CitiFirst Self-Funding Instalment MINI for Betashares QLTY ETF Announces AUD 1.02875663 Unfranked Final Distribution

Distribution Details and Important Dates for QLTY CitiFirst Self-Funding Instalment MINI

Citigroup Global Markets Australia Pty Limited, as issuer, has officially announced a final distribution of AUD 1.02875663 per unit for the QLTY CitiFirst Self-Funding Instalment MINI. The distribution is unfranked, indicating no franking credits will be attached for Australian taxation. This announcement was signed by Paul Kedwell, Warrants and Structured Products Manager, and released on 1 July 2026.

The entitlement record date is 2 July 2026, with the product trading ex-distribution from 1 July 2026. These dates align precisely with those of the underlying Betashares Global Quality Leaders ETF (ASX:QLTY), ensuring the structured product reflects the same economic events as its reference ETF. This alignment is standard for self-funding instalment products and maintains consistency between the warrant and the underlying asset.

Impact of the AUD 1.02875663 Distribution on QLTSO1 and QLTSO2 Loan Balances

Self-funding instalment products apply distributions from the underlying asset to reduce the loan balance rather than paying cash directly to holders, as outlined in section 1.1 of the Product Disclosure Statement (PDS). This approach enables investors to gradually repay their loan using income generated by the underlying asset without additional cash contributions.

Accordingly, the full AUD 1.02875663 distribution has been uniformly applied to both QLTSO1 and QLTSO2 warrants to reduce their outstanding loan amounts. This mechanism helps holders build Equity in the underlying asset over the instalment term by reinvesting income rather than receiving cash distributions.

Revised Loan Balance for QLTSO1 After Distribution

Following the distribution, QLTSO1’s loan balance has decreased from $14.2329 to $13.2075. This approximate $1.0254 reduction per unit is slightly less than the distribution amount due to typical rounding conventions used in loan adjustments for structured products.

Holders should note this updated loan balance as it directly influences their equity position—the difference between the Market Value of the QLTY ETF and the outstanding loan. A lower loan balance increases equity exposure, all else equal. Investors should update their records to reflect the new loan balance effective 2 July 2026.

Adjusted Loan Balance for QLTSO2 and Implications for Investors

Similarly, QLTSO2’s loan balance has been reduced from $11.8162 to $10.7902 after applying the distribution. This reduction aligns with the declared distribution amount, subject to rounding. The lower loan balance compared to QLTSO1 suggests these warrant series represent different instalment tranches with varying embedded Leverage levels.

QLTSO2 holders now have a reduced Debt obligation of $10.7902 per unit against the market value of the QLTY ETF. This loan decrease enhances the equity portion of their position. Investors should consult their product statements and the latest PDS to understand how this change affects risk parameters like stop-loss levels.

Synchronization with Betashares Global Quality Leaders ETF Distribution Schedule

The ex-distribution and record dates for the QLTY CitiFirst Self-Funding Instalment MINI coincide exactly with those of the Betashares Global Quality Leaders ETF (ASX:QLTY). This synchronization ensures the instalment product captures the same income events as the underlying ETF simultaneously. Holders of the structured product experience the economic impact of distributions through loan reductions rather than cash payments.

The Betashares Global Quality Leaders ETF (QLTY) offers exposure to a global equity portfolio selected for quality attributes such as high Return on Equity, low leverage, and stable Earnings growth. By issuing self-funding instalments over QLTY, Citigroup Global Markets Australia provides leveraged exposure while allowing ETF distributions to reduce leverage costs over time. This distribution event is a routine part of the product’s lifecycle.

Citigroup Global Markets Australia’s Role as Issuer of CitiFirst Structured Products

Citigroup Global Markets Australia Pty Limited (ABN 64 003 114 832, AFSL 240992) is the issuer of the CitiFirst product suite, including self-funding instalments, trading warrants, turbos, MINIs, and standard instalments. As an ASX Group and Cboe Australia participant, the company is responsible for declaring distributions, updating loan balances, and communicating key dates to the market and warrant holders.

Paul Kedwell, Warrants and Structured Products Manager, signed the announcement. This communication follows standard procedures for notifying the ASX Warrants desk of distribution events affecting listed warrants. The update is a routine administrative notice and does not alter the product’s commercial terms or risk profile beyond the loan reduction described.

Tax Implications of the Unfranked Distribution for Australian Investors

The declared AUD 1.02875663 distribution is unfranked, meaning no franking credits are attached and investors cannot claim a tax offset for company tax paid. However, since the income reduces the loan balance rather than being received as cash, tax implications may differ from those of a direct ETF distribution.

Investors should obtain independent tax advice regarding distributions within self-funding instalment structures, as tax treatment can be complex and depends on individual circumstances. The issuer did not provide specific tax guidance beyond noting the unfranked status. Holders are advised to review the PDS and consult qualified tax professionals to understand the impact on their 2026 tax obligations.

Secondary Market Effects on QLTSO1 and QLTSO2 Pricing Post-Loan Adjustment

With updated loan balances, secondary market pricing for QLTSO1 and QLTSO2 may adjust to reflect new instalment values. In self-funding instalments, the Market Price of the warrant is influenced by the difference between the underlying asset’s price and the outstanding loan. As loan balances decrease, the Intrinsic Value of the instalment generally rises correspondingly.

The immediate impact on warrant prices is unclear from public information, as pricing also depends on factors like Interest Rate expectations, time to expiry, Volatility of the underlying ETF, and overall market conditions. Investors should factor the updated loan balances effective 2 July 2026 into any valuation or trading decisions. The issuer did not provide guidance on expected secondary market pricing.

Guidance for Holders of QLTSO1 and QLTSO2 Going Forward

Current holders should note the revised loan balances—$13.2075 for QLTSO1 and $10.7902 for QLTSO2—and update their Portfolio Management records accordingly. No cash payment will be received; benefits arise from the reduced embedded debt. Holders uncertain about these mechanics should contact Citigroup Global Markets Australia or review the product’s PDS.

Looking ahead, future distribution announcements from the Betashares Global Quality Leaders ETF will trigger further loan reductions under the self-funding mechanism. Investors should monitor the underlying QLTY ETF’s performance and interest rate changes that may affect leverage costs. The issuer did not disclose any maturity dates or upcoming corporate actions for these warrants in this update.