CITIGROUP INC — Capital/Financing Update 2011

Jun 20, 2011

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Citigroup Funding Inc. June 20, 2011 Medium-Term Notes, Series D No. 2011-MTNDG0056 Registration Statements Nos. 333-172554 and 333-172554-01 Filed pursuant to Rule 433

Callable Step-Up Coupon Notes Due June 28, 2026

We have the right to redeem the notes on any interest payment date on or after June 28, 2016. From and including June 28, 2011 to but excluding June 28, 2016, the notes will bear interest during each semi-annual interest period at the per annum rate equal to 4.75%. Unless redeemed by us, from and including June 28, 2016 to but excluding June 28 , 2021, the notes will bear interest during each semi-annual interest period at the per annum rate equal to 5.00%. Unless redeemed by us, from and including June 28, 2021 to but excluding the maturity date, the notes will bear interest during each semi-annual interest period at the per annum rate equal to 7.00%. The notes are senior unsecured obligations of Citigroup Funding Inc. All payments due on the notes, including the repayment of principal, are fully and unconditionally guaranteed by Citigroup Inc., Citigroup Funding’s parent company, and are subject to the credit risk of Citigroup Inc.

SUMMARY TERMS
Issuer:	Citigroup Funding Inc.
Guarantee:	Any payments due on the notes are fully and unconditionally guaranteed by Citigroup Inc., Citigroup Funding’s parent company
Issue price:	$1,000 per note
Principal amount:	$1,000 per note
Aggregate principal
amount:	$
Pricing date:	June , 2011
Original issue date:	June 28, 2011 (three business days after the pricing date)
Maturity date:	June 28, 2026
Principal due at
maturity:	Full principal amount due at maturity
Payment at maturity:	$1,000 per note plus any accrued and unpaid interest
Interest
rate per annum:	4.75%, from and including June 28,
2011 to but excluding June 28, 2016; 5.00%, from and including June 28, 2016 to but excluding June 28, 2021, unless redeemed by us.
	7.00%, from and including June 28, 2021 to but excluding June 28, 2026, unless redeemed by us.
Interest payment
period:	Semi-annually.
Interest
payment dates:	Each June 28 and December 28,
beginning on December 28, 2011, provided that if any such day is not
a business day, that interest payment will be made on the next
succeeding business day, unless that day falls in the next calendar
month, in which case, that interest payment will be made on the first preceding business day. No adjustment will be made to any interest payment made on that succeeding or preceding
business day, as applicable.
Day-count
convention:	30/360
Redemption:	Beginning on June 28, 2016 we have the right to redeem all of these notes on any redemption date and pay to you 100% of the principal amount of the notes plus accrued and unpaid interest to but excluding the date of such redemption. If we decide to redeem the notes, we will give you notice at least 10 calendar days before the redemption date specified in the notice.
Redemption dates:	June 28, 2016 and each interest payment date thereafter.
CUSIP:	1730T0MS5
Listing:	The notes will not be listed on any securities exchange.
Business day:	New York
Underwriter:	Citigroup Global Markets Inc., an
affiliate of the issuer. See “Supplemental Information Concerning Plan of Distribution; Conflicts of Interest.”

Commissions and issue price:	Price to public	Underwriting fee (1)	Proceeds to the issuer
Per Note	$ 1,000	$ 20	$ 980
Total	$	$	$

(1) Selected dealers, including Morgan Stanley Smith Barney LLC (an affiliate of the underwriter), and their financial advisors will collectively receive from the underwriter, Citigroup Global Markets Inc., a fixed selling concession of $20 for each note they sell, while selected dealers not affiliated with Citigroup Global Markets will receive a selling concession of up to $20 for each note they sell. See “Fees and selling concessions” on page 5 and “Supplemental information regarding plan of distribution; conflicts of interest” on page 5.

YOU SHOULD READ THIS DOCUMENT TOGETHER WITH THE RELATED PRICING SUPPLEMENT, PROSPECTUS SUPPLEMENT AND PROSPECTUS, EACH OF WHICH CAN BE ACCESSED VIA THE HYPERLINKS BELOW, BEFORE YOU DECIDE TO INVEST.

Pricing Supplement, Subject to Completion, filed on June 20, 2011:

http://www.sec.gov/Archives/edgar/data/831001/000095012311060012/y91756b2e424b2.htm

Prospectus Supplement and Prospectus filed on May 12, 2011:

http://www.sec.gov/Archives/edgar/data/831001/000095012311049309/y91273b2e424b2.htm

THE NOTES ARE NOT BANK DEPOSITS OR SAVINGS ACCOUNTS, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY, NOR ARE THEY OBLIGATIONS OF, OR GUARANTEED BY, A BANK.

Citigroup Funding Inc., the issuer, and Citigroup Inc., the guarantor, have filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement (File No. 333-172554) and other documents Citigroup Funding Inc. and Citigroup Inc. have filed with the SEC for more complete information about Citigroup Funding Inc., Citigroup Inc. and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free 1-877-858-5407.

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Citigroup Funding Inc.

Callable Step-Up Coupon Notes Due June 28, 2026

Risk Factors

The following is a non-exhaustive list of certain key risk factors for investors in the notes. For further discussion of these and other risks you should read the section entitled “Risk Factors” in the accompanying pricing supplement related to this offering and “Risk Factors” in the accompanying prospectus supplement. We also urge you to consult with your investment, legal, tax, accounting and other advisers before you invest in the notes.

| • | The notes may be redeemed at our option, which limits your ability to accrue interest over
the full term of the notes. We may redeem all of the notes on any interest payment date
beginning approximately five years after the date of issuance of the notes upon not less than
ten calendar days’ notice. In the event that we redeem the notes, you will receive the
principal amount of your investment in the notes and any accrued and unpaid interest to and
including the date when the notes are redeemed. In this case, you will not have the
opportunity to continue to accrue and be paid interest to the original maturity date of the
notes. |
| --- | --- |
| • | The per annum interest rate applicable at a particular time will affect our decision to
redeem the notes. It is more likely that we will redeem the notes prior to their maturity date
during periods when the remaining interest is to accrue on the notes at a rate that is greater
than that which we would pay on a conventional fixed-rate non-callable debt security of
Citigroup Funding (guaranteed by Citigroup Inc.) of comparable maturity. If we redeem the
notes prior to their maturity, you may not be able to invest in other securities with a
similar level of risk that yield as much interest as the notes. |
| • | The step-up feature presents different investment considerations than fixed rate notes .
Unless general interest rates rise significantly, you should not expect to earn the highest
stated interest rate which is applicable only during the last five years of the term of the
notes because the notes are likely to be redeemed prior to maturity if interest rates remain
the same or fall during the term of the notes. When determining whether to invest in the
notes, you should focus on, among other things, the overall annual percentage rate of interest
to maturity or the various potential redemption dates as compared to other equivalent
investment alternatives instead of the focusing on the highest stated interest rate. |
| • | Secondary market sales of the notes may result in a loss of principal. You will be entitled
to receive at least the full principal amount of your notes, subject to the credit risk of
Citigroup Inc., only if you hold the notes to maturity. The market value of the notes may
fluctuate, and if you sell your notes in the secondary market prior to maturity, you may
receive less than your initial investment. |
| • | Potential for a lower comparative yield. From and including June 28, 2011 to but
excluding June 28, 2016, the notes will bear interest during each semi-annual interest period
at the per annum rate equal to 4.75%. Unless redeemed by us, from and including June 28, 2016
to but excluding June 28, 2021, the notes will bear interest during each semi-annual interest
period at the per annum rate equal to 5.00%. Unless redeemed by us, from and including June
28, 2021 to but excluding the maturity date, the notes will bear interest during each
semi-annual interest period at the per annum rate equal to 7.00%. As a result, the
effective yield on your notes may be less than that which would be payable on a conventional
fixed-rate, non-callable debt security of Citigroup Funding (guaranteed by Citigroup Inc.) of
comparable maturity. |
| • | The notes are subject to the credit risk of Citigroup Inc. and any actual or anticipated
changes to its credit ratings or credit spreads may adversely affect the market value of the
notes. You are subject to the credit risk of Citigroup Inc. The notes are not guaranteed by
any entity other than Citigroup Inc. If Citigroup Inc. defaults on its guarantee obligations
under the notes, your investment would be at risk and you could lose some or all of your
investment. As a result, the market value of the notes will be affected by changes in the
market’s view of Citigroup Inc.’s creditworthiness. Any decline, or anticipated decline, in
Citigroup Inc.’s credit ratings or increase, or anticipated increase, in the credit spreads
charged by the market for taking Citigroup Inc. credit risk is likely to adversely affect the
market value of the notes. |

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Citigroup Funding Inc.

Callable Step-Up Coupon Notes Due June 28, 2026

| • | The price at which you will be able to sell your notes prior to maturity will depend on a number
of factors and may be substantially less than the amount you originally invest . We believe that
the value of the notes in any secondary market will be affected by supply of and demand for the
notes and a number of other factors. Some of these factors are interrelated in complex ways. As
a result, the effect of any one factor may be offset or magnified by the effect of another
factor. |
| --- | --- |
| • | The notes will not be listed on any securities exchange and secondary trading may be
limited. The notes will not be listed on any securities exchange. Therefore, there may be
little or no secondary market for the notes. Citigroup Global Markets may, but is not
obligated to, make a market in the notes. Even if there is a secondary market, it may not
provide enough liquidity to allow you to trade or sell the notes easily. Because we do not
expect that other broker-dealers will participate significantly in the secondary market for
the notes, the price at which you may be able to trade your notes is likely to depend on the
price, if any, at which Citigroup Global Markets is willing to transact. If, at any time,
Citigroup Global Markets were not to make a market in the notes, it is likely that there would
be no secondary market for the notes. Accordingly, you should be willing to hold your notes to
maturity. |
| • | The inclusion of underwriting fees and projected profit from hedging in the original issue
price is likely to adversely affect secondary market prices . The price, if any, at which
Citigroup Global Markets is willing to purchase the notes in secondary market transactions
will likely be lower than the public offering price since the public offering price of the
notes will include, and secondary market prices are likely to exclude, underwriting fees paid
with respect to the notes, as well as the cost of hedging our obligations under the notes. The
cost of hedging includes the projected profit that our affiliates may realize in consideration
for assuming the risks inherent in managing the hedging transactions. The secondary market
prices for the notes are also likely to be reduced by the costs of unwinding the related
hedging transaction. Our affiliates may realize a profit from the expected hedging activity
even if the market value of the notes declines. In addition, any secondary market prices for
the notes may differ from values determined by pricing models used by Citigroup Global
Markets, as a result of dealer discounts, mark-ups or other transaction costs. |
| • | The calculation agent, which is an affiliate of the issuer, will make determinations with
respect to the notes. Citigroup Financial Products, which is acting as the calculation agent
for the notes, is an affiliate of ours. As calculation agent, Citigroup Financial Products
will determine the interest payable to you on each interest payment date. Any of these
determinations made by Citigroup Financial Products, in its capacity as calculation agent may
adversely affect the payments to you on any interest payment date. |
| • | Hedging and trading activity by Citigroup Funding could result in a conflict of interest .
In anticipation of the sale of the notes, we expect one or more of our affiliates to enter
into hedge transactions. This hedging activity will likely involve trading in instruments,
such as options, swaps or futures. This hedging activity may present a conflict between your
interest in the notes and the interests our affiliates have in executing, maintaining and
adjusting their hedge transactions because it could affect the price at which our affiliate
Citigroup Global Markets may be willing to purchase your notes in the secondary market. Since
hedging the obligations under the notes involves risk and may be influenced by a number of
factors, it is possible that our affiliates may profit from the hedging activity, even if the
market value of the notes declines. |

General Information
Certain U.S. federal income tax
considerations :	The following summarizes certain
U.S. federal income tax considerations
for initial U.S. investors who hold
the notes as capital assets. Investors
should refer to the accompanying
pricing supplement related to this
offering for additional information
relating to U.S. federal income tax
and consult their tax advisors in
determining the tax consequences of an
investment in the notes, including the
application of state, local and other
tax laws and the possible effects of
changes in federal or other tax
laws.

• Amounts received as coupons on the notes will be taxable to a U.S. Holder as ordinary interest income at the time that such payments are accrued or received (in accordance with such U.S. Holder’s method of accounting).

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Citigroup Funding Inc.

Callable Step-Up Coupon Notes Due June 28, 2026

| | • At maturity or upon a
taxable disposition of the notes, a
U.S. Holder generally will recognize
capital gain or loss equal to the
difference between the amount realized
on the sale, exchange or retirement
and the U.S. Holder’s tax basis in
such note. A U.S. Holder’s tax basis
in a note generally will equal the
cost of such note to such holder. |
| --- | --- |
| | • Gain
or loss recognized by a U.S. Holder
generally will be long-term capital
gain or loss if the U.S. Holder has
held the note for more than one year
at the time of disposition. |
| | In the
case of a holder of the notes that is
not a U.S. person, all payments made
with respect to the notes and any gain
realized upon the sale or other
disposition of the notes will not be
subject to U.S. income or withholding
tax, provided that such payments and
gain are not effectively connected
with the conduct of a trade or
business in the United States by such
holder and the holder complies with
applicable certification requirements
(generally, an IRS form W-8BEN).
Further, if such holder does not
comply with applicable certification
requirements, such holder may be
subject to backup withholding. |
| | Notes
beneficially owned by a non-U.S.
holder who at the time of death is
neither a resident nor a citizen of
the United States generally should not
be subject to U.S. federal estate
tax. |
| | You should refer to the
accompanying pricing supplement
related to this offering for
additional information relating to
U.S. federal income tax treatment. You
should also consult your own tax
advisors to determine tax consequences
particular to your situation. |
| Trustee: | The Bank of New York Mellon |
| Use of proceeds and hedging: | The net proceeds received from the
sale of the notes will be used for
general corporate purposes and, in
part, in connection with hedging our
obligations under the notes through
one or more of our affiliates. |
| | Hedging
activities related to the notes by one
or more of our affiliates will likely
involve trading in one or more
instruments, such as options, swaps or
futures, or by taking positions in any
other available securities or
instruments that we may wish to use in
connection with such hedging. It is
possible that our affiliates or we may
profit from our hedging activity, even
if the market value of the notes
declines. Profit or loss from this
hedging activity could affect the
price at which Citigroup Funding’s
affiliate Citigroup Global Markets may
be willing to purchase your notes in
the secondary market. For further
information on our use of proceeds and
hedging, see “Risk Factors—Citigroup
Funding’s Hedging Activity Could
Result in a Conflict of Interest” in
the accompanying prospectus supplement
and the section “Use of Proceeds and
Hedging” in the accompanying
prospectus. |
| ERISA and IRA purchase
considerations: | Employee benefit plans subject to
ERISA, entities the assets of which
are deemed to constitute the assets of
such plans, governmental or other
plans subject to laws substantially
similar to ERISA and retirement
accounts (including Keogh, SEP and
SIMPLE plans, individual retirement
accounts and individual retirement
annuities) are permitted to purchase
the notes as long as either (A) (1) no
Citigroup Global Markets affiliate or
employee or affiliate’s employee is a
fiduciary to such plan or retirement
account that has or exercises any
discretionary authority or control
with respect to the assets of such
plan or retirement account used to
purchase the notes or renders
investment advice with respect to
those assets, and (2) such plan or
retirement account is paying no more
than adequate consideration for the
notes or (B) its acquisition and
holding of the notes is not prohibited
by any such provisions or laws or is
exempt from any such prohibition. |

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Citigroup Funding Inc.

Callable Step-Up Coupon Notes Due June 28, 2026

| | However, individual retirement
accounts, individual retirement
annuities and Keogh plans, as well as
employee benefit plans that permit
participants to direct the investment
of their accounts, will not be
permitted to purchase or hold the
notes if the account, plan or annuity
is for the benefit of an employee of
Citigroup Global Markets or Morgan
Stanley Smith Barney LLC or a family
member and the employee receives any
compensation (such as, for example, an
addition to bonus) based on the
purchase of notes by the account, plan
or annuity. |
| --- | --- |
| | You should refer to the
section “ERISA Matters” in the
accompanying pricing supplement
related to this offering for more
information. |
| Fees and selling concessions: | Citigroup Global Markets Inc., an
affiliate of Citigroup Funding and the
underwriter of the sale of the notes,
will receive an underwriting fee of
$20 for each note sold in this
offering. From this underwriting fee,
Citigroup Global Markets will pay
selected dealers, including its
affiliate Morgan Stanley Smith Barney
LLC, and their financial advisors,
collectively a fixed selling
concession of $20 for each note they
sell, while selected dealers not
affiliated with Citigroup Global
Markets will receive a selling
concession of up to $20 for each note
they sell. |
| | Additionally, it is
possible that Citigroup Global Markets
and its affiliates may profit from
expected hedging activity related to
this offering, even if the value of
the notes declines. You should refer
to “Risk Factors” below and “Risk
Factors” and “Plan of Distribution;
Conflicts of Interest” in the
accompanying pricing supplement
related to this offering for more
information. |
| Supplemental information
regarding plan of distribution;
conflicts of interest: | Citigroup Global Markets is an
affiliate of Citigroup Funding.
Accordingly, the offering of the notes
will conform with the requirements
addressing conflicts of interest when
distributing the securities of an
affiliate set forth in Rule 5121 of
the Financial Industry Regulatory
Authority. Client accounts over which
Citigroup Inc., its subsidiaries or
affiliates of its subsidiaries have
investment discretion are NOT
permitted to purchase the notes,
either directly or indirectly. See
“Plan of Distribution; Conflicts of
Interest” in the accompanying pricing
supplement related to this offering. |
| Calculation agent: | Citigroup Financial Products, Inc. |
| Contact: | Morgan Stanley Smith Barney clients
may contact their local Morgan Stanley
Smith Barney branch office or our
principal executive offices at 1585
Broadway, New York, New York 10036
(telephone number (866) 477-4776). All
other clients may contact their local
brokerage representative. Third-party
distributors may contact Citi
Structured Investment Sales at (212)
723-7005. |

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