Citigroup Smith Barney Affluent Investor Poll April 2006; Economic Climate, the Federal Budget Deficit and Taxes; Conducted by Greenwald & Associates and Synovate

All results are specifically from those investors interviewed forthe Citigroup Smith Barney Affluent Investor Poll between March 2 andMarch 16. The poll does not reflect Citigroup Smith Barney predictionsor recommendations.

Investor Poll Highlights

Affluent investors in the latest Citigroup Smith Barney AffluentInvestor Poll were asked about their outlook for the current andfuture economic climate, trends in their personal finances, theirviews of the Federal Budget Deficit, as well as their tax planningstrategies and opinions of the current tax system.

-- Concerns regarding the nation's investment climate have begun to calm. Nearly half of all investors believe that the investment climate in the country is better today compared to a year ago, up more than five % from last month's results.

-- The wealthiest group of investors is beginning to change their outlook regarding the national economy. Fewer than two out of five, of those who have at least $1 million in assets, believe the investment climate in the country is better than it was a year ago, which is at its lowest point for the year for this previously optimistic group of investors.

-- Most believe the federal budget deficit is a critical problem. However, many overestimate the actual size of the country's deficit.

-- Those expected to solve the deficit problem are, in fact, seen as contributing to the problem themselves. Earmarked spending on pet projects is identified as a key contributor to the deficit problem; few trust either Republicans or Democrats to do anything meaningful about the deficit.

-- Despite concerns for the deficit, there is widespread support for lower taxes. Most affluent investors believe that tax cuts promote economic growth, and lower individual rates and a higher Alternative Minimum Tax threshold are seen as the two most needed tax reforms.

-- The affluent prepare their own taxes. Even among the wealthiest investors, only half use a financial professional to prepare their tax return.

Concerns regarding the nation's investment climate are calming

Concerns regarding the nation's investment climate have begun tocalm among most affluent investors. Just under half of the investorssurveyed in this month's Citigroup Smith Barney Affluent Investor Pollbelieve that the investment climate in the country is better todaythan it was a year ago, and nearly two-thirds maintain a positiveoutlook for the investment climate over the next six months. Bothmeasures are up more than five % from last month's results.

More investors are beginning to believe that it is a good time tomake large-scale financial purchases, another indicator that economicconcerns are calming. About seven out of ten say they think it is agood time to buy major items for their home, including big screentelevisions or washers and dryers. Similarly, two-thirds say it is agood time to invest in other financial outlets like stocks and bonds,or other fixed investments (59%); all up more than five % from lastmonth's results.

Still, the wealthiest group of investors is beginning to changetheir outlook regarding the national economy, falling more in-linewith the views that other affluent investors have been reporting sincethe start of 2006. Fewer than two out of five in this previouslyoptimistic segment now believe the investment climate in the countryis better than it was a year ago; about two-thirds say the investmentclimate will be better over the next six months. Both are at thelowest points for the year for the wealthiest investors, and similarto the results found among the rest of the affluent investorpopulation.

Long-term outlooks continue to fall

While short-term concerns may be calming, investor outlook for thenational economy over the next 12 months continues to decline and isat its weakest point for the year. Fewer than three out of ten expectthe investment climate to be better a year from now, down 13 % fromthe start of the year, while 15 % believe it will be worse (48% thinkit will be about the same). Here too, the wealthiest group ofinvestors is again beginning to see what the entire investorpopulation has been expressing throughout the year, as one-quarter saythe economy will be better in the year to come and a similar share sayit will be worse.

Individual financial outlook remains positive

Regardless of their feelings toward the long-term nationaleconomic outlook, investors continue to be optimistic regarding thefuture of their individual portfolios. Just under half of all affluentinvestors say that their personal financial situation is better todaythan a year ago, which is at its strongest point all year. Similarnumbers indicate that their investments performed better than expectedover the past 12 months, and believe they will do the same in themonths to come.

The wealthiest group of investors remains optimistic regardingtheir personal finances; nearly two-thirds say they are getting alongbetter today compared to a year ago, up slightly from last month, butsignificantly higher than the Poll's initial results from January.

Predictions of a continued rise in interest rates

With the changing of the guard at the Federal Reserve Board,affluent investors appear to believe that Chairman Bernanke willcontinue to raise interest rates. About three-quarters expect rates torise in the coming months, close to two-thirds believe inflation willbe higher, and a similar majority foresees a rise in consumer prices.

Widespread dissatisfaction with the President's management of theeconomy

Investors continue to show strong dissatisfaction regardingPresident Bush's management of the economy, as almost one-third saythey are very dissatisfied and another 22 % describe themselves assomewhat dissatisfied. Satisfaction was at its highest point (40%) inJanuary and has steadily decreased since.

Deep concern about the deficit

Seven out of ten affluent investors believe the federal budgetdeficit is either a serious or critical problem; nearly all others(25%) acknowledge it is somewhat of a problem. Most investors, though,overestimate the actual size of the federal budget deficit, with 55%estimating it to be $500 million or more.

The vast majority feels the deficit is a problem that is mostly,if not entirely, within the government's control. In fact, most pointdirectly to the President when asked which one person comes to mindwhen thinking about the deficit and about half believe that Congressand the White House, regardless of political party affiliation, areequally responsible for the deficit's existence.

In their Own Words: When you think about the federal budgetdeficit, which one person comes to mind first?

1. President George W. Bush (mentioned by 50%)

2. The President (general) (11%)

3. Alan Greenspan (4%)

4. Senator Ted Kennedy (4%)

5. Bill Clinton (3%)

6. Congress (3%)

7. Senator Robert Byrd (1%)

8. Senator Ted Stevens (1%)

9. Chairman of the Federal Reserve (general) (1%)

10. Ben Bernanke (<1%)

-- "I can't be specific. This is a system-wide breakdown in responsibility, from the President down to most Senators and Congressmen; they all share in this blame."

Both altruistic and economic reasons

Why is the deficit such a big problem? Although two-thirds ofinvestors identify future-focused or socially responsible reasons,such as the importance of not passing on debt to future generations orthe government's ability to pay for Social Security, Medicare, andother entitlements, a larger share (more than three-quarters) offer astrictly economical rationale - the deficit weakens the U.S. Dollar inthe world economy.

Still, the more altruistic reasons are seen as most importantoverall. One-quarter of all investors indicate that the most importantreason the deficit presents a problem is that it makes it less likelythat the government will be able to pay for entitlements, such asSocial Security and Medicare, compared to one out of five who suggestthe weakening of the U.S. dollar is most important. Additionally,slightly more than half of investors feel the deficit is a problembecause the tax money spent on interest payments reduces what can bespent on programs to help the needy or to support public education.

The more affluent investors tend to place greater emphasis oneconomic rationale. Those with assets of $500,000 or more areparticularly likely to mention the weakening of the U.S. dollar as areason why the deficit presents a problem; one-quarter suggest this isthe most important reason. Investors in this asset bracket alsoexpress some concern that the deficit will cause foreign countries tostop accepting U.S. debt in the future (44% cite this as a reason whythe deficit is a problem).

Many causes for the deficit

Even with the focus on altruistic reasons for reducing thedeficit, more than one-third state that entitlement programs for theelderly and the poor, combined with spending on education, contributea great deal to the fact the federal government has a budget deficit.

Many more, however, suggest that defense spending, includingspending on Iraq and Afghanistan, Homeland Security and generalmilitary spending, is a significant contributor to the deficit; nearlyeight out of ten say such spending contributes a great deal to theexistence of the deficit.

Affluent investors also believe that the people and institutionsexpected to solve the deficit problem are, in fact, contributing tothe problem themselves. Two-thirds cite Senators' and Congressmen'searmarked spending on pet projects as a significant contributor to thefederal budget deficit, while four out of ten place blame on the sizeof the federal workforce.

Little hope for the future

Investors appear skeptical that any institution or political partywill be able to make meaningful cuts in the deficit. 60 % say they donot trust either Congress or the White House to make meaningful cutsin the federal budget deficit and 44% do not trust either Republicansor Democrats (with the remainder evenly split between the twoparties). Accordingly, nearly two-thirds of all investors think thefederal budget deficit will be at least somewhat higher five yearsfrom now.

Economic growth and spending cuts are the answer

Almost all investors say the federal government should encourageeconomic growth as a means of cutting the deficit. Also at the top ofthe suggested to-do list are cutting Senators' and Congressmen'sspending on pet projects, reducing the size of the federal workforce,cutting spending specifically for Iraq and Afghanistan, andeliminating farm subsidies.

Majorities also mention specific tax increases that the federalgovernment should enact in order to reduce the deficit, such ascutting tax incentives for corporations and keeping the estate taxeson estates over $2 million.

When asked to describe in their own words the best way to reducethe federal budget deficit, affluent investors provide many differentideas. A large portion of investors look toward the war in Iraq andmilitary spending in general as a major burden on the deficit, yet anoverwhelming portion see general spending cuts across the board asbeing the easiest way to make a substantial dent. Affluent investorsdo not overlook the high cost of government entitlements, and theyalso focus on the price tag of "pork barrel" spending as a majorcontributor to the country's substantial deficit. Only a few mentionincreasing taxes as a key to reducing deficit issues.

In Their Own Words: What do you think is the best way to reducethe federal budget deficit?

-- "Eliminate 'pork barrel' spending."

-- "End the war in Iraq."

-- "Balanced budget; an end to pork barrel politics"

-- "Become aggressive in repayment of loans due the U.S."

A desire for lower taxes

For the most part, these affluent investors believe that tax cutslower the deficit by stimulating the economy and raising more revenue.It's not surprising that fewer investors feel that tax-related reformswill yield a substantial decrease in the deficit. In fact, 77 % ofaffluent investors believe it is important that the federal governmentlower individual income tax rates and nearly one-third name thisreform as the tax reform that is needed most. Nearly as many believeit is important that the federal government raise the income thresholdat which taxpayers are subject to the Alternative Minimum Tax, withone out of five saying this reform is needed most. Likewise, more thantwo-thirds believe it is important to lower rates for capital gainstaxes.

Investors who have assets of $1 million or more seem to haveslightly different priorities in mind. Four out of ten wealthyinvestors indicate that reforms regarding the Alternative Minimum Taxare needed most, which is more than double the number who say loweringindividual income taxes is most essential (16%).

Still, affluent investors seem willing to absorb some of the taxburden. More than half indicate that it is important for thegovernment to keep the estate tax on estate worth over $2 million andfour out of ten emphasize the importance of raising the income taxrate for households earning over $100,000.

A large majority of investors (65%) feel it is very important thatthe tax cuts enacted in 2001 become permanent; if allowed to expire,half of all investors and two-thirds of those in the wealthiestsegment believe the country's economic growth would decline.

Paying their fair share

72 % of all affluent investors describe the nation's current taxsystem as unfair and seven out of ten affluent investors feel thetaxes they pay are too high. Three out of four feel that the middleclass generally pays more than their fair share of taxes.Interestingly, though, nearly two-thirds feel that the tax burdenborne by "affluent individuals" is less than their fair share.

Nine out of ten believe it is important for investors to considertax consequences when deciding how to invest; however, only about halfindicate that tax-planning strategies actually do influence theirpersonal investment decisions.

Many affluent investors take a do-it-yourself approach to theirown taxes, with half saying they prepare their own taxes rather thanuse a financial professional. Even among those who have assets of $1million or more, only 52% use a financial professional to preparetheir tax return.

Most affluent investors indicate that they file in March or April,although millionaires are slightly more likely to file after April 17,presumably with an extension. On average, investors will spend justshy of 11 hours either preparing their taxes themselves or readyinginformation for a financial professional.

Background and Methodology

Greenwald & Associates and Synovate conducted the Citigroup SmithBarney Affluent Investor Poll March 2 to March 16. Interviewing wasconducted online with 555 investors who are members of the SynovateConsumer Opinion Panel. In order to qualify for participation, panelmembers had to have at least $100,000 in financial assets (excludingreal estate and employer retirement plans), a definition thatdescribes approximately one-quarter of all U.S. households. Surveyresults include 164 interviews with households that have $100,000 to$499,999 in savings and investments, 152 interviews with those in the$500,000 to $999,999 asset range, and 239 interviews with investorswho have $1 million or more. Survey results have been weighted by ageand asset level to reflect national population norms. The results ofthe Citigroup Smith Barney Investor Poll have a maximum margin ofsampling error (at the 95% confidence level) of plus or minus four%age points.

(C) 2006 Citigroup Global Markets, Inc. Member SIPC, Smith Barneyis a division and service mark of Citigroup Global Markets, Inc. andits affiliates and is used and registered throughout the world.CITIGROUP and the Umbrella Device are trademarks and service marks ofCitigroup, Inc. or its affiliates and are used and registeredthroughout the world.

Mathew Greenwald & Associates, Inc. is a leading full servicepublic opinion and market research firm that has been conductingcustomized research for our clients for over 20 years. Specializing inserving the research needs of financial services organizations,Greenwald & Associates has earned a reputation for extensive researchknowledge, industry expertise, and commitment to serving the needs ofour clients. For more information about Mathew Greenwald & Associates,call (202) 686-0300 or visit www.greenwaldresearch.com.

Synovate, the market research arm of Aegis Group plc, generatesconsumer insights that drive competitive marketing solutions. Thenetwork provides clients with cohesive global support and acomprehensive suite of research solutions. Synovate employs over 5,000staff in 107 offices across 50 countries. More information on Synovatecan be found at www.synovate.com or call (508) 655-0777.