CommoditiesSeries 6

Commodities Series 6 - Diversified Agricultural Commodities

Sequoia Commodities Series 6 (“Series 6”) is a structured investment whereby investors obtain 100% leverage and exposure to any positive performance of S&P GSCI Agriculture ER Index (“the Reference Asset or Index”) over an 18-month period with the potential to receive an uncapped Performance Coupon at Maturity dependent on the Index Performance, adjusted for changes in the AUD/USD exchange rate during the Investment Term.

Sequoia Commodities - Series 6 Performance

DateReference Asset LevelIndicative Unit Value*Performance
17-Dec-202145.80Initial Value
31-Dec-202145.55$1.119-0.55%
31-Jan-202247.55TBA3.82%
28-Feb-202252.33$1.19614.26%
31-Mar-202255.53$1.24621.24%
30-Apr-202258.74$1.30028.25%
31-May-202257.84$1.28526.29%

* This represents an indicative level for unwinding your investment on the reporting date and is an indication of the market value of the investment.

The S&P GSCI ER Agriculture Index

 

The S&P GSCI Agriculture ER Index (Bloomberg Ticker: SPGCAGP), a sub-set of the S&P GSCI commodities index, provides investors with a reliable and publicly available benchmark for investment performance in the agricultural commodity markets.

 

The S&P GSCI Agriculture ER Index is designed as a benchmark for investment in the agriculture commodity markets and as a measure of agriculture commodity market performance over time. It is also designed as a tradable index that is readily accessible to market participants. In order to accomplish these objectives, the S&P GSCI Agriculture ER Index is calculated primarily on a world production weighted basis and comprises the principal physical commodities that are the subject of active, liquid futures markets in the agriculture industry segment as described below. The S&P GSCI is calculated and maintained by S&P.

 

Commodity indices such as the S&P GSCI Agriculture ER Index aim to provide exposure to the commodity market by using futures. Futures are contractual agreements specifying a future delivery date of particular product at a price and quantity agreed today. In order to maintain constant exposure and avoid the delivery of the physical product, as the date of delivery approaches, the futures contract is sold and a new futures contract with a later expiry date is purchased. This process, which is repeated before every contract expiry, is called rolling. Each time a futures contract is rolled into the next one, there will be a profit or a loss: this is the roll yield. Due to the impact of the roll yield, the returns from a commodity index investment do not equal the returns from investing in physical commodities.

 

Investors should refer to the website for further information in relation to the Index: https://www.spglobal.com/spdji/en/indices/commodities/sp-gsci-agriculture/#overview

Diversification:

 

The Index is diversified across eight individual commodities. The individual commodity allocation of the Index as at 29 October 2021 was:

Summary of the key features

Tracking the Index Performance

The Index level for the S&P GSCI ER Agriculture ER Index (Bloomberg Ticker: SPGCAGP) published at the close of trading on the relevant Business Day at the following web address: https://www.spglobal.com/spdji/en/indices/commodities/sp-gsci-agriculture/#overview

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Downloads

 

To find out more, and to download a copy of the Term sheet PDS and Master PDS, please click on the links below

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Key risks include:

  • Risk of 100% loss in relation to the Total Investment Cost and Upfront Adviser Fee. The Total Investment Cost equals the Prepaid Interest in relation to the Loan and the Application Fee. Investors may also incur an Upfront Adviser Fee in addition. A 100% loss will occur if there is no Performance Coupon paid at Maturity. This will be the case if the Index Performance is negative at Maturity and no Performance Coupon is paid;
  • Risk of partial loss (i.e. less than 100% loss) in relation to the Total Investment Cost and Upfront Adviser Fee. The Total Investment Cost equals the Prepaid Interest in relation to the Loan and the Application Fee. Investors may also incur an Upfront Adviser Fee in addition. Investors may incur a partial loss if the Performance Coupon at Maturity is positive but less than the Break-Even Point;
  • Timing risks. The timing risk associated with Series 6 is significant. This is because the Investment Term is fixed and the Series Performance is required to at least generate some positive performance over and above the Break-Even Point by the time the Maturity Date arrives in order for the investor to generate a profit from their investment (ignoring any Upfront Adviser Fee and any external costs). If this does not occur then Investors will generate a loss;
  • The potential Performance Coupon is determined by reference to the Series Performance. The Series Performance is determined by reference to the Index Performance as well as changes in the AUD/USD exchange rate. An increase in the AUD/USD exchange rate between the Commencement Date and the Maturity Date will reduce the Performance Coupon whilst a decrease in the AUD/USD rate between the relevant dates will lead to an increase in the Performance Coupon. As such, whether or not you break-even depends on both the Index Performance and the AUD/USD exchange rate performance during the Investment Term;
  • There is no guarantee that the Units will generate returns in excess of the Prepaid Interest and Fees, during the Investment Term;
  • Additionally, in the event of an Investor requested Issuer Buy-Back or Early Maturity Event, you will not receive a refund of your Prepaid Interest or Fees. The amount received will depend on the market value of the Units which will be determined by many factors before the Maturity Date including prevailing interest rates in Australia and internationally, foreign exchange rates, the remaining time to Maturity, and general market risks and movements. Depending on these various factors there is a risk the buy-back price is zero at the time an Issuer Buy-Back is requested. Should this be the case then investors will incur a 100% loss of their investment if they proceed with completing the Issuer Buy-Back at that time. Investors should be aware the Units are designed to be held to Maturity and are not designed to be a trading instrument;
  • Gains (and losses) may be magnified by the use of a 100% Loan. However, note that the Loan is a limited recourse Loan, so you can never lose more than your Prepaid Interest Amount and Fees paid at Commencement.
  • Investors are subject to counterparty credit risk with respect to the Issuer and the Hedge Counterparty; and
  • The Units may mature early following an Early Maturity Event, including an Adjustment Event, Market Disruption Event or if the Issuer accepts your request for an Issuer Buy-Back.

 

Please refer to Section 2 “Risks” of the Master PDS for more information.

 

For more information, please contact Sequoia at:
invest@sequoia.com.au and 02 8114 2222.

 

Units in Sequoia Commodities – Series 6 are issued by Sequoia Specialist Investments Pty Ltd (ACN 145 459 936 ) (the “Issuer”) and arranged by Sequoia Asset Management Pty Ltd (ACN 135 907 550, AFSL 341506) (the “Arranger”). Investments in the Sequoia Commodities – Series 6 can only be made by completing an Application Form attached to the Term Sheet PDS, after reading the Term Sheet PDS dated 1 December 2021, the Master PDS dated 14 August 2017 and Target Market Determination (for retail investors) and submitting it to Sequoia. A copy of the Termsheet PDS, Master PDS and Target Market Determination can be obtained by contacting Sequoia Asset Management on or contacting your financial adviser. You should consider the Term Sheet & Master PDS’ as well as the Target Market Determination before deciding whether to invest in Units in Sequoia Commodities – Series 6. Capitalised terms on the webpage have the meaning given to them in Section 10 “Definitions” of the Master PDS.

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