Citigroup (C)

Proprietary Investment Activities Revenues

        The proprietary investment portfolio of Alternative Investments consists of private equity, single- and multi-manager hedge funds, real estate, and St. Paul Travelers Companies Inc. (St. Paul) and MetLife, Inc. (MetLife) common shares. Private equity, which constitutes the majority of proprietary investments, on both a direct and indirect basis, is in the form of equity and mezzanine debt financing in companies across a broad range of industries worldwide, including investments in companies located in developing economies. Such investments include Citigroup Venture Capital International Brazil, LP (CVC/Brazil, formerly CVC/Opportunity Equity Partners, LP), which has invested primarily in companies privatized by the government of Brazil in the mid-1990s.

        Investments held by investment company subsidiaries (including CVC/Brazil) are carried at fair value with the net change in unrealized gains and losses recorded in income. Certain private equity investments in companies located in developing economies not held in investment company subsidiaries are either carried at cost or accounted for by the equity method with impairments recognized in income for "other than temporary" declines in value. Investments classified as available-for-sale are carried at fair value with the net change in unrealized gains and losses recorded in equity as other comprehensive income. All other investment activities are primarily carried at fair value, with the net change in unrealized gains and losses recorded in income.

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        The ownership of St. Paul shares was a result of the April 1, 2004 merger of Travelers Property Casualty Corp. (TPC) with The St. Paul Companies, whereby existing shares of TPC common stock were converted to 0.4334 shares of St. Paul common stock. The investment in MetLife resulted from the sale of Citigroup's Life Insurance and Annuities business to MetLife, Inc. on July 1, 2005 in which the sale proceeds included $1.0 billion in MetLife equity securities. The MetLife and St. Paul shares are classified on Citigroup's Balance Sheet as Investments (available-for-sale).

        For the 2005 third quarter, total proprietary revenues, net of interest expense, of $639 million were comprised of revenues from private equity of $449 million, other investment activity of $99 million and hedge funds of $91 million. Total proprietary revenue, net of interest expenses, in the 2005 third quarter increased $410 million over the third quarter of 2004. The growth in proprietary revenues was driven primarily by higher revenue from private equity investments of $224 million, higher revenue from hedge funds of $106 million as a result of increased proprietary capital invested, and other investment activity, which increased $80 million, primarily driven by the sale of St. Paul shares. The private equity revenue for the third quarter of 2005 was driven by investment activity managed by the United States and International investment teams. The International results include the valuation changes related to the expected sale of a public investment in an Indian software company. The Company's investment in CVC/Brazil is subject to a variety of controversies involving some if its portfolio companies, which could affect future valuation of these companies. This is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 68.

        The investment activity for the third quarter of 2005 includes the closing of a number of private equity investment transactions that were in a sale process, primarily held in a consolidated investment subsidiary, which includes revenue due to minority interest shareholders. As a result, significant realized gains were recorded in the quarter, which were substantially recognized in earnings in prior periods through the net change in unrealized gains (losses). As such, the net change in unrealized gains (losses) in the three months ended September 30, 2005 includes a reversal of the previous valuation adjustments recorded since inception on those investments.

        For the 2005 nine months, total proprietary revenues, net of interest expense, of $2.472 billion are comprised of revenues from private equity of $2.183 billion, other investment activity of $215 million, and hedge funds of $74 million. For the 2005 nine months, total proprietary revenues, net of interest expense, of $2.472 billion increased $1.625 billion from the 2004 nine-month period. The growth in proprietary revenues were driven primarily by higher revenue from private equity investments of $1.422 billion, higher revenue from other investment activity of $134 million primarily driven by the sale of St. Paul shares, and higher hedge funds revenue of $69 million as a result of increased proprietary capital invested.

        Proprietary capital under management of $10.7 billion as of September 30, 2005, increased $3.1 billion from September 30, 2004, primarily driven by funding of investments into hedge funds, real estate and the receipt of MetLife shares resulting from the sale of the Life Insurance and Annuities business.

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Proprietary Investment Activities revenues

        The proprietary investment portfolio of Alternative Investments consists of private equity, single- and multi-manager hedge funds, real estate, and St. Paul shares. Private equity, which constitutes the majority of proprietary investments, on both a direct and indirect basis, is in the form of equity and mezzanine debt financing in companies across a broad range of industries worldwide, including investments in companies located in developing economies. Such investments in developing economies include Citigroup Venture Capital International Brazil, LP (CVC/Brazil, formerly CVC/Opportunity Equity Partners, LP), which invests in companies privatized by the government of Brazil in the mid-1990s.

        Private equity investments held in investment company subsidiaries and CVC/Brazil are carried at fair value with net unrealized gains and losses recorded in income. Direct private investments in companies located in developing economies are principally carried at cost with impairments recognized in income for "other than temporary" declines in value. Other investment activities are primarily carried at fair value, with net unrealized gains and losses reported in income.

        The ownership of St. Paul shares was a result of the April 1, 2004 merger of Travelers Property Casualty Corp. (TPC) with The St. Paul Companies, whereby existing shares of TPC common stock were converted to 0.4334 shares of St. Paul common stock. As of June 30, 2005, the Company owned 32.1 million shares or approximately 4.7% of St. Paul shares outstanding. The shares are reported as Investments (available-for-sale) on the Consolidated Balance Sheet.

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        Total proprietary revenues, net of interest expense, of $1.029 billion in the 2005 second quarter increased $542 million over the second quarter of 2004. The growth in proprietary revenues was driven by higher net unrealized gains on private equity investments of $486 million and higher net unrealized gains on publicly-traded investments of $130 million, partially offset by lower net realized gains of $37 million, lower other revenue of $31 million and lower fees, dividends and interest of $6 million. The higher net unrealized gains on private equity investments were primarily attributable to unrealized gains from investment activity in the United States and Latin America. Investment activity in the United States improved significantly due to better results from a consolidated investment company subsidiary. Latin American results reflect the favorable currency movements in Brazil and the resulting impact on the Company's investment in CVC/Brazil. The Company's investment in CVC/Brazil is subject to a variety of controversies involving some of its portfolio companies, which could affect future valuation of these companies. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 63. The increase in net unrealized gains on publicly-traded investments was primarily due to a mark-to-market gain on an investment in an Indian software company. The decrease in net realized gains was primarily due to lower realized gains from European private equity investments, partially offset by higher realized gains from sales of St. Paul shares. The decrease in other proprietary revenues was primarily driven by higher funding costs. The decline in fees, dividends and interest revenues was the result of lower dividend and interest income from private equity investments.

        For the 2005 six months, total proprietary revenues, net of interest expense, of $1.833 billion increased $1.215 billion from the 2004 six-month period. The growth in proprietary revenues was driven by higher net unrealized gains on private equity investments of $1.035 billion, higher net unrealized gains on publicly-traded investments of $205 million and higher fees, dividends and interest of $37 million, partially offset by lower other proprietary revenues of $47 million and lower net realized gains of $15 million. The higher net unrealized gains on private equity investments were primarily attributable to an increase in net unrealized gains related to a consolidated investment company subsidiary, whose underlying investments reflected improved performance, and improved results from CVC/Brazil. The higher net unrealized gains on publicly-traded investments were primarily due to a significant improvement on an investment in an Indian software company in which the prior-year results included unrealized losses. The increase in fees, dividends and interest revenues was the result of higher dividend and interest income from private equity investments in the United States. The decrease in other proprietary revenues was primarily driven by higher funding costs. The decrease in net realized gains were primarily due to lower realized gains from Asian and European private equity investments, partially offset by higher realized gains from sales of St. Paul shares.

        Proprietary capital under management of $9.6 billion as of June 30, 2005 increased $2.2 billion from June 30, 2004 due to additional capital investments received and changes in valuation.

Proprietary Investment Activities revenues

        The proprietary investment portfolio of Alternative Investments consists of private equity, single- and multi-manager hedge funds, real estate, and St. Paul shares. Private equity, which constitutes the majority of proprietary investments, on both a direct and indirect basis, is in the form of equity and mezzanine debt financing in companies across a broad range of industries worldwide, including investments in companies located in developing economies. Such investments include Citigroup Venture Capital International Brazil, LP (CVC/Brazil, formerly CVC/Opportunity Equity Partners, LP), which invests in companies privatized by the government of Brazil in the mid-1990s.

        Private equity investments held in investment company subsidiaries and CVC/Brazil are carried at fair value with net unrealized gains and losses recorded in income. Direct investments in companies located in developing economies are principally carried at cost with impairments recognized in income for "other than temporary" declines in value. Other investment activities are primarily carried at fair value, with net unrealized gains and losses recorded in income.

        The ownership of St. Paul shares was a result of the April 1, 2004 merger of Travelers Property Casualty Corp. (TPC) with The St. Paul Companies, whereby existing shares of TPC common stock were converted to 0.4334 shares of St. Paul common stock. As of March 31, 2005, the Company owned 38.2 million shares or approximately 6.0% of St. Paul shares outstanding. The shares are classified as available-for-sale.

        Total proprietary revenues, net of interest expense, of $804 million in the 2005 first quarter increased $673 million over the first quarter of 2004. The growth in proprietary revenues was driven by higher net unrealized gains on private equity investments of $549 million, lower net unrealized losses on publicly-traded investments of $75 million, higher fees, dividends and interest of $43 million, and higher net realized gains of $22 million, partially offset by lower other proprietary revenues of $16 million. The higher net unrealized gains on private equity investments were primarily attributable to investment activity in Europe. European results reflect improved performance in many of the underlying investments and an improving private equity market. The net unrealized losses on

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publicly-traded investments were primarily due to lower net mark-to-market losses on an investment in an Indian software company. The increase in fees, dividends and interest revenues was primarily due to a dividend received from an underlying investment and higher dividend and interest income from European investments. The higher net realized gains were driven by sales of certain portfolio investments. The decline in other revenues was the result of lower management fees and higher funding costs.

        Proprietary capital under management of $8.8 billion as of March 31, 2005 increased $1.5 billion from March 31, 2004 due to valuation and other increases in private equity and hedge fund investments.