Self Funding Instalments

Recent changes allowing Self Managed Super Funds to invest in instalments and the clarification of the deductibility of interest on capital protected borrowings make it the right time to consider an investment in Citi SFI's.

Citi SFI's are the first SFI's to be strutured to take advantage of these changes, therefore allowing you to maximise potential growth in this new environment.

SFI's are an increasingly popular and flexible investment product benefiting those seeking long-term geared exposure to the performance of shares in Australia's leading companies and indices. Investing in Citi SFI’s is a convenient way of borrowing to invest , with no intrusive credit checks, complicated loan documents, and no ongoing interest payment.

SFIs are similar to ordinary instalments in structure. The most significant variation is the treatment of dividends. Holders are entitled to dividends (including franking credits) however the cash component of a dividend will be used to reduce the loan amount rather than being paid in cash to the holder.

The loan amount for a SFI will generally increase once every 12 months, as funding costs are added to the total loan. Hence, over the life of the SFI, the loan amount will periodically decrease due to the payment of dividends from the underlying instrument, and increase by the amount of funding costs. Ideally the loan amount progressively reduces over the life of the SFI due to regular dividend payments exceeding interest and borrowing charges.

It is envisaged that during the life of the SFI the loan amount will decrease where the dividends outstrip the annual interest payments to the loan, representing a positively geared investment.

Disclaimer

This material is made available by Citigroup Global Markets Australia Pty Limited (“Citi”) ABN 64 003 114 832 and AFSL 240992, Participant of the ASX Group and a Participant of the Sydney Futures Exchange Limited. The Financial Products referred to in this document are issued by Citi. Warrants can be traded on ASX and investors can obtain a copy of the relevant Product Disclosure Statement by contacting Citi. Investors may also apply for Instalment Warrants under the Product Disclosure Statement. 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. Warrants are not bank deposits or obligations of, or guaranteed by, Citibank, N.A., Citibank Pty Limited or any of its affiliates or subsidiaries and are subject to investment risks, including the possible loss of the principal amount invested.

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