CONSULTING GROUP CAPITAL MARKETS FUNDS, 485APOS, 1999-07-15

CONSULTING GROUP CAPITAL MARKETS FUNDS
485APOS, 1999-07-15

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Registration No. 33-40823
811-6318

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

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

Post-Effective Amendment No. 26 X

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940

Amendment No. 26 X

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

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

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

Christina T. Sydor
Consulting Group Capital Markets Funds
388 Greenwich Street, 22nd Floor
New York, New York 10013
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: Continuous

It is proposed that this filing will become effective:

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

on (date) pursuant to paragraph (b) of Rule 485

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

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

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

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

If appropriate, check the following box:

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

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

PART A

<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to sell these securities
and is not soliciting an offer to buy these securities in any state where the
offer and sale is not permitted.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Consulting Group

Capital Markets Funds

S&P 500 Index Investments

Prospectus SalomonSmithBarney
September _________, 1999 ----------------------------
a member of citigroup [LOGO]

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

Table of Contents
<TABLE>
<S> <C>
Investments, Risks and Performance 2
- ----------------------------------------------------------
Investment Objective 2
- ----------------------------------------------------------
Principal Investment Strategies 2
- ----------------------------------------------------------
Fees and Expenses 3
- ----------------------------------------------------------

More on the Portfolio's Investments and Related Risks 4
- ----------------------------------------------------------

The Manager 6
- ----------------------------------------------------------
Year 2000 Issue 7
- ----------------------------------------------------------
Asset Allocation Programs 8
- ----------------------------------------------------------

Investment and Account Information 9
- ----------------------------------------------------------
Account Transactions 9
- ----------------------------------------------------------
Valuation of Shares 10
- ----------------------------------------------------------
Dividends and distributions 10
- ----------------------------------------------------------
Taxes 10
- ----------------------------------------------------------
Appendix A A-1
- ----------------------------------------------------------
</TABLE>

An investment in the Portfolio is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

S&P 500 Index Investments
<PAGE>

Investments, Risks and Performance

About the portfolio

The Consulting Group, a division of SSBC Fund Management Inc. ("SSBC"), serves
as investment manager for S&P 500 Index Investments (the "Portfolio"). As man-
ager, the Consulting Group selects and oversees professional money managers who
are responsible for investing the assets of the Portfolio. The S&P 500 Index
Investments is subadvised by Barclays Global Fund

Advisors.

Investment objective

The Portfolio seeks to provide investment results that, before expenses, corre-
spond to the price and yield performance of the S&P 500 Index. The Portfolio
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 capitaliza-
tion and liquidity.

Principal investment strategies

The Portfolio invests at least 80% of its assets in common stocks included in
the S&P 500 Index. The Portfolio holds stocks of substantially all of the com-
panies which comprise the S&P 500 Index, including those companies which are
headquartered outside the U.S. The Portfolio also enters into repurchase agree-
ments, lends portfolio securities and uses certain types of derivative instru-
ments to help implement its objective.

How the subadvisor selects the portfolio's investments

The manager has selected Barclays Global Fund Advisors as subadvisor to manage
the Portfolio. The subadvisor manages the portfolio as a "pure" index fund.
This means that the subadvisor does not evaluate individual companies to iden-
tify attractive investment candidates. Instead, the subadvisor attempts to mir-
ror the composition of the S&P 500 Index as closely as possible by adjusting
the Portfolio's holdings daily to reflect the companies included in the index
and their weightings. The Portfolio does not mirror the index exactly because,
unlike the index, the Portfolio must maintain a portion of its assets in cash
and liquid securities to meet redemption requests and pay the Portfolio's ex-
penses.

The S&P 500 Index is one of the most widely used benchmarks of U.S. equity per-
formance. The index consists of 500 stocks chosen for market capitalization,
liquidity and industry group representation. The index is market-value-weight-
ed, so the larger of the 500 companies have a bigger impact on the performance
of the index. The index is unmanaged and does not have to maintain liquidity to
meet redemption requests or pay expenses.

SUBADVISOR

BARCLAYS GLOBAL FUND ADVISORS
45 Fremont Street
5th Floor
San Francisco, CA 94105

PORTFOLIO MANAGERS

Domestic Equity Team of

Barclays Global Fund Advisors

Principal risks of investing in the Portfolio

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

. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments

. The S&P 500 Index may go down, or perform poorly relative to other U.S. eq-
uity indices or individual stocks

. An adverse company specific event, such as an unfavorable earnings report,
may negatively affect the stock price of one of the larger companies in the
S&P 500 Index

. The stocks of companies which comprise the S&P 500 Index may fall out of fa-
vor with investors

Because the Portfolio is managed as an index fund, it will not ordinarily sell
a portfolio security because of the security's poor performance. The Portfolio
normally buys or sells a portfolio security only to reflect additions or dele-
tions of stocks that comprise the S&P 500 Index or to adjust their relative
weightings. Although the subadvisor seeks to replicate the performance of the
S&P 500 Index, the Portfolio may underperform the index even before deducting
expenses because the Portfolio must maintain a portion of its assets in liquid
short-term debt securities which historically have generated significantly
lower returns than common stocks.

S&P 500 Index Investments
<PAGE>

Investments, Risks and Performance, continued

Who may want to invest

The Portfolio may be an appropriate investment if you:

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

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

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

. Are willing to accept the risks of the stock market

- ------------------------------------------------------------------------
Performance

Because this Portfolio was added to the Consulting Group Capital Markets Funds
this year, the Portfolio does not yet have a sufficient operating history to
generate the performance information which other Smith Barney funds show in bar
and table form in this location of the prospectus.

Fee table

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

<TABLE>
<S> <C>
Shareholder fees None
(fees paid directly from your
investment)
Maximum annual TRAK(R) fee* 1.50%
Annual Portfolio operating expenses
(expenses that are deducted from
Portfolio assets)
Management fee** 0.32%
Administration 0.10%
Other expenses 0.10%
-----
Total annual Portfolio operating
expenses 0.52%
</TABLE>

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

** The management fee rate shown above reflects the maximum permissible fee
paid to the manager and subadvisor. The manager projects an effective annual
management fee rate of 0.02% and will seek the approval of the Board of
Trustees to lower the management fee rate shown above.

Example

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

The example assumes:

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

. You reinvest all dividends and distributions;

. You redeem at the end of each period;

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

. The Portfolio's operating expenses remain the same.

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

<TABLE>
<CAPTION>
After 1 After 3 After 5 After 10
year years years years
<S> <C> <C> <C>
$203 $632 $1,087 $2,344
</TABLE>

S&P 500 Index Investments
<PAGE>

More on the Portfolio's Investments and Related Risks

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

Percentage Limits

Some Portfolio policies in this
section are stated as a percent-
age of assets. These percentages
are applied at the time of pur-
chase of a security and subse-
quently may be exceeded because
of changes in the value of the
Portfolio's investments.

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

Derivatives. The Portfolio may, but is not required to, use futures and options
on securities and securities indices, and options on these futures, for any of
the following purposes:

. to simulate full investment in the S&P 500 Index while maintaining sufficient
liquidity to satisfy daily redemption requests and operating expenses

. to facilitate trading in the securities of companies that comprise the index

. to reduce transaction costs

. to seek higher investment returns when a contract is priced more attractively
than the stocks comprising the index

The Portfolio may not invest more than 20% of its assets in derivative con-
tracts or more than 5% of its assets in open purchased put options. However,
during its initial operating period, the Portfolio will invest substantially
all of its assets in futures contracts and options on these contracts.

A derivative contract will obligate or entitle the Portfolio to deliver or re-
ceive an asset or cash payment based on the change in value of one or more se-
curities or indices. Even a small investment in derivative contracts can have a
big impact on the Portfolio's stock market exposure. Therefore, using deriva-
tives can disproportionately increase losses and reduce opportunities for gains
when stock prices are changing. The Portfolio may not fully benefit from or may
lose money on derivatives if changes in their value do not correspond accu-
rately to changes in the value of the Portfolio's holdings. Derivatives can
also make the Portfolio less liquid and harder to value, especially in declin-
ing markets.

Money market instruments. The Portfolio may temporarily maintain up to 10% of
its assets in money market instruments. The Portfolio invests in money market
instruments under the following circumstances:

. pending investment of proceeds of the sale of shares of the Portfolio

. pending settlement of purchases of securities by the Portfolio

. to maintain liquidity to meet anticipated redemptions

Foreign investments. The Portfolio may purchase common stocks and American De-
positary Receipts (ADRs) of the foreign companies included in the S&P 500 In-
dex. These securities are publicly traded on U.S. securities exchanges or over-
the-counter markets. ADRs are U.S. dollar denominated securities which repre-
sent an interest in an underlying foreign security.

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 informa-
tion available about foreign issuers and markets because of less rigorous ac-
counting and regulatory standards than in the U.S. Currency fluctuations could
erase investment gains or add to investment losses. Because the value of an ADR
is dependent upon the market price of an underlying foreign security, ADRs are
subject to most of the risks associated with foreign investing.

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

More information about investment styles. The subadvisor follows a passive
style, where the principal objective is to mirror the return of a benchmark in-
dex. The subadvisor may seek to achieve that goal by investing in all of the
securities in the index. However, in those in -

S&P 500 Index Investments
<PAGE>

stances where the subadvisor is unable to replicate the exact index weightings
for a particular company in the index, it will allocate a pro rata portion to
the other companies in the index.

Order of Exemption. The Trust is subject to an Order of Exemption from the De-
partment of Labor requiring the Portfolio to limit its investments in the secu-
rities of affiliates of Salomon Smith Barney, including Citigroup, Inc., to one
percent of the Portfolio's net assets. Since the Portfolio will be managed to
comply with this limitation, this may result in differences in performance be-
tween the Portfolio and other funds that fully replicate the S & P 500 Index.

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

Potential Conversion. The Portfolio reserves the right, if approved by the
Board of Trustees, to convert in the future to a "Master/Feeder" fund that
would invest all of its assets in a Master/Feeder fund having substantially the
same investment objective, policies and restrictions. At least 30 days written
notice of any action would be given to all shareholders if, and when, such a
proposal is approved.

S&P 500 Index Investments
<PAGE>

The Manager

The manager. The Consulting Group, a division of SSBC, serves as the manager
for the Portfolio. SSBC is a wholly-owned subsidiary of Salomon Smith Barney
Holdings Inc., which in turn is a wholly-owned subsidiary of Citigroup Inc.
Citigroup businesses produce a broad range of financial services--asset manage-
ment, banking and consumer finance, credit and charge cards, insurance, invest-
ments, investment banking and trading--and use diverse channels to make them
available to consumer and corporate customers around the world. As manager, the
Consulting Group selects and oversees professional money managers who are re-
sponsible for investing the assets of the Portfolio. The Consulting Group was
established to match the investment needs of institutional investors and sub-
stantial individual investors with appropriate and well-qualified investment
advisers. Since 1973, the Consulting Group has grown to become one of the na-
tion's foremost organizations providing portfolio evaluation, asset allocation,
market analysis and investment adviser selection services.

The Portfolio is part of a series of portfolios which comprise the Consulting
Group Capital Market Funds (the "Trust"). The Trust is a series company that
consists of the Portfolio and the following additional portfolios which are of-
fered in a separate prospectus, a copy of which can be obtained from any Salo-
mon Smith Barney Financial Consultant:

. Government Money Investments

. Intermediate Fixed Income Investments

. Long-Term Bond Investments

. Municipal Bond Investments

. Mortgage Backed Investments

. High Yield Investments

. Balanced Investments

. Large Capitalization Value Equity Investments

. Large Capitalization Growth Investments

. Small Capitalization Value Equity Investments

. Small Capitalization Growth Investments

. International Equity Investments

. International Fixed Income Investments

. Emerging Markets Equity Investments

. Multi-Strategy Market Neutral Investments

The Evaluation Process

The Consulting Group screens
more than 3,000 registered in-
vestment advisory firms, tracks
the performance of more than 700
firms on its comprehensive data-
base and evaluates the strength
and performance of advisory
firms in Consulting Group pro-
grams each year. Throughout the
evaluation, the Consulting Group
focuses on a number of key is-
sues:

. level of expertise

. relative performance and
consistency of performance

. strict adherence to investment
discipline or philosophy

. personnel, facility and finan-
cial strength

. quality of service and commu-
nication.

The subadvisor. The subadvisor is responsible for the day-to-day investment
operations of the Portfolio in accordance with the Portfolio's investment
objectives and policies. The name and address of the subadvisor is included in
the Section entitled "Investments, Risks and Performance."

The subadvisor selection process. Subject to the review and approval of the
Portfolio's Trustees, the Consulting Group is responsible for selecting,
supervising and evaluating subadvisors who manage the Portfolio's assets. The
Consulting Group employs a rigorous evaluation process to select those
subadvisors that have distinguished themselves through consistent and superior
performance. The Consulting Group is also responsible for communicating
performance expectations and evaluations to the subadvisor and ultimately
recommending to the Board of Trustees whether the subadvisor's contract should
be renewed. The Consulting Group provides written reports to the Trustees
regarding the results of its evaluation and monitoring functions.

The Portfolio relies upon an exemptive order from the Securities and Exchange
Commission which permits the manager to select new subadvisors or replace ex-
isting subadvisors without first obtaining shareholder approval for the change.
The Trustees, including a majority of the "non-interested" Trustees, must ap-
prove each new subadvisory contract. This allows the manager to act more
quickly to change subadvisors when it determines that a change is beneficial to
shareholders by avoiding the delay of calling and holding shareholder meetings
to approve each change. In accordance with the exemptive order, the Portfolio
will provide investors with informa -

S&P 500 Index Investments
<PAGE>

tion about each new subadvisor and its subadvisory contract within 90 days of
the engagement of a new subadvisor.

Management Fees. The Consulting Group receives fees from the Portfolio for its
services at an annual rate of 0.32% of its average daily net assets. In turn,
the Consulting Group pays the subadvisor a portion of this fee for its servic-
es. In addition, the Portfolio pays SSBC a fee
at an annual rate of 0.10 of the Portfolio's average daily net assets for ad-
ministration services.

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

Year 2000 issue

Information technology experts are concerned about computer systems' ability to
process date-related information on and after January 1, 2000. This situation,
commonly known as the "Year 2000" issue, could have an adverse impact on the
Portfolio. The cost of addressing the Year 2000 issue, if substantial, could
adversely affect companies and governments that issue securities held by the
Portfolio. The manager and Salomon Smith Barney are addressing the Year 2000
issue for their systems. The Portfolio has been informed by other service
providers that they are taking similar measures. Although the Portfolio does
not expect the Year 2000 issue to adversely affect it, the Portfolio cannot
guarantee that the efforts of the Portfolio, which are limited to requesting
and receiving reports from service providers, or the efforts of service
providers to correct the problem, will be successful.

S&P 500 Index Investments
<PAGE>

Asset Allocation Programs

Shares of the portfolios are available to participants in advisory programs
sponsored by Salomon Smith Barney Inc., including the TRAK(R) Personalized In-
vestment Advisory Service, or other qualified investment advisors approved by
the Consulting Group. The advisory services provide investors with asset allo-
cation recommendations, which are implemented through the portfolios.

Advisory services generally include:

. evaluating the investor's investment objectives and time horizon

. analyzing the investor's risk tolerance

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

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

While an advisory service makes a recommendation, the ultimate investment deci-
sion is normally up to the investor and not the provider of the advisory serv-
ice.

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

S&P 500 Index Investments
<PAGE>

Investment and Account Information
Account Transactions

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

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

. There is no minimum on additional investments.

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

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

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

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

. Name of the Portfolio

. Account Number

. Dollar amount or number of shares to be purchased

. Signatures of each owner exactly as the account is registered

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

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

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

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

The Consulting Group may limit additional exchanges and/or purchases by a
shareholder if it determines that the shareholder is pursuing a pattern of fre-
quent exchanges. Excessive exchange transactions can adversely affect the Port-
folio's performance, hurting the Portfolio's other shareholders. If the Con-
sulting Group discovers a pattern of frequent exchanges, it will provide notice
in writing or by telephone to the shareholder at least 15 days before sus-
pending his or her exchange privilege. During the 15-day period the shareholder
will be required either to redeem his or her shares in the Portfolio

S&P 500 Index Investments
<PAGE>

Investment and Account Information, continued
or establish an allocation which the shareholder expects to maintain for a sig-
nificant period of time.

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

Valuation of shares

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

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

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

Dividends and distributions

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

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

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

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

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

After the end of each year, you will receive a Form 1099 indicating your divi-
dends and distributions for the prior year, which are taxable as described
above even if reinvested, and your redemptions during that year. If you do not
provide the Portfolio with your correct taxpayer identification number and any
required certifications, you may be subject to backup withholding of 31% of the
Portfolio's distributions, dividends and redemption proceeds. Because each
shareholder's circumstances are different and special tax rules may apply, you
should consult your tax adviser about your investment in the Portfolio.

As noted above, investors, out of their own assets, will pay an advisory serv-
ice fee. For most investors who are individuals, this fee will be treated as a
"miscellaneous itemized deduction" for federal income tax purposes. Under cur-
rent federal income tax law, an individual's miscellaneous itemized deductions
for any taxable year will be allowed as a deduction only to the extent the ag-
gregate of these deductions exceeds 2% of adjusted gross income. Such deduc-
tions are also subject to the general limitation on itemized deductions for in-
dividuals having, in 1999, adjusted gross income in excess of $126,600 ($63,600
for married individuals filing separately).

S&P 500 Index Investments
<PAGE>

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<PAGE>

APPENDIX A

The following are copies of the proposed and final exemptions from the Depart-
ment of Labor from certain provisions of the Employee Retirement Income Secu-
rity Act of 1974 relating to the purchase of shares and participation in TRAK
by certain retirement plans.

- --------------------------------------------------------------------------------
[Application Nos. D-9337 and D-9415]

Smith Barney Shearson (SBS), Located in New York, NY

NEW AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Notice of proposed exemption to modify and replace prohibited
transaction exemption (PTE) 92-77 involving Shearson Lehman Brothers, Inc.
(Shearson Lehman).
- --------------------------------------------------------------------------------
SUMMARY: This document contains a notice of pendency before the Department of
Labor (the Department) of a proposed individual exemption which, if granted,
would replace PTE 92-77 (55 FR 45833, October 5, 1992). PTE 92-77 permits the
purchase or redemption of shares by an employee benefit plan, an individual
retirement account (the IRA) or a retirement plan for a self-employed
individual (the Keogh Plan; collectively the Plans) in the Trust for TRAK
Investments (the Trust) established by Shearson Lehman, in connection with such
loans' participation in the TRAK Personalized Investment Advisory Service (the
TRAK Program). In addition, PTE 92-77 permits the provision, by the Consulting
Group Division of Shearson Lehman (the Consulting Group), of investment
advisory services to an independent fiduciary of a participating Plan (the
Independent Plan Fiduciary) which may result in such fiduciary's selection of a
portfolio (the Portfolio) in the TRAK Program for the investment of Plan
assets. These transactions are described in a notice of pendency that was
published in the Federal Register on April 3, 1992 at 57 FR 11514. PTE 92-77 is
effective as of April 3, 1992.
If granted, the proposed exemption would replace PTE 92-77, which as discussed
below, expired by operation of the law. The new proposed exemption would permit
the replacement of Shearson Lehman with a newly-merged entity known as "Smith
Barney Shearson, Inc." It would also permit the adoption of a daily-traded
collective investment fund (the GIC Fund) for Plans providing for participant
directed investments (the Section 404(c) Plans). The proposed exemption would
provide conditional relief that is identical to that provided by PTE 92-77. In
addition, the proposed exemption would affect participants and beneficiaries
of, and fiduciaries with respect to, Plans participating in the TRAK Program.

DATES: Written comments and requests for a public hearing should be received by
the Department on or before the expiration of 60 days from the publication of
this proposed exemption in the Federal Register. If granted, the proposed
exemption will be effective July 31, 1993 for transactions that are covered by
PTE 92-77. With respect to transactions involving the GIC Fund, the proposed
exemption will be effective as of the date the grant notice is published in the
Federal Register.

ADDRESSES: All written comments and requests for a public hearing (preferably,
three copies) should be sent to the Office of Exemption Determinations, Pension
and Welfare Benefits Administration, Room N-5849, U.S. Department of Labor, 200
Constitution Avenue, NW., Washington, DC 20210. Attention: Application Nos. D-
9337 and D-9415. The applications pertaining to the proposed exemption and the
comments received will be available for public inspection in the Public
Documents Room of the Pension and Welfare Benefits Administration. U.S.
Department of Labor, Room N-3307, 200 Constitution Avenue, NW., Washington, DC
20210.

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

SUPPLEMENTARY INFORMATION: Notice is hereby given of the pendency before the
Department of a proposed exemption that would replace PTE 92-77. PTE 92-77
provides an exemption from certain prohibited transaction restrictions of
section 406 of the Employee Retirement Income Security Act of 1974 (the Act)
and from the sanctions resulting from the application of section 4975 of the
Internal Revenue Code of 1986 (the Code), as amended, by reason of section
4975(c)(1) of the Code. The proposed exemption was requested in an application
filed by SBS pursuant to section 408(a) of the Act and section 4975(c)(2) of
the Code, and in accordance with the procedures (the Procedures) set forth in
29 CFR Part 2570, Subpart 3 (55 FR 32836, August 10, 1990). Effective December
31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR 47713,
October 17, 1978) transferred the authority of the Secretary of the Treasury to
issue exemptions of the type requested to the Secretary of Labor. Accordingly,
this proposed replacement exemption is being issued solely by the Department.

As stated briefly above, PTE 92-77 allows Shearson Lehman to make the TRAK
Program available to Plans that acquire shares in the Trust subject to certain
conditions. Specifically, PTE 92-77 provides exemptive relief from section
406(a) of the Act and the sanctions resulting from the application of section
4975 of the Code, by reason of section 4975(c)(1) (A) through (D) of the Code,
with respect to the purchase or redemption of shares in the Trust by Plans
investing therein. In addition, PTE 92-77 provides exemptive relief from the
restrictions of section 408(b)(1) and (b)(2) of the Act and the sanctions
resulting from the application of section 4975 of the Code, by reason of
section 4975(c)(1)(E) of the Code, with respect to the provision, by the
Consulting Group of Shearson Lehman, of investment advisory services to an
Independent Plan Fiduciary of a Plan participating in the TRAK Program which
may result in such fiduciary's selection of a Portfolio in the TRAK Program for
the investment of Plan assets.

Subsequent to the granting of PTE 92-77, Shearson Lehman informed the
Department that it had signed an asset purchase agreement with Primerica
Corporation (Primerica) and Smith Barney Harris Upham & Company, Inc. (Smith
Barney), an indirect wholly owned subsidiary. The terms of the agreement
provided for the sale of substantially all of the assets of Shearson Lehman and
its Asset Management Divisions (collectively, the Shearson Divisions) to Smith
Barney./1/ The transaction was completed on July 31, 1993. As a result of the
transaction, most of the assets and business of the Shearson Divisions were
transferred to Smith Barney which, upon merger with Shearson Lehman, was
renamed "Smith Barney Shearson." (Smith Barney Shearson is denoted herein as
SBS.) Shearson Lehman received cash and an
- -------
/1/ Shearson Lehman's other primary division, Lehman Brothers, which is
responsible for securities underwriting, financial advisory, investment and
merchant banking services and commodities trading as a principal and agent has
been retained by Shearson Lehman it has been renamed "Lehman Brothers Inc."
A-1
<PAGE>

interest-bearing note from SBS. As further consideration for the asset sale,
SBS agreed to pay future contingent amounts based upon the combined performance
of SBS and certain other Shearson Divisions acquired from Shearson Lehman.
Shearson Lehman also assigned to the American Express Company (American
Express) the right to receive 2.5 million shares of certain convertible
preferred stock issued by Primerica and a warrant. As consideration for the
assignment, American Express agreed to pay Shearson Lehman for the stock and
the warrant based on their value as of March 12, 1993, the date of the Asset
Purchase Agreement. At present, SBS offers the TRAK Program to investors
through one or more of its subsidiaries or divisions.

Since PTE 92-77 was granted, SBS informed the Department that it wished to
modify the exemption in order to improve the TRAK Program and make it more
responsive to the needs of investors. Specifically, SBS proposes to add to the
Portfolios currently available under the TRAK Program, the GIC Fund, which is
designed to invest primarily in guaranteed investment contracts (the GIC's),
synthetic GIC products and/or units of other GIC collective funds. The GIC Fund
will not differ in any material respects from the Government Money Investments
Portfolio which generally permits daily redemptions of its shares. In addition,
the GIC Fund will operate in a manner that is consistent with the requirements
of PTE 92-77. SBS believes it is important to offer the GIC Fund to Section
404(c) Plans because these Plans may prefer to offer participants this type of
investment option instead of the Government Money Investments Portfolio
presently offered to such Plans under the TRAK Program. Therefore, SBS requests
exemptive relief in order that the GIC Fund may be added to the Portfolios that
are available under the Trust.

The proposed GIC Fund will be a collective trust fund established and
maintained by Smith Barney Shearson Trust Company (SBS Trust), a wholly owned
subsidiary of Primerica. The GIC Fund will invest primarily in a portfolio of
GICs with varying maturities issued by highly-rated insurance companies, and/or
units of other collective funds invested in GICs. The GIC Fund may also invest
in asset-backed investment products designed to offer risk and return
characteristics similar to those of GICs (i.e., synthetic GIC products). In
addition, the GIC Fund may hold short-term, low risk securities where the
investment of all fund assets in GICs and/or units of other GIC collective
funds is not feasible.

SBS Trust will serve as the trustee of the GIC Fund. SBS Trust will employ a
sub-adviser (the Sub-Adviser) which is independent of SBS and its affiliates to
make recommendations on purchases of GICs and/or units of other GIC collective
funds. Currently, SBS Trust employs Morley Capital Management (Morley Capital)
of Lake Oswego, Oregon as the Sub-Adviser of the GIC Fund. SBS Trust will also
employ Boston Company Investors Services Group (ISG), a business group of The
Boston Company to provide custody and valuation services and The Shareholder
Services Group, Inc. (TSSG), an entity which is indirectly owned by American
Express, as transfer agent. Both ISG and TSSG are not affiliated with SBS.
SBS represents that the GIC Fund will not pay a management or other similar
fee to it or SBS Trust. (SBS Trust's fees for general trust services provided
to a Section 404(c) Plan is included in such plan's investment advisory or
"outside" fee.) A management fee may be paid to Morley Capital or any other
Sub-Adviser which is independent of SBS and its affiliates. The GIC Fund will
pay ISG, as custodian and provider of fund valuation services, a fee for such
services, and TSSG, as transfer agent, a fee of $8.50 to $9.50 per Section
404(c) Plan, plus out-of-pocket expenses. With respect to the fees paid to SBS
and its affiliates, the GIC Fund will not differ materially from the Government
Money Investments Portfolio in that it will not pay a management or other
similar fee to SBS or SBS Trust.
SBS will describe the GIC Fund, in the prospectus (the Prospectus) and
promotional materials it furnishes to Section 404(c) Plan participants who are
interested in investing in the GIC Fund. Such disclosures will reflect, in all
material respects, the information discussed above.
Because of the foregoing material changes to the factual representations
supporting PTE 92-77, the Department has determined that the prior exemption
was no longer effective as of July 31, 1993, the date Shearson Lehman sold the
assets described above to SBS. Thus, the Department is of the view that PTE 92-
77 would be unavailable for use by SBS and its subsidiaries with respect to the
subject transactions.
Accordingly, the Department has decided to publish a new exemption which, if
granted, would replace PTE 92-77. Under the replacement exemption, all
references to Shearson Lehman would be replaced with references to SBS. In
addition, the replacement exemption would incorporate the new GIC Fund, SBS
Trust, ISG and TSSG. Further, the replacement exemption would have an effective
date of July 31, 1993 for transactions described in PTE 92-77. With respect to
transactions involving the GIC Fund, the replacement exemption would become
effective as of the date of the grant of the notices of pendency.

Notice to Interested Persons
Notice of the proposed exemption will be mailed by first class mail to each
Plan which invests in the TRAK Program. The notice will contain a copy of the
notice of proposed exemption as published in the Federal Register and an
explanation of the rights of interested persons to comment on and/or request
such a hearing with respect thereto. Such notice will be sent to the above-
named parties within 30 days of the publication of the proposed exemption in
the Federal Register. Written comments and hearing request are due within 60
days of the publication of the proposed exemption in the Federal Register.

General Information
The attention of interested persons is directed to the following:
(1) This fact that a transaction is the subject of an exemption under section
408(a) of the Act and section 4973(c)(2) of the Code does not relieve a
fiduciary or other party in interest or disqualified person from certain other
provisions of the Act and the Code, including any prohibited transaction
provisions to which the exemption does not apply and the general fiduciary
responsibility provisions of section 404 of the Act, which require, among other
things, a fiduciary to discharge his or her duties respecting the plan solely
in the interest of the participants and beneficiaries of the plan and in a
prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it
affect the requirements of section 401(a) of the Code that the Plan operate for
the exclusive benefit of the employees of the employer maintaining the plan and
their beneficiaries;
(2) Before an exemption can be granted under section 408(a) of the Act and
section 4975(c)(2) of the Code, the Department must find that the exemption is
administratively feasible, in the interest of the plan and of its participants
and beneficiaries and protective of the rights of participants and
beneficiaries of the plan; and
(3) The proposed exemption, if granted, will be supplemental to, and not in
derogation of, any other provisions of the
A-2
<PAGE>

Act and the Code, including statutory or administrative exemptions.
Furthermore, the fact that a transaction is subject to an administrative or
statutory exemption is not dispositive of whether the transaction is in fact a
prohibited transaction.
(4) In addition to transactions involving the GIC Fund, the proposed
exemption, if granted, will be applicable to the transactions previously
described in PTE 92-77 only if the conditions specified therein are met.

Written Comments and Hearing Requests
All interested persons are invited to submit written comments or requests for
a hearing on the proposed replacement exemption to the address above, within
the time period set forth above. All comments will be made a part of the
record. Comments and requests for a hearing should state the reasons for the
writer's interest in the proposed exemption. Comments received will be
available for public inspection with the referenced applications at the address
set forth above.

Proposed Exemption
Under the authority of section 408(a) of the Act and section 4975(c)(2) of the
Code and in accordance with the Procedures cited above, the Department proposes
to replace PTE 92-77 as follows:

Section 1. Covered Transactions
(a) The restrictions of section 406(a) of the Act and the sanctions resulting
from the application of section 4975 of the Code, by reason of section
4975(c)(1)(A) through (D) of the Code, shall not apply to the purchase or
redemption of shares by Plans in the SBS-established Trust in connection with
such Plans' participation in the TRAK Personalized Investment Advisory Service.

(b) The restrictions of action 406(b) of the Act and the sanctions resulting
from the application of section 4975 of the Code by reason of section
4975(c)(1)(E) and (F) of the Code, shall not apply to the provision, by the
Consulting Group, of investment advisory services to an Independent Plan
Fiduciary of a participating Plan which may result in such fiduciary's
selection of a Portfolio in the TRAK Program for the investment of Plan assets.
The proposed exemption is subject to the following conditions that are set
forth in Section II.

(b) The total fees paid to the Consulting Group and its affiliates will
constitute no more than reasonable compensation.
(c) No Plan will pay a fee or commission by reason of the acquisition or
redemption of shares in the Trust.
(d) The terms of each purchase or redemption of Trust shares shall remain at
least as favorable to an investing Plan as those obtainable in an arm's length
transaction with an unrelated party.

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

(f) Any recommendation or evaluation made by the Consulting Group to an
Independent Plan Fiduciary will be implemented only at the express direction of
such independent fiduciary.

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

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

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

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

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

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

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

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

(C) A copy of the investment advisory agreement between the Consulting Group
and such Plan relating to participation in the TRAK Program.

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

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

(F) Copies of PTE 92-77 and documents pertaining to the proposed replacement
exemption.

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

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

(4) With respect to a Plan that is covered under Title I of the Act, where
investment decisions are made by a trustee, investment

A-3
<PAGE>

manager or a named fiduciary, such Independent Plan Fiduciary is required to
acknowledge, in writing, receipt of such documents and represent to SBS that
such fiduciary is (a) independent of SBS and its affiliates, (b) capable of
making an independent decision regarding the investment of Plan assets and (c)
knowledgeable with respect to the Plan in administrative matters and funding
matters related thereto, and able to make an informed decision concerning
participation in the TRAK Program.

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

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

(2) A written quarterly monitoring statement containing an analysis and an
evaluation of a Plan investor's account to ascertain whether the Plan's
investment objectives have been met and recommending, if required, changes in
Portfolio allocations.
(3) If required by the arrangement negotiated between the Consulting Group and
a section 404(c) Plan, a quarterly, detailed investment performance monitoring
report, in writing, provided to an Independent Plan Fiduciary of such Plan
showing, Plan level asset allocation, Plan cash flow analysis and annualized
risk adjusted rates of return for Plan investments. In addition, if required by
such arrangement, Financial Consultants will meet periodically with Independent
Plan Fiduciaries of section 404(c) Plans to discuss the report as well as with
eligible participants to review their accounts' performance.

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

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

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

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

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

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

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

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

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

Section III. Definitions
For purposes of this exemption:

(a) An "affiliate" of SBS includes--

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

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

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

(b) An "Independent Plan Fiduciary" is a Plan fiduciary which is independent
of SBS and its affiliates and is either--

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

(2) A participant in a Keogh Plan.
(3) An individual covered under a self-directed IRA which invests in Trust
shares, or

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

Section IV. Effective Dates

This exemption will be effective as of July 31, 1993, except for transactions
involving the GIC Fund. The exemption will be effective upon its grant with
respect to the inclusion of the GIC Fund in the TRAK Program.

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

For a more complete statement of the facts and representations supporting the
Department's decision to grant PTE 92-77, refer to the proposed exemption and
grant notice which are cited above.

Signed at Washington, D.C. this 23rd day of March, 1994.

Ivan L. Strasfeld,

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

[FR Doc. 94-7271 Filed 3-28-94; 8:45 am]

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[Prohibited Transaction Exemption 94-50; Application Nos. D-9337 and D-9415]

Smith Barney, Inc. (SBI) Located in New York, NY

AGENCY: Pension and Welfare Benefits Administration.

ACTION: Grant of individual exemption to modify and replace prohibited
transaction exemption (PTE) 92-77 involving Shearson Lehman Brothers, Inc.
(Shearson Lehman).
- --------------------------------------------------------------------------------
SUMMARY: This document contains an individual exemption which supersedes PTE
92-77 (57 FR 45833, October 5, 1992)./1/ This exemption permits the replacement
of Shearson Lehman with an entity known as "Smith Barney Inc."/2/ It also
allows SBI to adopt a daily-traded collective investment fund (the GIC Fund)
for Plans investing in the Consulting Group Capital Markets Funds (the Trust).
The exemption provides conditional relief that is identical to that provided by
PTE 92-77 and it will affect participants and beneficiaries of, and fiduciaries
with respect to, Plans participating in the Trust.

EFFECTIVE DATE: This exemption is effective July 31, 1993 for transactions that
are covered by PTE 92-77. With respect to transactions involving the GIC Fund,
the exemption is effective March 29, 1994.

SUPPLEMENTARY INFORMATION: On March 29, 1994, the Department of Labor (the
Department) published a notice of proposed exemption (the Notice) in the
Federal Register (59 FR 14680) that would replace PTE 92-77. PTE 92-77 provides
an exemption from certain prohibited transaction restrictions of section 406 of
the Employee Retirement Income Security Act of 1974 (the Act) and from the
sanctions resulting from the application of section 4975 of the Internal
Revenue Code of 1986 (the Code), as amended, by reason of section 4975(c)(1) of
the Code. The proposed exemption was requested in an application filed by SBI
pursuant to section 408(a) of the Act and section 4975(c)(2) of the Code, and
in accordance with the procedures (the Procedures) set forth in 29 CFR Part
2570, Subpart B (55 FR 32836, August 10, 1990). Effective December 31, 1978,
section 102 of Reorganization Plan No. 4 of 1978 (43 FR 47713, October 17,
1978) transferred the authority of the Secretary of the Treasury to issue
exemptions of the type requested to the Secretary of Labor. Accordingly, this
replacement exemption is being issued solely by the Department.
The Notice gave interested persons an opportunity to comment on the proposed
exemption and to request a public hearing. The only written comments submitted
to the Department during the comment period were made by SBI. These comments
expressed SBI's substantive concerns about the Notice and offered suggestions
for clarifying certain language of the Notice. Discussed below are SBI's
comments and the Department's responses thereto. Also discussed is a comment
made by the Department.

SBI's Comments
SBI notes that there is an ambiguity regarding the effective date of the GIC
Fund. SBI represents that the Notice provides in the last paragraph under the
heading "Supplementary Information," that with respect to transactions
involving the GIC Fund, the exemption "would become effective as of the date of
the grant of the notice of pendency." However, under the captions EFFECTIVE
DATES and DATES, SBI explains that the Notice states that the exemption will be
effective "upon its grant," or "as of the date the grant notice is published."
Because it was the intention of the parties that the effective date for
transactions involving the GIC Fund would be March 29, 1994, the date of
publication of the Notice in the Federal Register, SBI requests that the
Department make the exemption retroactive to this date for the GIC Fund.
The Department has considered SBI's comment and has made the requested
modification.
SBI wishes to modify the exemption in order that it may offer the GIC Fund to
both fiduciary-directed Plans as well as Plans providing for participant-
directed investments (the Section 404(c) Plans). The Department believes this
comment has merit and that it would be potentially beneficial to participants
and beneficiaries since it provides different types of Plans participating in
the TRAK Program with the opportunity to invest in the GIC Fund.
SBI explains that in the preamble to the Notice there is a statement to the
effect that it will "describe the GIC Fund in a prospectus (the Prospectus) and
promotional materials that will be furnished to Section 404(c) Plan
participants." SBI represents that interests in the GIC Fund are not subject to
the registration and Prospectus delivery requirements of the Securities Act of
1933. Also, SBI points out that the conditions of PTE 92-77 require it to
deliver copies of the Trust Prospectus only to the Plan administrator and not
to the individual participants. Because it has no practical means of delivering
Prospectuses or other disclosures to participants, SBI indicates that the
responsibility for providing these materials to participants rests with the
Plan administrator. In this regard, SBI represents that the
disclosure information it will make available to all Plans proposing to invest
in the GIC Fund will include copies of the Trust Prospectus and a separate
description of the GIC Fund's investment objectives, policies and processes.
SBI explains that its description of the GIC Fund will be designed to provide a
participant with sufficient information in order that the participant can make
an informed investment decision.
The Department concurs with these comments.
In addition to principal comments discussed above, SBI has made certain
technical clarifications and updates to the Notice in the following areas:

(1) General.
a. Redesignations. SBI explains that effective December 31, 1993, Primerica
Corporation changed its name to "The Travelers Inc." and that effective May 9,
1994, the "Trust for TRAK Investments" was renamed "Consulting Group Capital
Markets Funds." Also effective June 1, 1994, "Smith Barney Shearson Inc." was
renamed "Smith Barney Inc."

(2) Supplementary Information.
a. Asset Sale Transaction. SBI explains that the transaction by which Smith
Barney Harris Upham & Company, Inc. (Smith Barney) acquired Shearson Lehman and
its Asset Management Divisions was an asset sale and not a merger. Accordingly,
SBI suggests that the fourth sentence of the third
- -------
/1/ PTE 92-77 provides exemptive relief from section 406(a) of the Act and the
sanctions resulting from the application of section 4975 of the Code, by reason
of section 4975(c)(1) (A) through (D) of the Code, with respect to the purchase
or redemption of shares in the Trust for TRAK Investments (which has been
redesignated as the "Consulting Group Capital Markets Funds" and is referred to
herein as the Trust) by Plans investing therein. In addition, PTE 92-77
provides exemptive relief from the restrictions of section 406(b)(1) and (b)(2)
of the Act and the sanctions resulting from the application of section 4975 of
the Code, by reason of section 4975(c)(1)(E) of the Code, with respect to the
provision, by the Consulting Group of Shearson Lehman, of investment advisory
services to an Independent Plan Fiduciary of a Plan participating in the TRAK
Personalized Investment Advisory Service (the TRAK Program) which may result in
such fiduciary's selection of a Portfolio in the TRAK Program for the
investment of Plan assets.
/2/ Effective June 1, 1994, Smith Barney Shearson, Inc. (SBS) was renamed
"Smith Barney Inc." Hereinafter, SBS is referred to in this grant notice as
either "Smith Barney Inc." or "SBI."

A-5
<PAGE>

paragraph under the heading "Supplementary Information," read as follows: "As a
result of the transaction, most of the assets and business of the Shearson
divisions were transferred to Smith Barney, which was renamed "Smith Barney
Shearson Inc.' "
b. Fees Paid to Transfer Agent. SBI represents that in the seventh paragraph
under the heading "Supplementary Information," the Notice states that The
Shareholder Services Group (TSSG), as transfer agent, will charge a fee of
$8.50 to $9.50 per plan for its transfer agency services. While these are the
current expected fee levels, SBI notes that such fees may increase or decrease
in the future. Because TSSG is no longer an affiliate, SBI requests that the
paragraph be amended to provide that TSSG as transfer agent will receive a
reasonable fee for its services rather than specifying a precise dollar amount.

(3) General Conditions.
a. Written Disclosures. Section II(k)(1)(F) of the General Conditions of the
Notice states that SBI will provide copies of PTE 92-77 and documents
pertaining to the proposed replacement exemption to each Plan participating in
the TRAK Program. SBI wishes to clarify that the "documents pertaining to the
proposed replacement exemption" refer to copies of the Notice and, when issued,
the final exemption.
The Department concurs with the above supplemental clarifications to the
Notice that have been made by SBI and hereby incorporates these changes, as
well as the substantive changes also described above, by reference into the
Notice and, where applicable, into this final exemption.

Department's Comment
Section III of the Notice, which is captioned "Definitions," provides several
meanings of the term "Independent Plan Fiduciary" in subparagraph (b). For
purposes of the exemption, the term "Independent Plan Fiduciary" may include a
Plan administrator, a participant in a Keogh Plan, an individual covered under
a self-directed IRA or a trustee of a Title I Plan that does not permit
participant-directed investments as contemplated under section 404(c) of the
Act. However, due to an oversight, the definition does not extend to a
participant in a Section 404(c) Plan. Because the TRAK Program is being
marketed as an investment alternative to Section 404(c) Plans and the
individual participant of such Plan makes the decision on whether to invest
therein, the Department has amended the definition of the term "Independent
Plan Fiduciary" by providing a new subparagraph (b)(5) which includes a Section
404(c) Plan participant.
Accordingly, after consideration of the entire exemption record, including the
written comments, the Department has determined to grant the replacement
exemption as modified herein.

General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption under section
408(a) of the Act and section 4975(c)(2) of the Code does not relieve a
fiduciary or other party in interest or disqualified person from certain other
provisions of the Act and the Code, including any prohibited transaction
provisions to which the exemption does not apply and the general fiduciary
responsibility provisions of section 404 of the Act, which require, among other
things, a fiduciary to discharge his or her duties respecting the plan solely
in the interest of the participants and beneficiaries of the plan and in a
prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it
affect the requirements of section 401(a) of the Code that the plan operate for
the exclusive benefit of the employees of the employer maintaining the plan and
their beneficiaries;
(2) In accordance with section 408(a) of the Act and section 4975(c)(2) of the
Code, the Department has found that the exemption is administratively feasible,
in the interest of the Plans and their participants and beneficiaries and
protective of the rights of participants and beneficiaries of the Plans; and
(3) The exemption is supplemental to, and not in derogation of, any other
provisions of the Act and the Code, including statutory or administrative
exemptions. Furthermore, the fact that a transaction is subject to an
administrative or statutory exemption is not dispositive of whether the
transaction is in fact a prohibited transaction.
(4) In addition to transactions involving the GIC Fund, the exemption is
applicable to the transactions previously described in PTE 92-77 only if the
conditions specified therein are met.

Exemption
Under the authority of section 408(a) of the Act and section 4975(c)(2) of the
Code and in accordance with the Procedures cited above, the Department hereby
replaces PTE 92-77 as follows:

Section I. Covered Transactions
(a) The restrictions of section 406(a) of the Act and the sanctions resulting
from the application of section 4975 of the Code, by reason of section
4975(c)(1)(A) through (D) of the Code, shall not apply to the purchase or
redemption of shares by Plans in the SBI-established Trust in connection with
such Plans' participation in the TRAK Personalized Investment Advisory Service.
(b) The restrictions of section 406(b) of the Act and the sanctions resulting
from the application of section 4975 of the Code by reason of section
4975(c)(1)(E) and (F) of the Code, shall not apply to the provision, by the
Consulting Group, of investment advisory services to an Independent Plan
Fiduciary of a participating Plan which may result in such fiduciary's
selection of a Portfolio in the TRAK Program for the investment of Plan assets.
The exemption is subject to the following conditions that are set forth in
Section II.

Section II. General Conditions
(a) The participation of Plans in the TRAK Program will be approved by an
Independent Plan Fiduciary. For purposes of this requirement, an employee,
officer or director of SBI and/or its affiliates covered by an IRA not subject
to Title I of the Act will be considered an Independent Plan Fiduciary with
respect to such IRA.
(b) The total fees paid to the Consulting Group and its affiliates will
constitute no more than reasonable compensation.
(c) No Plan will pay a fee or commission by reason of the acquisition or
redemption of shares in the Trust.
(d) The terms of each purchase or redemption of Trust shares remain at least
as favorable to an investing Plan as those obtainable in an arm's length
transaction with an unrelated party.
(e) The Consulting Group will provide written documentation to an Independent
Plan Fiduciary of its recommendations or evaluations based upon objective
criteria.
(f) Any recommendation or evaluation made by the Consulting Group to an
Independent Plan Fiduciary will be implemented only at the express direction of
such independent fiduciary.
(g) The Consulting Group will generally give investment advice in writing to
an Independent Plan Fiduciary with respect to all available Portfolios.
However, in the case of a Section 404(c) Plan, the Consulting Group will
provide investment advice that is limited to the Portfolios made available
under the Plan.

A-6
<PAGE>

(h) Any Sub-Adviser that acts for the Trust to exercise investment discretion
over a Portfolio will be independent of SBI and its affiliates.
(i) immediately following the acquisition by a Portfolio of any securities
that are issued by SBI and/or its affiliates, the percentage of that
Portfolio's net assets invested in such securities will not exceed one percent.
(j) The quarterly investment advisory fee that is paid by a Plan to the
Consulting Group for investment advisory services rendered to such Plan will be
offset by such amount as is necessary to assure that the Consulting Group
retains no more than 20 basis points from any Portfolio (with the exception of
the Government Money Investments Portfolio and the GIC Fund Portfolio for which
the Consulting Group and SBI Trust will retain no investment management fee)
which contains investments attributable to the Plan investor.
(k) With respect to its participation in the TRAK Program prior to purchasing
Trust shares.
(1) Each Plan will receive the following written or oral disclosures from the
Consulting Group:
(A) A copy of the Prospectus for the Trust discussing the investment
objectives of the Portfolios comprising the Trust, the policies employed to
achieve these objectives, the corporate affiliation existing between the
Consulting Group, SBI and its subsidiaries and the compensation paid to such
entities./3/
(B) Upon written or oral request to SBI, a Statement of Additional Information
supplementing the Prospectus which describes the types of securities and other
instruments in which the Portfolios may invest, the investment policies and
strategies that the Portfolios may utilize and certain risks attendant to those
investments, policies and strategies.
(C) A copy of the investment advisory agreement between the Consulting Group
and such Plan relating to participation in the TRAK Program.
(D) Upon written request of SBI, a copy of the respective investment advisory
agreement between the Consulting Group and the Sub-Advisers.
(E) In the case of a Section 404(c) Plan, if required by the arrangement
negotiated between the Consulting Group and the Plan, an explanation by an SBI
Financial Consultant (the Financial Consultant) to eligible participants in
such Plan, of the services offered under the TRAK Program and the operation and
objectives of the Portfolios.
(F) Copies of PTE 92-77 and documents pertaining to the replacement exemption.
(2) If accepted as an investor in the TRAK Program, an Independent Plan
Fiduciary of an IRA or Keogh Plan, is required to acknowledge, in writing,
prior to purchasing Trust shares that such fiduciary has received copies of the
documents described above in subparagraph (k)(1) of this Section.
(3) With respect to a Section 404(c) Plan, written acknowledgement of the
receipt of such documents will be provided by the Independent Plan Fiduciary
(i.e., the Plan administrator, trustee or named fiduciary, as the recordholder
of Trust shares). Such Independent Plan Fiduciary will be required to represent
in writing to SBI that such fiduciary is (a) independent of SBI and its
affiliates and (b) knowledgeable with respect to the Plan in administrative
matters and funding matters related thereto, and able to make an informed
decision concerning participation in the TRAK Program.
(4) With respect to a Plan that is covered under Title I of the Act, where
investment decisions are made by a trustee, investment manager or a named
fiduciary, such Independent Plan Fiduciary is required to acknowledge, in
writing, receipt of such documents and represent to SBI that such fiduciary is
(a) independent of SBI and its affiliates, (b) capable of making an independent
decision regarding the investment of Plan assets and (c) knowledgeable with
respect to the Plan in administrative matters and funding matters related
thereto, and able to make an informed decision concerning participation in the
TRAK Program.
(l) Subsequent to its participation in the TRAK Program, each Plan receives
the following written or oral disclosures with respect to its ongoing
participation in the TRAK Program:
(1) The Trust's semi-annual and annual report which will include financial
statement for the Trust and investment management fees paid by each Portfolio.
(2) A written quarterly monitoring statement containing an analysis and an
evaluation of a Plan investor's account to ascertain whether the Plan's
investment objectives have been met and recommending, if required, changes in
Portfolio allocations.
(3) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly, detailed investment performance monitoring
report, in writing, provided to an Independent Plan Fiduciary of such Plan
showing, Plan level asset allocations, Plan cash flow analysis and annualized
risk adjusted rates of return for Plan investments. In addition, if required by
such arrangement, Financial Consultants will meet periodically with Independent
Plan Fiduciaries of Section 404(c) Plans to discuss the report as well as with
eligible participants to review their accounts' performance.
(4) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly participant performance monitoring report
provided to a Plan participant which accompanies the participant's benefit
statement and describes the investment performance of the Portfolios, the
investment performance of the participant's individual investment in the TRAK
Program, and gives market commentary and toll-free numbers that will enable the
participant to obtain more information about the TRAK Program or to amend his
or her investment allocations.
(5) On a quarterly and annual basis, written disclosures to all Plans of the
(a) percentage of each Portfolio's brokerage commissions that are paid to SBI
and its affiliates and (b) the average brokerage commission per share paid by
each Portfolio to SBI and its affiliates, as compared to the average brokerage
commission per share paid by the Trust to brokers other than SBI and its
affiliates, both expressed as cents per share.
(m) SBI shall maintain, for a period of six years, the records necessary to
enable the persons described in paragraph (n) of this Section to determine
whether the conditions of this exemption have been met, except that (1) a
prohibited transaction will not be considered to have occurred if, due to
circumstances beyond the control of SBI and/or its affiliates, the records are
lost or destroyed prior to the end of the six year period, and (2) no party in
interest other than SBI shall be subject to the civil penalty that may be
assessed under section 502(i) of the Act, or to the taxes imposed by section
4975(a) and (b) of the Code, if the records are not maintained, or are not
available for
- -------
/3/ The fact that certain transactions and fee arrangements are the subject of
an administrative exemption does not relieve the Independent Plan Fiduciary
from the general fiduciary responsibility provisions of section 404 of the Act.
In this regard, the Department expects the Independent Plan Fiduciary to
consider carefully the totality of fees and expenses to be paid by the Plan
including the fees paid directly to SBI or to other third parties and paid
directly through the Trust to SBI.
A-7
<PAGE>

examination as required by paragraph (n) below.
(n)(1) Except as provided in section (2) of this paragraph and notwithstanding
any provisions of subsections (a)(2) and (b) of section 504 of the Act, the
records referred to in paragraph (m) of this Section shall be unconditionally
available at their customary location during normal business hours by:
(A) Any duly authorized employee or representative of the Department or the
Internal Revenue Service;
(B) Any fiduciary of a participating Plan or any duly authorized
representative of such fiduciary;
(C) Any contributing employer to any participating Plan or any duly authorized
employee representative of such employer; and
(D) Any participant or beneficiary of any participating Plan, or any duly
authorized representative of such participant or beneficiary.
(2) None of the persons described above in subparagraphs (B)-(D) of this
paragraph (n) shall be authorized to examine the trade secrets of SBI or
commercial or financial information which is privileged or confidential.

Section III. Definitions
For purposes of this exemption:
(a) An "affiliate" of SBI includes--
(1) Any person directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with SBI. (For purposes of
this subsection, the term "control" means the power to exercise a controlling
influence over the management or policies of a person other than an
individual.)
(2) Any officer, director or partner in such person, and
(3) Any corporation or partnership of which such person is an officer,
director or a 5 percent partner or owner.
(b) An "Independent Plan Fiduciary" is a Plan fiduciary which is independent
of SBI and its affiliates and is either
(1) A Plan administrator, sponsor, trustee or named fiduciary, as the
recordholder of Trust shares of a Section 404(c) Plan,
(2) A participant in a Keogh Plan,
(3) An individual covered under a self-directed IRA which invests in Trust
shares,
(4) A trustee, investment manager or named fiduciary responsible for
investment decisions in the case of a Title I Plan that does not permit
individual direction as contemplated by Section 404(c) of the Act, or
(5) A participant in a Section 404(c) Plan.

Section IV. Effective Dates
This exemption will be effective as of July 31, 1993, except for transactions
involving the GIC Fund. The exemption will be effective March 29, 1994 with
respect to the inclusion of the GIC Fund in the TRAK Program.
The availability of this exemption is subject to the express condition that
the material facts and representations contained in the applications for
exemption are true and complete and accurately describe all material terms of
the transactions. In the case of continuing transactions, if any of the
material facts or representations described in the applications change, the
exemption will cease to apply as of the date of such change. In the event of
any such change, an application for a new exemption must be made to the
Department.
For a more complete statement of the facts and representations supporting the
Department's decision to grant PTE 92-77, refer to the proposed exemption and
grant notice which are cited above.
Signed at Washington, DC, this 16th day of June 1994.

Ivan L. Strasfeld,

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

[FR Doc. 94-15006 Filed 6-20-94; 8:45 am]
BILLING CODE 4510-28-P

A-8
<PAGE>

Federal Register: November 9, 1998 (Volume 63, Number 216)
Notices
Page 60391-60398
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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

Pension and Welfare Benefits Administration [Application No. D-10574]

Notice of Proposed Individual Exemption to Amend Prohibited Transaction
Exemption (PTE) 94-50 Involving Salomon Smith, Barney Inc. (Salomon Smith
Barney) Located in New York, NY

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

ACTION: Notice of proposed individual exemption to modify PTE 94-50.
- --------------------------------------------------------------------------------

SUMMARY: This document contains a notice of pendency before the Department of
Labor (the Department) of a proposed individual exemption which, if granted,
would amend PTE 94-50 (59 FR 32024, June 21, 1994), an exemption granted to
Smith Barney, Inc. (Smith Barney), the predecessor of Salomon Smith Barney.
PTE 94-50 relates to the operation of the TRAK Personalized Investment Advisory
Service product (the TRAK Program) and the Trust for TRAK Investments
(subsequently renamed the Trust for Consulting Group Capital Markets Funds)
(the Trust). If granted, the proposed exemption would affect participants and
beneficiaries of and fiduciaries with respect to employee benefit plans (the
Plans) participating in the TRAK Program.

EFFECTIVE DATE: If granted, the proposed amendments will be effective as of
November 9, 1998.

DATES: Written comments and requests for a public hearing should be received by
the Department on or before December 24, 1998.

ADDRESSES: All written comments and requests for a public hearing (preferably,
three copies) should be sent to the Office of Exemption Determinations, Pension
and Welfare Benefits Administration, Room N-5649, U.S. Department of Labor, 200
Constitution Avenue, N.W., Washington, D.C. 20210, Attention: Application No.
D-10574. The application pertaining to the proposed exemption and the comments
received will be available for public inspection in the Public Documents Room
of the Pension and Welfare Benefits Administration, U.S. Department of Labor,
Room N-5507, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

SUPPLEMENTARY INFORMATION: Notice is hereby given of the pendency before the
Department of a proposed exemption that would amend PTE 94-50. PTE 94-50
provides an exemption from certain prohibited transaction restrictions of
section 406 of the Employee Retirement Income Security Act of 1974 (the Act)
and from the sanctions resulting from the application of section 4975 of the
Internal Revenue Code of 1986 (the Code), as amended, by reason of section
4975(c)(1) of the Code. Specifically, PTE 94-50 provides exemptive relief from
the restrictions of section 406(a) of the Act and the sanctions resulting from
the application of section 4975 of the Code, by reason of section 4975(c)(1)(A)
through (D) of the Code, for the purchase or redemption of shares in the Trust
by an employee benefit plan, an individual retirement account (the IRA), or a
retirement plan for a self-employed individual (the Keogh Plan). PTE 94-50 also
provides exemptive relief from the restrictions of section 406(b) of the Act
and the sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(E) and (F) of the Code, with respect to the
provision, by the Consulting Group of Smith Barney (the Consulting Group), of
investment advisory services to independent fiduciaries of participating Plans
(the Independent Plan Fiduciaries) that might result in such fiduciary's
selection of an investment portfolio (the Portfolio) under the TRAK Program for
the investment of Plan assets.\/1/

[Page 60392]
Besides the transactions described above, PTE 94-50 permitted Smith Barney to
add a daily-traded collective investment fund (the GIC Fund) to the existing
Fund Portfolios and to describe the various entities operating the GIC Fund.
Further, PTE 94-50 replaced references to Shearson Lehman with references to
Smith Barney. PTE 94-50 is effective as of July 31, 1993 for the transactions
described in PTE 92-77 and effective as of March 29, 1994 with respect to
transactions involving the GIC Fund.
As of December 31, 1997, the TRAK Program held assets that were in excess of
$8.4 billion. Of those assets, approximately $1.7 billion were held in 540,
401(k) Plan accounts and approximately 57,100 employee benefit plan and
IRA/Keogh-type accounts. At present, the Trust consists of 13 Portfolios that
are managed by the Consulting Group and advised by one or more unaffiliated
sub-advisers selected by Salomon Smith Barney.
Salomon Smith Barney has informed the Department of certain changes, which are
discussed below, to the facts underlying PTE 94-50. These modifications include
(1) corporate mergers that have changed the names of the parties described in
PTE 94-50 and would permit broader distribution of TRAK-related products, (2)
the implementation of a recordkeeping reimbursement offset system (the
Recordkeeping Reimbursement Offset Procedure) under the TRAK Program, and (3)
the institution of an automated reallocation option (the Automatic Reallocation
Option) under the TRAK Program for which Salomon Smith Barney has requested
administrative exemptive relief from the Department.
The proposed exemption has been requested in an application filed on behalf of
Salomon Smith Barney pursuant to section 408(a) of the Act and section
4975(c)(2) of the Code, and in accordance with the procedures set forth in 29
CFR Part 2570, Subpart B (55 FR 32836, August 10, 1990). Effective December 31,
1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR 47713, October
17, 1978) transferred the authority of the Secretary of the Treasury to issue
exemptions of the type requested to the Secretary of Labor. Accordingly, the
- -------
/1/ On October 5, 1992, the Department granted PTE 92-77 at 55 FR 45833. PTE
92-77 permitted Shearson Lehman Brothers, Inc. (Shearson Lehman) to make the
TRAK Program available to Plans that acquired shares in the Trust. In this
regard, PTE 92-77 permitted Plans to purchase or redeem shares in the Trust and
allowed the Consulting Group to provide investment advisory services to an
Independent Fiduciary of a Plan which might result in such fiduciary's
selection of a Portfolio in the TRAK Program for the investment of Plan assets.
Subsequent to the granting of PTE 92-77, on July 31, 1993, Smith Barney
acquired certain assets of Shearson Lehman associated with its retail business,
including the TRAK Program, and applied for and received a new exemption (PTE
94-50) for the ongoing operation of the TRAK Program. Essentially, PTE 94-50
amended and replaced PTE 92-77. However, because of certain material factual
changes to the representations supporting PTE 92-77, the Department determined
that the exemption was no longer effective for use by Smith Barney and its
subsidiaries as of the date of the asset sale.

A-9
<PAGE>

proposed exemption is being issued solely by the Department.
1. The Corporate Mergers. Salomon Smith Barney states that in November 1997, a
subsidiary of the Travelers Group Inc. (the Travelers Group), the parent of
Smith Barney, acquired all of the shares of Salomon Brothers, Inc. (Salomon).
Subsequent to the acquisition, Salomon and Smith Barney were operated as
separately-registered broker-dealers and as sister corporations with a common
parent. On September 1, 1998, Salomon was merged with and into Smith Barney,
with Smith Barney remaining as the surviving corporation. As a result of the
merger, the corporate name of Smith Barney has been changed to "Salomon Smith
Barney Inc."
Salomon Smith Barney also states that in April 1998, the Travelers Group and
Citicorp Inc. (Citicorp) announced a stock merger whereby Citicorp would be
merged with and into a subsidiary of the Travelers Group. As a result of the
merger, the Travelers Group would become a bank holding company and change its
name to "Citigroup Inc." (Citigroup).
Salomon Smith Barney represents that the purpose of the merger is to create
more distribution channels for TRAK products. In this regard, registered
broker-dealers associated with Citigroup will be permitted to market the TRAK
Program under a different product name. However, Salomon Smith Barney explains
that the terms and conditions of PTE 94-50 and this amendment will be complied
with by the parties involved.
The merger, which occurred on October 8, 1998, required that the affected
parties obtain approval from the Federal Reserve Board under the Bank Holding
Company Act (the BHC Act). Under the BHC Act, the Federal Reserve Board does
not authorize bank holding companies, such as Citigroup, to be affiliated with
companies that organize, sponsor, control or distribute United States open-end
mutual funds. As a bank holding company, Citigroup is required to engage an
independent party to provide certain distribution services in connection with
the marketing of mutual fund shares) for all United States, publicly-traded
mutual funds for which any subsidiary of the Travelers Group/Citigroup acts as
a distributor. Salomon Smith Barney notes that although the Funds participating
in the TRAK Program will be affected by this change, no Plan will be required
to pay distribution fees to the independent distributors.
On October 15, 1998, Salomon Smith Barney was merged with and into Pendex Real
Estate Corp. (Pendex), a shell corporation domiciled in New York. Pendex, the
survivor of the merger, was then renamed "Salomon Smith Barney Inc." Upon
completion of this merger, Salomon Smith Barney became a New York corporation.
2. Recordkeeping Reimbursement Offset Procedure. Salomon Smith Barney states
that the Board of Trustees (the Board) of the Funds approved, but has not yet
implemented, a recordkeeping reimbursement offset procedure under which a Plan
participating in the TRAK Program would be permitted to reduce its investment
fees and expenses. The
reimbursement amount would be paid solely by the Funds as a means of being
competitive with other mutual funds offering similar reimbursements to
investors.
In May 1998, the Board approved a recordkeeping reimbursement amount of $12.50
for each investment position held by a participant. (In other words, a
participant holding positions in three different Funds would be eligible to
receive a total annual reimbursement of $37.50). In addition, the Board
resolved that after applying such reimbursement to recordkeeping expenses
charged by recordkeepers of the Plans, any excess reimbursement amount would be
applied to reduce other fees and expenses/2/ payable by participating Plans,
including, but not limited to, the Plan-level investment advisory fee payable
to the Consulting Group for asset allocation recommendations (the Outside Fee),
after the appropriate offset has been applied (the Net Outside Fee)./3/ If
implemented, Salomon Smith Barney explains that the Funds would pay the
appropriate reimbursement amount directly to the recordkeeper of the Plan. The
affected Plan would then be required to pay only the balance of the fee, which
is generally charged on a quarterly basis, after the excess reimbursement
amount has been deducted.
The Recordkeeping Reimbursement Offset Procedure would work as follows:
Assume that Plan A has $1 million in assets invested in the TRAK Program and
100 participants. Assume further that Plan A pays its recordkeeper $20 per
participant per year in Annual Fees totaling $2,000 per year or

[Page 60393]
$500 per quarter and $12 per participant per year in Other Fees, totaling
$1,200 per year or $300 per quarter. In addition, Plan A pays the Consulting
Group a total annual net investment advisory fee (i.e., the Net Outside Fee) of
$8,500.
At the end of each calendar quarter, Plan A's recordkeeper will determine the
actual number of Fund positions held by the Plan A participants and calculate
the resulting reimbursement amount. If Plan A had 300 participant positions at
the end of the quarter, the Plan's total recordkeeping reimbursement amount
would be 300 x $3.125 (the annual amount of $12.50
divided by 4) or $937.50. That amount would be credited as follows:

Application of Reimbursement to Recordkeeping Fees
<TABLE>
<S> <C>
Quarterly Portion of Annual Fees...................................... $ 500.00
Quarterly Portion of Other Fees....................................... 300.00
--------
Total Quarterly Recordkeeping Fees.................................... 800.00
Credit for Reimbursement.............................................. (937.50)
Excess Reimbursement.................................................. (137.50)
--------
</TABLE>
Because the reimbursement amount exceeds the recordkeeping fees due for the
quarter, the Plan does not owe any recordkeeping fee for that period.
Therefore, the recordkeeper will not bill the Plan.

Application of Excess Reimbursement to the Net Outside Fee
<TABLE>
<S> <C>
Quarterly Net Outside Fee............................................ $2,125.00
Excess Reimbursement................................................. (137.50)
---------
Total.............................................................. 1,987.50
---------
</TABLE>

The recordkeeper will advise the Consulting Group that it is entitled to bill
the Plan for the $1,987.50 balance of its investment advisory fee (i.e., the
Net Outside Fee).
Upon participation in the TRAK Program, an Independent Plan Fiduciary selects
a recordkeeper for the Plan, from a list of recordkeepers which maintain
computer links to the Funds under the TRAK Program. Salomon Smith Barney states
that of the 23 recordkeepers currently providing services to TRAK Program
investors, only one, Smith Barney Plan Services, is an

- -------
/2/ In addition to annual recordkeeping fees (the Annual Fees) payable by a
Plan participating in the TRAK Program, it is represented that a Plan might be
required to pay recordkeeping fees associated with certain particular services
(the Other Fees) such as initial plan set-up and conversion, preparation of
annual filings, enrollment, special statement preparation and audit.
/3/ Salomon Smith Barney is offsetting, quarterly, against the Outside Fee,
such amount as is necessary to assure that the Consulting Group retains not
more than 20 basis points (as an Inside Fee) from any Portfolio on investment
assets attributable to any Plan.

A-10
<PAGE>

affiliate. Because the reimbursement rate and the timing of the offset of the
excess reimbursement amount against fees will be the same regardless of the
identity of the recordkeeper and the Independent Plan Fiduciary is responsible
for the selection of this particular recordkeeper, Salomon Smith Barney
believes its affiliation with Smith Barney Plan Services does not appear to
present additional potential abuses under section 406(b)(1) or 406(b)(3) of the
Act in its capacity as an investment adviser in recommending investment in the
Funds to Independent Plan Fiduciaries.

Salomon Smith Barney notes that the reasoning in the Frost National Bank
Advisory Opinion (ERISA Advisory Opinion 97-15A, May 22, 1997) (the Frost
Opinion), is relevant to this situation. Therefore, it has not requested
administrative exemptive relief from the Department. Salomon Smith Barney
explains that in the Frost Opinion, the bank offered a comprehensive program of
administrative and investment services to Plan investors. Under this program,
the Department opined that section 406(b)(1) and 406(b)(3) of the Act would not
be violated if the bank received payments for services from mutual funds while
recommending mutual fund investments to plans provided such payments were fully
disclosed and then offset to reduce other plan expenses, with any excess
payments made to the plans. Salomon Smith Barney further explains that in the
Frost Opinion any benefit from payments made by the mutual funds benefitted the
plans and not the bank.

With respect to the TRAK Program, Salomon Smith Barney represents that the
reimbursement rates adopted by the Funds will be fully disclosed to Independent
Plan Fiduciaries and the offset of the excess reimbursement amount against a
Plan's expenses will be accomplished in a manner to ensure that the Plans
obtain the full benefit of the reimbursement to reduce their recordkeeping and
other Plan expenses. Salomon Smith Barney submits that the reasoning in the
Frost Opinion would apply equally to the proposed reimbursement of expenses
under the TRAK Program. Therefore, Salomon Smith Barney does not believe any
change in the scope of the exemption is necessary./4/

3. The Automatic Reallocation Option. Salomon Smith Barney wishes to modify
the TRAK Program to institute an automated reallocation feature whereby an
Independent Plan Fiduciary could elect to have his or her current asset
allocation adjusted automatically whenever the Consulting Group changes the
recommended asset allocation model (the Allocation Model) followed by such Plan
or participant./5/ Therefore, Salomon Smith Barney proposes to amend General
Condition II(f) of PTE 94-50 which requires that any recommendation or
evaluation offered by the Consulting Group be implemented only upon the express
direction of the Independent Plan Fiduciary. With the exception of the
requested changes to General Condition II(f) of PTE 94-50, all of the existing
conditions of PTE 94-50 will continue to apply to the TRAK Program.
As noted above, General Condition II(f) of PTE 94-50 provides that any
recommendation or evaluation by the Consulting Group to an Independent Plan
Fiduciary will be implemented only at the express direction of such fiduciary.
Accordingly, under the current exemption, whenever asset allocation advice is
modified by the Consulting Group, Salomon Smith Barney states that its
Financial Consultants are required to contact the Independent Plan Fiduciary of
each Plan who has chosen the Allocation Model, and obtain such fiduciary's
consent to modification of the asset allocation applied to the Plan's account.
Salomon Smith Barney notes that many TRAK Program investors have expressly
indicated that they expect reallocations to take place in the ordinary course
of the provision of investment advisory services offered by the Consulting
Group. However, these investors do not understand why they need to be contacted
in each instance

[Page 60394]
for this purpose. In addition, Salomon Smith Barney explains that the case-by-
case contact and reallocation involves delay in implementing the change at the
client's express direction, putting similarly-situated investors into the new
Allocation Models at different times.
To resolve these problems, Salomon Smith Barney proposes to offer TRAK Program
investors an Automatic Reallocation Option. Because Salomon Smith Barney
recognizes that the Automatic Reallocation Option is outside the scope of PTE
94-50, it requests a modification of the existing terms of PTE 94-50 to the
extent necessary to allow it to offer this alternative to investors. If the
exemptive relief is granted, Salomon Smith Barney represents that it will fully
disclose the nature of the Automatic Reallocation Option to the Independent
Plan Fiduciary of each existing client Plan in a written notice (the
Announcement) and permit the fiduciary to elect the Automatic Reallocation
Option by responding in writing. The Announcement will describe the intended
operation of the Automatic Reallocation Option and how future changes to the
Allocation Model selected on behalf of the Plan will be implemented. In order
to implement the Automatic Reallocation Option for new TRAK Program investors,
the Independent Plan Fiduciary will be required to check a box on the form of
Investment Advisory contract with Salomon Smith Barney (or on a separate
document designed for this purpose for those investors who have already
executed such an agreement with Salomon Smith Barney). By checking the box, the
Independent Plan Fiduciary will indicate its consent to and authorization of
actions to be taken by Salomon Smith Barney to reallocate automatically the
asset allocation in the Plan account whenever the Consulting Group modifies the
particular asset allocation recommendation which the Plan or participant has
chosen. Such election will continue in effect until revoked or terminated by
the Plan, in writing.
In operation, Salomon Smith Barney represents that the Automatic Reallocation
Option will work as follows:
(a) The Consulting Group will release a modified version of the Allocation
Model for the Plan account based upon its amended recommendation.

- -------
/4/ In this proposed exemption, the Department expresses no opinion on whether
the Frost Opinion is applicable to the recordkeeping reimbursement procedure
described above. In this regard, the Department notes that, under the facts
presented in the Frost Opinion, Frost would offset the fees received from the
mutual funds on a dollar-for-dollar basis against the trustee fees that the
plan was otherwise obligated to pay Frost.
- -------
/5/ Salomon Smith Barney notes that the Automatic Reallocation Option is to be
distinguished from "rebalancing" which occurs after the passage of time from
the original allocation decision and changes a participant's investment mix to
bring the actual allocation among investment alternatives back in line with the
participant's original allocation choices. For example, Salomon Smith Barney
states that a Plan participant receives a written quarterly review that sets
forth information concerning the participant's investments and includes a chart
comparing the original asset allocation recommendation and the actual
percentage distribution of investments held in the portfolio. Salomon Smith
Barney explains that under the chart is the following legend:
TRAK is a non-discretionary investment advisory service. All investment
decisions rest with you, the participant. Therefore, you are strongly urged to
adhere to the Consulting Group's asset allocation recommendations. Please call
your Financial Consultant should a change in allocation be warranted due to a
significant difference between the portfolio originally recommended by the
Consulting Group and your allocation or due to a change in your objectives.
Salomon Smith Barney further explains that the Financial Consultant is
expected to contact participants at least annually to encourage a comparison of
the holdings in the portfolio against the Consulting Group's original
recommendation. Barney proposes to amend General Condition II(f) of PTE 94-50
which requires that any recommendation or evaluation offered by the Consulting
Group be implemented only upon the express direction of the Independent Plan
Fiduciary. With the exception of the requested changes to General Condition
II(f) of PTE 94-50, all of the existing conditions of PTE 94-50 will continue
to apply to the TRAK Program.

A-11
<PAGE>

(b) On the day such modification is released, the Consulting Group will adjust
the Plan account to fit the new Allocation Model and to reflect current market
conditions./6/ Such adjustments will be effected through a series of purchases
and redemptions of Portfolio shares to increase or decrease the relative
investment in the various Portfolios by the Plan account.
(c) The reallocation of the Plan account will be effected on the same business
day as the release of the new Allocation Model by the Consulting Group, except
to the extent market conditions and orderly purchase and redemption procedures
may delay such processing. For purposes of calculating the percentage changes
in its asset allocation recommendation underlying the Automatic Reallocation
Option for a Plan investor's account, the Consulting Group will use the net
asset values at the close of business on the preceding trading day. However,
the execution of trades to give effect to the changed percentages will occur on
the next trading day at the then-current net asset values.
(d) Participants in the TRAK Program will receive trade confirmations of the
reallocation transactions. In this regard, for all Plan investors other than
Section 404(c) Plan accounts (i.e., 401(k) Plan accounts), Salomon Smith Barney
will mail trade confirmations the next business day after the reallocation
trades are executed. In the case of Section 404(c) Plan participants,
notification will depend upon the notification provisions agreed to by the Plan
recordkeeper./7/\ For example, if the recordkeeper notifies Section 404(c) Plan
participants (i.e., Independent Plan Fiduciaries) in writing after each trade,
such participants will be notified of reallocation transactions in this manner.
If, however, the recordkeeper notifies Section 404(c) Plan participants of
trading activity in a quarterly statement, the reallocation activity would be
included there.
In addition to the trade confirmations which Salomon Smith Barney will provide
to all Plan investors except Section 404(c) Plans, disclosure of the
reallocation transactions will appear in the next regular client statement.
Such transactions will be reflected as a series of purchase and redemption
transactions that will shift assets among the Portfolios in accordance with the
Allocation Model as modified by the Consulting Group.
(e) If, however, the reallocation to be made in response to the Consulting
Group's recommendation exceeds an increase or decrease of more than 10 percent
in the absolute percentage allocated to any one investment medium (e.g., a
suggested increase in a 15 percent allocation to greater than 25 percent or a
decrease of such 15 percent allocation to less than 5 percent), Salomon Smith
Barney will not automatically adjust a Plan account. Under such circumstances,
Salomon Smith Barney will send out a written notice (the Notice) to the
Independent Plan Fiduciary for each affected Plan, describing the proposed
reallocation and the date on which such allocation is to be instituted (the
Effective Date).
(f) The Notice will be mailed with the presumption of delivery within three
business days to permit timely notification and adequate response time for the
Independent Plan Fiduciary. The Notice will instruct the fiduciary that he or
she will need to do nothing if such fiduciary decides to have his or her Plan
account automatically reallocated on the Effective Date. If, on the other hand,
the Independent Plan Fiduciary does not wish to follow the Consulting Group's
revised asset allocation recommendation, the Notice will instruct the
Independent Plan Fiduciary to inform a Financial Consultant, in writing, at
least 30 calendar days prior to the proposed Effective Date that the fiduciary
wishes to "opt out" of the new Allocation Model.\/8/
(g) If the Independent Plan Fiduciary "opts out," his or her Plan account will
not be changed on the Effective Date.

[Page 60395]
Under such circumstances, the Allocation Model will remain at its current level
or at such other level as the Independent Plan Fiduciary designates. However,
the Automatic Reallocation Option, will remain in effect for future changes in
such participant's Allocation Model.
(h) The Independent Plan Fiduciary will always have the ability to elect,
terminate or reinstitute the Automatic Reallocation Option or to otherwise
adjust an Allocation Model, in any way, by providing reasonably prompt notice
to a Financial Consultant. Upon request by the Independent Plan Fiduciary, the
Financial Consultant will send the appropriate form.
Salomon Smith Barney states that it is not possible to predict the frequency
of reallocations because these changes are dictated by the Consulting Group's
analysis of market conditions. However, since November 1991, Salomon Smith
Barney represents that asset allocation changes of the type that would trigger
automatic reallocations have been instituted by the Consulting Group on ten
occasions. Eight of these changes were of a magnitude of 10 percentage points
or less. The other two changes were 15 percent changes and impacted only
approximately one percent and 3 percent, respectively, of the total number of
clients participating in the TRAK Program at the time.\/9/
Salomon Smith Barney also states that the reallocation called for under the
Automatic Reallocation Option will be effected by a dollar- for-dollar
liquidation and purchase of the required amounts in the respective Plan
accounts. Because of the billing of Plan accounts participating in the TRAK
Program is leveled with respect to the compensation received by Salomon Smith
Barney and by the Financial Consultant involved in an account, Salomon Smith
Barney states that the implementation of the Automatic Reallocation Option will
be revenue-neutral. In addition, Salomon Smith Barney represents that neither
the Plan nor the participants will pay any additional fees for electing to use
the Automatic Reallocation Option./10/

- -------
/6/ Salomon Smith Barney notes that there are 12 standard Allocation Models
and that two similarly-situated Plan participants who receive the same
recommendation from the Consulting Group will receive the same reallocation.
/7/ Under these circumstances, Salomon Smith Barney will advise the
recordkeeper of the proposed reallocation of the account of a Section 404(c)
Plan participant as soon as the Consulting Group has determined that a change
to an asset allocation recommendation is going to be made. The communication
may initially be made orally because the recordkeeper must then promptly modify
its system to effect the necessary changes to a participant's account on the
effective date of the new recommendation. The oral communication is customarily
followed by a full written description of the changes within two business days
of the verbal update.
As noted above, a Section 404(c) Plan participant who has elected the
Automatic Reallocation Option would receive a trade confirmation from the
recordkeeper of the resulting changes to the positions in his or her account,
if that is the notification procedure agreed to for the Plan. Also as noted
above, transactions occurring upon automatic reallocation and the underlying
recommendation changes will be disclosed in the "Participant Quarterly Review."
- -------
/8/ The Notice will be mailed with the presumption of delivery within three
business days so that the 30 day calendar period will not commence until the
third business day following the mailing. In addition, the Effective Date of
the Automatic Reallocation Option will occur no sooner than the business day
following the thirtieth calendar day. To avoid any misunderstandings or
miscalculations by the Independent Plan Fiduciary, Salomon Smith Barney
represents that it will conspicuously state, in the Notice, the last date for
its receipt of the Independent Plan Fiduciary's written response.
- -------
/9/ While there is no minimum percentage threshold that will trigger the
Automatic Reallocation Option, other than the historical ranges specified
above, Salomon Smith Barney notes that there may be future market circumstances
that may justify an asset allocation adjustment of a lesser amount. Because the
Consulting Group will only adjust asset allocation recommendations to reflect
current market conditions, Salomon Smith Barney anticipates that triggers for
the Automatic Reallocation Option will continue to be only market-related. As
is currently the situation, Salomon Smith Barney represents that a Plan
investor may, at any time and for any reason, contact a Financial Consultant to
request a modification of an existing Allocation Model.
/10/ General Condition II(c) of PTE 94-50 as well as this proposal states that
no Plan will pay a fee or commission by reason of the acquisition or redemption
of shares in the Trust. Since the fees paid to Salomon Smith Barney are based
upon net asset values of investments and not transactions, a change of
investment allocations and the net purchases and redemptions used to effect
such changes do not change the payable fees.

A-12
<PAGE>

Thus, on the basis of the foregoing, General Condition II(f) has been revised
to read as follows:
(f) Any recommendation or evaluation made by the Consulting Group to an
Independent Plan Fiduciary will be implemented only at the express direction of
such Independent Plan Fiduciary, provided, however, that--
(1) If such Independent Plan Fiduciary shall have elected in writing (the
Election), on a form designated by Salomon Smith Barney from time to time for
such purpose, to participate in the Automatic Reallocation Option under the
TRAK Program, the affected Plan or participant account will be automatically
reallocated whenever the Consulting Group modifies the particular asset
allocation recommendation which the Independent Plan Fiduciary has chosen. Such
Election shall continue in effect until revoked or terminated by the
Independent Plan Fiduciary, in writing.
(2) Except as set forth below in paragraph II(f)(3), at the time of a change
in the Consulting Group's asset allocation recommendation, each account based
upon the asset allocation model (the Allocation Model) affected by such change
would be adjusted on the business day of the release of the new Allocation
Model by the Consulting Group, except to the extent that market conditions, and
order purchase and redemption procedures may delay such processing through a
series of purchase and redemption transactions to shift assets among the
affected Portfolios.
(3) If the change in the Consulting Group's asset allocation recommendation
exceeds an increase or decrease of more than 10 percent in the absolute
percentage allocated to any one investment medium (e.g., a suggested increase
in a 15 percent allocation to greater than 25 percent, or a decrease of such 15
percent allocation to less than 5 percent), Salomon Smith Barney will send out
a written notice (the Notice) to all Independent Plan Fiduciaries whose current
investment allocation would be affected, describing the proposed reallocation
and the date on which such allocation is to be instituted (the Effective Date).
If the Independent Plan Fiduciary notifies Salomon Smith Barney, in writing, at
least 30 calendar days prior to the proposed Effective Date that such fiduciary
does not wish to follow such revised asset allocation recommendation, the
Allocation Model will remain at the current level, or at such other level as
the Independent Plan Fiduciary then expressly designates, in writing. If the
Independent Plan Fiduciary does not affirmatively "opt out" of the new
Consulting Group recommendation, in writing, prior to the proposed Effective
Date, such new recommendation will be automatically effected by a dollar-for-
dollar liquidation and purchase of the required amounts in the respective
account.
(4) An Independent Plan Fiduciary will receive a trade confirmation of each
reallocation transaction. In this regard, for all Plan investors other than
Section 404(c) Plan accounts (i.e., 401(k) Plan accounts), Salomon Smith Barney
will mail trade confirmations on the next business day after the reallocation
trades are executed. In the case of Section 404(c) Plan participants,
notification will depend upon the notification provisions agreed to by the Plan
recordkeeper.

Notice to Interested Persons

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

General Information

The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption under section
408(a) of the Act and section 4975(c)(2) of the Code does not relieve a
fiduciary or other party in interest or disqualified person from certain other
provisions of the Act and the Code, including any prohibited transaction
provisions to which the exemption does not apply and the general fiduciary
responsibility provisions of section 404 of the Act, which require, among other
things, a fiduciary to discharge his or her duties respecting the plan solely
in the interest of the participants and beneficiaries of the plan and in a
prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it
affect the requirements of section 401(a) of the Code that the plan operate for
the exclusive benefit of the employees of the employer maintaining the plan and
their beneficiaries;
(2) The proposed exemption, if granted, will not extend to transactions
prohibited under section 406(b)(3) of the

[Page 60396]
Act and section 4975(c)(1)(F) of the Code;
(3) Before an exemption can be granted under section 408(a) of the Act and
section 4975(c)(2) of the Code, the Department must find that the exemption is
administratively feasible, in the interest of the plan and of its participants
and beneficiaries and protective of the rights of participants and
beneficiaries of the plan;
(4) This proposed exemption, if granted, will be supplemental to, and not in
derogation of, any other provisions of the Act and the Code, including
statutory or administrative exemptions. Furthermore, the fact that a
transaction is subject to an administrative or statutory exemption is not
dispositive of whether the transaction is in fact a prohibited transaction; and
(5) This proposed exemption, if granted, is subject to the express condition
that the Summary of Facts and Representations set forth in the notice of
proposed exemption relating to PTE 92-77, as amended by PTE 94-50 and this
notice, accurately describe, where relevant, the material terms of the
transactions to be consummated pursuant to this exemption.

Written Comments and Hearing Requests

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

Proposed Exemption

Based on the facts and representations set forth in the application, the
Department is considering granting the requested exemption under the authority
of section 408(a) of the Act and section 4975(c)(2) of the Code and in
accordance with the procedures set forth in 29 CFR Part 2570, Subpart B (55 FR
32836, August 10, 1990).
A-13
<PAGE>

Section I. Covered Transactions

A. If the exemption is granted, the restrictions of section 406(a) of the Act
and the sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(A) through (D) of the Code, shall not apply, to
the purchase or redemption of shares by an employee benefit plan, an individual
retirement account (the IRA), or a retirement plan for self-employed
individuals (the Keogh Plan)/11/ in the Trust for Consulting Group Capital
Market Funds (the Trust), established by Salomon Smith Barney, in connection
with such Plans' participation in the TRAK Personalized Investment Advisory
Service product (the TRAK Program).
B. If the exemption is granted, the restrictions of section 406(b) of the Act
and the sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(E) and (F) of the Code, shall not apply, to the
provision, by the Consulting Group, of (1) investment advisory services or (2)
an automatic reallocation option (the Automatic Reallocation Option) to an
independent fiduciary of a participating Plan (the Independent Plan Fiduciary),
which may result in such fiduciary's selection of a portfolio (the Portfolio)
in the TRAK Program for the investment of Plan assets.
This proposed exemption is subject to the following conditions that are set
forth below in Section II.

Section II. General Conditions

(a) The participation of Plans in the TRAK Program will be approved by an
Independent Plan Fiduciary. For purposes of this requirement, an employee,
officer or director of Salomon Smith Barney and/or its affiliates covered by an
IRA not subject to Title I of the Act will be considered an Independent Plan
Fiduciary with respect to such IRA.
(b) The total fees paid to the Consulting Group and its affiliates will
constitute no more than reasonable compensation.
(c) No Plan will pay a fee or commission by reason of the acquisition or
redemption of shares in the Trust.
(d) The terms of each purchase or redemption of Trust shares shall remain at
least as favorable to an investing Plan as those obtainable in an arm's length
transaction with an unrelated party.
(e) The Consulting Group will provide written documentation to an Independent
Plan Fiduciary of its recommendations or evaluations based upon objective
criteria.
(f) Any recommendation or evaluation made by the Consulting Group to an
Independent Plan Fiduciary will be implemented only at the express direction of
such Independent Plan Fiduciary, provided, however, that--
(1) If such Independent Plan Fiduciary shall have elected in writing (the
Election), on a form designated by Salomon Smith Barney from time to time for
such purpose, to participate in the Automatic Reallocation Option under the
TRAK Program, the affected Plan or participant account will be automatically
reallocated whenever the Consulting Group modifies the particular asset
allocation recommendation which the Independent Plan Fiduciary has chosen. Such
Election shall continue in effect until revoked or terminated by the
Independent Plan Fiduciary in writing.
(2) Except as set forth below in paragraph II(f)(3), at the time of a change
in the Consulting Group's asset allocation recommendation, each account based
upon the asset allocation model (the Allocation Model) affected by such change
would be adjusted on the business day of the release of the new Allocation
Model by the Consulting Group, except to the extent that market conditions, and
order purchase and redemption procedures may delay such processing through a
series of purchase and redemption transactions to shift assets among the
affected Portfolios.
(3) If the change in the Consulting Group's asset allocation recommendation
exceeds an increase or decrease of more than 10 percent in the absolute
percentage allocated to any one investment medium (e.g., a suggested increase
in a 15 percent allocation to greater than 25 percent, or a decrease of such 15
percent allocation to less than 5 percent), Salomon Smith Barney will send out
a written notice (the Notice) to all Independent Plan Fiduciaries whose current
investment allocation would be affected, describing the proposed reallocation
and the date on which such allocation is to be instituted (the Effective Date).
If the Independent Plan Fiduciary notifies Salomon Smith Barney, in writing, at
least 30 calendar days prior to the proposed Effective Date that such fiduciary
does not wish to follow such revised asset allocation recommendation, the
Allocation Model will remain at the current level, or at such other level as
the Independent Plan Fiduciary then expressly designates, in writing. If the
Independent Plan Fiduciary does not affirmatively "opt out" of the new
Consulting Group recommendation, in writing, prior to the proposed Effective
Date, such new recommendation will be automatically effected by a dollar-for-
dollar liquidation and purchase of the required amounts in the respective
account.
(4) An Independent Plan Fiduciary will receive a trade confirmation of each
reallocation transaction. In this regard, for all Plan investors other than
Section

[Page 60397]
404(c) Plan accounts (i.e., 401(k) Plan accounts), Salomon Smith Barney will
mail trade confirmations on the next business day after the reallocation trades
are executed. In the case of Section 404(c) Plan participants, notification
will depend upon the notification provisions agreed to by the Plan
recordkeeper.
(g) The Consulting Group will generally give investment advice in writing to
an Independent Plan Fiduciary with respect to all available Portfolios.
However, in the case of a Plan providing for participant-directed investments
(the Section 404(c) Plan), the Consulting Group will provide investment advice
that is limited to the Portfolios made available under the Plan.
(h) Any sub-adviser (the Sub-Adviser) that acts for the Trust to exercise
investment discretion over a Portfolio will be independent of Salomon Smith
Barney and its affiliates.
(i) Immediately following the acquisition by a Portfolio of any securities
that are issued by Salomon Smith Barney and/or its affiliates, the percentage
of that Portfolio's net assets invested in such securities will not exceed one
percent.
(j) The quarterly investment advisory fee that is paid by a Plan to the
Consulting Group for investment advisory services rendered to such Plan will be
offset by such amount as is necessary to assure that the Consulting Group
retains no more than 20 basis points from any Portfolio (with the exception of
the Government Money Investments Portfolio and the GIC Fund Portfolio for which
the Consulting Group and the Trust will retain no investment management fee)
which contains investments attributable to the Plan investor.
(k) With respect to its participation in the TRAK Program prior to purchasing
Trust shares,

- -------
/11/ The employee benefit plan, the IRA and the Keogh Plan are collectively
referred to herein as the Plans.

A-14
<PAGE>

(1) Each Plan will receive the following written or oral disclosures from the
Consulting Group:
(A) A copy of the Prospectus for the Trust discussing the investment
objectives of the Portfolios comprising the Trust, the policies employed to
achieve these objectives, the corporate affiliation existing between the
Consulting Group, Salomon Smith Barney and its subsidiaries and the
compensation paid to such entities./12/
(B) Upon written or oral request to Salomon Smith Barney, a Statement of
Additional Information supplementing the Prospectus which describes the types
of securities and other instruments in which the Portfolios may invest, the
investment policies and strategies that the Portfolios may utilize and certain
risks attendant to those investments, policies and strategies.
(C) A copy of the investment advisory agreement between the Consulting Group
and such Plan relating to participation in the TRAK Program and, if applicable,
informing Plan investors of the Automatic Reallocation Option.
(D) Upon written request of Salomon Smith Barney, a copy of the respective
investment advisory agreement between the Consulting Group and the Sub-
Advisers.
(E) In the case of a Section 404(c) Plan, if required by the arrangement
negotiated between the Consulting Group and the Plan, an explanation by a
Salomon Smith Barney Financial Consultant (the Financial Consultant) to
eligible participants in such Plan, of the services offered under the TRAK
Program and the operation and objectives of the Portfolios.
(F) A copy of PTE 94-50 as well as the proposed exemption and the final
exemption
pertaining to the exemptive relief described herein.
(2) If accepted as an investor in the TRAK Program, an Independent Plan
Fiduciary of an IRA or Keogh Plan, is required to acknowledge, in writing,
prior to purchasing Trust shares that such fiduciary has received copies of the
documents described above in subparagraph (k)(1) of this Section.
(3) With respect to a Section 404(c) Plan, written acknowledgement of the
receipt of such documents will be provided by the Independent Plan Fiduciary
(i.e., the Plan administrator, trustee or named fiduciary, as the recordholder
of Trust shares). Such Independent Plan Fiduciary will be required to represent
in writing to Salomon Smith Barney that such fiduciary is (a) independent of
Salomon Smith Barney and its affiliates and (b) knowledgeable with respect to
the Plan in administrative matters and funding matters related thereto, and
able to make an informed decision concerning participation in the TRAK Program.
(4) With respect to a Plan that is covered under Title I of the Act, where
investment decisions are made by a trustee, investment manager or a named
fiduciary, such Independent Plan Fiduciary is required to acknowledge, in
writing, receipt of such documents and represent to Salomon Smith Barney that
such fiduciary is (a) independent of Salomon Smith Barney and its affiliates,
(b) capable of making an independent decision regarding the investment of Plan
assets and (c) knowledgeable with respect to the Plan in administrative matters
and funding matters related thereto, and able to make an informed decision
concerning participation in the TRAK Program.
(l) Subsequent to its participation in the TRAK Program, each Plan receives
the following written or oral disclosures with respect to its ongoing
participation in the TRAK Program:
(1) The Trust's semi-annual and annual report which will include financial
statement for the Trust and investment management fees paid by each Portfolio.
(2) A written quarterly monitoring statement containing an analysis and an
evaluation of a Plan investor's account to ascertain whether the Plan's
investment objectives have been met and recommending, if required, changes in
Portfolio allocations.
(3) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly, detailed investment performance monitoring
report, in writing, provided to an Independent Plan Fiduciary of such Plan
showing, Plan level asset allocations,
Plan cash flow analysis and annualized risk adjusted rates of return for Plan
investments. In addition, if required by such arrangement, Financial
Consultants will meet periodically with Independent Plan Fiduciaries of Section
404(c) Plans to discuss the report as well as with eligible participants to
review their accounts' performance.
(4) If required by the arrangement negotiated between the Consulting Group and
a Section 404(c) Plan, a quarterly participant performance monitoring report
provided to a Plan participant which accompanies the participant's benefit
statement and describes the investment performance of the Portfolios, the
investment performance of the participant's individual investment in the TRAK
Program, and gives market commentary and toll-free numbers that will enable the
participant to obtain more information about the TRAK Program or to amend his
or her investment allocations.
(5) On a quarterly and annual basis, written disclosures to all Plans of the
(a) percentage of each Portfolio's brokerage commissions that are paid to
Salomon Smith Barney and its affiliates and (b)

[Page 60398]
the average brokerage commission per share paid by each Portfolio to Salomon
Smith Barney and its affiliates, as compared to the average brokerage
commission per share paid by the Trust to brokers other than Salomon Smith
Barney and its affiliates, both expressed as cents per share.
(m) Salomon Smith Barney shall maintain, for a period of six years, the
records necessary to enable the persons described in paragraph (n) of this
Section to determine whether the conditions of this exemption have been met,
except that (1) a prohibited transaction will not be considered to have
occurred if, due to circumstances beyond the control of Salomon Smith Barney
and/or its affiliates, the records are lost or destroyed prior to the end of
the six year period, and (2) no party in interest other than Salomon Smith
Barney shall be subject to the civil penalty that may be assessed under section
502(i) of the Act, or to the taxes imposed by section 4975(a) and (b) of the
Code, if the records are not maintained, or are not available for examination
as required by paragraph (n) below.
(n)(1) Except as provided in section (2) of this paragraph and notwithstanding
any provisions of subsections (a)(2) and (b) of section 504 of the Act, the
records referred to in paragraph (m) of this Section II shall be
unconditionally available at their customary location during normal business
hours by:
(A) Any duly authorized employee or representative of the Department or the
Service;
(B) Any fiduciary of a participating Plan or any duly authorized
representative of such fiduciary;

- -------
/12/ The fact that certain transactions and fee arrangements are the subject
of an administrative exemption does not relieve the Independent Plan Fiduciary
from the general fiduciary responsibility provisions of section 404 of the Act.
In this regard, the Department expects the Independent Plan Fiduciary to
consider carefully the totality of fees and expenses to be paid by the Plan,
including the fees paid directly to Salomon Smith Barney or to other third
parties and/or indirectly through the Trust to Smith Barney.

A-15
<PAGE>

(C) Any contributing employer to any participating Plan or any duly authorized
employee representative of such employer; and
(D) Any participant or beneficiary of any participating Plan, or any duly
authorized representative of such participant or beneficiary.
(2) None of the persons described above in subparagraphs (B)-(D) of this
paragraph (n) shall be authorized to examine the trade secrets of Salomon Smith
Barney or commercial or financial information which is privileged or
confidential.

Section III. Definitions

For purposes of this proposed exemption:
(a) The term "Salomon Smith Barney" means Salomon Smith Barney Inc. and any
affiliate of Salomon Smith Barney, as defined in paragraph (b) of this Section
III.
(b) An "affiliate" of Salomon Smith Barney includes--
(1) Any person directly or indirectly through one or more intermediaries,
controlling, controlled by, or under common control with Salomon Smith Barney.
(For purposes of this subsection, the term "control" means the power to
exercise a controlling influence over the management or policies of a person
other than an individual.)
(2) Any officer, director or partner in such person, and
(3) Any corporation or partnership of which such person is an officer,
director or a 5 percent partner or owner.
(c) An "Independent Plan Fiduciary" is a Plan fiduciary which is independent
of Salomon Smith Barney and its affiliates and is either--
(1) A Plan administrator, sponsor, trustee or named fiduciary, as the
recordholder of Trust shares under a Section 404(c) Plan;
(2) A participant in a Keogh Plan;
(3) An individual covered under a self-directed IRA which invests in Trust
shares;
(4) A trustee, investment manager or named fiduciary responsible for
investment decisions in the case of a Title I Plan that does not permit
individual direction as contemplated by Section 404(c) of the Act; or
(5) A participant in a Plan, such as a Section 404(c) Plan, who is permitted
under the terms of such Plan to direct, and who elects to direct the investment
of assets of his or her account in such Plan.

Section IV. Effective Dates

If granted, this proposed exemption will be effective as of June 21, 1994 with
respect to the transactions described in Section I.A. and B.(1). With respect
to Section I.B.(2) and Section II(f)(1)-(4) of the General Conditions, this
proposed exemption will be effective November 9, 1998.
The availability of this proposed exemption is subject to the express
condition that the material facts and representations contained in the
application for exemption are true and complete and accurately describe all
material terms of the transactions. In the case of continuing transactions, if
any of the material facts or representations described in the applications
change, the exemption will cease to apply as of the date of such change. In the
event of any such change, an application for a new exemption must be made to
the Department.
For a more complete statement of the facts and representations supporting the
Department's decision to grant PTEs 92-77 and PTE 94-50, refer to the proposed
exemptions and the grant notices which are cited above.

Signed at Washington, D.C., this 4th day of November, 1998.

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

[FR Doc. 98-29964 Filed 11-6-98; 8:45 am]

BILLING CODE 4510-29-P
A-16
<PAGE>

Federal Register: April 5, 1999 (Volume 64, Number 64)
Notices
Page 16486-16493
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05ap99-118]
- --------------------------------------------------------------------------------
DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 99-15; Exemption Application No. D-10574]

Grant of Individual Exemption To Amend Prohibited Transaction

Exemption (PTE) 94-50 Involving Salomon Smith Barney Inc.

Salomon Smith Barney Located in New York, NY

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

ACTION: Grant of individual exemption to modify PTE 94-50.

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

SUMMARY: This document contains a final exemption before the Department of
Labor (the Department) which would amend PTE 94-50 (59 FR 32024, June 21,
1994), an exemption granted to Smith Barney, Inc. (Smith Barney), the
predecessor of Salomon Smith Barney. PTE 94-50 relates to the operation of the
TRAK Personalized Investment Advisory Service product (the TRAK Program) and
the Trust for TRAK Investments (subsequently renamed the Trust for Consulting
Group Capital Markets Funds) (the Trust). These transactions are described in a
notice of pendency that was published in the Federal Register on November 9,
1998 at 63 FR 60391.

EFFECTIVE DATE: This exemption is effective as of July 31, 1993 with respect to
the transactions described in Section I.A. and B.(1). of this grant notice. It
is also effective as of March 29, 1994 for transactions involving a daily-
traded collective investment fund (the GIC Fund) that was added to the TRAK
Program pursuant to PTE 94-50. With respect to Section I.B(2) and Section
II(f)(1)-(4) of the General Conditions of this grant notice, which set forth
the amendments to PTE 94-50, this exemption is effective as of November 9,
1998.

SUPPLEMENTARY INFORMATION: On November 9, 1998, the Department published, at 63
FR 60391, a notice of proposed exemption in the Federal Register that would
amend PTE 94-50. PTE 94-50 provides an exemption from certain prohibited
transaction restrictions of section 406 of the Employee Retirement Income
Security Act of 1974 (the Act) and from the sanctions resulting from the
application of section 4975 of the Internal Revenue Code of 1986 (the Code), as
amended, by reason of section 4975(c)(1) of the Code. Specifically, PTE 94-50
provides exemptive relief from the restrictions of section 406(a) of the Act
and the sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(A) through (D) of the Code, for the purchase or
redemption of shares in the Trust by an employee benefit plan, an individual
retirement account, or a retirement plan for a self-employed individual
(collectively, the Plans). PTE 94-50 also provides exemptive relief from the
restrictions of section 406(b) of the Act and the sanctions resulting from the
application of section 4975 of the Code, by reason of section 4975(c)(1)(E) and
(F) of the Code, with respect to the provision, by the Consulting Group of
Smith Barney (the Consulting Group), of investment advisory services to
independent fiduciaries of participating Plans (the Independent Plan
Fiduciaries) that might result in such fiduciary's selection of an investment
portfolio under the TRAK Program for the investment of Plan assets.

Besides the transactions described above, PTE 94-50 permitted Smith Barney to
add a daily-traded collective investment fund (i.e., the GIC Fund) to the
existing Fund Portfolios and to describe the various entities operating the GIC
Fund. Further, PTE 94-50 replaced references to Shearson Lehman with references
to Smith Barney. PTE 94-50 is effective as of July 31, 1993 for the
transactions described in PTE 92- 77 and effective as of March 29, 1994 with
respect to transactions involving the GIC Fund.

Salomon Smith Barney has informed the Department of certain changes to the
facts underlying PTE 94-50. These modifications include (1) Corporate mergers
that have changed the names of the parties described in PTE 94-50 and would
permit broader distribution of TRAK-related products, (2) the implementation of
a recordkeeping reimbursement offset system (the Recordkeeping Reimbursement
Offset Procedure) under the TRAK Program, and (3) the institution of an
automated reallocation option (the Automatic Reallocation Option) under the
TRAK Program for which Salomon Smith Barney has requested administrative
exemptive relief from the Department. The proposed exemption was requested in
an application filed on behalf of Salomon Smith Barney pursuant to section
408(a) of the Act and section 4975(c)(2) of the Code, and in accordance with
the procedures (the Procedures) set forth in 29 CFR Part 2570, Subpart B (55 FR
32836, August 10, 1990). Effective December 31, 1978, section 102 of
Reorganization Plan No. 4 of 1978 (43 FR 47713, October 17, 1978) transferred
the authority of the Secretary of the Treasury to issue exemptions of the type
requested to the Secretary of Labor. Accordingly, this exemption is being
issued solely by the Department.

The proposed exemption gave interested persons an opportunity to comment on
the notice of pendency and to request a public hearing. During the comment
period, the Department received three written comments and no requests for a
hearing in response to the notice. Two comments were submitted by Plan
participants investing in the TRAK Program. The third comment, which is
intended to clarify and

[[Page 16487]]

modify the proposed exemption, was submitted by Salomon Smith Barney.

Following is a discussion of the comments received, the responses provided by
Salomon Smith Barney, and the Department's determinations regarding the
comments.

Participant Comments

The first commenter objects to the proposed exemption because he is under the
impression that the new services that will be
- -------
/1/ On October 5, 1992, the Department granted PTE 92-77 at 55 FR 45833. PTE
92-77 permitted Shearson Lehman Brothers, Inc. (Shearson Lehman) to make the
TRAK Program available to Plans that acquired shares in the Trust. In this
regard, PTE 92-77 permitted Plans to purchase or redeem shares in the Trust and
allowed the Consulting Group to provide investment advisory services to an
Independent Fiduciary of a Plan which might result in such fiduciary's
selection of a Portfolio in the TRAK Program for the investment of Plan assets.
- -------
Subsequent to the granting of PTE 92-77, on July 31, 1993, Smith Barney
acquired certain assets of Shearson Lehman associated with its retail business,
including the TRAK Program, and applied for and received a new exemption (PTE
94-50) for the ongoing operation of the TRAK Program. Essentially, PTE 94-50
amended and replaced PTE 92-77. However, because of certain material factual
changes to the representations supporting PTE 92-77, the Department determined
that the exemption was no longer effective for use by Smith Barney and its
subsidiaries as of the date of the asset sale.

A-17
<PAGE>

offered to TRAK Program investors by Salomon Smith Barney will result in
increased fees paid to consultants and investment advisers by the Funds. The
commenter also does not believe that there will be a corresponding increase in
the growth of the Funds.

Salomon Smith Barney represents that although it is not clear which provisions
in the proposed exemption have elicted the comment, it points out that the
comment relates more or less to the underlying Fund portfolios rather than to
the TRAK Program.

As to the commenter's first area of concern, Salomon Smith Barney explains
that the proposed Automatic Reallocation Option is a service that is to be
provided at no additional cost to the investor and it does not affect the
calculation of the investment advisory fee. In addition, Salomon Smith Barney
represents that it does not have a basis to respond to the inclusion of
"consultants" in this comment. With respect to the commenter's concern about
growth prospects, Salomon Smith Barney states that no investment vehicle can
assure investors future performance.

The second commenter states that while he has no objection to Salomon Smith
Barney's implementation of the Automatic Reallocation Option, he would like to
see the requirement for clear explanations of the choices and the implications
of such choices. The commenter also suggests that Salomon Smith Barney provide
a clear path for revocation of the Automatic Reallocation Option, whereby a
Plan investor's choice would have to be reaffirmed periodically.

In response to this comment, Salomon Smith Barney states that the text of the
announcement referred to in the preamble (the Preamble) at 60394 provides
participants with the same information that the commenter requests. However, as
an alternative to the commenter's suggestion of a reaffirmation mechanism,
Salomon Smith Barney represents that it will include a footnote in the
"Participant Quarterly Review" indicating that the participant is currently
using the Automatic Reallocation Option and stating that such participant can
cancel this service at any time. Salomon Smith Barney proposes to place the
footnote after the legend quoted in Footnote 5 of the Preamble. The additional
language would read as follows:

You have elected to have your TRAK Portfolio automatically reallocated at such
time as the Consulting Group recommends a change to the Allocation Model you
are following. If, at any time, you choose to discontinue this service, please
contact your Financial Consultant for instructions.

Salomon Smith Barney believes the participant will then be consistently
reminded of his or her option to discontinue the Automatic Reallocation Option.

Salomon Smith Barney's Comments

1. Corporate Mergers

Salomon Smith Barney wishes to clarify that on page 60392 of the Preamble, in
the first sentence of the paragraph captioned "Corporate Mergers," the phrase
"Salomon Inc., the ultimate parent of" should be inserted after the phrase
"acquired all the shares of." Also, in this section, Salomon Smith Barney
wishes to modify the first sentence of the third paragraph to clarify that one
of the purposes of the merger, rather than the "sole" purpose of the merger,
was to create additional distribution channels for the TRAK Program.

In response to this comment, the Department concurs with the requested
modifications and has made the suggested changes.

2. Recordkeeping Reimbursement Offset Procedure

Salomon Smith Barney has informed the Department that although it has not yet
implemented the Recordkeeping Reimbursement Offset Procedure in a manner that
will reduce the net outside fee (the Net Outside Fee), at the present time, it
has in place a recordkeeping reimbursement program that reduces recordkeeping
expenses only, at an annual rate of $8.50 per participant position. Salomon
Smith Barney states that this annualized rate has been approved by the Funds'
Board of Trustees and that, of the $8.50 amount, $0.50 per participant position
represents a sub-transfer agency fee for the costs associated with the
application of the reimbursement process (the Processing Fee). Currently,
Salomon Smith Barney states that its affiliate, Smith Barney Corporate Trust
Company, is retaining this Processing Fee.

Salomon Smith Barney has provided an example showing the manner in which the
recordkeeping reimbursement amount is determined by the Funds at the $8.50
level using some of the numbers set forth in the example given in the Preamble
on pages 60392 and 60393. The example assumes that all positions are eligible
for reimbursement because positions in the Government Money Investments
Portfolio and the Stable Value (GIC) Fund Portfolio are not eligible for
recordkeeping reimbursement.

Assume that Plan A has $1 million in assets invested in the TRAK Program and
100 participants. Assume further that Plan A pays its recordkeeper $20 per
participant per year in Annual Fees totaling $2,000 per year or $500 per
quarter and $12 per participant per year in Other Fees, totaling $1,200 per
year or $300 per quarter. Assume also that the Plan pays the recordkeeper an
annual Processing Fee of $150.

At the end of each calendar quarter, Plan A's recordkeeper would determine the
actual number of Fund positions held by the Plan A participants and calculate
the resulting reimbursement amount that would be paid by the Funds. If Plan A
had 300 participant positions at the end of the quarter, the Plan's total
recordkeeping reimbursement amount to be paid by the Funds would be 300 x $2
(the annual amount of $8 divided by 4) or $600.

The Processing Fee paid by the Plan to the recordkeeper for the quarter would
be 300 x $0.125 (the annual amount of $0.50 divided by 4) or $37.50. This
Processing Fee would, in turn, also be credited back to the Plan by the Funds.

Application of Reimbursement to Recordkeeping Fees

<TABLE>
<S> <C>
Quarterly Portion of Annual Fees..................................... $ 500.00
Quarterly Portion of Other Fees/2................................./.. 300.00
Processing Fee....................................................... 37.50
--------
Total Quarterly Recordkeeping Fees................................... $ 837.50
Credit for Reimbursement............................................. $(600.00)
Credit for Processing Fee............................................ $ (37.50)
--------
Total Reimbursement............................................... $(637.50)
Net Amount of Recordkeeping Fees Payable by the Plan................. $ 200.00
Net Amount of Recordkeeping Fees Payable by the Funds................ 637.50
--------
Total Quarterly Recordkeeping Fees................................ $ 837.50
</TABLE>

Since the recordkeeping reimbursement program currently in place applies only
to the payment of expenses related to recordkeeping, there would never be an
"excess reimbursement" according to Salomon Smith Barney. Therefore, the Total
Reimbursement amount would reflect the lesser of the amount calculated as in
the example above, or the actual

[[Page 16488]]

costs billed. If the Total Reimbursement
- -------

/2/ Assumes "Other Fees" are paid by the Plan during the quarter.

A-18
<PAGE>

calculation had exceeded the Total Quarterly Recordkeeping Fees, Salomon Smith
Barney states that the maximum reimbursement amount would be limited to the
Total Quarterly Recordkeeping Fees.

On page 60392 of the Preamble, the second paragraph of the section describing
the Recordkeeping Reimbursement Offset Procedure states that in May 1998, the
Board of Trustees of the Funds approved a recordkeeping reimbursement amount of
$12.50 for each investment position held by a participant. Salomon Smith Barney
notes that the recordkeeping reimbursement amount may be changed by the Board
of Trustees of the Funds from time to time. Therefore, it requests that the
description of the TRAK Program define the reimbursement amount as "such annual
dollar amount per eligible position as shall be set by the Board of Trustees of
the Funds from time to time." Salomon Smith Barney has also informed the
Department that, of the $12.50 annual reimbursement amount approved by the
Board of Trustees of the Funds, $0.50 is being retained by Smith Barney
Corporate Trust Company as a Processing Fee.

The Department does not object to making the foregoing clarifications to the
description of the Recordkeeping Reimbursement Offset Procedure in the
Preamble. However, because Smith Barney Corporate Trust Company is retaining
$0.50 per participant position as a Processing Fee, the Department requested
that Salomon Smith Barney revise the calculations in the example appearing on
pages 60392 and 60393 of the Preamble. In addition to these changes, Salomon
Smith Barney suggested that the following disclaimer language preface the
example in order to avoid investor confusion:

Salomon Smith Barney has provided the following numbers solely for ease of
calculation and not as typical or representative of the operation of the TRAK
product in any particular client circumstance.

Moreover, Salomon Smith Barney notes that because a Plan participating in the
TRAK Program may be required to pay a recordkeeper "Other Fees" in addition to
annual recordkeeping fees, both of which may be billed on a quarterly basis, it
wishes to clarify that "Other Fees" may arise only at certain times of the year
and that it does not wish to imply by the example that "Other Fees" are
regularly billed quarterly in all instances.

In light of these changes, the revised example is set forth as follows:

Salomon Smith Barney has provided the following numbers solely for ease of
calculation and not as typical or representative of the operation of the TRAK
product in any particular client circumstance. Therefore, the Recordkeeping
Reimbursement Offset Procedure would work as follows:

At the end of each calendar quarter, Plan A's recordkeeper would determine the
actual number of Fund positions held by the Plan A participants and calculate
the resulting reimbursement amount. If Plan A had 300 participant positions at
the end of the quarter, the Plan's total recordkeeping reimbursement amount
would be 300 x $3 (the annual amount of $12 divided by 4) or $900. In addition,
the Processing Fee paid to the recordkeeper for the quarter would be 300 x
$0.125 (the annual amount of $0.50 divided by 4) or $37.50.

At the end of each calendar quarter, Plan A's recordkeeper would determine the
actual number of Fund positions held by the Plan A participants and calculate
the resulting reimbursement amounts to be paid by the Funds. If Plan A had 300
participant positions at the end of the quarter, the Plan's total recordkeeping
reimbursement amount would be 300 x $3 (the annual amount of $12 divided by 4)
or $900. To this amount would be added the $37.50 Processing Fee paid to the
recordkeeper during the quarter. Such amounts would be credited as follows:

Application of Reimbursement to Recordkeeping Fees
<TABLE>
<S> <C>
Quarterly Portion of Annual Fees/3/ ................................. $ 500.00
Quarterly Portion of Other Fees...................................... 300.00
Processing Fee....................................................... 37.50
Total Quarterly Recordkeeping Fees................................... $ 837.50
Credit for Reimbursement............................................. $(900.00)
Credit for Processing Fee............................................ (37.50)
--------
Total Reimbursement............................................... $(937.50)
--------
Excess Reimbursement................................................. $(100.00)
</TABLE>

Because the Total Reimbursement amount exceeds the Total Quarterly
Recordkeeping Fees, the Plan does not owe any recordkeeping fees for that
period. Therefore, the recordkeeper would not bill the Plan. Instead, the Funds
would pay the recordkeeper the $837.50 amount due.

Application of Excess Reimbursement to the Net Outside Fee

<TABLE>
<S> <C>
Quarterly Net Outside Fee............................................ $2,125.00
Excess Reimbursement................................................. (100.00)
Net Outside Fee Paid by the Plan..................................... $2,025.00
Net Outside Fee Paid by the Funds.................................... 100.00
---------
Total Quarterly Net Outside Fee................................... $2,125.00
---------
</TABLE>
In the program as proposed, the Funds have agreed that any Excess
Reimbursement amount remaining after the payment of the Total Quarterly
Recordkeeping Fees would be paid by the Funds to reduce the Plan's investment
advisory fee obligations. Therefore, the $100 Excess Reimbursement amount would
be applied against the Plan's Quarterly Net Outside Fee. Under such
circumstances, the recordkeeper would advise the Consulting Group that it is
entitled to bill the Plan for the $2,025.00 balance of the Consulting Group's
Net Outside Fee. In turn, the Funds would pay the $100 amount attributable to
the Excess Reimbursement to the Consulting Group./4/

Also, on page 60392 of the Preamble, in the second paragraph of the section
describing the Recordkeeping Reimbursement Offset Procedure, it states that a
participant holding positions in three different Funds would be eligible to
receive a total annual reimbursement of $37.50. In light of the change to the
allocation of the $12.50 reimbursement amount (i.e., $12.00 per participant
position and $0.50 payable to Smith Barney Corporate Trust Company as a
Processing Fee), Salomon Smith Barney wishes to clarify that the participant
would receive a "total annual offset of $36.00" rather than a "total annual
reimbursement of $37.50."

Finally, on page 60392 of the Preamble, in the last sentence of the second
paragraph describing the Recordkeeping Reimbursement Offset Procedure, it
states that an affected Plan will be required to pay only the balance of the
[Net Outside] fee, which is generally charged on a quarterly
- -------
/3/ Assumes "Other Fees" are paid by the Plan during the quarter.
- -------
/4/ It should be noted that the existence or the amount of the excess will not
alter the amount of the recordkeeping or advisory fees. Instead, the
reimbursement calculations will determine the proportion of payment by the
Funds of the Plan's fee obligations.

A-19
<PAGE>

basis, after the excess reimbursement amount has been deducted. Salomon Smith
Barney wishes to point out that because some recordkeepers choose to bill the
initial quarterly installment of the recordkeeping fee in full and then apply
the recordkeeping reimbursement amount for each quarter to the next quarter's

[[Page 16489]]

fees, it suggests that the Department delete the clause stating "and the timing
of the offset of the excess reimbursement amount against the fees," appearing
on page 60393 of the Preamble in the second sentence of the first full
paragraph following the example. The Department concurs with the modifications
to the Preamble.

3. Footnote 3

On page 60392 of the Preamble, Footnote 3 states that Salomon Smith Barney is
offsetting, quarterly, against the Outside Fee, such amount as is necessary to
assure that the Consulting Group retains not more than 20 basis points (as an
Inside Fee) from any Portfolio on investment assets attributable to any Plan.
For purposes of clarification, Salomon Smith Barney requests that the
Department add the following parenthetical exception at the end of the footnote
after the word "Plan":

(except the Government Money Investments Portfolio and the Stable Value (GIC)
Fund Portfolio, as to which no investment management fee is retained).

In response, the Department concurs with this clarification. On page 60393 of
the Preamble, the second sentence of the first paragraph following the example
states that 23 recordkeepers currently provide services to TRAK Program
investors. Salomon Smith Barney explains that since a Plan designates its own
recordkeeper, the number "23" is subject to change. Therefore, Salomon Smith
Barney suggests the deletion of this number and the Department concurs with
this clarification.

4. Investor Contact/Superfluous Language

On page 60393 of the Preamble, Footnote 5 distinguishes the Automatic
Reallocation Option from rebalancing of a participant's account and it
instructs a TRAK Program participant to contact his or her Financial Consultant
should a change in an investment allocation be warranted. Footnote 5 also
states that a Financial Consultant is expected to initiate contact with Plan
participants at least annually to encourage a comparison of the holdings in the
Plan participant's portfolio against the Consulting Group's recommendation.
Salomon Smith Barney wishes to inform the Department that in the case of
retirement plans covering multiple participants, this contact typically may
take the form of regular written communications between the Financial
Consultant and the Plan investor.

Moreover, the Department has stricken the last two sentences of Footnote 5,
which due to a printing error, contain superfluous language also appearing on
page 60393 of the Preamble, in the second and third sentences of the first
paragraph under the description of the Automatic Reallocation Option.

5. Footnote 6

On page 60394 of the Preamble, Footnote 6 states, in pertinent part, that
there are 12 standard asset allocation models (the Allocation Models). Salomon
Smith Barney explains that because it is constantly in the process of refining
the basis for its asset allocation advice, the number of standard Allocation
Models is expected to change as a result of such product modifications. To
avoid an ongoing obligation to alter this number, Salomon Smith Barney suggests
that the reference to the number "12" be deleted. Therefore, the Department has
modified the Preamble, accordingly.

6. Condition (f)

On page 60395 of the Preamble and page 60396 of the operative language of the
proposed exemption, Section II(f)(3) of the General Conditions contains a
notice provision that requires an Independent Plan Fiduciary to give Salomon
Smith Barney at least 30 calendar days prior written notice of its intention to
"opt out" of a new asset allocation model. Salomon Smith Barney wishes to
clarify that an Independent Plan Fiduciary has a period of at least 30 calendar
days during which to provide Salomon Smith Barney with written notice.
Therefore, Salomon Smith Barney proposes that the notice period be described as
"at any time within the period of 30 calendar days" prior to the Effective
Date.

In response to this comment, the Department has made the change suggested by
Salomon Smith Barney.

7. Deletion of the Last Sentence of Paragraph (g)

On pages 60394 and 60395 of the Preamble, paragraph (g) states that if the
Independent Plan Fiduciary "opts out," his or her Plan account will not be
changed on the Effective Date. Paragraph (g) also states that, under such
circumstances, the Allocation Model will remain at its current level or at such
other level as the Independent Plan Fiduciary designates. However, the
Automatic Reallocation Option will remain in effect for future changes in such
participant's Allocation Model.

Salomon Smith Barney explains that once a participant has opted out of the
Automatic Reallocation Option, the participant's account is left at its current
"non-conforming" allocation levels and it no longer resembles a Consulting
Group Allocation Model. Because the Automatic Reallocation Option, in effect,
terminates upon a participant's "opting out," Salomon Smith Barney requests the
deletion of the last sentence of paragraph (g).

In response to this comment, the Department has made the requested deletion to
paragraph (g).

8. General Information

On page 60395 of the proposed exemption, in the section captioned "General
Information," paragraph (2) states that the proposed exemption, if granted,
will not extend to transactions prohibited under section 406(b)(3) of the Act
and section 4975(c)(1)(F) of the Code. The Department wishes to point out that
the exemption will extend to transactions that are prohibited under section
406(b) of the Act and section 4975(c)(1)(E) and (F) of the Code and it has
modified the final exemption, accordingly.

9. Scope of the Term "Employee Benefit Plans"

Salomon Smith Barney requests that the exemption cover transactions in the
TRAK Program that are entered into not only by qualified plans that meet the
requirements of section 401(k) of the Code, but also by any individual account
pension plan that may be subject to Title I of the Act and established under
section 403(b) of the Code (the Section 403(b) Plan). To the extent that
participants in Section 403(b) Plans invest their contributions in shares of
the Funds, Salomon Smith Barney and its affiliates would like to make the TRAK
Program available to them.

The Department concurs with this comment and, on page 60396 of the proposed
exemption, it has revised Section I.A. of the operative language by deleting
the word "or" preceding the phrase "a retirement plan for self-employed
individuals (the Keogh Plan)" and adding

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<PAGE>

the phrase "or an individual account pension plan that is subject to the
provisions of Title I of the Act and established under section 403(b) of the
Code (the Section 403(b) Plan)." In addition, the Department has revised
Footnote 11 of the proposed exemption to include a reference to the term
"Section 403(b) Plan" after the term "Keogh Plan." Further, on page 60398 of
the proposed exemption, the Department has

[[Page 16490]]

revised Section III(c)(3) of the Definitions as follows:

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

For further information regarding the comments or other matters discussed
herein, interested persons are encouraged to obtain copies of the exemption
application file (Exemption Application No. D-10574) the Department is
maintaining in this case. The complete application file, as well as all
supplemental submissions received by the Department are made available for
public inspection in the Public Documents Room of the Pension and Welfare
Benefits Administration, Room N-5638, U.S. Department of Labor, 200
Constitution Avenue, N.W., Washington, D.C. 20210.

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

General Information

The attention of interested persons is directed to the following:

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

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

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

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

(5) This is subject to the express condition that the Summary of Facts and
Representations set forth in the notice of proposed exemption relating to PTE
92-77, as amended by PTE 94-50 and this notice, accurately describe, where
relevant, the material terms of the transactions to be consummated pursuant to
this exemption.

Exemption

Under the authority of section 408(a) of the Act and section 4975(c)(2) of the
Code and in accordance with the Procedures set forth above, the Department
hereby amends PTE 94-50 as follows:

Section I. Covered Transactions

A. The restrictions of section 406(a) of the Act and the sanctions resulting
from the application of section 4975 of the Code, by reason of section
4975(c)(1) (A) through (D) of the Code, shall not apply, to the purchase or
redemption of shares by an employee benefit plan, an individual retirement
account (the IRA), a retirement plan for self- employed individuals (the Keogh
Plan), or an individual account pension plan that is subject to the provisions
of Title I of the Act and established under section 403(b) of the Code (the
Section 403(b) Plan)/5/ in the Trust for Consulting Group Capital Market Funds
(the Trust), established by Salomon Smith Barney, in connection with such
Plans' participation in the TRAK Personalized Investment Advisory Service
product (the TRAK Program).

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

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

Section II. General Conditions

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

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

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

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

(1) If such Independent Plan Fiduciary shall have elected in writing (the
Election), on a form designated by Salomon Smith Barney from time to time for
such purpose, to participate in the Automatic Reallocation Option under the
TRAK Program, the affected Plan or participant account will be
- -------
/5/ The employee benefit plan, the IRA, the Keogh Plan and the Section 403(b)
Plan are collectively referred to herein as the Plans.
A-21
<PAGE>

automatically reallocated whenever the Consulting Group modifies the particular
asset allocation recommendation which the Independent Plan Fiduciary has
chosen. Such Election shall continue in effect until revoked or terminated by
the Independent Plan Fiduciary in writing.

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

[[Page 16491]]

redemption procedures may delay such processing through a series of purchase
and redemption transactions to shift assets among the affected Portfolios.

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

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

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

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

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

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

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

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

(A) A copy of the Prospectus for the Trust discussing the investment
objectives of the Portfolios comprising the Trust, the policies employed to
achieve these objectives, the corporate affiliation existing between the
Consulting Group, Salomon Smith Barney and its subsidiaries and the
compensation paid to such entities./6/

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

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

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

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

(F) A copy of PTE 94-50 as well as the proposed exemption and the final
exemption pertaining to the exemptive relief described herein.

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

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

(4) With respect to a Plan that is covered under Title I of the Act, where
investment decisions are made by a trustee, investment manager or a named
fiduciary, such
- -------
/6/ The fact that certain transactions and fee arrangements are the subject of
an administrative exemption does not relieve the Independent Plan Fiduciary
from the general fiduciary responsibility provisions of section 404 of the Act.
In this regard, the Department expects the Independent Plan Fiduciary to
consider carefully the totality of fees and expenses to be paid by the Plan,
including the fees paid directly to Salomon Smith Barney or to other third
parties and/or indirectly through the Trust to Smith Barney.

A-22
<PAGE>

Independent Plan Fiduciary is required to acknowledge, in writing, receipt of
such documents and represent to Salomon Smith Barney that such fiduciary is (a)
independent of Salomon Smith Barney and its affiliates, (b) capable of making
an independent decision regarding the investment of Plan assets and (c)
knowledgeable with respect to the Plan in administrative matters and funding
matters related thereto, and able to make an informed decision concerning
participation in the TRAK Program.

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

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

(2) A written quarterly monitoring statement containing an analysis and an
evaluation of a

[[Page 16492]]

Plan investor's account to ascertain whether the Plan's investment objectives
have been met and recommending, if required, changes in Portfolio allocations.

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

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

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

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

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

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

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

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

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

Section III. Definitions

For purposes of this exemption,

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

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

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

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

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

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

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

(2) A participant in a Keogh Plan;

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

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

Section IV. Effective Dates

This exemption is effective as of July 31, 1993 with respect to the
transactions described in Section I.A. and B.(1). of this grant notice. It is
also effective as of March 29, 1994 for transactions involving a daily-traded
collective investment fund that was added to the TRAK Program pursuant to PTE
94-50. With respect to Section I.B(2) and Section II(f)(1)-(4) of the General
Conditions of this grant notice, which set forth the amendments to PTE 94-50,
this exemption is effective as of November 9, 1998.

A-23
<PAGE>

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

For a more complete statement of the facts and representations supporting the
Department's decision to grant the case of continuing transactions, if any of
the material facts or representations described in the application change, the
exemption will cease to apply as of the date of such change. In the event of
any such change, an application for a new exemption must be made to the
Department.

For a more complete statement of the facts and representations supporting the
Department's decision to grant this exemption, refer to the proposed exemption
and PTEs 92-77 and 94-50 which are cited above.

[[Page 16493]]

Signed at Washington, DC, this 30th day of March, 1999.

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

[FR Doc. 99-8226 Filed 4-2-99; 8:45 am]
BILLING CODE 4510-29-P

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<PAGE>

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<PAGE>

For More Information

If you want more information about the Portfolio or the other portfolios that
comprise the Trust, the following resources are available upon request.

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

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

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

Investors can get free copies of reports and SAIs, request other information and
discuss their questions about the Portfolio by contacting their Financial
Consultant, or the Consulting Group at:

The Consulting Group
222 Delaware Avenue
Wilmington, Delaware 19801
Telephone: 1-212-816-8725

Investors can review the Portfolio's reports and SAI at the Public Reference
Room of the Securities and Exchange Commission. Investors can get text-only
copies for free from the Commission's Internet website at: http://www.sec.gov,
or for a duplicating fee by calling or writing to:

Public Reference Section of the Commission
Washington, D.C. 20549-6009
Telephone: 1-800-SEC-0330

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

Investment Company Act File No. 811-06318

SalomonSmithBarney
----------------------------
a member of citigroup [LOGO]

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

(R) 1999 Salomon Smith Barney Inc. TK__ 9/99

PART B

STATEMENT OF ADDITIONAL INFORMATION

CONSULTING GROUP CAPITAL MARKETS FUNDS
S & P 500 INDEX INVESTMENTS
SEPTEMBER ___, 1999

222 Delaware Avenue ~ Wilmington, Delaware 19801 ~
(212) 816-8725

This Statement of Additional Information supplements the information
contained in the current Prospectus (the "Prospectus") of S & P 500
Index Investments (the "Portfolio"), a separate series of Consulting
Group Capital Markets Funds (the "Trust"), dated September ___, 1999,
and should be read in conjunction with the Prospectus. The Trust is a
series company that consists of the Portfolio and fifteen other
portfolios offered in separate prospectuses. The Prospectus for the
Portfolio may be obtained by contacting any Financial Consultant of
Salomon Smith Barney Inc. ("Salomon Smith Barney"), or by writing or
calling the Trust at the address or telephone number listed above. This
Statement of Additional Information, although not in itself a
prospectus, is incorporated by reference into the Prospectus in its
entirety.

CONTENTS

Trustees and Executive Officers of the Trust
1
Investment Objectives, Management Policies and Risk Factors
of the Portfolio
3
Investment Restrictions
7
Portfolio Transactions
9
Portfolio Turnover
10
Investment Management and Other Services
10
Purchase of Shares
13
Redemption of Shares
13
Redemptions in Kind
14
Net Asset Value
14
Determination of Performance
14
Taxes
16
Distributor
19
Custodian and Transfer Agent
19

Capitalized terms used but not defined in this Statement of Additional
Information have the meanings accorded to them in the Prospectus.

TRUSTEES AND EXECUTIVE OFFICERS OF THE TRUST

The Trustees and executive officers of the Trust, together with
information as to their principal business occupations, are set forth
below. The executive officers of the Trust are employees of
organizations that provide services to the Portfolios. Each Trustee who
is an "interested person" of the Trust, as defined in the 1940 Act, is
indicated by an asterisk.

Walter E. Auch, Trustee (Age 78). Consultant to companies in the
financial services industry; Director of Pimco Advisers L.P.; Brinson
Partners; Nicholas-Applegate (each a registered investment adviser);
Legend Properties, a real estate management company; Banyan Realty
Trust; and Banyan Land Fund II. Director or trustee of 2 investment
companies associated with Citigroup Inc. ("Citigroup"). His address is
6001 N. 62nd Place, Paradise Valley, Arizona 85253.

Martin Brody, Trustee (Age 77). Private Investor; Director or
trustee of 20 investment companies associated with Citigroup. His
address is c/o HMK Associates, 30 Columbia Turnpike, Florham Park, N.J.
07932.

H. John Ellis, Trustee (Age 72). Retired. Director or trustee of
2 investment companies associated with Citigroup. His address is 858
East Crystal Downs Drive, Frankfort, Michigan 49635.

Armon E. Kamesar, Trustee (Age 72). Chairman of the Board of TEC,
an international organization of Chief Executive Officers; Trustee,
U.S. Bankruptcy Court. Director or trustee of 2 investment companies
associated with Citigroup. His address is 7328 Country Club Drive, La
Jolla, CA 92037.

Stephen E. Kaufman, Trustee (Age 67). Attorney. Director or
trustee of 13 investment companies associated with Citigroup. His
address is 277 Park Avenue, New York, New York 10172.

*Heath B. McLendon, Trustee and Chairman of the Board (Age 66).
Managing Director of Salomon Smith Barney and Chairman of the Board of
Salomon Smith Barney Strategy Advisers Inc. and Director and President
of SSBC Fund Management Inc. ("SSBC") (formerly known as Mutual
Management Corp.) and Travelers Investment Adviser, Inc. ("TIA"); Mr.
McLendon serves on the Board of 64 investment companies associated with
Citigroup. His address is 388 Greenwich Street, New York, New York
10013.

Lewis E. Daidone, Senior Vice President and Treasurer (Age 41).
Managing Director of Salomon Smith Barney; Direcor and Senior Vice
President of SSBC and TIA. Mr. Daidone serves as Senior Vice President
and Treasurer of 59 investment companies associated with Citigroup. His
address is 388 Greenwich Street, New York, New York 10013.

Frank L. Campanale, Investment Officer (Age 46). President and
Chief Executive Officer of Salomon Smith Barney's Consulting Group.
Prior to 1996, National Sales Director for Consulting Group. His
address is 222 Delaware Avenue, Wilmington, Delaware, 19801.

LeRoy T. Pease, CFA, Investment Officer (Age 40). First Vice
President of Salomon Smith Barney Consulting Group. Prior to 1996,
Chief Investment Officer of EMT Group and Manager for Investment
Strategy for Bell Atlantic, Philadelphia, Pennsylvania. His address is
222 Delaware Avenue, Wilmington, Delaware, 19801.

Christina T. Sydor, Secretary (Age 48). Managing Director of
Salomon Smith Barney; General Counsel and Secretary of SSBC and TIA.
Ms. Sydor serves as Secretary of 59 investment companies associated
with Citigroup. Her address is 388 Greenwich Street, New York New York
10013.

Paul Brook, Controller (Age 45). Director of Salomon Smith
Barney; Controller or Assistant Treasurer of 43 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 388 Greenwich Street, New York, New York 10013.

Irving David, Controller (Age 38). Director of Salomon Smith
Barney. Controller or Assistant Treasurer of 43 investment companies
associated with Citigroup; Formerly Assistant Treasurer of First
Investment Management Company; His address is 388 Greenwich Street, New
York, New York 10013.

As of September ___, 1999, the Trustees and officers as a group
owned less than 1% of the outstanding shares of the Portfolio.

Remuneration. No director, officer or employee of Salomon Smith
Barney, SSBC or any of their affiliates will receive any compensation
from the Trust for serving as an officer or Trustee of the Trust. The
Trust pays each Trustee who is not a director, officer or employee of
Salomon Smith Barney, the Manager, any advisor, SSBC or any of their
affiliates a fee of $32,000 per annum plus $1,000 per meeting attended.
The Trust reimburses the Trustees for travel and out-of-pocket expenses
to attend meetings of the Board. For the fiscal year ended August 31,
1999, such fees and expenses totaled $[ ].

For the fiscal year ended August 31, 1999, the Trustees of the Trust
were paid the following compensation:
Total
Pension or Total Number
Aggregate Retirement Benefits Compensation of
Funds
Compensation Aggregate Accrued as Expense From Served in
Name From Portfolio Compensation of Trust Fund Complex Complex
Heath B. McLendon* None None None None 64
Walter Auch None None $ [ ] 2
Martin Brody None None [ ] 20
H. John Ellis None None 2

Armon E. Kamesar None None [ ] 2
Stephen E. Kaufman None None [ ] 13

* Designates "interested trustee".

INVESTMENT OBJECTIVES, MANAGEMENT POLICIES AND RISK FACTORS

The Portfolio is a diversified, open-end management investment company.
The Prospectus discusses the investment objectives of the Portfolio, a
separate series of the Trust and the policies to be employed to achieve
those objectives. Supplemental information is set out below concerning
the types of securities and other instruments in which the Portfolio
may invest, the investment policies and strategies the Portfolio may
utilize and certain risks attendant to those investments, policies and
strategies.

The 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.

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.

Futures Contracts and Related Options. The Portfolio may enter into
futures contracts and purchase and write (sell) options on these
contracts. These contracts 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
transactions costs or to seek higher investment returns when a futures
contract is priced more attractively than stocks comprising the S & P
500 Index. These contracts will be entered into on exchanges
designated by the Commodity Futures Trading Commission ("CFTC") or,
consistent with CFTC regulations, on foreign exchanges. These
transactions may be entered into for bona fide hedging and other
permissible risk management purposes including protecting against
anticipated changes in the value of securities the Portfolio intends to
purchase. The Portfolio will not use futures for speculative purposes.

The Portfolio will not enter into futures contracts and related options
for which the aggregate initial margin and premiums exceed 5% of the
fair market value of the Portfolio's assets after taking into account
unrealized profits and unrealized losses on any contracts it has
entered into. All futures and options on futures positions will be
covered by owning the underlying security or segregation of assets.
With respect to long positions in a futures contract or option (e.g.,
futures contracts to purchase the underlying instrument and call
options purchased or put options written on these futures contracts or
instruments), the underlying value of the futures contract at all times
will not exceed the sum of cash, short-term U.S. debt obligations or
other high quality obligations set aside for this purpose.

The Portfolio may lose the expected benefit of these futures or options
transactions and may incur losses if the prices of the underlying
commodities move in an unanticipated manner. In addition, changes in
the value of the Portfolio's futures and options positions may not
prove to be perfectly or even highly correlated with changes in the
value of its portfolio securities. Successful use of futures and
related options is subject to the Subadviser's ability to predict
correctly movements in the direction of the securities markets
generally, which ability may require different skills and techniques
than predicting changes in the prices of individual securities.
Moreover, futures and options contracts may only be closed out by
entering into offsetting transactions on the exchange where the
position was entered into (or a linked exchange), and as a result of
daily price fluctuation limits there can be no assurance that an
offsetting transaction could be entered into at an advantageous price
at any particular time. Consequently, the Portfolio may realize a loss
on a futures contract or option that is not offset by an increase in
the value of its portfolio securities that are being hedged or the
Portfolio may not be able to close a futures or options position
without incurring a loss in the event of adverse price movements.

The Portfolio will incur brokerage costs whether or not its hedging is
successful and will be required to post and maintain "margin" as a
good-faith deposit against performance of its obligations under futures
contracts and under options written by the Portfolio. Futures and
options positions are marked to the market daily and the Portfolio may
be required to make subsequent "variation" margin payments depending
upon whether its positions increase or decrease in value. In this
context margin payments involve no borrowing on the part of the
Portfolio.

Options on Securities Indices. The Portfolio may purchase put and call
options on the S & P 500 Index. The Portfolio may also enter into
closing sale transactions in order to realize gains or minimize losses
on options it has purchased. The Portfolio will not use options for
speculative purposes. The Portfolio may terminate its obligations under
an exchange-traded call or put option by purchasing an option identical
to the one it has written.

Transactions by the Portfolio in options on securities indices will be
subject to limitations established by each of the exchanges, boards of
trade or other trading facilities governing the maximum number of
options in each class which may be written or purchased by a single
investor or group of investors acting in concert. Thus, the number of
options which the Portfolio may write or purchase may be affected by
options written or purchased by other investment advisory clients. An
exchange, board of trade or other trading facility may order the
liquidation of positions found to be in excess of these limits, and it
may impose certain other sanctions.

The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent the options
markets close before the markets for the underlying securities,
significant price movements can take place in the underlying markets
that cannot be reflected in the options markets.

In addition to the risks of imperfect correlation between the
Portfolio's portfolio and the index underlying the option, the purchase
of securities index options involves the risk that the premium and
transaction costs paid by the Portfolio in purchasing an option will be
lost. This could occur as a result of unanticipated movements in the
price of the securities comprising the securities index on which the
option is based.

Money Market Instruments. The fund may invest up to 10% 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.

Repurchase Agreements. The Portfolio may enter into repurchase
agreements. Under the terms of a typical repurchase agreement, the
Portfolio would acquire an underlying debt obligation for a relatively
short period (usually not more than one week) subject to an obligation
of the seller to repurchase, and the Portfolio to resell, the
obligation at an agreed upon price and time, thereby determining the
yield during the Portfolio's holding period. This arrangement results
in a fixed rate of return that is not subject to market fluctuations
during the Portfolio's holding period. The Portfolio may enter into
repurchase agreements with respect to U.S. Government Securities with
member banks of the Federal Reserve System and certain non-bank dealers
approved by the board of trustees. Under each repurchase agreement,
the selling institution is required to maintain the value of the
securities subject to the repurchase agreement at not less than their
repurchase price. The Portfolio's Subadviser, acting under the
supervision of the board of trustees, reviews on an ongoing basis the
value of the collateral and the creditworthiness of those non-bank
dealers with whom the Portfolio enters into repurchase agreements. The
Portfolio will not invest in a repurchase agreement maturing in more
than seven days if the investment, together with illiquid securities
held by the Portfolio, exceeds 15% of the Portfolio's total assets. In
entering into a repurchase agreement, the Portfolio bears a risk of
loss if the other party to the transaction defaults on its obligations
and the Portfolio is delayed or prevented from exercising its rights to
dispose of the underlying securities, including the risk of a possible
decline in the value of the underlying securities during the period in
which the Portfolio seeks to assert its rights to them, the risk of
incurring expenses associated with asserting those rights and the risk
of losing all or a part of the income from the agreement.

Borrowing. Leverage increases investment risk as well as investment
opportunity. If the income and investment gains on securities
purchased with borrowed money exceed the interest paid on the
borrowing, the net asset value of the Portfolio's shares will rise
faster than would otherwise be the case. On the other hand, if the
income and investment gains fail to cover the cost, including interest,
of the borrowings, or if there are losses, the net asset value of the
Portfolio's shares will decrease faster than otherwise would be the
case.

Lending Portfolio Securities. Consistent with applicable regulatory
requirements, the Portfolio, may lend portfolio securities to brokers,
dealers and other financial organizations. The Portfolio will not lend
securities to Salomon Smith Barney unless the Portfolio has applied for
and received specific authority to do so from the SEC. The Portfolio's
loan of securities will be collateralized by cash, letters of credit or
U.S. Government Securities. The Portfolio will maintain the collateral
in an amount at least equal to the current market value of the loaned
securities. From time to time, the Portfolio may pay a part of the
interest earned from the investment of collateral received for
securities loaned to the borrower and/or a third party that is
unaffiliated with the Portfolio and is acting as a "finder." The
Portfolio will comply with the following conditions whenever it loans
securities: (i) the Portfolio must receive at least 100% cash
collateral or equivalent securities from the borrower; (ii) the
borrower must increase the collateral whenever the market value of the
securities loaned rises above the level of the collateral; (iii) the
Portfolio must be able to terminate the loan at any time; (iv) the
Portfolio must receive reasonable interest on the loan, as well as any
dividends, interest or other distributions on the loaned securities and
any increase in market value; (v) the Portfolio may pay only reasonable
custodian fees in connection with the loan; and (vi) voting rights on
the loaned securities may pass to the borrower except that, if a
material event adversely affecting the investment in the loaned
securities occurs, the Trust's Board of Trustees must terminate the
loan and regain the right to vote the securities.

Temporary Investments. For temporary defensive purposes, during
periods when the Subadvisor of the Portfolio, in consultation with the
Manager, believes that pursuing the Portfolio's basic investment
strategy may be inconsistent with the best interests of its
shareholders, the Portfolio may invest its assets in the following
money market instruments: U.S. Government Securities (including those
purchased in the form of custodial receipts), repurchase agreements,
certificates of deposit and bankers' acceptances issued by U.S. banks
or savings and loan associations having assets of at least $500 million
as of the end of their most recent fiscal year and high quality
commercial paper. The Portfolio's U.S. dollar-denominated temporary
investments are managed by SSBC. The Portfolio also may hold a portion
of its assets in money market instruments or cash in amounts designed
to pay expenses, to meet anticipated redemptions or pending investment
in accordance with its objectives and policies. Any temporary
investments may be purchased on a when-issued basis. The Portfolio's
investment in any other short-term debt instruments would be subject to
the Portfolio's investment objectives and policies, and to approval by
the Trust's Board of Trustees.

Department of Labor ("DOL") Order of Exemption. The Trust may offer
shares of its portfolios to certain employee benefit plans, individual
retirement accounts ("IRAs"), or retirement plans for a self-employed
individual ("Keogh Plans"). Because the Trust may offer shares of its
portfolios to these plans, it is subject to regulation by the DOL and
the provisions of the Employee Retirement Income Security Act of 1974
("ERISA"). The Trust has received an Order of Exemption from the DOL
exempting it from certain provisions of ERISA. However, certain
limitations remain, including a limitation on investments in the
securities of affiliates of Salomon Smith Barney. Pursuant to the
Order, the Portfolio must limit its investments in the securities of
affiliates of Salomon Smith Barney, including Citigroup, Inc., to one
percent of the Portfolio's net assets. Since the Portfolio will be
managed to comply with this limitation, this may result in differences
in performance between the Portfolio and other funds that fully
replicate the S & P 500 Index.

INVESTMENT RESTRICTIONS

The investment restrictions numbered 1 through 7 below have been
adopted by the Trust as fundamental policies of the Portfolio. Under
the 1940 Act, a fundamental policy may not be changed without the vote
of a majority of the outstanding voting securities of a Portfolio,
which is defined in the 1940 Act as the lesser of (i) 67% or more of
the shares present at a Portfolio meeting, if the holders of more than
50% of the outstanding shares of the Portfolio are present or
represented by proxy, or (ii) more than 50% of the outstanding shares
of the Portfolio. Investment restrictions 8 through 11 may be changed
by a vote of a majority of the Board of Trustees at any time.

Under the investment restrictions adopted by the Portfolio:

1. The Portfolio will not deviate from the definition of a
"diversified company" as defined in the 1940 Act and rules thereunder.

2. The Portfolio will not invest more than 25% of its total
assets in securities, the issuers of which conduct their principal
business activities in the same industry. For purposes of this
limitation, U.S. government securities and securities of state or
municipal governments and their political subdivisions are not
considered to be issued by members of any industry.

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

4. The Portfolio will not borrow money, except that (a) the
Portfolio may borrow from banks for temporary or emergency (not
leveraging) purposes, including the meeting of redemption requests
which might otherwise require the untimely disposition of securities,
in an amount not exceeding 33 1/3% of the value of the Portfolio's
total assets (including the amount borrowed) valued at the lesser of
cost or market, less liabilities (not including the amount borrowed)
and (b) a Portfolio may, to the extent consistent with its investment
policies, enter into reverse repurchase agreements, forward roll
transactions and similar investment strategies and techniques.

5. The Portfolio will not make loans. This restriction does not
apply to: (a) the purchase of debt obligations in which a Portfolio may
invest consistent with its investment objectives and policies
(including participation interests in such obligations); (b) repurchase
agreements; and (c) loans of its portfolio securities.

6. The Portfolio will not engage in the business of underwriting
securities issued by other persons, except to the extent that a
Portfolio may technically be deemed to be an underwriter under the
Securities Act of 1933, as amended, in disposing of Portfolio
securities.

7. The Portfolio will not purchase or sell real estate, real
estate mortgages, commodities or commodity contracts, but this
restriction shall not prevent a Portfolio from (a) investing in and
selling securities of issuers engaged in the real estate business and
securities which are secured by real estate or interests therein; (b)
holding or selling real estate received in connection with securities
it holds; (c) trading in futures contracts and options on futures
contracts or (d) investing in or purchasing real estate investment
trust securities.

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

9. The Portfolio will not invest in oil, gas or other mineral
leases or exploration or development programs.

10. The Portfolio will not make short sales of securities,
unless it owns or has the right to obtain securities equivalent in kind
and amount to the securities sold short and provided that transactions
in futures contracts and options are not deemed to constitute selling
securities short.

11. The Portfolio will not make investments for the purpose of
exercising control of management.

12. 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.

The percentage limitations contained in the restrictions listed above
(other than with respect to Number 4 above) apply at the time of
purchase of securities.

PORTFOLIO TRANSACTIONS

Decisions to buy and sell securities for the Portfolio are made by the
Subadvisor, subject to the overall review of the Manager and the Board
of Trustees. Although investment decisions for the Portfolio are made
independently from those of the other accounts managed by the
Subadvisor, investments of the type that the Portfolio may make also
may be made by those other accounts. When the Portfolio and one or more
other accounts managed by the Subadvisor 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
Subadvisor to be equitable to each. In some cases, this procedure may
adversely affect the price paid or received by the Portfolio or the
size of the position obtained or disposed of by the Portfolio.

Transactions on U.S. stock exchanges and some foreign stock exchanges
involve the payment of negotiated brokerage commissions. On exchanges
on which commissions are negotiated, the cost of transactions may vary
among different brokers. On most foreign exchanges, commissions are
generally fixed. No stated commission is generally applicable to
securities traded in U.S. over-the-counter markets, but the
underwriters include an underwriting commission or concession and the
prices at which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down. U.S. Government Securities
generally are purchased from underwriters or dealers, although certain
newly issued U.S. Government Securities may be purchased directly from
the U.S. Treasury or from the issuing agency or instrumentality.

In selecting brokers or dealers to execute securities transactions on
behalf of the Portfolio, its Subadvisor seeks the best overall terms
available. In assessing the best overall terms available for any
transaction, the Subadvisor will consider the factors it deems
relevant, including the breadth of the market in the security, the
price of the security, the financial condition and execution capability
of the broker or dealer and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis. In
addition, the Advisory Agreement between the Trust and the Subadvisor
authorizes the Subadvisor, in selecting brokers or dealers to execute a
particular transaction, and in evaluating the best overall terms
available, to consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of
1934) provided to the Portfolio and/or other accounts over which the
Subadvisor or its affiliates exercise investment discretion. The fees
under the Management Agreement and the Advisory Agreement,
respectively, are not reduced by reason of the Portfolio's Subadvisor
receiving brokerage and research services. The Board of Trustees of the
Trust will periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits inuring to the Portfolio.
Over-the-counter purchases and sales by the Portfolio are transacted
directly with principal market makers except in those cases in which
better prices and executions may be obtained elsewhere.

To the extent consistent with applicable provisions of the 1940 Act and
the rules and exemptions adopted by the SEC under the 1940 Act, the
Board of Trustees has determined that transactions for the Portfolio
may be executed through Salomon Smith Barney and other affiliated
broker-dealers if, in the judgment of the Subadvisor, the use of an
affiliated broker-dealer is likely to result in price and execution at
least as favorable as those of other qualified broker-dealers, and if,
in the transaction, the affiliated broker-dealer charges the Portfolio
a fair and reasonable rate.

The Portfolio will not purchase any security, including U.S. Government
Securities or Obligations, during the existence of any underwriting or
selling group relating thereto of which Salomon Smith Barney is a
member, except to the extent permitted by the SEC.

The Portfolio may use Salomon Smith Barney and other affiliated broker-
dealers as a commodities broker in connection with entering into
futures contracts and options on futures contracts if, in the judgment
of the Subadvisor, the use of an affiliated broker-dealer is likely to
result in price and execution at least as favorable as those of other
qualified broker-dealers, and if, in the transaction, the affiliated
broker-dealer charges the Portfolio a fair and reasonable rate. Salomon
Smith Barney has agreed to charge the Portfolio commodity commissions
at rates comparable to those charged by Salomon Smith Barney to its
most favored clients for comparable trades in comparable accounts.

PORTFOLIO TURNOVER

Although the Portfolio generally seeks to invest for the long term, it
retains the right to sell securities irrespective of how long they have
been held. However, because of the "passive" investment management
approach of the Portfolio, the turnover rate is expected to be under
50%, a generally lower turnover rate than for most other investment
companies. A portfolio turnover rate of 50% would occur if one-half of
the Portfolio's securities were sold within one year. Ordinarily,
securities will be sold from the Portfolio 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 Portfolio while maintaining the similarity of the
Portfolio to the index.

INVESTMENT MANAGEMENT AND OTHER SERVICES

Manager; Subadvisors; Administrator. The Manager serves as investment
manager to the Trust pursuant to an investment management agreement
("Management Agreement"). The Subadvisor serves as investment advisor
to the Portfolio pursuant to a separate written agreement with the
Portfolio ("Advisory Agreement"), SSBC serves as administrator to the
Portfolio pursuant to a written agreement ("Administration Agreement").

The Portfolio bears its own expenses, which generally include all costs
not specifically borne by the Manager, the Subadvisors, and SSBC.
Included among the Portfolio's expenses are costs incurred in
connection with the Portfolio's organization; investment management and
administration fees; fees for necessary professional and brokerage
services; fees for any pricing service; the costs of regulatory
compliance; and costs associated with maintaining the Trust's legal
existence and shareholder relations. As administrator, SSBC generally
oversees all aspects of the Trust's administration and operations
including furnishing the Trust with statistical and research data,
clerical help, accounting, data processing, bookkeeping, internal
auditing and legal services and certain other services required by the
Trust, prepares reports to the Trust's shareholders and prepares tax
returns, reports to and filings with the SEC and state blue sky
authorities. The Portfolio pays SSBC a fee for these services that is
computed daily and paid monthly at the annual rate of 0.10% of the
value of the Portfolio's average daily net assets.

SSBC was incorporated on March 12, 1968 under the laws of Delaware and
is a registered investment adviser. SSBC renders investment advice to
investment companies that had aggregate assets under management as of
August 31, 1999 in excess of [$_____ ] billion. The Consulting Group,
a division of SSBC, has extensive experience in providing investment
advisor selection services. The Consulting Group, through its
predecessors, was established in 1973 with the primary objective of
matching the investment needs of institutional and individual clients
with appropriate and qualified money management organizations
throughout the nation. In 1989, the Consulting Services Division was
restructured and its research and investment advisory evaluation
services functions were segregated and named the Consulting Group. The
Consulting Group's analysts, in the aggregate, have many years of
experience performing asset manager searches for institutional and
individual clients. They screen more than 3,000 registered investment
advisory firms and track the performance of more than 700 firms on the
Manager's comprehensive database. In addition, the Manager conducts
over 300 on-sight evaluations of advisors annually. As of August 31,
1999, the Consulting Group provided services with respect to over $[
] billion in client assets representing more than [ ] separate
accounts under a variety of programs designed for individual and
institutional investors.

The Manager and the Subadvisor pay the salaries of all officers and
employees who are employed by it and the Trust, and the Manager
maintains office facilities for the Trust. The Manager and the
Subadvisor bear all expenses in connection with the performance of
their respective services under the Management Agreement, the Advisory
Agreement, and the Administration Agreement.

As noted in the Prospectus, subject to the supervision and direction of
the Manager and, ultimately, the Board of Trustees, the Subadvisor
manages the securities held by the Portfolio in accordance with the
Portfolio's stated investment objectives and policies, makes investment
decisions for the Portfolio and places orders to purchase and sell
securities on behalf of the Portfolio.

Subject to the supervision and direction of the Board of Trustees, the
Manager provides to the Trust investment management evaluation services
principally by performing initial due diligence on prospective
Subadvisors for the Portfolio and thereafter monitoring the
Subadvisor's performance through quantitative and qualitative analysis
as well as periodic in-person, telephonic and written consultations
with Subadvisors. In evaluating prospective Subadvisors, the Manager
considers, among other factors, each Subadvisor's level of expertise;
relative performance and consistency of performance over a minimum
period of five years; level of adherence to investment discipline or
philosophy, personnel, facilities, financial strength and quality of
service and client communications. The Manager has responsibility for
communicating performance expectations and evaluations to the
Subadvisor and ultimately recommending to the Board of Trustees whether
the Subadvisor's contract should be renewed, modified or terminated.
The Manager provides written reports to the Board of Trustees regarding
the results of its evaluations and monitoring functions. The Manager
is also responsible for conducting all operations of the Trust except
those operations contracted to the Subadvisor, custodian, transfer
agent or administrator.

Investors should be aware that the Manager may be subject to a conflict
of interest when making decisions regarding the retention and
compensation of particular Subadvisors. However, the Manager's
decisions, including the identity of the Subadvisor and the specific
amount of the Manager's compensation to be paid to the Subadvisor and
the specific amount of the Manager's compensation to be paid to the
Subadvisor, are subject to review and approval by a majority of the
Board of Trustees and separately by a majority of the Trustees who are
not affiliated with the manager or any of its affiliates.

Investors should also be aware that through Smith Barney Advisory
Services, the Consulting Group serves as investment adviser to each
participant in such service and receives a fee from each participant
that does not vary based on the Portfolios of the Trust recommended for
the participant's investments. At the same time, the Consulting Group
serves as the Trust's Manager with responsibility for identifying,
retaining, supervising and compensating each Portfolio's Subadvisor and
receives a fee from each Portfolio of the Trust. The portion of such
fee that is retained by the Manager varies based on the Portfolio
involved. Consequently, the Consulting Group, when making asset
allocation recommendations for participants in Smith Barney Advisory
Services, may be presented with a conflict of interest as to the
specific portfolios of the trust recommended for investment. The
Consulting Group, however, is subject to and intends to comply fully
with standards of fiduciary duty that require that it act solely in the
best interest of the participant when making investment
recommendations.

The Trust has received an exemption (the "Exemption") from certain
provisions of the 1940 Act which would otherwise require the Manager to
obtain formal shareholder approval prior to engaging and entering into
investment advisory agreements with Subadvisors. The Exemption is
based on among other things: (1) the Manager will select, monitor,
evaluate and allocate assets to, the Subadvisors and ensure that the
Subadvisors comply with a Portfolio's investment objective, policies
and restrictions; (2) shares of a Portfolio relying on the Exemption
will not be subject to any sales loads or redemption fees or other
charges for redeeming shares; (3) the Trust will provide to
shareholders certain information about a new Subadvisor and its
investment advisory contract within 90 days of the engagement of new
Subadvisor; (4) the Trust will disclose in its prospectus the terms of
the Exemption; and (5) the Trustees, including a majority of the "non-
interested" Trustees, must approve each investment advisory contract in
the manner required under the 1940 Act. Any changes to the Management
Agreement between the Trust and the Manager still require shareholder
approval.

Auditors

KPMG LLP, 757 Third Avenue, New York, New York 10017, currently serves
as the independent auditors of the Trust and rendered an opinion on the
Trust's most recent financial statements and financial highlights.

Organization of the Trust. The Trust has been organized as an
unincorporated business trust under the laws of The Commonwealth of
Massachusetts pursuant to a Master Trust Agreement dated April 12,
1991, as amended from time to time (the "Trust Agreement").

In the interest of economy and convenience, certificates representing
shares in the Trust are not physically issued. PNC Bank, N.A., the
Trust's custodian, maintains a record of each shareholder's ownership
of Trust shares. Shares do not have cumulative voting rights, which
means that holders of more than 50% of the shares voting for the
election of Trustees can elect all Trustees. Shares are transferable,
but have no preemptive, conversion or subscription rights. Shareholders
generally vote on a Trust-wide basis, except with respect to
continuation of the Advisory Agreement, in which case shareholders vote
by Portfolio.

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

PURCHASE OF SHARES

Purchases of shares of the Portfolio through an Advisory Service must
be made through a brokerage account maintained with Salomon Smith
Barney. Payment for Portfolio shares must be made by check directly to
Salomon Smith Barney or to a broker that clears securities transactions
through Salomon Smith Barney. No brokerage account or inactivity fee
is charged in connection with a brokerage account through which an
investor purchases shares of a Portfolio.

Shares of the Portfolio are available exclusively to participants in
Advisory Services and are generally designed to relieve investors of
the burden of devising an asset allocation strategy to meet their
individual needs as well as selecting individual investments within
each asset category among the myriad choices available. Advisory
Services generally provide investment advice in connection with
investments among the Trust's Portfolios by identifying the investor's
risk tolerances and investment objectives through evaluation of an
investment questionnaire; identifying and recommending in writing an
appropriate allocation of assets among the Portfolios that conform to
those tolerances and objectives in a written recommendation; and
providing on a periodic basis, a written monitoring report to the
investor containing an analysis and evaluation of an investor's account
and recommending any appropriate changes in the allocation of assets
among the Portfolios. Usually under an Advisory Service, all
investment decisions ultimately rest with the investor and investment
discretion is not given to the investment adviser.

The TRAK(r) Personalized Investment Advisory Service ("TRAK") sponsored
by Salomon Smith Barney is one such advisory service. Under the TRAK
program the Consulting Group in its capacity as investment adviser to
participants in TRAK generally directly provides to investors asset
allocation recommendations and related services with respect to the
Portfolios based on an evaluation of an investor's investment objective
and risk tolerances. Shares of the Portfolios are offered for purchase
and redemption at their respective net asset value next determined,
without imposition of any initial or contingent deferred sales charge
except that the Consulting Group is paid directly by the investors
purchasing Portfolio shares based on the recommendation of investment
advisors other than the Consulting Group, or who contract with the
Consulting Group for services other than those described above, pay, in
lieu of TRAK charges, different fees for different levels of services
as agreed upon with their investment advisers.

REDEMPTION OF SHARES

Detailed information on how to redeem shares of the Portfolio is
included in the Prospectus. The right of redemption of shares of the
Portfolio may be suspended or the date of payment postponed (i) for any
periods during which the New York Stock Exchange, Inc. (the "NYSE") is
closed (other than for customary weekend and holiday closings), (ii)
when trading in the markets the Portfolio normally utilizes is
restricted, or an emergency, as defined by the rules and regulations of
the SEC, exists making disposal of the Portfolio's investments or
determination of its net asset value not reasonably practicable or
(iii) for such other periods as the SEC by order may permit for the
protection of the Portfolio's shareholders.

REDEMPTIONS IN KIND

If the Board of Trustees determines that it would be detrimental to the
best interests of a Portfolio's shareholders to make a redemption
payment wholly in cash, the Portfolio may pay, in accordance with rules
adopted by the SEC, any portion of a redemption in excess of the lesser
of $250,000 or 1% of the Portfolio's net assets by a distribution in
kind of readily marketable portfolio securities in lieu of cash.
Redemptions failing to meet this threshold must be made in cash.
Shareholders receiving distributions in kind of portfolio securities
may incur brokerage commissions when subsequently disposing of those
securities.

NET ASSET VALUE

The Portfolio's net asset value per share is calculated by SSBC on each
day, Monday through Friday, except days on which the NYSE is closed.
The NYSE is currently scheduled to be closed on New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas, and on the
preceding Friday when one of those holidays falls on a Saturday or on
the subsequent Monday when one of those holidays falls on a Sunday. On
those days, securities held by the Portfolio may nevertheless be
actively traded and the value of the Portfolio's shares could be
significantly affected.

Securities listed on a national securities exchange will be valued on
the basis of the last sale on the date on which the valuation is made
or, in the absence of sales, at the mean between the closing bid and
asked prices. Over-the-counter securities will be valued at the mean
between the closing bid and asked prices on each day, or, if market
quotations for those securities are not readily available, at fair
value, as determined in good faith by the Portfolio's Board of
Trustees. Short-term obligations with maturities of 60 days or less
are valued at amortized cost, which constitutes fair value as
determined by the 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 Portfolio's Board of Trustees.

DETERMINATION OF PERFORMANCE

Average Annual Total Return

From time to time, the Trust may advertise the Portfolio's "average
annual total return" over various periods of time. This total return
figure shows the average percentage change in value of an investment in
the Portfolio from the beginning date of the measuring period to the
ending date of the measuring period and is reduced by the maximum
Salomon Smith Barney Advisory Service fee during the measuring period.
The figure reflects changes in the price of the Portfolio's shares and
assumes that any income, dividends and/or capital gains distributions
made by the Portfolio during the period are reinvested in shares of the
Portfolio. Figures will be given for recent one-, five- and ten-year
periods (if applicable) and may be given for other periods as well
(such as from commencement of the Portfolio's operations or on a year-
by-year basis). Aggregate total returns also may be shown by means of
schedules, charts or graphs, and may indicate subtotals of the various
components of total return (that is, the change in value of initial
investment, income dividends and capital gains distributions).

In reports or other communications to shareholders or in advertising
material, the Portfolio may quote total return figures that do not
reflect Salomon Smith Barney Advisory Service fees (provided that these
figures are accompanied by standardized total return figures calculated
as described above), as well as compare its performance with that of
other mutual funds as listed in the rankings prepared by Lipper
Analytical Services, Inc. or similar independent services that monitor
the performance of mutual funds or with other appropriate indices of
investment securities. The performance information also may include
evaluations of the Portfolio published by nationally recognized ranking
services and by financial publications that are nationally recognized,
such as Barron's, Business Week, CDA Investment Technologies, Inc.,
Changing Times, Forbes, Fortune, Institutional Investor, Investor's
Daily, Kiplinger's Personal Finance Magazine, Money, Morningstar Mutual
Fund Values, The New York Times, USA Today and The Wall Street Journal.

The Portfolio's average annual total return figures are computed
according to a formula prescribed by the SEC, expressed as follows:

P(1+T)n = ERV

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

The ERV assumes complete redemption of the hypothetical investment at
the end of the measuring period. A Portfolio's net investment income
changes in response to fluctuations in interest rates and the expenses
of the Portfolio. Consequently, the given performance quotations should
not be considered as representative of the Portfolio's performance for
any specified period in the future.

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

Comparative performance information may be used from time to time in
advertising the Portfolios' shares, including data from Lipper
Analytical Services, Inc., Standard & Poor's 500 Composite Stock Price
Index and other industry publications.

TAXES

The following is a summary of certain federal income tax considerations
that may affect the Portfolio and its shareholders. In addition to the
considerations described below, there may be other federal, state,
local or foreign tax applications to consider. The summary does not
address all of the potential federal income tax consequences that may
be applicable to the Portfolio or to all categories of investors, some
of which may be subject to special tax rules. The summary is not
intended as a substitute for individual tax advice and investors are
urged to consult their own tax advisors as to the tax consequences of
an investment in the Portfolio. The summary is based on the laws in
effect on the date of this SAI, which are subject to change.

The Portfolio intends to qualify in each year as a separate "regulated
investment company" under the Internal Revenue Code of 1986, as amended
(the "Code") by complying with certain requirements regarding the
sources and distribution of its income and the diversification of its
assets. Provided that the Portfolio (i) is a regulated investment
company and (ii) distributes to its shareholders at least 90% of its
taxable net investment income (including, for this purpose, any excess
of its net short-term capital gain over its net long-term capital loss)
for a taxable year and 90% of its tax exempt interest income (reduced
by certain expenses for that year), it will not be liable for federal
income taxes to the extent its taxable net investment income and its
net realized long-term and short-term capital gains, if any, are
distributed to its shareholders in compliance with the Code's timing
and other requirements.

If, in any taxable year, the 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 would otherwise (at
least in part) be treated 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) in order to qualify as a regulated investment
company in a subsequent year.

In order to avoid the application of a 4% nondeductible excise tax on
certain undistributed amounts of ordinary income and capital gains, the
Portfolio may make an additional distribution shortly before or shortly
after December 31 in each year of any undistributed ordinary income or
capital gains. The Portfolio generally will seek to pay any additional
dividends and distributions necessary to avoid the application of this
tax.

The Portfolio's transactions in foreign currencies, forward contracts,
options and futures contracts (including options and futures contracts
on foreign currencies) will be subject to special provisions of the
Code that, among other things, may affect the character of gains and
losses realized by the Portfolio (i.e., may affect whether gains or
losses are ordinary or capital and, if capital, the extent to which
they are long-term or short-term), accelerate recognition of income to
the Portfolio and defer Portfolio losses. These rules could therefore
affect the character, amount and timing of distributions to
shareholders. These provisions also (i) will require the Portfolio to
mark-to-market certain types of positions in its portfolio (i.e., treat
them as if they were closed out), and (ii) may cause the Portfolio to
recognize income without receiving cash with which to pay dividends or
make distributions in amounts necessary to satisfy the distribution
requirements for avoiding income and excise taxes that are referred to
above. The Portfolio will monitor its transactions, will make the
appropriate tax elections, if any, and will make the appropriate
entries in its books and records when it acquires any foreign currency,
forward contract, option, futures contract or hedged investment in
order to mitigate the effect of these rules and seek to prevent
disqualification of the Portfolio as a regulated investment company.

As a general rule, the Portfolio's gain or loss on a sale or exchange
of an investment will be a long-term capital gain or loss if the
Portfolio has held the investment for more than one year and will be a
short-term capital gain or loss if it has held the investment for one
year or less. Gains or losses on the sale of debt securities
denominated in a foreign currency may be recharacterized as ordinary
income or losses, as described below.

Dividends or other income (including, in some cases, capital gains)
received by the Portfolio from investments in foreign securities may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce
or eliminate such taxes in some cases. The Portfolio will not be
eligible to elect to treat any foreign taxes paid by it as paid by its
shareholders, who therefore will not be entitled to deductions or
credits for such taxes on their own tax returns.

The Portfolio may be required to treat amounts as taxable income or
gain, subject to the distribution requirements referred to above, even
though no corresponding amounts of cash are received concurrently, as a
result of (1) mark to market, constructive sale or other rules
applicable to passive foreign investment companies or partnerships or
trusts in which the Portfolio invests or to certain options, futures or
forward contracts, or "appreciated financial positions" or (2) the
inability to obtain cash distributions or other amounts due to currency
controls or restrictions on repatriation imposed by a foreign country
with respect to the Portfolio's investments (including through
depositary receipts) in issuers in such country or (3) tax rules
applicable to debt obligations acquired with "original issue discount,"
including zero-coupon or deferred payment bonds and pay-in-kind debt
obligations, or to market discount if an election is made with respect
to such market discount. The Portfolio may therefore be required to
obtain cash to be used to satisfy these distribution requirements by
selling securities at times that it might not otherwise be desirable to
do so or borrowing the necessary cash, thereby incurring interest
expenses.

Under Section 988 of the Code, gains or losses attributable to
fluctuations in exchange rates between the time the Portfolio accrues
income or receivables or expenses or other liabilities denominated in a
foreign currency and the time the Portfolio actually collects such
income or pays such liabilities are generally treated as ordinary
income or ordinary loss. Similarly, gains or losses on foreign
currency, foreign currency forward contracts, certain foreign currency
options or futures contracts and the disposition of debt securities
denominated in foreign currency, to the extent attributable to
fluctuations in exchange rates between the acquisition and disposition
dates, are also treated as ordinary income or loss.

The Portfolio is permitted to carry forward any unused capital losses
to be utilized to offset its capital gains realized during the eight-
year period following the year in which the losses arose, which will
reduce the net realized capital gains (if any) required to be
distributed to shareholders for those years.

Dividends and Distributions

For federal income tax purposes, dividends declared by the Portfolio in
October, November or December as of a record date in such a month and
which are actually paid in January of the following year will be
taxable to shareholders as if they were paid on December 31 of the year
in which they are declared rather than in the year in which
shareholders actually receive the dividends.

As a general rule, a shareholder's gain or loss on a redemption or
other disposition of Portfolio shares that is treated as a sale under
the Code will be a long-term capital gain or loss if the shareholder
has held his or her Portfolio shares for more than one year and will be
a short-term capital gain or loss if he or she has held his or her
Portfolio shares for one year or less.

The Portfolio may realize net long-term capital gains. Distributions of
the excess of net long-term capital gain over net short-term capital
loss ("capital gain dividends" if any) will be taxable to shareholders
as long-term capital gains, regardless of whether received in cash or
reinvested in additional shares and how long a shareholder has held
Portfolio shares. If a shareholder receives a capital gain dividend
with respect to any share and redeems, sells or otherwise disposes of
the share before it has been held for more than six months, then any
loss, to the extent of the capital gain dividend, will be treated as a
long-term capital loss. Additionally, any loss realized on a
redemption, exchange or other disposition of Portfolio shares generally
will be disallowed to the extent the shares disposed of are replaced,
including replacement through the reinvesting of dividends and capital
gains distributions in the Portfolio, within a 61-day period beginning
30 days before and ending 30 days after the disposition of the shares.

Dividends paid from net investment income and distributions of any
excess of net short-term capital gain over net long-term capital loss
are taxable to shareholders as ordinary income, regardless of how long
shareholders have held their Portfolio shares and whether such
dividends and distributions are received in cash or reinvested in
additional Portfolio shares. Dividends paid by the Portfolio that are
declared from net investment income and are attributable to qualifying
dividends received by the Portfolio from domestic corporations may
qualify for the federal dividends-received deduction for corporations.

Each shareholder will receive after the close of the calendar year an
annual statement as to the federal income tax status of his or her
dividends and distributions for the prior calendar year. Each
shareholder will also receive, if appropriate, various written notices
after the close of the Portfolio's prior taxable year as to the federal
income tax status of the Portfolio during the Portfolio's prior taxable
year. Shareholders should consult their tax advisors as to any state
and local taxes that may apply to these dividends and distributions and
the possible availability of an exemption for dividends paid by a
Portfolio attributable to interest the Portfolio earns from U.S.
Government obligations.

If the Portfolio is the holder of record of any stock on the record
date for any dividends payable with respect to the stock, these
dividends will be included in the Portfolio's gross income as of the
later of (i) the date the stock became ex-dividend with respect to the
dividends (i.e., the date on which a buyer of the stock would not be
entitled to receive the declared, but unpaid, dividends) or (ii) the
date the Portfolio acquired the stock. Accordingly, in order to satisfy
its income distribution requirements, the Portfolio may be required to
pay dividends based on anticipated earnings, and shareholders may
receive dividends in an earlier year than would otherwise be the case.

Investors considering buying shares of the Portfolio on or just prior
to the record date for a taxable dividend or capital gain distribution
should be aware that even if the net asset value of the Portfolio's
shares is reduced below the investor's cost as a result of the
distribution, the amount of the forthcoming dividend or distribution
payment will be a taxable dividend or distribution payment even though
it may represent a return of invested capital.

If a shareholder fails to furnish a correct taxpayer identification
number, fails to report fully dividend or interest income, or fails to
certify that he or she has provided a correct taxpayer identification
number and that he or she is not subject to "backup withholding," then
the shareholder may be subject to a 31% "backup withholding" tax with
respect to (i) dividends and distributions and (ii) the proceeds of any
redemptions of Portfolio shares. An individual's taxpayer
identification number is his or her social security number. The 31%
"backup withholding" tax is not an additional tax and may be credited
against a taxpayer's federal income tax liability. Distributions to
nonresident aliens and foreign entities may be subject to different tax
rules, including other possible withholding taxes.

The foregoing is only a summary of certain tax considerations generally
affecting the Portfolio and its shareholders, and is not intended as a
substitute for careful tax planning. Shareholders are urged to consult
their tax advisors with specific reference to their own tax situations,
including their state and local tax liabilities.

DISTRIBUTOR

CFBDS, Inc., 21 Milk Street, 5th Floor, Boston, MA 02109 serves as the
Portfolio's distributor on a best efforts basis pursuant to a written
agreement, which was approved by the Trustees of the Trust.

CUSTODIANS AND TRANSFER AGENT

PNC Bank National Association ("PNC") and The Chase Manhattan Bank
("Chase") serve as the custodians for the Trust. The assets of the
Trust are held under bank custodianship in accordance with the 1940
Act. Under their custody agreements with the Trust, PNC and Chase are
authorized to establish separate accounts for foreign securities owned
by the Portfolio to be held with foreign branches of U.S. banks as well
as certain foreign banks and securities depositories as sub-custodians
of assets owned by the Portfolio. For its custody services, PNC and
Chase receive monthly fees charged to the Portfolio based upon the
month-end, aggregate net asset value of the Portfolio plus certain
charges for securities transactions. PNC and Chase are also reimbursed
by the Portfolio for out-of-pocket expenses including the costs of any
foreign and domestic sub-custodians.

First Data Investors Services Group Inc., ("First Data"), a subsidiary
of First Data Corporation, serves as the Trust's transfer agent. For
its services as transfer agent, First Data receives fees charged to the
Portfolio at an annual rate based upon the number of shareholder
accounts maintained during the year. First Data is also reimbursed by
the Portfolio for out-of-pocket expenses.

"S&P 500(r)" is a trademark of The McGraw-Hill Companies, Inc. and has
been licensed for use by SSBC Fund Management Inc. The Portfolio 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 Portfolio or any member of the public regarding the advisability of
investing in securities generally or in the Portfolio particularly or
the ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to SSBC Fund Management Inc. 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 SSBC Fund Management Inc. or the Portfolio. S&P has no
obligation to take the needs of SSBC Fund Management Inc. or the
shareholders of the Portfolio 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 Portfolio's shares or the timing of the issuance or sale of the
Portfolio's shares or in the determination or calculation of the
equation by which Portfolio shares are to be converted into cash. S&P
has no obligation or liability in connection with the administration,
marketing or trading of Portfolio 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 PORTFOLIO, OWNERS
OF THE PORTFOLIO, 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.

1
g:\fundacctg\legal\funds\trak\1999\secdocs\sais&p500

PART C

Item 23. Exhibits

(a)(1) Master Trust Agreement is incorporated by reference to
Registrant's Registration Statement on Form N-1A as filed with the
Securities and Exchange Commission (the "Commission") on May
24, 1991 (the "Registration Statement").

(a)(2) Amendment No. 1 to Master Trust Agreement is
incorporated by reference to the Registration Statement.

(a)(3) Amendment No. 2 to Master Trust Agreement is
incorporated by reference to Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-1A as
filed with the Commission on July 22, 1991 ("Pre-Effective
Amendment No. 1").

(a)(4) Amendment No. 3 to Master Trust Agreement is
incorporated by reference to Post-Effective Amendment
No. 6 ("Post-Effective Amendment No. 6") to the Registration
Statement on Form N-1A filed on March 18, 1994.

(b)(1) By-Laws are incorporated by reference to the
Registration Statement.

(b)(2) Amended and Restated By-Laws are incorporated by
reference to Pre-Effective Amendment No. 1.

(d)(1) Investment Management Agreement dated July 30, 1993
between the Registrant and The Consulting Group, a division of Smith,
Barney Advisers, Inc., is incorporated by reference to Post-Effective
Amendment No. 3 ("Post-Effective Amendment No. 3") to the
Registration Statement on Form N-1A filed with the Commission
on October 29, 1993.

(d)(2) Investment Advisory Agreement dated July 30, 1993
between Smith, Barney Advisers, Inc. and Smith Affiliated Capital Corp.
relating to Registrant's Municipal Bond Investments Portfolio is
incorporated by reference to Post-Effective Amendment No. 3.

(d)(3) Investment Advisory Agreement dated July 30, 1993
between Smith, Barney Advisers, Inc. and Atlantic Portfolio Analytics &
Management, Inc. relating to Registrant's Mortgage Backed Investments
Portfolio is incorporated by reference to Post-Effective Amendment No. 3.

(d)(4) Investment Advisory Agreement dated January 4, 1999
between Mutual Management Corp. and Seix Investment Advisors Inc.
relating to Registrant's Balanced Investments Portfolio will
be filed by amendment.

(d)(4) Investment Advisory Agreement dated January 4, 1999
between Mutual Management Corp. and Laurel Capital Advisors, LLP
relating to Registrant's Balanced Investments Portfolio will
be filed by amendment.

(d)(6) Investment Advisory Agreement dated April 1, 1998
between Smith, Barney Advisers, Inc. and Standish, Ayer & Wood, Inc.
relating to Registrant's Intermediate Fixed Income Investments Portfolio
is to be filed by amendment.

(d)(7) Investment Advisory Agreement dated July 30, 1993
between Smith, Barney Advisers, Inc. and Julius Baer Investment Management
Inc. relating to Registrant's International Fixed Income Investments
Portfolio is incorporated by reference to Post-Effective Amendment No. 3.

(d)(8) Investment Advisory Agreement dated April 1, 1998
between Mutual Management Corp. and NFJ Investment Group Inc. relating
to Registrant's Small Capitalization Value Equity Investments
Portfolio is to be filed by amendment.

(d)(9) Investment Advisory Agreement dated October 1, 1998 between
Mutual Management Corp. (Formerly Smith Barney Mutual Funds
Management Inc.) and The Boston Company
Asset Management LLC relating to Registrant's Large Capitalization Value
Equity Investments Portfolio is to be filed by amendment.

(d)(10) Investment Advisory Agreement dated March 10, 1995
between Smith Barney Mutual Funds Management Inc. and Parametric Portfolio
Associates, Inc. relating to Registrant's Large Capitalization Value Equity
Investments Portfolio is to be filed by amendment.

(d)(11) Investment Advisory Agreement
dated January 11, 1999 between Mutual Management Corp. and Provident
Investment Counsel relating to Registrant's Large Capitalization Growth
Investments Portfolio is to be filed by amendment.

(d)(12) Investment Advisory Agreement dated October 1, 1998
between Mutual Management Corp. and Standish, Ayer & Wood, Inc.
relating to Registrant's Government Money Investments Portfolio is
to be filed by amendment.

(d)(13) Investment Advisory Agreement dated October 1, 1998
between Mutual Management Corp. and Oechsle International Advisors
L.P. relating to Registrant's International Equity Investments Portfolio is
To be filed by amendment.

(d)(14) Investment Advisory Agreement dated March 3, 1994
between Smith, Barney Advisers, Inc. and John Govett & Company, Ltd.
relating to Registrant's Emerging Markets Equity Investments Portfolio
is incorporated by reference to Post-Effective Amendment No. 6.

(d)(15) Administration Agreement dated June 2, 1994 between the
Registrant and Smith, Barney Advisers, Inc. is incorporated by
reference to Post-Effective Amendment No. 16

(d)(16) Investment Advisory Agreement dated April 1, 1998 between Mutual
Management Corp. and National Asset Management Corporation relating to
Long-Term Bonds Investments is to be filed by amendment.

(d)(17) Investment Advisory Agreement dated June, 1997 between
Smith Barney Mutual Funds Management Inc. and Wall Street Associates
relating to Small Capitalization Growth Investments is incorporated
by reference to Post-Effective Amendment No. 18 to the Registration
Statement on Form N-1A filed.

(d)(18) Investment Advisory Agreement dated November 18 1997 between
Smith Barney Mutual Funds Management Inc. and Westpeak Investment
Advisors, LP relating to Small Capitalization Growth Investments is
Incorporated by reference to Post-Effective Amendment No. 19 to the
Registration
Statement on Form N-1A filed.

(d)(19) Investment Advisory Agreement dated April 1, 1998 between Mutual
Management Corp. and Mellon Capital Management Corporation relating to
Small Capitalization Value Equity Investments is to be filed by amendment.

(d)(20) Investment Advisory Agreement dated April 1, 1998 between Mutual
Management Corp. and Mellon Capital Management Corporation relating to
Small Capitalization Growth Investments is to be filed by amendment.

(d)(21) Investment Advisory Agreement dated April 1, 1998 between Mutual
Management Corp. and Barclays Global Fund Advisors relating to Large
Capitalization Growth Investments is to be filed by amendment.

(d)(22) Investment Advisory Agreement dated January 11, 1999 between
Mutual Management Corp. and Barclays Global Fund Advisors relating to Large
Capitalization Value Equity Investments is to be filed by amendment.

(d)(23) Investment Advisory Agreement dated April 1, 1998 between Mutual
Management Corp. and David L. Babson & Co. Inc. relating to Small
Capitalization Value Equity Investments is to be filed by amendment.

(d)(24) Investment Advisory Agreement dated June 15, 1998 between Mutual
Management Corp. and Alliance Capital Management L.P. relating to Large
Capitalization Value Equity Investments is to be filed by amendment.

(d)(25) Investment Advisory Agreement dated October 1, 1998 between
Mutual Management Corp. and State Street Global Advisors relating to
International Equity Investments is to be filed by amendment.

(d)(25) Investment Advisory Agreement dated July 15, 1998 between Mutual
Management Corp. and State Street Global Advisors relating to Emerging
Markets Equity Investments is to be filed by amendment.

(d)(26) Investment Advisory Agreement dated August 3, 1998 between Mutual
Management Corp. and Baring Asset Management, Inc. relating to Emerging
Markets Equity Investments is to be filed by amendment.

(d)(27) Investment Advisory Agreement dated April , 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.)
and Pegasus Investments, Inc.
relating to Registrant's Multi-Strategy Market Neutral Investments will
be filed by amendment.

(d)(28) Investment Advisory Agreement dated April , 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.)
and State Street Global Advisors
relating to Registrant's Multi-Strategy Market Neutral Investments will
be filed by amendment.

(d)(29) Investment Advisory Agreement dated April , 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.)
and Calamos Asset Management
relating to Registrant's Multi-Strategy Market Neutral Investments will
be filed by amendment.

(d)(30) Investment Advisory Agreement dated September , 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.) and
Standish, Ayer & Wood, Inc.
relating to Registrant's Multi-Sector Fixed Income Investments
is to be filed by amendment.

(d)(31) Investment Advisory Agreement dated September , 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.) and
National Asset Management Corp.
relating to Registrant's Multi-Sector Fixed Income Investments
is to be filed by amendment.

(d)(32) Investment Advisory Agreement dated September , 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.) and
Atlantic Portfolio Analytics and Management Inc.
relating to Registrant's Multi-Sector Fixed Income Investments
is to be filed by amendment.

(d)(33) Investment Advisory Agreement dated September , 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.) and
Alliance Capital Management, L.P.
relating to Registrant's Multi-Sector Fixed Income Investments
is to be filed by amendment.

(d)(34) Investment Advisory Agreement dated September , 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.) and
Barclays Global Fund Advisors
relating to Registrant's S & P 500 Index Investments
is to be filed by amendment.

(d)(35) Investment Advisory Agreement dated March 31, 1999
between SSBC Fund Management Inc. (formerly Mutual Management Corp.) and
Chartwell Investment Partners relating to Registrant's Large Capitalization
Value Equity Investments Portfolio is to be filed by amendment.

(d)(36) Investment Advisory Agreement dated March 31, 1999 between
SSBC Fund Management Inc. (formerly Mutual Management Corp.) and Kern
capital Management LLC relating to Small Capitalization Growth Investments
is to be filed by amendment.

(d)(37) Investment Advisory Agreement dated March 31, 1999 between SSBC
Fund Management Inc. (formerly Mutual Management Corp.) and Marvin &
Palmer Associates relating to International Equity Investments is to be
filed by amendment.

(d)(38) Investment Advisory Agreement dated March 31, 1999
between SSBC Fund Management Inc. and Pacific Investment Management Co.
relating to Registrant's Intermediate Fixed Income Investments Portfolio
is to be filed by amendment.

(e)(1) Distribution Agreement dated July 30, 1993 between the
Registrant and Smith Barney Shearson Inc. is incorporated by reference to
Post-Effective Amendment No. 3.

(e)(2) Form of Distribution Agreement between the Registrant
and CFBDS Inc. is incorpotated by reference to
Post-Effective Amendment No.23.

(f) Not Applicable.

(g)(1) Custody Agreements between the Registrant and PNC
Bank and Morgan Guaranty and Trust Company dated March
3, 1995 and August 24, 1995, respectively, are incorporated by reference to
Post-Effective Amendment No. 13 to the Registration Statement
on Form N-1A as filed on November 2, 1995.

(g) (2) Custody Agreement between the Registrant and Chase Manhattan Bank
dated December 6, 1996 is to be filed by amendment.

(h) Transfer Agency and Registrar Agreement between the
Registrant and The Shareholder Services Group, Inc., dated September 26,
1993, is incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, as filed on
December 30, 1993.

(i) Opinion of Willkie Farr & Gallagher, including Consent,
is incorporated by reference to Post-Effective Amendment
No. 13 to the Registration Statement on Form N-1A filed
on November 2, 1995.

(j) Auditors' Consent is to be filed by amendment.

(k) Not Applicable.

(l) Purchase Agreement between the Registrant and Shearson
Lehman Brothers Inc. is incorporated by reference to Post-Effective
Amendment No. 1.

(m) Not Applicable.

(n) Not Applicable.

(o) Not Applicable.

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

None.

Item 25. Indemnification

Incorporated by reference to Pre-Effective Amendment
No. 2 to the Registration Statement on Form N-1A as filed on
January 7, 1993.

Item 26(a) Business and Other Connections of Investment
Advisors

Investment Manager - The Consulting Group

The Consulting Group and its predecessor have been in
the investment counseling business since 1973. The Consulting Group is a
division of SSBC Fund Management Inc. ("SSBC") (formerly Mutual Management
Corp.), which was incorporated in 1968 under the laws of
the State of Delaware. SSBC is a wholly owned subsidiary of Salomon Smith
Barney Holdings Inc., which is in turn a wholly owned subsidiary of
Citigroup Inc.

The list required by this Item 26 of officers and
directors of SSBC and the Consulting Group, together with information as to
any other business, profession, vocation or employment of a substantial
nature engaged in by such officers and directors during the past two fiscal
years, is incorporated by reference to Schedules A and D of Form ADV filed
by SSBC on behalf of the Consulting Group pursuant to the Advisers
Act (SEC File No. 801-8314).

Item 26.(b) Business and Other Connections of Advisors

Advisors - Standish, Ayer & Wood, Inc.

Standish, Ayer & Wood, Inc. ("SAW") serves as
investment advisor to Intermediate Fixed Income Investments and Government
Money Investments. SAW is registered as a commodity trading adviser with
the
National Futures Association. SAW has been registered as an investment
advisor under the Advisers Act since 1940. SAW provides investment
advisory
services to individuals and institutions. SAW's principal executive
offices are located at One Financial Center, Boston, Massachusetts 02111.

The list required by this Item 26 of officers and
directors of SAW, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by SAW pursuant to the
Advisers Act (SEC File No. 801-584).

Advisors - National Asset Management, Inc.

National Asset Management , Inc. ("National Asset") serves as
investment advisor to Long-Term Bond Investments. National Asset has
been registered as an investment advisor under the Advisers Act since 1979
and provides investment advisory services to individuals and
institutions. National Asset principal executive offices are located at
101 South Fifth Street, 6th Floor, Louisville, KY 40202.

The list required by this Item 26 of officers and
directors of National Asset together with information as to any other
business, profession, vocation or employment of a substantial nature
engaged in by such officers and directors is incorporated by reference to
Schedules A and D of Form ADV filed by National Asset.

Advisors - Smith Affiliated Capital Corp.

Smith Affiliated Capital Corp. ("SACC") serves as
investment advisor to Municipal Bond Investments. SACC has been registered
as an investment advisor under the Advisers Act since 1982. SACC provides
investment advisory services to individuals and institutions, and is a
general partner of, and investment advisor to, a limited partnership
primarily investment in municipal bonds. SAW's principal executive offices
are located at 880 Third Avenue, New York, New York 10022.

The list required by this Item 26 of officers and
directors of SACC, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by SACC pursuant to the
Advisers Act (SEC File No. 801-17037).

Advisors - Atlantic Portfolio Analytics & Management,
Inc.

Atlantic Portfolio Analytics & Management, Inc.
("APAM") serves as investment advisor to Mortgage Backed Investments. APAM
has been registered as an investment advisor under the Advisers Act
since 1984. APAM serves as an investment advisor to institutions.
APAM's principal executive offices are located at 201 East Pine Street,
Suite 600, Orlando, Florida 32801.

The list required by this Item 26 of officers and
directors of APAM, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by APAM pursuant to the
Advisers Act (SEC File No. 801-24775).

Advisors - The Boston Company Asset Management, Inc.

The Boston Company Asset Management, Inc. ("TBCAM") serves as
co-investment advisor to Large Capitalization Value Equity Investments.
TBCAM has been registered as an investment advisor under the Advisers Act
since 1970. TBCAM's principal executive offices are located at One Boston
Place, Boston, Massachusetts 02108.

The list required by this Item 26 of officers and
directors of TBCAM, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by TBCAM pursuant to the
Advisers Act (SEC File No. ________).

Advisors - Parametric Portfolio Associates, Inc.

Parametric Portfolio Associates, Inc. ("PPA") serves as
co-investment advisor to Large Capitalization Value Equity Investments.
PPA has been registered as an investment advisor under the Advisers Act
since 1987. PPA provides investment advisory services to a number of
individual and institutional clients. PPA's principal executive offices
are located at 7310 Columbia Center, 701 Fifth Avenue, Seattle, Washington
98104-7090.

The list required by this Item 26 of officers and
directors of PPA, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by PPA pursuant to the
Advisers Act (SEC File No. 801-29855).

Advisors - Provident Investment Counsel, Inc.

Provident Investment Counsel, Inc. ("PIC") serves as
investment advisor to Large Capitalization Growth Investments. PIC has
been registered as an investment advisor under the Advisers Act
since 1951. PIC provides investment advisory services to individual and
institutional clients. PIC's principal executive offices are located at
300 North Lake Avenue, Pasadena, California 91101.

The list required by this Item 26 of officers and
directors of PIC, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by PIC pursuant to the
Advisers Act (SEC File No. 801-11303).

Advisors - NFJ Investment Group, Inc.

NFJ Investment Group, Inc. ("NFJ") serves as co-
investment advisor to Small Capitalization Value Equity Investments.
NFJ has been registered as an investment advisor under the Advisors
Act since 1989. NFJ provides investment advisory services to a number
of individual and institutional clients. NFJ's principal executive offices
are located at 2121 San Jacinto Street, Suite 1440, Dallas, Texas 75201.

The list required by this Item 26 of officers and
directors of NFJ, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by NFJ pursuant to the
Advisers Act (SEC File No. 801-42814).

Advisors - Wall Street Associates

Wall Street Associates ("WSA") will serve as
co-investment advisor to Small Capitalization Growth Investments. WSA has
been registered as an investment advisor under the Advisers Act since 1987.
WSA is the investment adviser of various institutional clients. WSA's
principal executive offices are located at 1200 Prospect Street,
Suite 100, LaJolla, CA 92037.

The list required by this Item 26 of officers and
directors of WSA, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by WSA pursuant to the
Advisers Act (SEC File No.801-30019).

Advisors - Westpeak Investment Advisors, LP

Westpeak Investment Advisors, LP("WSA") will serve as
co-investment advisor to Small Capitalization Growth Investments. Westpeak
has been registered as an investment advisor under the Advisers Act since
1991. Westpeak is the investment adviser of various institutional clients.
Westpeak's principal executive offices are located at 1011 Walnut Street,
Suite 400, Boulder, CO 80302.

The list required by this Item 26 of officers and
directors of Westpeak, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Westpeak pursuant to the
Advisers Act (SEC File No.801-39554).

Advisors - Oechsle International Advisors, L.P.

Oechsle International Advisors, L.P. ("OIA") serves as
investment advisor to International Equity Investments. OIA has been
registered as an investment advisor under the Advisers Act since 1986. OIA
provides investment advisory services to a number of individual and
institutional clients. OIA's principal executive offices are located at
One International Place, Boston, Massachusetts 02110.

The list required by this Item 26 of officers and
directors of OIA, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by OIA pursuant to the
Advisers Act (SEC File No. 801-28111).

Advisors - Julius Baer Investment Management Inc.

Julius Baer Investment Management Inc. ("JBIM") serves
as investment advisor to International Fixed Income Investments. JBIM has
been registered as an investment advisor under the Advisers Act
since 1984. Directly and through Julius Baer Securities Inc., JBIM
provides investment advisory services to a wide variety of individual and
institutional clients, including registered investment companies. JBIM's
principal executive offices are located at 330 Madison Avenue, New
York, New York 10017.

The list required by this Item 26 of officers and
directors of JBIM together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedules A and D of Form ADV filed by JBIM pursuant to the
Advisers Act (SEC File No. 801-18766).

Advisors - AIB Govett Asset Management Ltd.

AIB Govett Asset Management Ltd. ("Govett") will serve as
investment advisor to Emerging Markets Equity Investments. Govett has been
registered as an investment advisor under the Advisers Act since 1972.
Govett is the investment adviser of various institutional clients.
Govett's
principal executive offices are located at Shackleton House, 4
Battlebridge Lane, London, SE1-2HR.

The list required by this Item 26 of officers and
directors of Govett, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Govett pursuant to the
Advisers Act (SEC File No.801-34730).

Advisors - Alliance Capital Management L.P.

Alliance Capital Management L.P. ("Alliance") will serve as
investment advisor to High Yield Investments. Alliance has been
registered as an investment advisor under the Advisers Act since 1971.
Alliance is the investment adviser of various institutional and individual
clients. Alliance's
principal executive offices are located at 1345 Avenue of the
Americas, New York, New York .

The list required by this Item 26 of officers and
directors of Alliance, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Alliance pursuant to the
Advisers Act (SEC File No.801-32361).

Advisors - David L. Babson & Co., Inc.

David L. Babson & Co. Inc. ("Babson") will serve as an
investment advisor to Small Capitalization Value Equity Investments.
Babson has been registered as an investment advisor under the Advisers Act
since 1940. Babson is the investment adviser of various institutional and
individual clients. Babson's principal executive offices are located at
One Memorial Drive, Cambridge, MA,02142-1300.

The list required by this Item 26 of officers and
directors of Babson, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
such officers and directors during the past two years, is incorporated by
reference to Schedule A and D of Form ADV filed by Babson pursuant to the
Advisers Act (SEC File No.801-241).

Item 27. Principal Underwriters

(a) CFBDS, Inc. the Registrant's Distributor, is also
the distributor for
CitiFundsSM International Growth & Income Portfolio,
CitiFundsSM International Equity Portfolio, CitiFundsSM Large Cap
Growth
Portfolio, CitiFundsSM Intermediate Income Portfolio,
CitiFundsSM Short-Term U.S. Government Income Portfolio,
CitiFundsSM Emerging Asian Markets Equity Portfolio,
CitiFundsSM U.S. Treasury Reserves, CitiFundsSM Cash Reserves,
CitiFundsSM Premium U.S. Treasury Reserves,
CitiFundsSM Premium Liquid Reserves, CitiFundsSM Institutional U.S.
Treasury Reserves, CitiFundsSM Institutional Liquid Reserves,
SM Institutional Cash Reserves, CitiFundsSM Tax Free Reserves,
CitiFundsSM Institutional Tax Free Reserves,
CitiFundsSM California Tax Free Reserves,
CitiFundsSM Connecticut Tax Free Reserves,
CitiFundsSM New York Tax Free Reserves, CitiFundsSM Balanced Portfolio,
CitiFundsSM Small Cap Value Portfolio, CitiFundsSM Growth & Income
Portfolio,
CitiFundsSM Small Cap Growth Portfolio, CitiFundsSM National
Tax Free Income Portfolio, CitiFundsSM New York Tax Free Income
Portfolio,
CitiSelect VIP Folio 200, Citiselect VIP Folio 300,
CitiSelect (VIP Folio 400, CitiSelect (VIP Folio 500,
CitiFundsSM Small Cap Growth VIP Portfolio, CitiSelect (Folio 200,
CitiSelect (Folio 300, CitiSelect (Folio 400, and CitiSelect (Folio
500.
CFBDS is also the placement agent for Large Cap Value Portfolio,
International Portfolio, Foreign Bond Portfolio,
Intermediate Income Portfolio, Short-Term Portfolio,
Growth & Income Portfolio, Large Cap Growth Portfolio,
Small Cap Growth Portfolio, International Equity Portfolio,
Balanced Portfolio, Government Income Portfolio, Emerging
Asian Markets Equity Portfolio, Tax Free Reserves Portfolio,
Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio.

CFBDS, Inc. is also the distributor for the following
Smith Barney Mutual Fund registrants:
Greenwich Street Series Fund
Smith Barney Adjustable Rate Government Income Fund
Smith Barney Appreciation Fund Inc.
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund Inc.
Smith Barney Concert Allocation Series Inc.
Smith Barney Equity Funds
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc.
Smith Barney Income Funds
Smith Barney Institutional Cash Management Fund, Inc.
Smith Barney Investment Trust
Smith Barney Investment Funds Inc.
Smith Barney Managed Governments Fund Inc.
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Money Funds, Inc.
Smith Barney Muni Funds
Smith Barney Municipal Money Market Fund, Inc.
Smith Barney Natural Resources Fund Inc.
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund Inc.
Smith Barney Principal Return Fund
Smith Barney Small Cap Blend Fund, Inc.
Smith Barney Telecommunications Trust
Smith Barney Variable Account Funds
Smith Barney World Funds, Inc.
Travelers Series Fund Inc.
And various series of unit investment trusts.

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

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

Item 28. Location of Accounts and Records

Consulting Group Capital Markets Funds
222 Delaware Avenue
Wilmington, Delaware 19801

PNC Bank, National Association
17th and Chestnuts Streets
Philadelphia, Pennsylvania

The Chase Manhattan Bank
Chase MetroTech Center
Brooklyn, NY 11245

Salomon Smith Barney Inc.
388 Greenwich Street, 22nd Floor
New York, New York 10013

First Data Investor Services Group Inc.
Exchange Place
Boston, MA 02109

CFBDS Inc.
21 Milk Street
Boston, MA 02109

Item 29. Management Services

Not Applicable.

Item 30. Undertakings

Not Applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended
(the"1933 Act")and the Investment Company Act of 1940, as amended, the
Registrant has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, this Post-Effective
Amendment, and where applicable, the true and lawful attorney-in-fact,
thereto duly authorized, in the City of New York and State of New York on the
15th day of July 1999.

CONSULTING GROUP CAPITAL MARKETS FUNDS

BY /s/ Heath B. McLendon
(Heath B. McLendon, Chief Executive Officer)

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the date indicated.

Signature Title Date

/s/ Heath B. McLendon
Trustee and Chairman of the Board July 15, 1999
Heath B. McLendon (Chief Executive Officer)

/s/ Lewis E. Daidone
Senior Vice President and Treasurer July 15, 1999
Lewis E. Daidone (Chief Financial and Accounting
Officer)

/s/ Walter E. Auch, Sr.*
Walter E. Auch, Sr., Trustee July 15, 1999

H. John Ellis, Trustee

/s/ Armon E. Kamesar, Trustee, July 15, 1999
Armon E. Kamesar

/s/ Martin Brody*
Martin Brody, Trustee, July 15, 1999

/s/ Stephen E. Kaufman*
Stephen E. Kaufman, Trustee, July 15, 1999

* Signed pursuant to power of attorney filed October 29, 1993 as an
exhibit
to Post-Effective Amendment No. 3.

/s/ Heath B. McLendon
Heath B. McLendon July 15, 1999