE is closed. The NYSE
currently is 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 or subsequent Monday when one of these holidays
falls on a Saturday or Sunday, respectively. Because
of the differences in distribution fees and Class-
specific expenses, the per share net asset value of
each Class will differ. The following is a
description of the procedures used by the trust in
valuing its assets.

The net asset value per share of each fund is
calculated as of the close of the NYSE by dividing the
total market value of its investments and other
assets, less any liabilities, by the total outstanding
shares of the stock of the fund. The value of each
fund's shares will fluctuate in relation to the
investment experience of the Master Portfolios in
which such fund invests. Securities held by a fund or
Master Portfolio which are listed on a securities
exchange and for which market quotations are available
are valued at the last quoted sale price of the day.
Price information on listed securities is taken from
the exchange where the security is primarily traded.

The securities of the Master Portfolios, including
covered call options written by the Master Portfolios,
are valued as discussed below. Domestic securities
are valued at the last sale price on the domestic
securities or commodities exchange or national
securities market on which such securities primarily
are traded. Securities not listed on a domestic
exchange or national securities market, or securities
in which there were no transactions, are valued at the
most recent bid prices. Portfolio securities which
are traded primarily on foreign securities or
commodities exchanges generally are valued at the
preceding closing values of such securities on their
respective exchanges, except that when an occurrence
subsequent to the time a value was so established is
likely to have changed such value, then the fair value
of those securities is determined by BGFA in
accordance with guidelines approved by MIP's board of
trustees. Short-term investments are carried at
amortized cost which approximates value. Any
securities or other assets for which recent market
quotations are not readily available are valued at
fair value as determined in good faith by BGFA in
accordance with such guidelines.

Restricted securities, as well as securities or other
assets for which market quotations are not readily
available, or are not valued by a pricing service
approved by MIP's board of trustees, are valued at
fair value as determined in good faith by BGFA in
accordance with guidelines approved by MIP's board of
trustees. BGFA and MIP's board of trustees
periodically review the method of valuation. In
making its good faith valuation of restricted
securities, BGFA generally takes the following factors
into consideration: restricted securities which are,
or are convertible into, securities of the same class
of securities for which a public market exists usually
will be valued at market value less the same
percentage discount at which purchased. This discount
is revised periodically if it is believed that the
discount no longer reflects the value of the
restricted securities. Restricted securities not of
the same class as securities for which a public market
exists usually are valued initially at cost. Any
subsequent adjustment from cost is based upon
considerations deemed relevant by MIP's board of
trustees.

PERFORMANCE DATA tc "PERFORMANCE DATA"

From time to time a fund may advertise its total
return and average annual total return in
advertisements and/or other types of sales literature.
These figures are based on historical earnings and are
not intended to indicate future performance. Total
return is computed for a specified period of time
assuming reinvestment of all income dividends and
capital gain distributions on the reinvestment dates
at prices calculated as stated in the prospectus, then
dividing the value of the investment at the end of the
period so calculated by the initial amount invested
and subtracting 100%. The standard average annual
total return, as prescribed by the SEC is derived from
this total return, which provides the ending
redeemable value. Such standard total return
information may also be accompanied with nonstandard
total return information for differing periods
computed in the same manner but without annualizing
the total return. A fund may also include comparative
performance information in advertising or marketing
its shares. Such performance information may include
data from Lipper Analytical Services, Inc. and other
financial publications.

Average Annual Total Return

A fund's "average annual total return," as described
below, is computed according to a formula prescribed
by the SEC. The formula can be expressed as follows:

P(1 + T)n = ERV

Where: P = a hypothetical
initial payment of $1,000.

T = average annual
total return.

n = number of years.

U.S. 5000 Index Fund
Aggregate Annual Total Return

Class of Shares
1-Year
5-Year
10-Year
Life of
Fund 1
Smith Barney Shares
N/A
N/A
N/A
22.70%
Citi Shares
N/A
N/A
N/A
N/A2

International Index Fund
Aggregate Annual Total Return

Class of Shares
1-Year
5-Year
10-Year
Life of
Fund 1
Smith Barney Shares
N/A
N/A
N/A
14.10%
Citi Shares
N/A
N/A
N/A
N/A2
____________________
1 Smith Barney Shares and Citi Shares commenced
operations on October 18, 1999. The results
reflected are for the period from October 18, 1999
to March 31, 2000. Prior to September 5, 2000, the
Classes were named Class A and Class D shares,
respectively.
2 There is no information for Citi Shares because no
Citi Shares shares were outstanding.

Aggregate Total Return

A fund's "aggregate total return," as described below,
represents the cumulative change in the value of an
investment in the fund for the specified period and is
computed by the following formula:

ERV - P
P

Where: P = a hypothetical initial
payment of $10,000.

The ERV assumes complete redemption of the
hypothetical investment at the end of the measuring
period.

U.S. 5000 Index Fund
Aggregate Annual Total Return

Class of Shares
1-Year
5-Year
10-
Year
Life of
Fund 1
Smith Barney Shares
N/A
N/A
N/A
22.70%
Citi Shares
N/A
N/A
N/A
N/A2

International Index Fund
Aggregate Annual Total Return

Class of Shares
1-Year
5-Year
10-
Year
Life of
Fund 1
Smith Barney Shares
N/A
N/A
N/A
14.10%
Citi Shares
N/A
N/A
N/A
N/A2
____________________
1 Smith Barney Shares and Citi Shares commenced
operations on October 18, 1999. The results
reflected are for the period from October 18, 1999
to March 31, 2000. Prior to September 5, 2000, the
Classes were named Class A and Class D shares,
respectively.
2 There is no information for Citi Shares because no
Citi Shares shares were outstanding.

MIP is organized as a business trust under Delaware
law. Under MIP's current classification for federal
income tax purposes, it is intended that each Master
Portfolio will be treated as a partnership for such
purposes and, therefore, such Master Portfolio will
not be subject to any federal income tax on its income
and gains (if any). However, each investor in a
Master Portfolio will be taxed on its share (as
determined in accordance with the governing
instruments of MIP) of such Master Portfolio's taxable
income and capital gain in determining its federal
income tax liability. The determination of such share
will be made in accordance with the Internal Revenue
Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.

MIP's taxable year-end is the last day of December.
Although MIP will not be subject to federal income
tax, it will file appropriate federal income tax
returns

The Master Portfolios assets, income and distributions
will be managed in such a way that an investor in a
Master Portfolio may satisfy the requirements of
Subchapter M of the Code by investing substantially
all of its assets in the Master Portfolio. Investors
are advised to consult their own tax advisors as to
the tax consequences of an investment in the Master
Portfolio.

Taxes

The Fund and Its Investments

The fund intends to continue to qualify to be treated
as a regulated investment company each taxable year
under the Code. To so qualify, the fund must, among
other things: (a) derive at least 90% of its gross
income in each taxable year from dividends, interest,
payments with respect to securities loans and gains
from the sale or other disposition of stock or
securities or foreign currencies, or other income
(including, but not limited to, gains from options,
futures or forward contracts) derived with respect to
its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at
the end of each quarter of the fund's taxable year,
(i) at least 50% of the market value of the fund's
assets is represented by cash, securities of other
regulated investment companies, United States
government securities and other securities, with such
other securities limited, in respect of any one
issuer, to an amount not greater than 5% of the fund's
assets and not greater than 10% of the outstanding
voting securities of such issuer and (ii) not more
than 25% of the value of its assets is invested in the
securities (other than United States government
securities or securities of other regulated investment
companies) of any one issuer or any two or more
issuers that the fund controls and are determined to
be engaged in the same or similar trades or businesses
or related trades or businesses. For purposes of
federal income tax law, including the application of
the foregoing qualification requirements, a fund will
be treated as if it derived directly its proportionate
share of each item of income, deduction, gain or loss
(and as if it held directly its proportionate share of
the assets and liabilities) of each Master Portfolio
in which it invests, either directly or indirectly.

As a regulated investment company, the fund will not
be subject to United States federal income tax on its
investment company taxable income (i.e., income other
than any excess of its net realized long-term capital
gains over its net realized short-term capital losses
("net relized capital gains") or on its net realized
capital gains, if any, that it distributes to its
shareholders, provided an amount equal to at least 90%
of its investment company taxable income, plus or
minus certain other adjustments as specified in the
Code, and 90% of its net tax-exempt income for the
taxable year is distributed in compliance with the
Code's timing and other requirements but will be
subject to tax at regular corporate rates on any
taxable income or gains it does not distribute. The
Code imposes a 4% nondeductible excise tax on the fund
to the extent it does not distribute by the end of any
calendar year at least 98% of its net investment
income for that year and 98% of the net amount of its
capital gains (both long-and short-term) for the one-
year period ending, as a general rule, on October 31
of that year. For this purpose, however, any income
or gain retained by the fund that is subject to
corporate income tax will be considered to have been
distributed by year-end. In addition, the minimum
amounts that must be distributed in any year to avoid
the excise tax will be increased or decreased to
reflect any underdistribution or overdistribution, as
the case may be, from the previous year. The fund
anticipates that it will pay such dividends and will
make such distributions as are necessary in order to
avoid the application of this tax.

If, in any taxable year, the fund 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 fund in computing its taxable
income. In addition, in the event of a failure to
qualify, the fund's distributions, to the extent
derived from the fund'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 might
otherwise (at least in part) have been treated in the
shareholders' hands as long-term capital gains. If
the fund 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 fund failed to qualify as a regulated
investment company for a period greater than one
taxable year, the fund may be required to recognize
any net built-in gains (the excess of the aggregate
gains, including items of income, over aggregate
losses that would have been realized if it had been
liquidated) with respect to certain of its assets in
order to qualify as a regulated investment company in
a subsequent year.

The fund's investment in Section 1256 contracts, such
as regulated futures contracts, most forward currency
contracts traded in the interbank market and options
on most stock indices, are subject to special tax
rules. All section 1256 contracts held by the fund at
the end of its taxable year are required to be marked
to their market value, and any unrealized gain or loss
on those positions will be included in the fund's
income as if each position had been sold for its fair
market value at the end of the taxable year. The
resulting gain or loss will be combined with any gain
or loss realized by the fund from positions in section
1256 contracts closed during the taxable year.
Provided such positions were held as capital assets
and were not part of a "hedging transaction" nor part
of a "straddle," 60% of the resulting net gain or loss
will be treated as long-term capital gain or loss, and
40% of such net gain or loss will be treated as short-
term capital gain or loss, regardless of the period of
time the positions were actually held by the fund.

Index Swaps. As a result of entering into index swaps,
the fund may make or receive periodic net payments. It
may also make or receive a payment when a swap is
terminated prior to maturity through an assignment of
the swap or other closing transaction. Periodic net
payments will constitute ordinary income or
deductions, while termination of a swap will result in
capital gain or loss (which will be a long-term
capital gain or loss if the fund has been a party to
the swap for more than one year).

Passive Foreign Investment Companies. If the fund
purchases shares in certain foreign investment
entities, called "passive foreign investment
companies" (a "PFIC"), it may be subject to United
States federal income tax on a portion of any "excess
distribution" or gain from the disposition of such
shares even if such income is distributed as a taxable
dividend by the fund to its shareholders. Additional
charges in the nature of interest may be imposed on
the fund in respect of deferred taxes arising from
such distributions or gains. If the fund were to
invest in a PFIC and elected to treat the PFIC as a
"qualified electing fund" under the Code, in lieu of
the foregoing requirements, the fund might be required
to include in income each year a portion of the
ordinary earnings and net capital gains of the
qualified electing fund, even if not distributed to
the fund, and such amounts would be subject to the 90%
and excise tax distribution requirements described
above. In order to make this election, the fund would
be required to obtain certain annual information from
the PFICs in which it invests, which may be difficult
or not possible to obtain.

Alternatively, the fund may elect to mark-to-market
its stock in a PFIC. This election would result in
the fund being treated as if it had sold and
repurchased all of the PFIC stock at the end of each
year. In this case, the fund would report gains as
ordinary income and would deduct losses as ordinary
losses to the extent of previously recognized gains.
The election, once made, would be effective for all
subsequent taxable years of the fund, unless revoked
with the consent of the Internal Revenue Service (the
"IRS"). By making the election, the fund could
potentially ameliorate the adverse tax consequences
with respect to its ownership of shares in a PFIC, but
in any particular year may be required to recognize
income in excess of the distributions it receives from
PFICs and its proceeds from dispositions of PFIC
stock. The fund may have to distribute this "phantom"
income and gain to satisfy its distribution
requirement and to avoid imposition of the 4% excise
tax. The fund will make the appropriate tax
elections, if possible, and take any additional steps
that are necessary to mitigate the effect of these
rules.

Taxation of United States Shareholders

Dividends and Distributions. Any dividend declared by
the fund in October, November or December of any
calendar year and payable to shareholders of record on
a specified date in such a month shall be deemed to
have been received by each shareholder on December 31
of such calendar year and to have been paid by the
fund not later than such December 31, provided such
dividend is actually paid by the fund during January
of the following calendar year. The fund intends to
distribute annually to its shareholders substantially
all of its investment company taxable income, and any
net realized capital gains. However, if the fund
retains for investment an amount equal to all or a
portion of its net realized capital gains, it will be
subject to a corporate tax (currently at a rate of
35%) on the amount retained. In that event, the fund
will designate such retained amounts as undistributed
capital gains in a notice to its shareholders who (a)
will be required to include in income for United
Stares federal income tax purposes, as long-term
capital gains, their proportionate shares of the
undistributed amount, (b) will be entitled to credit
their proportionate shares of the 35% tax paid by the
fund on the undistributed amount against their United
States federal income tax liabilities, if any, and to
claim refunds to the extent their credits exceed their
liabilities, if any, and (c) will be entitled to
increase their tax basis, for United States federal
income tax purposes, in their shares by an amount
equal to 65% of the amount of undistributed capital
gains included in the shareholder's income.
Organizations or persons not subject to federal income
tax on such capital gains will be entitled to a refund
of their pro rata share of such taxes paid by the fund
upon filing appropriate returns or claims for refund
with the IRS.

Sales of Shares. Upon the sale or exchange of his
shares, a shareholder will realize a taxable gain or
loss equal to the difference between the amount
realized and his basis in his shares. Such gain or
loss will be treated as capital gain or loss, if the
shares are capital assets in the shareholder's hands,
and will be long-term capital gain or loss if the
shares are held for more than one year and short-term
capital gain or loss if the shares are held for one
year or less. Any loss realized on a sale or exchange
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 fund, within a 61-day period
beginning 30 days before and ending 30 days after the
disposition of the shares. In such a case, the basis
of the shares acquired will be increased to reflect
the disallowed loss. Any loss realized by a
shareholder on the sale of a fund share held by the
shareholder for six months or less will be treated for
United States federal income tax purposes as a long-
term capital loss to the extent of any distributions
or deemed distributions of long-term capital gains
received by the shareholder with respect to such
share. If a shareholder incurs a sales charge in
acquiring shares of the fund, disposes of those shares
within 90 days and then acquires shares in a mutual
fund for which the otherwise applicable sales charge
is reduced by reason of a reinvestment right (e.g., an
exchange privilege), the original sales charge will
not be taken into account in computing gain/loss on
the original shares to the extent the subsequent sales
charge is reduced. Instead, the disregarded portion
of the original sales charge will be added to the tax
basis in the newly acquired shares. Furthermore, the
same rule also applies to a disposition of the newly
acquired shares made within 90 days of the second
acquisition. This provision prevents a shareholder
from immediately deducting the sales charge by
shifting his or her investment in a family of mutual
funds.

Other Taxation

Distributions also may be subject to additional state,
local and foreign taxes depending on each
shareholder's particular situation.

The foregoing is only a summary of certain material
tax consequences affecting the funds and their
shareholders. Shareholders are advised to consult
their own tax advisers with respect to the particular
tax consequences to them of an investment in a fund.

ADDITIONAL INFORMATION

The Funds

The trust was organized on October 17, 1991 under the
laws of the Commonwealth of Massachusetts and is a
business entity commonly known as a "Massachusetts
business trust" under the name Shearson Lehman
Brothers Intermediate-Term Trust. On October 14, 1994
and August 16, 1995, the trust's name was changed to
Smith Barney Income Trust and Smith Barney Investment
Trust, respectively. In addition to each fund, the
trust offers shares of beneficial interest of five
other separate funds with a par value of $.001 per
share. Each fund offers shares of beneficial interest
currently classified into two Classes - Smith Barney
Shares and Citi Shares. Each Class of the fund
represents an identical interest in the fund's
investment portfolio. As a result, the Classes have
the same rights, privileges and preferences, except
with respect to: (a) the designation of each Class;
(b) the effect of the respective sales charge, if any,
for each Class; (c) the distribution and/or service
fees borne by each Class pursuant to the Plan; (d) the
expenses allocable exclusively to each Class;
(e) voting rights on matters exclusively affecting a
single Class; and (f) the exchange privilege of each
Class. The trust's board of trustees does not
anticipate that there will be any conflicts among the
interests of the holders of the different Classes. The
trustees, on an ongoing basis, will consider whether
any such conflict exists and, if so, take appropriate
action.

The Master Trust Agreement permits the trustees of the
fund to issue an unlimited number of full and
fractional shares of a single Class and to divide or
combine the shares into a greater or lesser number of
shares without thereby changing the proportionate
beneficial interests in the fund. Each share in the
fund represents an equal proportional interest in the
fund with each other share. Shareholders of the fund
are entitled upon its liquidation to share pro rata in
its net assets available for distribution. No
shareholder of the fund has any preemptive or
conversion rights. Shares of the fund are fully paid
and non-assessable.

Master Portfolio Organization

The Master Portfolios are a series of MIP, an open-
end, series management investment company organized
as Delaware business trust. MIP was organized on
October 21, 1993. In accordance with Delaware law and
in connection with the tax treatment sought by MIP,
the Declaration of Trust provides that its investors
are personally responsible for trust liabilities and
obligations, but only to the extent the trust
property is insufficient to satisfy such
liabilities and obligations. The Declaration of Trust
also provides that MIP must maintain appropriate
insurance (for example, fidelity bonding and errors
and omissions insurance) for the protection of the
trust, its investors, trustees, officers, employees
and agents covering possible tort and other
liabilities, and that investors will be indemnified
to the extent they are held liable for a
disproportionate share of MIP's obligations. Thus,
the risk of an investor incurring financial loss on
account of investor liability is limited to
circumstances in which both inadequate insurance
existed and MIP itself was unable to meet its
obligations.

The Declaration of Trust further provides that
obligations of MIP are not binding upon its
trustees individually but only upon the property of
MIP and that the trustees will not be liable for any
action or failure to act, but nothing in the
Declaration of Trust protects a trustee against any
liability to which the trustee would otherwise be
subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties
involved in the conduct of the trustee's office.

The interests in the Master Portfolios have
substantially identical voting and other rights as
those rights enumerated above for shares of the
fund. MIP is generally not required to hold annual
meetings, but is required by Section 16(c) of the 1940
Act to hold a special meeting and assist investor
communications under certain circumstances. Whenever
the fund is requested to vote on a matter with
respect to the corresponding Master Portfolio, the
fund will hold a meeting of fund shareholders and
will cast its votes as instructed by such
shareholders.

In a situation where the fund does not receive
instruction from certain of its shareholders on how
to vote the corresponding shares of the Master
Portfolio, such fund will vote such shares in the same
proportion as the shares for which the fund does
receive voting instructions.

Annual and Semi-annual Reports. The fund sends its
shareholders a semi-annual report and an audited
annual report, which include listings of investment
securities held by the fund at the end of the period
covered. In an effort to reduce the fund's printing
and mailing costs, the fund consolidates the mailing
of its semi-annual and annual reports by household.
This consolidation means that a household having
multiple accounts with the identical address of record
will receive a single copy of each report. The fund
also consolidates the mailing of its prospectus so
that a shareholder having multiple accounts will
receive a single Prospectus annually. Shareholders who
do not want this consolidation to apply to their
accounts should contact their Salomon Smith Barney
Financial Consultant or the transfer agent.

FINANCIAL STATEMENTS

The U.S. 5000 Index Fund's annual report for the
fiscal year ended December 31, 1999 was filed on March
7, 2000, Accession Number 91155-00-000182. The
International Index Fund's annual report for the
fiscal year ended December 31, 1999 was filed on March
7, 2000, Accession Number 91155-00-000183.

OTHER INFORMATION

Styles of Fund Management In an industry where the
average portfolio manager has seven years of
experience (source: ICI, 1998), the portfolio managers
of Smith Barney mutual funds average 21 years in the
industry and 15 years with the firm.
Smith Barney mutual funds offers more than 60 mutual
funds. We understand that many investors prefer an
active role in allocating the mix of funds in their
portfolio, while others want the asset allocation
decisions to be made by experienced managers.

That's why we offer four "styles" of fund management
that can be tailored to suit each investor's unique
financial goals.

Style Pure Series
Our Style Pure Series funds stay fully invested
within their asset class and investment style,
enabling investors to make asset allocation
decisions in conjunction with their Salomon
Smith Barney Financial Consultant and Service
Agent.

Classic Investor Series
Our Classic Investor Series funds offer a range
of equity and fixed income strategies that seek
to capture opportunities across asset classes
and investment styles using disciplined
investment approaches.

The Concert Allocation Series
As a fund of funds, investors can select a
Concert Portfolio that may help their investment
needs. As needs change, investors can easily
choose another long-term, diversified investment
from our Concert family.

Special Discipline Series
Our Special Discipline Series funds are designed
for investors who are looking beyond more
traditional market categories: from natural
resources to a roster of state-specific
municipal funds.

U.S. 5000 Index Fund

Wilshire Associates, Incorporated ("Wilshire
Associates") does not sponsor any portfolio of the
fund, nor is it affiliated in anyway with the funds.
"Wilshire 5000 Equity Index" and related marks are
trademarks of Wilshire Associates. The fund is not
sponsored, endorsed, sold, or promoted by the index or
its sponsor and neither the index nor its sponsor make
any representation or warranty, express or implied,
regarding the advisability of investing in the fund.

The fund is not sponsored, endorsed, sold or promoted
by Wilshire Associates. Wilshire Associates makes no
representation or warranty, express or implied, to the
owners of this fund or any member of the public
regarding the advisability of investing in funds
generally or in this fund particularly or the ability
of the Wilshire 5000 Index to track general stock
market performance. Wilshire's only relationship to
the fund is the licensing of certain trademarks and
trade names of Wilshire. The Wilshire 5000 Index
which is composed and calculated without regard to the
issuer of this fund or the owners of this fund.
Wilshire has no obligation to take the needs of the
issuer of this fund or the owners of this fund into
consideration in determining, composing or calculating
the Wilshire 5000 Index. Wilshire does not guarantee
the accuracy or the completeness of the Wilshire 5000
Index or any data included therein and Wilshire shall
have no liability for any errors, omissions, or
interruptions therein. Wilshire makes no warranty,
express or implied, as to results to be obtained by
the fund, owners of the product, or any other person
or entity from the use of the Wilshire 5000 Index or
any data included therein. Wilshire makes no express
or implied warranties, and expressly disclaims all
warranties of merchantability or fitness for a
particular purpose or use with respect to the Wilshire
5000 Index or any data included therein. Without
limiting any of the foregoing, in no event shall
Wilshire have any liability for any special, punitive,
indirect, or consequential damages (including lost
profits), even if notified of the possibility of such
damages.

U.S. 5000 Index Fund

"S&P 500(r)" is a trademark of The McGraw-Hill
Companies, Inc. and has been licensed for use by
Salomon Smith Barney. The fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's (S&P),
a division of The McGraw-Hill Companies, Inc. S&P
makes no representation or warranty, express or
implied, to the shareholders of the fund or any member
of the public regarding the advisability of investing
in securities generally or in the fund particularly or
the ability of the S&P 500 Index to track general
stock market performance. S&P's only relationship to
Salomon Smith Barney is the licensing of certain
trademarks and trade names of S&P and the S&P 500
Index which is determined, composed and calculated by
S&P without regard to Salomon Smith Barney or the
fund. S&P has no obligation to take the needs of
Salomon Smith Barney or the shareholders of the fund
into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible
for and has not participated in the determination of
the prices and amount of the fund's shares or the
timing of the issuance or sale of the fund's shares or
in the determination or calculation of the equation by
which fund shares are to be converted into cash. S&P
has no obligation or liability in connection with the
administration, marketing or trading of fund shares.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
S&P 500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO
LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE
OBTAINED BY THE FUND, OWNERS OF THE FUND, OR ANY OTHER PERSON OR
ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX
OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING
LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.

International Index Fund

The fund is not sponsored, endorsed, sold or promoted
by MSCI or any affiliate of MSCI. Neither MSCI nor
any other party makes any representation or warranty,
express or implied, to the owners of this fund or any
member of the public regarding the advisability of
investing in funds generally or in this fund
particularly or the ability of the EAFE Index to track
general stock market performance. MSCI is the
licensor of certain trademarks, service marks, and
trade names of MSCI and the EAFE Index which is
determined, composed and calculated by MSCI without
regard to the issuer of this fund or this fund. MSCI
has no obligation to take the needs of the issuer of
this fund of the owners of this fund into
consideration in determining, composing or calculating
the EAFE Index. MSCI is not responsible for and has
not participated in the determination or calculation
of the equation by which the fund is redeemable for
cash. Neither MSCI nor any other party has any
obligation or liability to owners of this fund in
connection with the administration, marketing or
trading of this fund.

ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION
IN OR FOR USE IN THE CALCULATION OF THE INDEXES FROM
SOURCES WHICH MSCI CONSIDERS RELIABLE, NEITHER MSCI
NOR ANY OTHER PARTY GUARANTEES THE ACCURACY AND/OR THE
COMPLETENESS OF THE INDEXES OR ANY DATA INCLUDED
THEREIN. NEITHER MSCI NOT ANY OTHER PARTY MAKES ANY
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE
OBTAINED BY LICENSEE, LICENSEE'S CUSTOMERS AND
COUNTERPARTIES, OWNERS OF THE FUNDS, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE INDEXES OR ANY
DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS
LICENSED HEREUNDER OR FOR ANY OTHER USE. NEITHER MSCI
NOT ANY OTHER PARTY MAKES ANY EXPRESS OF IMPLIED
WARRANTIES, AND MSCI HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE INDEXES OR ANY
DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL MSCI OR ANY OTHER PARTY
HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL,
PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES
(INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES

APPENDIX

Description of certain ratings assigned by Standard &
Poor's Corporation ("S&P") and Moody's Investors
Service, Inc. ("Moody's")

APPENDIX

DESCRIPTION OF COMMERCIAL PAPER RATINGS

A-1 and Prime-1 Commercial Paper Ratings

The rating A-1 (including A-1+) is the highest
commercial paper rating assigned by S&P. Commercial
paper rated A-1 by S&P has the following
characteristics:

? liquidity ratios are adequate to meet cash
requirements;

? long-term senior debt is rated "A" or better;

? the issuer has access to at least two additional
channels of borrowing;

? basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances;

? typically, the issuer's industry is well
established and the issuer has a strong position
within the industry; and

? the reliability and quality of management are
unquestioned.

Relative strength or weakness of the above
factors determines whether the issuer's commercial
paper is rated A-1, A-2 or A-3. Issues rated A-1 that
are determined by S&P to have overwhelming safety
characteristics are designated A-1+.

The rating Prime-1 is the highest commercial paper
rating assigned by Moody's. Among the factors
considered by Moody's in assigning ratings are the
following:

? evaluation of the management of the issuer;

? economic evaluation of the issuer's
industry or industries and an appraisal of
speculative-type risks which may be inherent in
certain areas;

? evaluation of the issuer's products in
relation to competition and customer acceptance;

? liquidity;

? amount and quality of long-term debt;

? trend of earnings over a period of ten years;

? financial strength of parent company and the
relationships which exist with the issuer; and

? recognition by the management of obligations
which may be present or may arise as a result of
public interest questions and preparations to meet
such obligations.

SMITH BARNEY
INVESTMENT TRUST

U.S. 5000 Index Fund

International Index Fund

April 28, 2000
(as amended September 5,
2000)

SMITH BARNEY INVESTMENT TRUST
388 Greenwich Street
New York, NY 10013

SALOMON SMITH BARNEY
A Member of Citigroup [Symbol]