Changes to the investment objective and policy of R34 Schroder Global Climate Change Equity

Old investment objective and policy of the underlying fund

New investment objective and policy of the underlying fund, effective immediately

Investment objective

The underlying fund aims to provide capital growth by investing in equity and equity related securities of companies worldwide, which the Investment Manager of the underlying fund believes will benefit from efforts to accommodate or limit the impact of global climate change.

Investment policy

The underlying fund is actively managed and invests at least two-thirds of its assets in equity and equity related securities of companies worldwide.

The Investment Manager of the underlying fund believes that companies that recognise the threats and embrace the challenges early, or that form part of the solution to the problems linked to climate change, will ultimately benefit from long term structural growth which is underappreciated by the market. We expect these companies to outperform once the market recognises these stronger earnings growth dynamics.

The underlying fund is managed with reference to material environmental, social and governance factors. This means issues such as climate change, environmental performance, labour standards or board composition that could impact a company’s value may be considered in the assessment of companies.

The underlying fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.

The underlying fund may use derivatives with the aim of reducing risk or managing the underlying fund more efficiently.

Investment objective

The underlying fund aims to provide capital growth by investing in equity and equity related securities of companies worldwide which the Investment Manager believes will benefit from efforts to accommodate or limit the impact of global climate change and which meet the Investment Manager’s sustainability criteria.

Investment policy

The underlying fund is actively managed and invests at least two-thirds of its assets in equity and equity related securities of companies worldwide.

The underlying fund maintains a higher overall level of avoided emissions than MSCI World (Net TR) index, based on the Investment Manager’s rating system.

The underlying fund invests in companies that have good governance practices, as determined by the Investment Manager’s rating criteria.

The Investment Manager may also engage with companies held by the underlying fund to challenge identified areas of weakness on sustainability issues.

The underlying fund may also invest up to one-third of its assets directly or indirectly in other securities (including other asset classes), countries, regions, industries or currencies, Investment Funds, warrants and Money Market Investments, and hold cash.

The underlying fund may use derivatives with the aim of reducing risk or managing the Fund more efficiently.

Sustainability Criteria

The Investment Manager applies sustainability criteria when selecting investments for the underlying fund.

When assessing the significance of climate change on the long-term business outlook for a company, a company is assessed on a number of factors which include but are not limited to:

- If the company has significant direct industry exposure to climate change trends (mitigation – reducing greenhouse gas emissions through energy efficiency, renewable power, and cleaner vehicles; or adaptation - those that are preparing for the impacts of climate change, for example water stress, coastal flooding, community health issues, or supply chain disruptions, among other issues).

- The proportion of business segments that are potentially exposed to climate change trends.

If the company has significant investment and research and development spending related to the transition to a lower carbon economy.

A product portfolio that takes into account the physical and transition risks posed by climate change.

The impact on the company of rising carbon costs in the context of its industry and competitive environment.

The Investment Manager will then decide on a case by case basis whether a company is eligible for inclusion in the underlying fund’s investment universe, based on this assessment. In addition, the Investment Manager’s ESG analysis seeks to evaluate the materiality and impact of a range of ESG factors on the sustainability of future earnings growth and as potential risk factors that may affect a company’s valuation. The Investment Manager’s decision will focus on ratings in the areas that are most relevant to the particular business of that company.

The Investment Manager performs its own analysis of information provided by the companies, including information provided in company sustainability reports and other relevant company material. The research draws information from a wide variety of publicly available corporate information and company meetings, broker reports and outputs from industry bodies, research organisations, think tanks, legislators, consultants, NGOs and academics. Third party research is used as a secondary consideration, and generally provides a source of challenge or endorsement for the Investment Manager’s proprietary view.

The Investment Manager ensures that at least 90% of companies in the underlying fund’s portfolio are rated against the sustainability criteria. As a result of the application of sustainability criteria, at least 20% of the Fund’s potential investment universe is excluded from the selection of investments.

For the purposes of this test, the potential investment universe is the core universe of issuers that the Investment Manager may select for the underlying fund prior to the application of sustainability criteria, in accordance with the other limitations of the Investment Objective and Policy. This universe is comprised of equity and equity related securities of companies worldwide.