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Annuities

Compensation

Citigroup Global Markets Inc. ("CGMI") offers clients a selection of domestic and offshore annuities from approved insurance company families or providers. We review and evaluate each provider whose products we offer based upon various factors, including but not limited to the quality and competitiveness of products offered; financial strength of the provider; systems compatibility and ability to provide technological support for the sale and servicing of contracts; ability and commitment to support our advisors and clients through training, education, and sales literature; and level of interest and demand among our clients and advisors. Evaluating providers in this manner allows us to focus our marketing and sales support resources on the providers of greatest interest to, and that offer the most competitive and suitable products for, our clients and their advisors. Advisors are not permitted to recommend investments in products from providers that have not reviewed, evaluated, and approved.

Revenue Sharing

For each variable annuity product offered, CGMI seeks to collect from providers a support fee, or what has come to be called a revenue-sharing payment. These revenuesharing payments are in addition to the mortality and expense risk charges, administrative fees, contract maintenance (or "annual") fees, applicable contingent deferred sales charges, and underlying sub-account expenses disclosed in the contract prospectus and in sub-account prospectus fee tables. Revenue-sharing payments are paid out of the provider's revenues or profits and not from a client's contract value or the assets of a subaccount. However, the provider's revenues or profits may in part be derived from the product fees and expenses described in the prospectus. No portion of these revenuesharing payments is made by means of brokerage commissions generated by the provider, the sub-account investment companies or their affiliates.

It is also important to note that advisors receive absolutely no additional compensation as a result of these revenue-sharing payments.

In 2009, CGMI is charging approved providers a revenue-sharing fee for contracts processed of up to 0.05% per year ($5 per $10,000) on client assets, calculated quarterly, based upon the aggregate value of variable annuity assets (including assets invested in fixed rate accounts within variable annuities) invested in contracts for which CGMI is designated as the broker/dealer or agent of record, to the extent such contracts have been in force for more than one year. This rate is subject to volume discounting (that is, as the number of assets increases, the basis-point charge for those assets will decrease). CGMI separately receives revenue-sharing fees charged at different rates from mutual fund families whose funds CGMI offers directly, which may include fund families whose products are offered within approved providers' sub-accounts, but those separate fees do not take into account any assets held within variable annuity sub-accounts.

Set forth below is a listing of the providers from which we received revenue-sharing payments in 2008, ranked based upon the total amount of revenue-sharing payments each provider paid to us for 2008.

Revenue-Sharing Providers

Metlife, Hartford Life, Lincoln Financial Distributors, John Hancock, ING, AXA Distributors, Nationwide, Pacific Life, Transamerica, Genworth, AIG Sunamerica, SunLife, Allstate, Ohio National, Prudential

Representatives of approved providers - whether they remit revenue sharing payments or not - are, subject to the discretion of our Branch Office Managers, provided access to our branch offices and advisors for educational, marketing, and other promotional efforts. Although all approved providers are provided with such access, some providers devote more staff and resources to these activities and therefore may have enhanced opportunities to promote their products to our advisors. This fact may, in turn, lead our advisors to focus on those products when recommending variable annuity investments to our clients instead of on products from those providers that do not commit similar resources to educational, marketing, and other promotional efforts.

Commissions

Each time a variable annuity is purchased through a CGMI advisor, the provider pays CGMI compensation, in the form of a commission, based upon the product and share class selected and the amount of the client investment. CGMI, in turn, pays a portion of the commission to the advisor. Compensation may also include annuity contract servicing payments (sometimes called trails), which are payable as long as the contract is in force. CGMI passes all or a portion of these trails on to the advisor. Upfront and trail commission payments are paid out of the provider's assets, but derived from the product fees and expenses described in the prospectus.

Expense Reimbursements

CGMI may be reimbursed by approved providers, their parent or affiliated companies, or other service providers for the expenses we incur for various sales meetings, seminars, and conferences held in the normal course of business. These reimbursements may be viewed as a form of revenue sharing but are not included in the data provided above. Although providers independently decide what they will spend on these activities, we are aware that some providers allocate their promotional budgets based upon prior sales and asset levels and that they work with our branch offices or advisors to plan promotional and educational activities on the basis of such budgets. We do not contribute in any way to providers' determinations of how to allocate their promotional budgets or to their spending decisions in this regard.

Compensation from Providers

CGMI and its affiliates may receive from certain approved providers or their parent or affiliated companies compensation in the form of commissions and other fees for providing traditional brokerage services, including related research and advisory support, and for purchases and sales of securities for their own portfolios or the portfolios of subaccount investment companies. They also receive other compensation from certain approved providers or their parent or affiliated companies for financial services performed for the benefit of such companies. CGMI prohibits linking the determination of the amount of such brokerage commissions and service fees charged to an approved provider or its parent or affiliated company to the aggregate values of our overall variable product sales or client holdings of these products or to offset the revenue-sharing or expense reimbursements described above.

For More Information

For additional information on a particular provider's payment and compensation practices, please refer to the provider's product Prospectus and Statement of Additional Information. For further information regarding the fees and expenses borne by you and how your Financial Advisor is compensated when you purchase variable annuities, please refer to "An Overview of Variable Annuities."

Securities offered through Citigroup Global Markets Inc. ("CGMI"), member SIPC. Insurance is offered through Citigroup Life Agency LLC ("CLA"). CGMI, CLA and Citibank, N.A. are affiliated companies under the common control of Citigroup Inc. Citi and Citi with Arc design are registered service marks of Citigroup Inc. and its affiliates and are used and registered throughout the world.