About Reset Instalments

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What are Citi Reset Instalments?

Investing in Citi Reset Instalments is a convenient way of borrowing to invest. There are no intrusive credit checks or complicated loan documents to complete, and no margin calls. Like Citi Instalments the structure involves two separate "instalment" payments (the First Instalment and the Final Instalment) a Loan with a prepaid interest component and a borrowing Fee.

Additionally, the Citi Reset Instalment has a Reset mechanism, which operates to reset the amount of the Loan on each Reset Date. This reset ensures that the level of gearing for each instalment can be maintained, should there be substantial movement in the underlying share price.

The First Instalment
An investor pays a portion of the upfront cost of the Underlying Share to acquire the Citi Reset Instalment and receives a Loan from Citigroup to fund the remaining cost of the Underlying Shares, interest on the Loan and Borrowing Fees. The amount is not fixed until the time of application, and will depend on a number of market variables including the underlying share price, the time remaining to the earlier of the next Reset Date or the Maturity Date, volatility of the Underlying Share price, dividend expectations and prevailing interest rates.

A Holder is entitled to receive all the Dividends (other than Special Dividends), distributions and, depending on their circumstances, available franking credits paid in relation to the Underlying Shares.

For Shareholder Applicants, the First Instalment is the Securities held by the investor that will become the Underlying Shares in respect of the Citi Reset Instalment.

For Rollover Applicants, the First Instalment is the Securities that make up the underlying parcel of the Rollover Instalments that are "rolled" into and will become the Underlying Shares in respect of the Citi Reset Instalments.

The Final Instalment
This is equal to the amount of the Loan, which may change during the term of the investment due to the operation of the reset mechanism on each Reset Date. Investors have the right to pay the Final Instalment at any time until maturity (including on any Reset Date) to complete the purchase of the Underlying Share.

Reset of the Loan
Approximately one month prior to the relevant Reset Date, Citigroup may nominate a New Loan Amount and indicative figures for the New Interest Amounts and New Borrowing Fee. On each Reset Date, Citigroup will reset the amount of the Loan to a level which maintains a similar level of gearing, and to take into account changes in the price of the Underlying Shares, prevailing interest rates and share price volatility. Depending on the amount of the new Loan, Holders may either be:

entitled to receive a Reset Cashback amount, which will automatically be directed to the subscription for additional Citi Reset Instalments pursuant to the Citi Reset Instalment Reinvestment Plan (or Holders can elect to receive in cash); or
be required to pay the Reset Payment as notified to Holders by Citigroup.

Investor Benefits

Citi Reset Instalments have the following key features and offer investors the following benefits:

an easy way to leverage your exposure to shares in leading Australian companies and trusts without the risk of margin calls;
benefits of share ownership for a fraction of the upfront cost of the Underlying Shares;
receive all ordinary dividends, available franking credits and capital appreciation in respect of the Underlying Shares;
pay the Final Instalment at any time prior to maturity and receive the Underlying Shares;
enhanced dividend yields and, depending on your circumstances, available franking credits;
potential tax benefits (please see the taxation summary in the PDS document);
an eligible investment for self-managed super funds (excluding Shareholder Applications);
Shareholder Applicants can free up capital for other investments without crystallising capital gains; and
a liquid investment that can be traded on ASX.

Risks

Subscription for or the purchase of the warrants is considered by the issuer to be suitable only for investors with experience in, or on the advice of professional advisers with experience in, derivative transactions. Potential investors should reach an investment decision only after carefully considering, with their advisers, the suitability of the warrants in light of their particular circumstances, taking into account the risk factors relating to the warrants set out below:

Factors Affecting Warrant Value
Performance by the Issuer and Guarantor of Obligations
Possible Illiquidity of Trading Market
General Market Risks
Investment Decisions
Exercise of Discretion by the Issuer
Extraordinary Events
Legislative Risks
National Guarantee Fund - not a Guarantor in all cases
Potential Conflicts of Interest
Suspension of Warrant Trading

For more information about risks involved with investing in warrants and structured products please click here

Disclaimer

This material is made available by Citigroup Global Markets Australia Pty Limited ("Citigroup Global Markets") ABN 64 003 114 832 and AFSL 240992, Participant of the ASX Group. The Financial Products referred to in this document are issued by Citigroup Global Markets. This information does not take into account the investment objectives or financial situation of any particular person. Investors should be aware that there are risks of investing and that prices both rise and fall. Investors should seek their own independent financial advice based on their own circumstances before making a decision.
The terms set forth herein are intended for discussion purposes only and subject to the final expression of the terms of a transaction as set forth in a definitive agreement and/or confirmation. Although the information contained herein is based upon generally available information and has been obtained from sources believed to be reliable, we do not guarantee its accuracy, and such information may be incomplete or condensed. Any prices used herein are historic and may not be available when any order is entered. All opinions and estimates included in this document constitute our judgment as of this date and are subject to change without notice.

This material does not purport to identify the nature of the specific market or other risks associated with a particular transaction. Before entering into a derivative transaction, you should ensure that you fully understand the terms of the transaction, relevant risk factors, the nature and extent of your risk of loss and the nature of the contractual relationship into which you are entering. You should also carefully evaluate whether the transaction is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances and whether you have the operational resources in place to monitor the associated risks and contractual obligations over the term of the transaction.

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