Mutual Funds
NEW INVESTMENT OPPORTUNITY
WHAT IS A MUTUAL FUND?
BENEFITS OF MUTUAL FUNDS
COST OF THE INVESTMENT

If you want to capture the opportunity of one of the fastest growing segments in Russian marketplace in the realm of asset management, Citibank offers you mutual funds of our partnering fund houses, which undergo our annual due diligence inspection in accordance with our international standards. Citibank’s certified investment consultants utilizing proprietary CitiPlanner system are ready to help you make choice of the right mutual funds portfolio, suitable for your risk and return expectations with investing strategy corresponding to your needs and goals.

Being one of the leading custodians on the Russian market, Citibank also provides reliable safekeeping of your investments. You will receive combined statements reflecting all your banking and investment transactions and holdings.

Option to Top Up Your Investments though Citibank Online

Citibank offers multiple (subsequent) subscriptions to Mutual Funds via Citibank Online and CitiPhone. You can learn all the details from your personal manager.

Investment Products: Not government insured. Not a bank deposit. No bank guarantee. May lose value, including the possible loss of principal invested.

Mutual Fund shares are not bank deposits and do not constitute the obligations of AO Citibank, Citigroup Inc. or their affiliates. Past performance of any fund is not a guarantee of its future performance and the price of the mutual fund shares may go down as well as up, and all operations with the mutual fund shares, in particular, their purchase and redemption, are carried out in accordance with the current laws. Mutual fund shares are held at customers' sole risk and that AO Citibank, Citigroup Inc. and their affiliates shall not be liable for any damage or loss occurred as a result of such investments. AO Citibank may disclose any information relating to customers operations with the mutual fund shares to Citigroup, Inc., any of its affiliates and to any third parties involved by AO Citibank in order to procure or facilitate the performance of its obligations to customers under the agreements that may be executed between customers (to the extent it is required for the performance of these third parties' functions) and government authorities in cases stipulated by law. Mutual fund shares may not be held or transferred to investors who are "United Stated persons". Customers must inform AO Citibank immediately if their statuses change to "United States person" at any time.

Past performance is not a guarantee of future performance. Although the information contained herein is believed to be reliable, AO Citibank makes no representation as to the accuracy or completeness of any information contained herein or provided by AO Citibank. Citibank is not acting as your advisor. Prior to entering into any proposed transaction, you should determine without reliance upon AO Citibank, the risks and consequences of the transaction with respect to instruments underlying a proposed transaction. This document and its contents are proprietary information and products of AO Citibank and may not be reproduced in whole or in part without AO Citibank's written consent.

Foreign securities that are not publicly listed and/or not circulated in Russia, as well as foreign financial instruments that are not securities, cannot be offered to an unlimited number of investors or non-qualified investors, and can be purchased and/or sold only by qualified investors as defined by the applicable Russian law (Federal Law No. 39-FZ Of April 22, 1996 On The Securities Market).

What is a Mutual Fund?

A mutual fund is an entity that pools money from many investors - its unit holders - to invest in different securities depending on the type of fund. Investment may be in shares, debt securities (bonds), money market securities, other funds, derivatives or a combination of these. Those securities are professionally managed on behalf of the unit-holders, and each investor holds a pro-rata share of the portfolio i.e. entitled to any profits when the securities are sold, but subject to any losses in value as well.

Shares and their prices

When you make an investment in a mutual fund you purchase units or shares. The number of shares you buy depends on the amount of your investment and upon the price of a fund share (this price follows from the fund’s Net Assets Value per one share). The net assets value of the fund (NAV) is calculated on a daily basis as the value of fund’s assets may change daily, depending on current events in the markets.

Let’s assume that you decide to subscribe a fund with subscription fee payable at the time of the purchase of shares. Assume the price of one unit (share) of the fund is RUB 100, the subscription fee charged is 1% and you make a purchase worth RUB 500,000 of these units. The subscription fee of RUB 5,000 will be debited from your account; net investment amount will be RUB 495,000 and the number of shares purchased will be 4,950 (RUB 495,000 : 100). Unlike a purchase of stocks in a certain company, investment in a mutual fund usually allows you to own fractions of a share.

Types of Mutual Funds

Bond Funds

Bond funds invest mainly in bonds; i.e. debt instruments issued by companies and governments. The bond funds may pay out regular dividends and are suitable for investors who are looking for regular income. The amount of paid-out incomes will vary according to market conditions.

Bond funds differ from money market funds in two aspects: they tend to yield more profit (thanks to their longer maturity periods and variable quality of its investments) and to undergo greater fluctuations (due to price fluctuations).

The fluctuation presents a risk of losing a part of your investment which depends on the difference between the purchase (subscription) price of a share and its sale (redemption) price (naturally, the price of a share may be favorable for you as well).

Equity Funds

Equity funds invest in stocks which represent ownership shares in the companies which issue them. As a rule, these funds are more suitable for those who wish to make a long-term investment for a minimum of five years.

The main idea behind equity funds is the fact that the prices of shares can show marked decreases over a short time. However, history has proven that over a long-term period the same shares bring greater profit than bond or money market investments. This means that, on a daily basis, the value of your investment in an equity fund may rise or fall, but your long-term returns are likely to be greater than those you could expect from investments in a money market or bond fund. However, you should never forget that the greater the profit potential, the greater the risks. Equity funds usually show a higher fluctuation in the price of a share than other types of funds.

Balanced Funds

Balanced funds hold their securities in all investment categories: stocks, bonds, and short-term securities. In this way balanced funds attempt to reduce risks, as well as fluctuations, of all types of investment instruments. These funds are specific in that they can regulate the individual types of investment instruments held according to the current changes in economic and market estimates of the respective managers.

There are various types of balanced funds. Some of them are more aggressive and make their main investments in stocks. Others are more conservative and focus on the income from bonds and short-term securities.

Balanced funds can be used for the same purposes as standard growth or dividend funds because this approach permits the inclusion of the various types of securities in the fund.

Sector funds

Equity funds can be focused on securities of companies operating in the particular sector of economy (oil and gas, electricity,telecommunications, metallurgy etc.)

Index funds

Index funds - are mutual funds that construct their portfolio in accordance with the structure of certain stock index. The purpose of investment strategy of these funds - to increase customers' wealth by passive management of the fund, investing in securities in proportions, they are presented in stock indices, such as MICEX index. These funds are targeted to achieve investment results, similar to the changes of this index, which is one of the main indicators of Russian stock market.

Money market funds

Money market funds are funds that invest in the most reliable and liquid, primarily short-term instruments, including cash accounts in commercial banks and highly liquid bonds. The purpose of the investment policy of the Fund - a permanent increase in customers' wealth with a minimum level of risk and necessary level of liquidity.

Investment Products: Not government insured. Not a bank deposit. No bank guarantee. May lose value, including the possible loss of principal invested.

Mutual Fund shares are not bank deposits and do not constitute the obligations of AO Citibank, Citigroup Inc. or their affiliates. Past performance of any fund is not a guarantee of its future performance and the price of the mutual fund shares may go down as well as up, and all operations with the mutual fund shares, in particular, their purchase and redemption, are carried out in accordance with the current laws. Mutual fund shares are held at customers' sole risk and that AO Citibank, Citigroup Inc. and their affiliates shall not be liable for any damage or loss occurred as a result of such investments. AO Citibank may disclose any information relating to customers operations with the mutual fund shares to Citigroup, Inc., any of its affiliates and to any third parties involved by AO Citibank in order to procure or facilitate the performance of its obligations to customers under the agreements that may be executed between customers (to the extent it is required for the performance of these third parties' functions) and government authorities in cases stipulated by law. Mutual fund shares may not be held or transferred to investors who are "United Stated persons". Customers must inform AO Citibank immediately if their statuses change to "United States person" at any time.

Foreign securities that are not publicly listed and/or not circulated in Russia, as well as foreign financial instruments that are not securities, cannot be offered to an unlimited number of investors or non-qualified investors, and can be purchased and/or sold only by qualified investors as defined by the applicable Russian law (Federal Law No. 39-FZ Of April 22, 1996 On The Securities Market).

What are the benefits of investing through a Mutual Fund?

Professional investment management

Mutual funds hire full-time, high-level, independent investment professionals. Funds can afford to do so as they manage large pools of money. The managers have real-time access to crucial market information and are able to execute trades on the largest and most cost-effective scale.

Diversification

Mutual funds invest in a broad range of securities. In principle, this limits investment risk by reducing the effect of a possible decline in the value of any one security. Mutual fund unit-holders can benefit from diversification techniques usually available only to investors wealthy enough to buy significant positions in a wide variety of securities.

Convenience and Flexibility

You own just one security rather than many; yet enjoy the benefits of a diversified portfolio and wide range of services. Fund managers decide what securities to trade, collect interest payments and see that your dividends on portfolio securities are received and your rights exercised. It also uses the services of a high quality registrar ensuring that your convenience remains a priority.

Personal Service

One call puts you in touch with a specialist who can provide you with the material needed to enable you to make your own informative investment decisions. They will provide you with personal assistance in buying and selling your fund units, provide fund information and answer questions about your account status.

Liquidity & Flexibility

In open-ended funds, you can get your money back promptly at net asset value related prices from the mutual fund itself.

Transparency

You get regular information of the value of your investment in addition to disclosure on the specific investments made by the mutual fund.

The Citibank Advantage

Citibank's unique profiling process will help you identify your risk tolerance and your time horizon, among other things. This is the first step your certified Citibank investment consultant will take to help you identify your financial goals.

Citibank makes available mutual funds offered by Russia's and global most reputable investment managers, and most importantly they are 'need-based'. In line with your goals and financial needs, Citibank will make available the most suitable products identified to cater to your needs.

AO Citibank will be the custodian for your mutual fund shares: high quality & security.

Shareholder servicing and account management is no longer an issue for you. Citibank takes care of it for you.

A one-glance statement with your complete banking and investment relationship, your transactions and holdings.

Investment Products: Not government insured. Not a bank deposit. No bank guarantee. May lose value, including the possible loss of principal invested.

Mutual Fund shares are not bank deposits and do not constitute the obligations of AO Citibank, Citigroup Inc. or their affiliates. Past performance of any fund is not a guarantee of its future performance and the price of the mutual fund shares may go down as well as up, and all operations with the mutual fund shares, in particular, their purchase and redemption, are carried out in accordance with the current laws. Mutual fund shares are held at customers' sole risk and that AO Citibank, Citigroup Inc. and their affiliates shall not be liable for any damage or loss occurred as a result of such investments. AO Citibank may disclose any information relating to customers operations with the mutual fund shares to Citigroup, Inc., any of its affiliates and to any third parties involved by AO Citibank in order to procure or facilitate the performance of its obligations to customers under the agreements that may be executed between customers (to the extent it is required for the performance of these third parties' functions) and government authorities in cases stipulated by law. Mutual fund shares may not be held or transferred to investors who are "United Stated persons". Customers must inform AO Citibank immediately if their statuses change to "United States person" at any time.

Foreign securities that are not publicly listed and/or not circulated in Russia, as well as foreign financial instruments that are not securities, cannot be offered to an unlimited number of investors or non-qualified investors, and can be purchased and/or sold only by qualified investors as defined by the applicable Russian law (Federal Law No. 39-FZ Of April 22, 1996 On The Securities Market).

What's the cost of the investment?

When you compare for yourself the costs of investing through a mutual fund with the number of hours you would need to spend researching and analyzing individual securities, you will realize that investing your money in mutual funds is most favorable for you. Moreover, some investors have worked out that investing in a mutual fund costs less than what you would have to spend on fees charged for the purchase and sale of individual securities.

All asset management companies charge individual investors for portfolio management. These fees cover all of the fund's management-related costs and are calculated in the price of a fund share on a daily basis. (The prices of shares are net prices; i.e. they are free of any further fees and/or expenditures.) Therefore, you do not pay these fees directly.

A subscription or redemption fee is also applicable; level of these fees generally depends on the investment amount. You can get more information on fee schedules from your Investment certified relationship manager.

Investment Products: Not government insured. Not a bank deposit. No bank guarantee. May lose value, including the possible loss of principal invested.

Mutual Fund shares are not bank deposits and do not constitute the obligations of AO Citibank, Citigroup Inc. or their affiliates. Past performance of any fund is not a guarantee of its future performance and the price of the mutual fund shares may go down as well as up, and all operations with the mutual fund shares, in particular, their purchase and redemption, are carried out in accordance with the current laws. Mutual fund shares are held at customers' sole risk and that AO Citibank, Citigroup Inc. and their affiliates shall not be liable for any damage or loss occurred as a result of such investments. AO Citibank may disclose any information relating to customers operations with the mutual fund shares to Citigroup, Inc., any of its affiliates and to any third parties involved by AO Citibank in order to procure or facilitate the performance of its obligations to customers under the agreements that may be executed between customers (to the extent it is required for the performance of these third parties' functions) and government authorities in cases stipulated by law. Mutual fund shares may not be held or transferred to investors who are "United Stated persons". Customers must inform AO Citibank immediately if their statuses change to "United States person" at any time.

Foreign securities that are not publicly listed and/or not circulated in Russia, as well as foreign financial instruments that are not securities, cannot be offered to an unlimited number of investors or non-qualified investors, and can be purchased and/or sold only by qualified investors as defined by the applicable Russian law (Federal Law No. 39-FZ Of April 22, 1996 On The Securities Market).