Greg-
Hope you and your family and friends are safe. Thought you might find the
attached of interest.
Michael Matthews
Salomon Smith Barney
First Vice President- Investments
Portfolio Manager
1661 International Drive
Suite 200
Memphis, TN 38120
(901)818-4224   (800)227-4146

> Words cannot begin to describe our feelings at this moment or our concern
> for the safety of so many of our friends and colleagues placed at risk in
> the recent terrorist attacks.  We know that all of our thoughts, hopes and
> prayers go out to all the victims and their families.
> 
> At this time we are cautiously relieved to hear that there have been no
> reported injuries to Citigroup employees.
> 
> As you may have seen in media reports, our facilities located at Seven
> World Trade Center were destroyed.  We have been told by Citigroup Asset
> Management senior management that pre-existing business continuation plans
> for offices located in lower Manhattan have been put in place.  They
> expect to resume operations as the exchanges and markets re-open.
> Displaced staff has already been relocated to designated Citigroup offices
> in mid-town Manhattan, New Jersey and Connecticut.
> 
> Please rest assured that your assets are safe and that they will be
> properly and continuously managed by the portfolio managers of Smith
> Barney Asset Management and Salomon Brothers Asset Management.
> 
> The days ahead for all of us will be difficult.  Please feel free to call
> us with any questions you may have.  As always, we appreciate the
> opportunity to be of service to you.
> 
> Best Regards,
> 
> Jerrold Graber			Michael Matthews
> Scott Notowich
> Sr. Vice Pres-Investments	1st Vice Pres-Investments	1st Vice
> Pres-Investments
> Financial Consultant		Financial Consultant		Financial
> Consultant	
> 
> We thought you would be interested in seeing Equity Strategist view for
> the markets:
> 
> 	As we await the re-opening of the U.S. equity markets it seems to be
> a good time to reflect on some of the fundamental and technical issues we
> will have to confront in the weeks ahead.  To say that the future is
> unclear is to state the obvious.  We must examine the information
> currently available, make suppositions about the likelihood of future
> events and structure our portfolios in a way most likely to exploit short
> term market inefficiencies and take advantage of our long term strategic
> views.
> 	To us, there are at least five issues which will influence the
> course of the economy and markets in the time ahead.  The effects of
> global liquidity, consumer confidence and energy prices should determine a
> great deal of the equity market's direction and internal dynamics.  In
> addition, the fundamental and market performance of the Technology and
> Financial sectors should have an impact beyond their normal sphere of
> influence.
> 
> 1.  Global Liquidity:  We believe that the Government will try to make
> individuals and institutions as whole as possible.   Clearly, Washington
> does not want a financial panic to exacerbate the physical damage already
> done.  We believe that the Federal Reserve will effectively make unlimited
> liquidity available to the system, as they have done during prior crises.
> Additionally, the Executive and Legislative branches appear ready to
> provide fiscal assistance as needed.  We should assume that the Government
> will behave rationally and apply the techniques used successfully in the
> past.  These actions would tend to be supportive to the markets.  While
> the European Central Bank has stated that no easing is imminent, they
> obviously are ready to inject liquidity on an "as-needed" basis.
> 
> 2.  Consumer Confidence:  Clearly the Consumer will be negatively impacted
> in the short run by recent events.  Obviously air travel and lodging will
> feel an immediate impact.  However, the key questions are:  how much will
> the consumer be effected and for how long?  We note that following the
> "Crash" of 1987, Wall Street predicted a dramatic consumer slowdown which
> did not materialize.  We do not intend to draw direct analogies to 1987
> but would merely point out that predictions of Consumer collapse have
> proved to be unreliable.  While some slowdown will inevitably result from
> the catastrophe, one must remain aware of the Consumer's inherent
> resilience and the potential offset of the fiscal and monetary stimulus
> discussed above.  
> While we do not wish to minimize this potential problem, we believe that
> it must be viewed in a broader historical context.
> 
> 3.  Oil Prices:  Early indications are that responsible oil producing
> nations  will not move to seriously curtail production or shipments.
> While nothing can be ruled out, it is hard to say that the perceived risk
> to world-wide oil supplies will necessarily result in higher oil prices.
> This is important.   The absence of a price spike would significantly
> differentiate today from the 1990 precedent.  Then, the risk of inflation
> affected the Fed's ability to rapidly lower rates and offset the price
> rises.  In 1990, higher energy prices undoubtedly contributed to the
> subsequent recession; and the Fed's decision not to immediately cut rates
> adversely impacted the Consumer.  We must indeed ask ourselves if the risk
> to the world's oil supplies is significantly greater today than it was a
> week ago?
> 
> 4.  Technology and Communication Services:  Surprisingly, Technology was
> one of the better performing areas in the European markets in the days
> immediately after the tragedy.  While one does not want to read too much
> into this, a logical progression of events could help the group's
> fundamentals in the months ahead.  Initially, much of the infrastructure
> damage done will have to be undone.  After any disaster, the first
> response is to replace or repair that which has been damaged.  This could
> provide a short-term boost in spending.  Longer-term, there will likely be
> a need for increased spending on bandwidth, back-up (recovery) systems,
> storage and communications systems. In recent months, many corporations
> have deferred technology expenditures. This week's events may accelerate
> the resumption of meaningful technology spending, lending a much needed
> boost to the group.
> 
> 
> 5.Financials:   Financial Services companies are obviously adversely
> affected by recent developments.  Existing concerns have been heightened
> by these events.  Insurers face the potential of massive claims.  Banks
> and brokers face potential credit concerns and the impact of distracted
> capital markets.  However, as mentioned earlier, we anticipate that the
> Fed will be injecting needed liquidity.  It would be rare indeed for
> Financials to fare poorly while such an easing is underway.  A healthy
> financial system is essential to our country as well as the world.
> Investors, while recognizing the damage done, should also be aware of the
> potential benefits of impending remedies. 
> 
> 
>  <<...OLE_Obj...>> 
> Michael Matthews
> Salomon Smith Barney
> First Vice President- Investments
> Portfolio Manager
> 1661 International Drive
> Suite 200
> Memphis, TN 38120
> (901)818-4224   (800)227-4146
> 

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