Citigroup Property Securities Trust Supplementary Product Disclosure Statement

Transcription

1 Citigroup Asset Management Australia Limited ABN AFSL No Citigroup Property Securities Trust Supplementary Product Disclosure Statement Issued by Citigroup Asset Management Australia Limited as Responsible Entity of the Citigroup Property Securities Trust ( the Trust ) (ARSN ). Date: 1 November This document is a Supplementary Product Disclosure Statement issued by Citigroup Asset Management Australia Limited. It supplements the Citigroup Property Securities Trust Product Disclosure Statement dated 3 March This Supplementary Product Disclosure Statement is to be read in conjunction with the Citigroup Property Securities Trust Product Disclosure Statement and has been issued to inform you of the following changes in relation to the Trust. Amendments to the Product Disclosure Statement Unit Price Calculation page 7 Replace the paragraph with the following text: The NAV of the Trust will generally be determined each Melbourne business day. The NAV of the Trust is determined by reference to the market value of the assets held by the Trust less the liabilities of the Trust (which includes an accrual for the expected expenses). The expenses accrued are expected to include audit costs, legal costs and applicable fees. This seeks to spread the expenses of the Trust on a reasonable basis throughout the year. In normal circumstances, an Entry Price and Exit Price will be determined for each Melbourne business day based on the underlying NAV of the Trust and the number of units on issue. Up to 30 November 2004, the underlying NAV used to calculate the Entry Price and Exit Price will generally be based on the previous business day s closing market values. From 1 December 2004, the underlying NAV used to calculate the Entry Price and Exit Price will generally be based on the current business day s closing market values. Entry Prices are rounded up and Exit Prices are rounded down. Please refer to the Application for and Redemption of Units section of this Product Disclosure Statement for more information. Citigroup Asset Management may declare the Entry Price and/or Exit Price more or less frequently if it considers it necessary. Application for and Redemption of Units page 8 Replace the information with the following text: Application requests that Citigroup Asset Management considers to be received before 2:00pm Melbourne time will generally receive the Entry Price for that business day. Application requests that Citigroup Asset Management considers to be received after 2:00pm Melbourne time will generally receive the Entry Price for the next Melbourne business day. Citigroup Asset Management reserves the right not to accept an application for units. Redemption requests that Citigroup Asset Management considers to be received before 2:00pm Melbourne time will generally receive the Exit Price for that business day. Redemption requests that Citigroup Asset Management considers to be received after 2:00pm Melbourne time will generally receive the Exit Price for the next Melbourne business day. Please refer to the How to Apply section of this Product Disclosure Statement for more information. Up to 30 November 2004, the underlying NAV used to calculate the Entry Price and Exit Price will generally be based on the previous business day s closing market values. If Citigroup Asset Management believes that the use of an Entry Price or Exit Price would materially disadvantage unitholders, the Entry Price or Exit Price used will be the Entry or Exit Price calculated for the next Melbourne business day or as at such other time Citigroup Asset Management determines. This may occur, for example, in order to materially eliminate the opportunity for unitholders to execute transactions at an Entry Price or Exit Price that does not reflect known market movements. From 1 December 2004, the underlying NAV used to calculate the Entry Price and Exit Price will generally be based on the current business day s closing market values. Citigroup Asset Management may postpone calculating Entry and Exit Prices if it is considered desirable for the protection of the Trust or in the interests of unitholders to do so. While Entry and Exit Prices reflect the value of accrued income, net income is only distributed in respect of units held at the end of a distribution period. It is distributed in proportion to the number of units held at the end of the distribution period, irrespective of the period the units have been on issue. Unitholders who redeem units during a distribution period will not receive a distribution of income in respect of those units for that distribution period.

2 Issued by Citigroup Asset Management Australia Limited ABN Australian Financial Services Licence Number March 2004 Citigroup Property Securities Trust Product Disclosure Statement

3 Important Information This Product Disclosure Statement for the Citigroup Property Securities Trust ARSN has been prepared by Citigroup Asset Management Australia Limited (ABN ) (AFSL No ) as responsible entity of the Trust. Throughout this Product Disclosure Statement: Citigroup Asset Management means Citigroup Asset Management Australia Limited (ABN ) (AFSL No ); PDS refers to this Product Disclosure Statement; the Trust refers to the Citigroup Property Securities Trust ARSN ; Responsible Entity refers to Citigroup Asset Management; IDPS refers to investor directed portfolio service or a like scheme; Corporations Act refers to the Corporations Act 2001 and Regulations; the Constitution refers to the Constitution of the Citigroup Property Securities Trust; GST refers to goods & services tax and RITC refers to reduced input tax credits; NAV refers to net asset value; and you or your refers to you as the reader or potential investor. This PDS is prepared for your information. It is not intended to be a recommendation by us, any associate of ours or any other person to invest in the Trust. This PDS does not take into account the investment objectives, financial situation or needs of any particular investor. You should consider, with or without the advice of an investment adviser, whether the Trust is appropriate for you in view of your financial position, investment objectives and needs. Only information and representations contained in this PDS may be relied upon as having been authorised by Citigroup Asset Management. No person is authorised to give any information or make any representation in connection with the offer that is not contained in this PDS. Units in the Trust are issued by Citigroup Asset Management under the terms and conditions described in this PDS. You should read this PDS because you will be bound by it if you become a Trust unitholder. The offer made in this PDS is available only to persons receiving this PDS in Australia. Unless otherwise stated, all fees quoted in this PDS are inclusive of GST. The current rate of GST is 10%. If this rate changes, Citigroup Asset Management may change fees accordingly. Citigroup Asset Management is a licensed investment manager and a separate business within the Citigroup Inc. group of companies (which include Citibank Pty Ltd). Investments in the Trust are not investments, deposits or other liabilities of, and are not guaranteed by Citigroup Asset Management (or Citibank Pty Ltd or any member of the Citigroup Inc. group of companies). Investments are subject to risks, including possible delays in payment of withdrawal proceeds, and loss of income and capital invested. Information concerning the Trust is subject to change from time to time. For further information at any time, please contact Citigroup Asset Management using the details below. A paper copy of any updated information will be provided to you without charge on request. If the change is considered to be materially adverse a new or supplementary PDS will be issued. About Citigroup Asset Management Citigroup Asset Management is the Australian asset management business of Citigroup Inc., one of the world s pre-eminent financial services organisations. Citigroup Asset Management provides investment management services to Australian clients and managed assets in excess of A$7.2 billion at 31 December Citigroup Asset Management undertakes in-house investment research and has access to Global Research Centres located in New York, Stamford, London, Melbourne, Singapore and Tokyo. Citigroup Inc. is a diversified global financial services holding company whose businesses provide a broad range of financial services. Citigroup Inc. is listed on the New York Stock Exchange and Pacific Exchange. Citigroup Asset Management has over 20 years experience in the Australian asset management industry and strives to provide investment management excellence, responsive client service and timely client communications. Citigroup Asset Management s investment style is research based, broadly diversified and incorporates the active management of risk. How to Contact Citigroup Asset Management Melbourne Level 15, 120 Collins Street, Melbourne VIC 3000 GPO Box 507H, Melbourne VIC 3001 Sydney Park Plaza, 2 Park Street, Sydney NSW 2000 GPO Box 557, Sydney NSW 2001 Client Service Telephone: (03) Freecall: Facsimile: (03)

4 1 Key Features of the Trust Feature Summary Information Inception Date January Investment Objective Benchmark Minimum Initial Investment Minimum Holding Distributions page 7 The Trust aims to earn a before fees and tax return of 1.5% p.a. in excess of the Benchmark over rolling 3-year periods. S&P/ASX 200 Property Trust Accumulation Index (a market index commonly used as a benchmark for Australian listed property trust portfolios). A$500,000. Citigroup Asset Management has the discretion to accept lower amounts. This discretion will only be exercised if the client is a wholesale client (as defined in the Corporations Act). Currently A$500,000. However, where Citigroup Asset Management has exercised its discretion to accept a lower initial investment, that lower amount will apply. Net income (if any) will be distributed after the Distribution Calculation Date (31 December and 30 June each financial year). Fees & Expenses Management Fee 0.682% p.a. (GST inclusive) page % p.a. (effective cost after RITC) Custodian Fee Responsible Entity Fee Entry/Exit Fee Buy/Sell Spread Up to 0.055% p.a. (GST inclusive) Up to 0.051% p.a. (effective cost after RITC) 0.022% p.a. (GST inclusive) 0.021% p.a. (effective cost after RITC) Nil Entry Prices reflect a spread of +0.40% and Exit Prices reflect a spread of -0.40% Management Expense Ratio 0.714% p.a. at 30 June 2003 Class X unitholders should consult their own professional advisers to ascertain their eligibility for RITC on GST paid on the Management Fee. Unit Prices page 7 Custodian page 6 & 10 Complaints page 10 Eligible Investors page 13 Entry Prices and Exit Prices, based on the Trust s NAV, will generally be determined each business day. State Street Australia Limited. An established formal procedure exists for dealing with enquiries and/or complaints. The initial approach should be to call Citigroup Asset Management on Described in Section 1 of the Application for Units.

5 2 Contents Important Information inside front cover About Citigroup Asset Management inside front cover Key Features of the Trust The Citigroup Property Securities Trust Investing via Investor Directed Portfolio Service Investment Process & Style Investment Guidelines Investment Performance Derivatives Risk Features Fees & Expenses Management Fee Responsible Entity Fee Custodian Fee Buy/Sell Spread Management Expense Ratio Other Fee & Expense Information Classes of Units Unit Price Calculation Distributions Cooling Off Period Reporting to Unitholders Other Rights & Obligations The Responsible Entity Constitution and Unit Trust Relationship Amendment of Constitution Meetings of Unitholders Termination of the Trust Investments Application for and Redemption of Units Payment of Redemptions Liquidity Responsible Entity s Indemnity and Unitholders Liability Compliance Committee Compliance Plan Custodian Related Party Dealings Complaints How to Contact Citigroup Asset Management Tax Privacy How to Apply Citigroup Property Securities Trust Application for Units Glossary of Terms inside back cover

6 3 The Citigroup Property Securities Trust The Trust offers eligible investors (as described in Section 1 of the Application for Units for this PDS): actively managed exposure to listed property trusts, property related listed equities and other similar securities (including units in trusts); and diversification benefits that would be difficult to achieve through direct investment. Diversification involves spreading and lowering risk by investing in a range of underlying listed property trusts and property related listed equities. The Trust s overall investment policy, direction and strategy are the responsibility of Citigroup Asset Management. The composition of the Trust s underlying investments is based primarily on Citigroup Asset Management s in-house research. The Trust s investment time frame is medium to long term (three to five year periods). Investing via Investor Directed Portfolio Service Investors and potential investors accessing the Trust indirectly through an IDPS or master trust may use this PDS for that purpose. These indirect investors do not acquire the rights of a unitholder under the Trust. Rather, the operator of that service acquires the rights of a unitholder on behalf of indirect investors. Therefore, indirect investors do not receive income or reports directly from Citigroup Asset Management and do not have a right to attend meetings of unitholders. Indirect investors should not complete the Application for Units form and should seek their own tax advice. The rights of indirect investors are set out in the disclosure document for the IDPS or master trust. Investment Process & Style Citigroup Asset Management s listed property trust investment process is summarised as follows: The investment process seeks to add value through active security selection and relies largely upon Citigroup Asset Management s in-house research into listed property trusts. This requires a substantial investment and reliance upon in-house research. Citigroup Asset Management builds detailed financial models for every security in the investment universe. The valuation is based on a long-term cash flow analysis. Securities are ranked by their expected return and the Trust is tilted towards those securities that are assessed as offering the most attractive risk/return characteristics. Factors that Citigroup Asset Management considers important when analysing property securities include asset quality, lease structure, financing structure, development opportunities and risks; and most importantly, the quality, style and depth of the management team. The Trust aims to hold around 20 securities for diversification purposes. The Trust does not take into account labour standards or environmental, social or ethical considerations in the selection, retention or realisation of investments. Decisions to invest in, retain or realise investments are based on the stated investment process. Investment Guidelines The Trust aims to hold investments so that, at time of purchasing securities: exposure to individual securities is within ±5% of Benchmark weight; and exposure to underlying property trust sub sectors (such as diversified property, retail property, commercial property, etc) is within ±5% of each property trust sub sector s Benchmark weight. The maximum cash holding of the Trust is 10% of market value. The intention is for the Trust to be fully invested at all times with cash being held for liquidity purposes only. The Trust does not intend to borrow. Citigroup Asset Management may change the Trust s investment guidelines. Unitholders will be provided with written notice of any change(s). Investment Performance Chart One Performance to 31 December 2003

7 4 Past Trust performance is not indicative of future performance. There is no guarantee that an investment in the Trust will increase in value over time or that any previous investment performance will be repeated. Performance is calculated by accumulating changes in month end NAV unit prices, assuming the reinvestment of all distributions. Investment performance calculations for each year have been prepared on a consistent basis. Citigroup Asset Management fully complies with the Country version (applicable to Australia) of the Global Investment Performance Standards developed by the Association for Investment Management and Research and endorsed in the Investment and Financial Services Association Limited Guidance Note No The Trust is subject to fluctuations as market values alter. No party named in this PDS nor any of their related companies guarantee or make any representation as to the performance or success of the rate of income or capital return from or recovery of money invested in the Trust. If you are an investor through an IDPS or master trust you should be aware that the investment performance figures in Chart One do not take into account all fees and charges of the IDPS or master trust. The Trust s size as at the date of issue of this PDS was $412.1 million. Information concerning the performance and size of the Trust is subject to change from time to time. To receive more recent information on the Trust than is provided in this PDS, please call Citigroup Asset Management on A paper copy of any updated information will be provided to you without charge on request. If the change is considered to be materially adverse a new or supplementary PDS will be issued. Derivatives Derivatives may be used to implement investment decisions. Derivatives are securities whose return is linked or derived from changes in the value of an underlying security. Derivatives are generally more timely and cost effective to buy and sell than underlying securities. Citigroup Asset Management s use of derivatives is limited to those where the associated risks can be understood, measured and adequately controlled. The Trust may use derivatives to: facilitate the implementation of stock switches; enhance returns through identified price inefficiencies between securities; manage risk; and invest cashflows. All derivative positions are fully backed by cash or cash equivalents. Although there is no formal limit to Citigroup Asset Management s use of derivatives, they will only be used for the purposes described. Derivatives are not used for speculation, where speculation is defined as derivatives activity that would result in the net exposure being outside the Investment Guidelines. Risk Features Citigroup Asset Management does not guarantee any profit or recovery of capital from an investment in the Trust. The value of investments in the Trust will fluctuate with the changing values of the Trust s assets. It is important that you understand and accept the risks of investment before you invest. A financial adviser can explain to you the risks and provide investment advice to suit your investment objectives. There is the risk that an investor s investment objective may not be met by their choice of investments. All investments involve risks that may arise out of domestic or international economic or political factors. Different asset classes have inherent different risk characteristics. Over the longer term: cash investments are expected to produce lower returns and lower volatility of returns (relative to bonds and shares/property trusts); bond investments are expected to produce lower returns and lower volatility of returns (relative to shares/property trusts); and share/property trust investments are expected to produce higher returns and higher volatility of returns (relative to bonds and cash). These are indicative classifications only. For example, some individual bonds (like high yield corporate bonds) might have higher risk return profiles than some relatively low risk shares. For diversified investments, risk is determined by the risk of each of the underlying asset classes that make up the investment and the correlations between the asset classes. Diversified portfolios typically have lower volatility of returns than the average of the volatility of returns of each of the individual asset classes that make up the diversified portfolios.

8 5 The following are some of the risk factors identified as being relevant to investment in the Trust: the risk of adverse movements in markets (including asset prices, derivatives, volatility or other market variables). Such risk is inherent in investing; the specific risks of investing in property securities, including the quality of the property trusts management, the valuation of underlying properties, tenancy levels, rental rates, borrowing levels and net income derived from underlying properties; the generic risk associated with implementing investment decisions using derivatives (including market risk, liquidity risk, counterparty risk and operations risk); the generic risk associated with implementing investment decisions using derivatives (including market risk, liquidity risk, counterparty risk and operations risk); the risk that inflation erodes the real value of the Trust s assets; the risk that a counterparty either cannot or will not meet its obligations; liquidity risk (liquidity being the characteristic of a market that enables investors to buy and sell investments); the risk that deficiencies in the effectiveness or accuracy of information systems or internal controls will result in a material loss. Such material loss might be caused by human error, system failures, inadequate procedures or lack of internal management controls; and the risk that Citigroup Asset Management will not achieve the Trust s investment objective and may underperform against the benchmark. Techniques used by Citigroup Asset Management to manage some of the identified risks include: ensuring a broad diversification of the Trust s assets; active management of the Trust s assets; utilising an extensive network of research analysts to assess the Trust s assets and to assess the creditworthiness of counterparties; backing derivatives with cash or cash equivalents; monitoring factors in Australian and international economies which may impact the Trust; and maintaining disciplined internal operational procedures and controls. Fees & Expenses Table One (you should read this Table in conjunction with the information below) Management Fee (GST inclusive) Effective cost after RITC (1) 0.682% p.a. payable to Citigroup Asset Management 0.636% p.a. Custodian Fee (GST inclusive) 0.055% p.a. on the first $2,000 million and 0.050% p.a. on the balance, payable to State Street Australia Limited (2) Effective cost after RITC (1) 0.051% p.a. on the first $2,000 million and 0.046% p.a. on the balance (2) Responsible Entity Fee (GST inclusive) 0.022% p.a. payable to Citigroup Asset Management Effective cost after RITC (1) 0.021% p.a. Entry/Exit Fee Buy/Sell spread Nil Entry Prices reflect a spread of +0.40% and Exit Prices reflect a spread of -0.40%. Management Expense Ratio 0.714% p.a. at 30 June % p.a. at 30 June % p.a. at 30 June 2001 Unit Prices Entry Prices and Exit Prices, based on the Trust s NAV, will generally be determined each business day. Please refer to Unit Price Calculation on page 7 of this PDS. Where fees & expenses are quoted to (3) decimal places they have been rounded to (3) decimal places. Applicants investing through an IDPS should note that the fees outlined in Table One are in addition to any other fees imposed by their IDPS operator under its IDPS disclosure document. (1) The Trust is currently entitled to a Reduced Input Tax Credit of 75% of the GST paid. (2) Based on the total of all domestic assets managed by Citigroup Asset Management where State Street Australia Limited acts as Custodian. The Custodian Fee is charged on the Gross Asset Value of Trust assets held (less holdings in other trusts managed by Citigroup Asset Management). Class X unitholders should consult their own professional advisers to ascertain their eligibility for RITC on GST paid on the Management Fee.

9 6 Management Fee The method of calculation and payment of the Management Fee is determined according to whether you are a Class A unitholder or Class X unitholder (see below under Classes of Units for more information). At its sole discretion and subject to any requirements under the law, Citigroup Asset Management may negotiate with investors who are considered wholesale (as defined in the Corporations Act) an alternative Management Fee arrangement to the one identified in Table One. Responsible Entity Fee The Responsible Entity Fee, based on the NAV of the Trust assets held (less holdings in other trusts managed by Citigroup Asset Management), is accrued daily and paid from the Trust to Citigroup Asset Management quarterly in arrears. The Constitution allows Citigroup Asset Management to charge a Responsible Entity Fee of up to 0.08% p.a. (exclusive of GST). Citigroup Asset Management may increase the Responsible Entity Fee charged up to this maximum. However, Citigroup Asset Management will provide unitholders with thirty days written notice of any proposed increase before the change takes effect. Custodian Fee A Custodian Fee is calculated based on the total of all domestic assets managed by Citigroup Asset Management where State Street Australia Limited acts as Custodian and is payable from the Trust. The Custodian Fee is charged on the Gross Asset Value of Trust assets held (less holdings in other trusts managed by Citigroup Asset Management). Buy/Sell Spread The Buy/Sell Spread represents an allowance per unit for the estimated costs of buying and selling investments of the Trust. Entry Prices reflect a spread of +0.40% relative to NAV per unit and Exit Prices reflect a spread of -0.40% relative to the NAV per unit. The Buy/Sell Spread is not retained by Citigroup Asset Management. Management Expense Ratio The Management Expense Ratio measures the total fees and expenses charged annually to the Trust excluding transaction costs. It is calculated as the total of the Management, Responsible Entity and Custodian fees and other expenses divided by the average Trust size. The ratio is calculated in accordance with the Investment and Financial Services Association Limited Standard No (Management Expense Ratio). Information concerning the Management Expense Ratio of the Trust is subject to change from time to time. To receive more recent information on the Trust than is provided in this PDS, please call Citigroup Asset Management on A paper copy of any updated information will be provided to you without charge on request. If the change is considered to be materially adverse a new or supplementary PDS will be issued. Other Fee & Expense Information In addition to the fees already referred to, certain other charges are borne by the Trust, including (without limitation) transaction costs, taxes, financial institution fees, costs of convening and holding unitholders meetings, costs associated with amending the Constitution, costs of engaging auditors and other advisers, costs connected with promoting the Trust, costs connected with the compliance committee (including any fees paid to, insurance premiums in respect of or fees or expenses incurred at the request of compliance committee members), costs connected with the compliance plan including auditing the plan, and the Trust s administrative costs generally. Citigroup Asset Management may pay fees to the operators of IDPS and master trusts that offer the Trust on their investment menus and may also provide marketing and product support to these operators. These payments are paid from Citigroup Asset Management s own funds and are not an additional charge to the investor. Classes of Units The Trust currently offers two classes of units, Class A units and Class X units. Citigroup Asset Management may offer new classes of units with such rights and restrictions as Citigroup Asset Management determines and may cease to offer units of any class. Eligible investors must nominate which class of units they intend to hold. IDPS and master trust operators typically invest in Class A units. In the absence of any nomination of the class of units an investor wishes to hold, new investors in the Trust will be issued with Class A units. The rights of each unitholder differs principally as follows: Class A units reflect the deduction of the Management Fee in the unit price. The Management Fee is based on the NAV of the assets held on behalf of unitholders in Class A at the rate shown in Table One. Where the assets held include holdings in other trusts managed by Citigroup Asset

10 7 Management, those assets are not subject to a management fee by the other trusts. The Management Fee is accrued daily and deducted quarterly in arrears from the Trust assets referable to unitholders in Class A and is reflected in the unit price. Class X units do not reflect the deduction of the Management Fee in the unit price. The Management Fee is based on the NAV of the assets held on behalf of unitholders in Class X at the rate shown in Table One, or as otherwise negotiated. Where the assets held include holdings in other trusts managed by Citigroup Asset Management, those assets are not subject to a management fee by the other trusts. The typical arrangement for Class X units is to have the Management Fee charged by Citigroup Asset Management directly to the unitholder as at 31 December and 30 June each financial year by having the Management Fee deducted from the twiceyearly Trust distributions the unitholder receives. If the Management Fee is greater than the unitholder s distribution, Citigroup Asset Management will invoice the unitholder for the difference. If a unitholder redeems some or all of its units in the Trust when a Management Fee is outstanding (whether the fee has become payable or not), the Management Fee may be deducted from the unitholder s redemption proceeds. Again, if the amount of the Management Fee outstanding is greater than the amount of the redemption proceeds, Citigroup Asset Management will invoice the unitholder for the difference. Invoiced amounts will be payable within 30 days. Citigroup Asset Management reserves the right to compulsorily redeem units to meet any outstanding fees. Class X unitholders should contact their financial advisers to ascertain their eligibility for RITC on GST paid on Management Fees. Unit Price Calculation The NAV of the Trust will generally be determined every business day. The applicable Entry Price and Exit Price will be determined based on the underlying NAV of the Trust and the number of units on issue. Entry Prices are rounded up and Exit Prices are rounded down. See also Application for and Redemption of Units on page 8 of this PDS. Distributions The Trust intends to distribute net income to unitholders twice yearly. There is no guarantee that distributions will always be available. Net income distributed may include: realised gains on sale of investments, dividends; interest, and other trust distributions. Net income available for distribution may be affected by: realised losses on sale of investments, and expenses charged to the Trust. Net income will be distributed within 60 days after the Distribution Calculation Date (generally 31 December and 30 June) or if the audit for the financial period is not completed, as soon as possible after completion of the audit. The net income is determined by reference to the taxable income of the Trust. The distribution will be made to unitholders holding units at the end of each distribution period in proportion to the number of units held by them at that time. Unitholders can choose to reinvest their distributions instead of receiving them as cash by indicating this on the Application for Units. If Citigroup Asset Management ceases to offer a particular class of units, the facility to reinvest distributions in that class of units may be withdrawn. Cooling Off Period A cooling off period is not applicable for this Trust as no direct offer is made to retail investors (as provided by the Corporations Act). If you are investing indirectly through an IDPS or master trust, you should refer to the relevant disclosure document for any rights that you may have in this regard. Reporting to Unitholders Unit Certificates are not issued. After the end of every quarter, unitholders currently receive a report that includes a summary of the Trust s investment performance, a market commentary, the units issued and/or redeemed by the unitholder over the quarter and the balance of units held by the unitholder at the end of the quarter. After the end of every financial year, unitholders will be sent the audited accounts of the Trust and other information required under the Corporations Act. Investors accessing the Trust through an IDPS or master trust do not receive these reports and should refer to the relevant disclosure document for any rights you may have to obtain these reports.

11 8 Other Rights & Obligations The Responsible Entity The Constitution, the Corporations Act and general legal principles govern Citigroup Asset Management s responsibilities as the Responsible Entity of the Trust. Its main duties include: to act honestly; to exercise the degree of care and diligence that a reasonable person would exercise if they were in Citigroup Asset Management s position; to act in the best interests of unitholders and if there is a conflict between the unitholders interests and its own interests, to give priority to the unitholders interests; and to treat unitholders of the same class equally and unitholders of different classes fairly. Citigroup Asset Management is also responsible for preparing the Trust s accounts and sending unitholders reports and information required by the Corporations Act and the Constitution. There is no separate trustee. Constitution and Unit Trust Relationship The Constitution, the Corporations Act, the law relating to trusts and this PDS govern the Trust s operation and relationship with unitholders. Direct investors are required to complete the Application for Units, under which they agree to be bound by the terms of the Constitution. The terms and conditions of the Constitution are binding on Citigroup Asset Management and on unitholders. A copy of the Constitution is available by calling Citigroup Asset Management on Subject to the Constitution and any relevant law, each unit confers an equal beneficial interest in the Trust. However, unitholders do not have any entitlement to any particular part of the Trust or the assets of the Trust. Investors accessing the Trust through an IDPS or master trust do not directly acquire the rights of a unitholder and are referred to the relevant IDPS or master trust disclosure document for their rights in this regard. Amendment of Constitution Citigroup Asset Management may amend the Constitution in circumstances permitted by the Corporations Act. The Corporations Act requires that unitholders approve an amendment of the Constitution at a meeting of unitholders if the proposed amendment will adversely affect their rights. Meetings of Unitholders Unitholders are entitled to attend meetings that may be convened at any time by Citigroup Asset Management in accordance with the provisions contained in the Corporations Act. A meeting must be arranged if requested by at least 100 unitholders or 5% of all unitholders of the Trust. If a meeting is to be held a notice of meeting will be sent to all unitholders. Termination of the Trust The Trust will terminate in accordance with the provisions of the Constitution. This includes termination by Citigroup Asset Management with prior notice. On termination, the proceeds of the net assets of the Trust will be distributed to unitholders according to the value of their units. Investments Citigroup Asset Management has broad powers under the Constitution to invest in any manner it thinks fit. However, it can only exercise these powers in accordance with its duties as Responsible Entity to meet the Trust s Investment Objective as stated in this PDS. Although the Constitution permits Citigroup Asset Management to borrow, it does not intend to do so. Application for and Redemption of Units Applications that Citigroup Asset Management considers to be received before 2:00pm EST will generally receive the Entry Price applicable for that business day. Applications that Citigroup Asset Management considers to be received after 2:00pm EST will generally receive the Entry Price applicable on the next business day. For further details, please refer to the How to Apply section on page 12 of this PDS. Redemptions that Citigroup Asset Management considers to be received before 2:00pm EST will generally receive the Exit Price applicable for that business day. Redemptions that Citigroup Asset Management considers to be received after 2:00pm EST will generally receive the Exit Price applicable on the next business day. If Citigroup Asset Management believes that the use of an applicable Entry Price or Exit Price would materially disadvantage unitholders, the applicable Entry Price or Exit Price will be the Entry or Exit Price calculated on the next business day or as at such other time Citigroup Asset Management determines. This may occur, for example, in order to materially eliminate the opportunity of executing transactions at an Entry Price or Exit Price that does not reflect known market movements.

12 9 Citigroup Asset Management may postpone calculating Entry and Exit Prices if it is desirable for the protection of the Trust or in the interests of unitholders to do so. While Entry and Exit Prices reflect the value of accrued income, net income is only distributed in respect of units held at the end of a distribution period. It is distributed in proportion to the number of units held at the end of the distribution period, irrespective of the period the units have been on issue. Unitholders who redeem units during a distribution period will not receive a distribution of income in respect of those units for that distribution period. Payment of Redemptions Proceeds from the redemption of units are normally payable within five business days. The Constitution allows Citigroup Asset Management up to 60 business days to pay redemption proceeds in normal circumstances (which may be extended in unusual circumstances for example, see the following Liquidity section). Redemptions are met out of the Trust s assets and Citigroup Asset Management is not obliged to pay any part of the Exit Price out of its own funds. Where redemption requests are not for a specific number of units, whole units (and fractional units rounded to three decimal places or such other number of decimal places as Citigroup Asset Management determines) will be redeemed. If a unitholder requests the repurchase of more than 5% of the units on issue (or class of units on issue) in the Trust on a business day, Citigroup Asset Management may treat the request as five separate requests, each for 1/5 of the original request, received on five successive business days commencing on the business day the original request was received. If unitholders request the repurchase of more than 10% of the number of units on issue (or class of units on issue) in the Trust over five consecutive business days, Citigroup Asset Management may pay the redemption proceeds on the excess over the 10% within 45 business days of the original requests. Citigroup Asset Management has the right to decline requests to register a transfer of units. Liquidity The Corporations Act regulates withdrawals from managed investment schemes (including the Trust) and sets out requirements that will apply to withdrawals from the Trust if it is not liquid. A scheme is not liquid if liquid assets do not account for at least 80% of the value of scheme property. Liquid assets are assets that Citigroup Asset Management reasonably expects can be redeemed for market value within the period specified in the Constitution to satisfy redemption requests. Citigroup Asset Management does not anticipate that the Trust will be illiquid for these purposes. However, if the Trust is not liquid, Citigroup Asset Management may offer unitholders the opportunity to withdraw from the Trust, effectively on a periodic basis. Offer periods must be at least 21 days and cannot overlap. A withdrawal offer must specify the assets available to meet any resulting withdrawal requests. Withdrawal requests must be satisfied within 21 days of the offer period closing. If the value of withdrawal requests exceeds the amount available to meet requests, the requests are to be satisfied proportionately. Responsible Entity s Indemnity and Unitholders Liability Citigroup Asset Management and the Citigroup Asset Management compliance committee are entitled to be indemnified out of the Trust for liabilities incurred in the proper performance of its duties as the Responsible Entity. The Constitution contains provisions designed to limit the liability of unitholders so that they are not, by reason only of being unitholders, under any personal obligation to indemnify Citigroup Asset Management as the Responsible Entity, or any creditor of the Responsible Entity in the event of there being any deficiency of assets of the Trust. The law, however, in relation to liability of unitholders is complex and to date, limitations on the liability of unitholders have not been tested by Australian courts. Therefore, it is not possible for Citigroup Asset Management to give an absolute assurance that liability as an investor will be limited in all circumstances. The Constitution also provides that each unitholder indemnifies Citigroup Asset Management for certain taxation liabilities and charges relating to that unitholder. Compliance Committee Citigroup Asset Management has established a compliance committee, as required by the Corporations Act. The function of the compliance committee is to monitor the extent to which Citigroup Asset Management complies with the Trust s compliance plan. The compliance committee must report breaches of the Corporations Act and certain breaches of the Constitution to Citigroup Asset Management and in some circumstances to the Australian Securities and Investments Commission. The compliance committee must meet at least half yearly, and usually meets quarterly.

13 10 Complaints Compliance Plan As required by the Corporations Act, Citigroup Asset Management has prepared and lodged with the Australian Securities and Investments Commission a compliance plan for the Trust, which describes the measures Citigroup Asset Management is to apply in operating the Trust that are designed to ensure compliance with the Corporations Act and the Constitution. The compliance plan must be audited annually. Custodian As Custodian of the Trust, State Street Australia Limited s responsibilities include holding the assets of the Trust and settlement of transactions. All assets of the Trust will be held in the name of the Custodian (or a sub-custodian appointed by the Custodian). The role of the Custodian is restricted to holding and administering the assets at Citigroup Asset Management s direction. The Custodian does not oversee Citigroup Asset Management s management of the Trust and is not responsible for protecting the rights and interests of unitholders. Citigroup Asset Management can terminate the Custodian s appointment in the circumstances specified under the custody agreement with the Custodian. Related Party Dealings Citigroup Asset Management may transact business with related parties where the Corporations Act permits. Broadly, the transaction must be on arms length terms, or be approved by unitholders. The related party may be acting either as agent or principal. Citigroup Asset Management may delegate its functions to related parties (or other third parties). Citigroup Asset Management currently deals with Citigroup Global Markets Australia Pty Ltd (also a business of Citigroup Inc.) in the purchase and sale of a range of investments. Citigroup Asset Management may invest in other trusts managed by it however, this will not result in additional fees payable to Citigroup Asset Management from the Trust. If you wish to make a complaint you can contact Citigroup Asset Management on If your complaint is not satisfactorily resolved, please forward your complaint in writing. Citigroup Asset Management will acknowledge the complaint promptly, investigate the complaint and decide on appropriate action, where required. Citigroup Asset Management will respond to you within 14 business days, advising you of the outcome of investigations and any avenues of appeal to an independent complaint resolution service. Citigroup Asset Management is a member of the Financial Industry Complaints Service, an independent body set up specifically to resolve complaints from investors. If you are not satisfied by our response to your complaint, you may contact the Financial Industry Complaints Service on How to Contact Citigroup Asset Management Melbourne Level 15, 120 Collins Street Melbourne VIC 3000 GPO Box 507H Melbourne VIC 3001 Sydney Park Plaza, 2 Park Street Sydney NSW 2000 GPO Box 557 Sydney NSW 2001 Client Service Telephone: (03) Freecall: Facsimile: (03)

14 11 Tax Privacy The taxation implications of investing and dealing with investments are complex and are invariably particular to each unitholder s circumstances. Given the complexity of taxation law, Citigroup Asset Management strongly recommends you seek professional tax advice and nothing contained in this PDS should be construed as the giving of or be relied upon as tax advice and nothing contained in this PDS should be construed as the giving of or be relied upon as tax advice. The Trust will issue a distribution statement following the Trust s year-end at 30 June, detailing the distribution paid (or reinvested) and any relevant tax information to assist unitholders in preparing their tax return. Generally, all taxable income of the Trust is distributed to unitholders. The unitholders share of the taxable income should be included in their assessable income in the year they become entitled to the distribution. Unitholders may be able to benefit from imputation credits on franked dividends and tax deferred receipts. The Trust s distribution may include net capital gains. When a unitholder redeems units from the Trust they may need to consider the capital gains tax implications. If a unitholder is not an Australian resident taxpayer, withholding tax may be deducted from the Australian sourced component of the unitholder s taxable income. Unitholders are not subject to GST on applications or redemptions from the Trust. The Trust will incur GST in respect of various supplies that it acquires, however a reduced input tax credit is expected to be available to the Trust on certain supplies. Citigroup Asset Management will only collect personal information necessary for the products or services you request. The information collected from you on the Application for Units form (and information acquired from you or other people during the course of managing the Trust) is required for: processing applications and redemptions, and servicing customer accounts; responding to customer inquiries about applications, accounts or services; understanding each customer s needs and offering products to meet those needs; allowing third party service providers to assist Citigroup Asset Management in business operations and service provisions; and meeting legal and regulatory requirements. We can use this information to send you information about other investment products if you so indicate in Section 4 of the Application for Units. If at any time you are receiving information about products and you do not wish to receive further correspondence, please let Citigroup Asset Management know. We store information about you in databases that may be maintained outside Australia by other Citigroup Inc. companies. On request, Citigroup Asset Management will provide you with a copy of any personal information held about you. Citigroup Asset Management will inform you beforehand if there is any charge associated with providing this information to you. If you do not provide personal information requested, Citigroup Asset Management may not be able to provide a service, or may be required by law to take particular actions such as deducting taxation at the top marginal rate. By signing the Application for Units form, you consent to Citigroup Asset Management using your information in the manner described above. Further information on Citigroup Asset Management s privacy practices is contained in a privacy policy. The privacy policy is available at: If you have any queries please contact Citigroup Asset Management.