In any instance where distribution of this communication is subject to the rules of the US Commodity Futures Trading Commission (“CFTC”), this communication constitutes an invitation to consider entering into a derivatives transaction under U.S. CFTC Regulations §§ 1.71 and 23.605, where applicable, but is not a binding offer to buy/sell any financial instrument.
This communication is issued by a member of the sales and trading department of Citigroup Global Markets Inc. or one of its affiliates (collectively, “Citi”). Sales and trading department personnel are not research analysts, and the information in this communication (“Communication”) is not intended to constitute “research” as that term is defined by applicable regulations. Unless otherwise indicated, any reference to a research report or research recommendation is not intended to represent the whole report and is not in itself considered a recommendation or research report. All views, opinions and estimates expressed in this Communication (i) may change without notice and (ii) may differ from those views, opinions and estimates held or expressed by Citi or other Citi personnel.
This Communication is provided for information and discussion purposes only. Unless otherwise indicated, it does not constitute an offer, solicitation or recommendation to purchase or sell any financial instruments or other products and is not intended as an official confirmation of any transaction. Unless otherwise expressly indicated, this Communication does not take into account the investment objectives or financial situation of any particular person. Citi is not acting as an advisor, fiduciary or agent. Recipients of this Communication should obtain advice based on their own individual circumstances from their own tax, financial, legal and other advisors about the risks and merits of any transaction before making an investment decision, and only make such decisions on the basis of the investor's own objectives, experience and resources. The information contained in this Communication is based on generally available information and, although obtained from sources believed by Citi to be reliable, its accuracy and completeness cannot be assured, and such information may be incomplete or condensed. Any assumptions or information contained in this document constitute a judgment only as of the date of this document or on any specified dates and is subject to change without notice.
Citi often acts as an issuer of financial instruments and other products, acts as a market maker and trades as principal in many different financial instruments and other products, and can be expected to perform or seek to perform investment banking and other services for the issuer of such financial instruments or other products.
The author of this Communication may have discussed the information contained therein with others within or outside Citi and the author and/or such other Citi personnel may have already acted on the basis of this information (including by trading for Citi's proprietary accounts or communicating the information contained herein to other customers of Citi). Citi, Citi's personnel (including those with whom the author may have consulted in the preparation of this communication), and other customers of Citi may be long or short the financial instruments or other products referred to in this Communication, may have acquired such positions at prices and market conditions that are no longer available, and may have interests different from or adverse to your interests. Citi may trade, for its own account or for customer accounts, the securities of the companies underlying the strategies or structures outlined in this report. Citi may also issue options related to the securities of the companies underlying the strategies or structures outlined, and may trade, for its own accounts or customer accounts, in options that have been issued by others. An employee of Citi may also be a director of a company issuing such securities.
Investments in financial instruments or other products carry significant risk, including the possible loss of the principal amount invested. This document does not purport to identify all the risks or material considerations which may be associated with entering into any transaction. Citi accepts no liability for any loss (whether direct, indirect or consequential) that may arise from any use of the information contained in or derived from this Communication. Financial instruments or other products denominated in a foreign currency are subject to exchange rate fluctuations, which may have an adverse effect on the price or value of an investment in such products.
This document may contain historical and forward looking information. Past performance is not a guarantee or indication of future results. Any prices, values or estimates provided in this Communication (other than those that are identified as being historical) are indicative only¸ may change without notice and do not represent firm quotes as to either price or size, nor reflect the value Citi may assign a security in its inventory. Forward looking information does not indicate a level at which Citi is prepared to do a trade and may not account for all relevant assumptions and future conditions. Actual conditions may vary substantially from estimates which could have a negative impact on the value of an instrument. You should contact your local representative directly if you are interested in buying or selling any financial instrument or other product or pursuing any trading strategy that may be mentioned in this Communication.
These materials are prepared solely for distribution into jurisdictions where such distribution is permitted by law. These materials are for the internal use of the intended recipients only and may contain information proprietary to Citi which may not be reproduced or redistributed in whole or in part without Citi’s prior consent.
This material may mention options regulated by the U.S. Securities and Exchange Commission. Before buying or selling options you should obtain and review the current version of the Options Clearing Corporation booklet, Characteristics and Risks of Standardized Options. A copy of the booklet can be obtained upon request from Citigroup Global Markets Inc., 390 Greenwich Street, 3rd Floor, New York, NY 10013 or by clicking the following link, http://www.theocc.com/about/publications/character-risks.jsp.
If you buy options, the maximum loss is the premium. If you sell put options, the risk is the entire notional below the strike. If you sell call options, the risk is unlimited. The actual profit or loss from any trade will depend on the price at which the trades are executed. The prices used herein are historical and may not be available when you order is entered. Commissions and other transaction costs are not considered in these examples. Option trades in general and these trades in particular may not be appropriate for every investor. Unless noted otherwise, the source of all graphs and tables in this report is Citi. Because of the importance of tax considerations to all option transactions, the investor considering options should consult with his/her tax advisor as to how their tax situation is affected by the outcome of contemplated options transactions.
Exchange Traded Funds
This material may mention Exchange Traded Funds (“ETFs”).Investors should consider the investment objectives,risks,and charges and expenses of the investment company or companies discussed in this material carefully before investing. The prospectus and, if available, the summary prospectus for each of the ETFs mentioned in this material contain this and other information about the investment company or companies and should be read carefully before investing. Clients may obtain prospectuses and, if available, summary prospectuses for the ETFs mentioned in this material by clicking on the below link(s) or from the ETF distributors or the exchanges upon which the ETFs are listed.
ETFs are redeemable only in Creation Unit size through an Authorized Participant. Citigroup may be an authorized participant for certain ETFs mentioned in this report. As an authorized participant or otherwise, Citigroup acquires securities from the issuers for the purposes of resale. An investment in an ETF is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. An ETF directly invests in or aims to track the performance of an underlying asset therefore the performance of an ETF will be affected by the performance of the underlying asset and the risks associated with investing in that asset. If the ETF aims to track the performance of an asset rather than investing in it directly then there is a "tracking risk" whereby the performance of the ETF doesn't exactly match that of the asset it is aiming to track. An investment in an ETF could lose money over short or even long periods and any investor should expect the Fund's share price and total return to fluctuate within a wide range, like the fluctuations of the overall stock market. ETF shares are traded on an exchange and thus liquidity is dependent on there being sufficient buyers and sellers of the security in the market thus there is a possibility that an active trading market may not be maintained. A lack of liquidity could affect the price of the security. The Fund's distributions may be taxable as ordinary income or capital gains. A sale of ETF Shares is a taxable event, which means that you may have a capital gain to report as income, or a capital loss to report as a deduction, to the tax authorities. Dividend and capital gains distributions that you receive, as well as your gains or losses from any sale of ETF Shares, may also be subject income taxes. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. Investors should review the prospectus for each ETF mentioned in the material to obtain additional performance.
Inverse and Leveraged ETFs: Most leveraged ETFs seek to provide a multiple of the investment returns of a given index or benchmark on a daily basis. Inverse ETFs seek to provide the opposite of the investment returns, also daily, of a given index or benchmark, either in whole or by multiples thereof. Due to the effects of compounding and possible correlation errors, leveraged and inverse ETFs may experience greater losses than one would ordinarily expect. Compounding can also cause a widening differential between the performances of an ETF and its underlying index or benchmark, so that returns over periods longer than one day can differ in amount and direction from the target return of the same period. Consequently, these ETFs may experience losses even in situations where the underlying index or benchmark has performed as hoped. Aggressive investment techniques such as futures, forward contracts, swap agreements, derivatives and options can increase ETF volatility and decrease performance. Investors holding these ETFs should therefore monitor their holdings consistent with their strategies, as frequently as daily.
International investing and Sector Specific ETFs: International investing involves special risks such as currency fluctuation and political instability. Investing in emerging markets may accentuate these risks. Since sector- and commodity-specific funds are not diversified and focus their investments entirely in a single sector, a commodity, or a basket of commodities, the funds will involve a greater degree of risk than an investment in other diversified fund types.
Exchange Traded Notes (ETNs): ETNs are not funds and are not registered under the Investment Company Act of 1940. ETNs are not secured debt and do not provide principal protection unless stated specifically in the prospectus. The repayment of the principal, interest (if any), and the payment of any returns at maturity or upon redemption are dependent on that issuer’s ability to pay. Risks of investing in ETNs include limited portfolio diversification, trade price fluctuations, uncertain principal repayment, and illiquidity. ETNs may have call features that allow the issuer to call the ETN at the issuer’s discretion due to the occurrence of certain market events. A call right by an issuer may adversely affect the value of the notes. Investing in ETNs is not equivalent to investing directly in an index or in any particular index components. The investor fee will reduce the amount of your return at maturity or on redemption, and as a result you may receive less than the principal amount of your investment at maturity or upon redemption of your ETN even if the level of the relevant index has increased or decreased (as may be applicable to the particular series of ETNs). An investment in ETNs may not be suitable for all investors. Commissions may apply and there are tax consequences in the event of sale, redemption or maturity of Securities. Investors should refer to the ETN’s prospectus to obtain a complete discussion of the risks involved when investing.
Although Citibank, N.A. (together with its subsidiaries and branches worldwide, "Citibank") is an affiliate of Citi, you should be aware that none of the financial instruments or other products mentioned in this Communication (unless expressly stated otherwise) are (i) insured by the Federal Deposit Insurance Corporation or any other governmental authority, or (ii) deposits or other obligations of, or guaranteed by, Citibank or any other insured depository institution.
IRS Circular 230 Disclosure: Citi and its employees are not in the business of providing, and do not provide, tax or legal advice to any taxpayer outside of Citi. Any statements in this Communication to tax matters were not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
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