Citigroup (C)

Certain equity method investments

        Citigroup adopted fair value accounting for various non-strategic investments in leveraged buyout funds and other hedge funds that previously were required to be accounted for under the equity method. Management elected fair value accounting to reduce operational and accounting complexity, in particular related to the future implementation of the Investment Company Audit Guide SOP. Since the funds account for all of their underlying assets at full fair value, the impact of applying the equity method to Citigroup's investment in these funds was equivalent to fair value accounting. Thus, this fair value election had no impact on opening retained earnings.

        These fund investments, which totaled $2.0 billion as of September 30, 2007, are classified as Investments on the Consolidated Balance Sheet. Changes in the fair values of

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these investments are classified in Other revenue in the Consolidated Statement of Income.

Certain equity method investments

Citigroup adopted fair value accounting for various non-strategic investments in leveraged buyout funds and other hedge funds that previously were required to be accounted for under the equity method.  Management elected fair value accounting to reduce operational future and accounting complexity, in particular related to the future implementation of the Investment Company Audit Guide SOP.  Because the funds account for all of their underlying assets at full fair value, the impact of applying the equity method to Citigroup’s investment in these funds was equivalent to fair value accounting (that is, the net investment in the funds reported on Citigroup’s Consolidated Balance Sheet will result in equal fair values for the investment in the fund on the balance sheet. In addition, Citigroup’s proportionate share of the net income or loss of each fund reported on Citigroup’s Consolidated Statement of Income in each period as equity income recognized under the equity method will equal the mark-to-market earnings on the income statement under fair value accounting). Thus, this fair value election had no impact on opening retained earnings.

These fund investments, which totaled $1.7 billion as of June 30, 2007, are classified as Investments on the Consolidated Balance Sheet.  Changes in fair value of these investments are classified in Other revenue in the Consolidated Statement of Income.