Sequoia Dispersion – Series 6
The Units in US Dispersion – Series 6 offer investors the ability to gain exposure to the Dispersion of a Reference Basket of listed US Shares (each an “Underlying”) during the period from the Commencement Date to the Maturity Date (being a period of approximately 2 years) based on the full leveraged Investment Amount. Investment in the Units is by way of a 100% LVR limited recourse loan, with Investors only being required to pay an Application Fee and Prepaid Interest following a successful application for Units.
The Reference Basket consists of US listed Shares which have been characterised as having a large exposure to the “value” and “growth” investment style factors.
The Units provide investors with a potential uncapped Performance Coupon at Maturity based on the full leveraged investment amount depending on the performance of Dispersion of the Reference Basket during the Investment Term provided the realised level of Dispersion at Maturity is greater than the Hurdle.
|Communications||Internet||Netflix Inc||NFLX UW Equity||Growth|
|Amazon.com Inc||AMZN UW Equity||Growth|
|Alphabet Inc||GOOGL UW Equity||Growth|
|Telecommunications||Verizon Communications Inc||VZ UN Equity||Growth|
|Technology||Semiconductors||Advanced Micro Devices Inc||AMDUW Equity||Growth|
|NVIDIA Corp||NVDA UW Equity||Growth|
|Software||Microsoft Corp||MSFT UW Equity||Growth|
|Consumer, Cyclical||Retail||McDonalds Corp||MCD UN Equity||Value|
|Walmart Inc||WMT UN Equity||Value|
|Costco Wholesale Corp||COST UW Equity||Value|
|Consumer, Non-Cyclical||Beverages||The CocaCola Co||KO UN Equity||Value|
|PepsiCo Inc||PEP UW Equity||Value|
|Food||Mondelez International Inc||MDLZ UW Equity||Value|
|Cosmetics/Personal Care||ColgatePalmolive Co||CL UN Equity||Value|
|Pharmaceuticals||Johnson Johnson||JNJ UN Equity||Value|
|Cosmetics/Personal Care||The Procter Gamble Co||PG UN Equity||Value|
|Dispersion||The dispersion of a basket of securities is typically measured by how much the return of each individual security in the basket differs, in absolute terms from the average return of the overall basket over a given period of time. Each of these return differentials are averaged and the greater the average, the higher the measure of dispersion
Refer to the Formulae & Calculations section of the PDS for a precise formula for calculating Dispersion.
|Potential Performance Coupon||Yes, the potential for one uncapped Performance Coupon based on the realised level of Dispersion at Maturity LESS the Hurdle.|
|Hurdle*||The Hurdle is determined by the Issuer on the Commencement Date. As at the date of the PDS the Hurdle would be 28%. The Issuer will not proceed with the issue of Units if the Hurdle cannot be set at or below 28% on the Commencement Date|
|Currency Exposure||AUD Hedged|
|Limited recourse Loan||Yes|
|Investment Term||2 years|
|Annual Interest Rate on Loan (payable for the full 2 years in advance)||3.75% p.a. (7.5% payable upfront for the full 2 year Investment Term)|
|Application Fee||1.1% including GST|
|Total Investment cost for the full 2 year period||8.6%|
|Break- Even Level Performance Coupon at Maturity||36.60%|
|Commencement Date/Issue Date||30 September 2020 or as soon as reasonably practicable thereafter as determined by the Issuer and as notified to you.|
|Maturity Date||30 September 2022|
Sequoia Dispersion – Series 6 Performance
|Date||Reference asset (Realized dispersion)||Indicative Unit value 1||Gross Performance 2|
1 – This represents an indicative level for unwinding your investment on the reporting date and is an indication of the market value of the investment.
2 – Gross Performance only becomes positive once the reference asset performance level exceeds the hurdle level of 28%
Key risks include:
- Your return (including any Performance Coupon) is affected by the performance of the Dispersion of the Reference Basket (globally listed Shares) and whether this is greater than the Hurdle at Maturity. There is no guarantee that the Dispersion of the Reference Basket will perform well.
- There will be no Performance Coupon payable if the Dispersion of the Reference Basket is below the Hurdle at Maturity.
- 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 an Early Maturity Event you will not receive a refund of your Prepaid Interest or Fees.
- 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 will never be required to pay more than the Prepaid Interest Amount and Fees 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.
Units in Sequoia Dispersion – 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 Dispersion – Series 6 can only be made by completing an Application Form attached to the Term Sheet PDS, after reading the Term Sheet PDS dated 28 August 2020 and the Master PDS dated 14 August 2017 and submitting it to Sequoia A copy of the PDS can be obtained by contacting Sequoia Asset Management on or contacting your financial adviser. You should consider the Term Sheet & Master PDS’ before deciding whether to invest in Units in Sequoia Dispersion – Series 6. Capitalised terms on the webpage have the meaning given to them in Section 10 “Definitions” of the Master PDS