Status under the EU Sustainable Finance Disclosure Regulation (SFDR)

Legal Entity Identifier: 549300RP87OTMIERPY70

A. Summary

The Fund is categorised as one which meets the provisions set out in Article 8 of SFDR as a product which promotes environmental and/or social characteristics and invests in companies with good governance practices. Whilst the Fund does not have as its objective a sustainable investment, it will have a minimum proportion of 15% of sustainable investments with a social objective and an environmental objective in economic activities that do not qualify as environmentally sustainable under the EU Taxonomy. See “B. No Sustainable Investment Objective” below for further details.

The Sub-Fund promotes support for the UN Global Compact principles (which cover matters including human rights, labor, corruption, and environmental pollution). The Sub-Fund promotes better management of environmental, social and/or governance (ESG) risks by minimising its exposure to issuers with the worst ESG risk ratings, i.e. those rated below BB by MSCI or equivalent, and by engaging with issuers who are considered ESG laggards (rated below BB by MSCI or equivalent). Companies with the worst ESG risk ratings demonstrate a higher exposure to ESG risks / worse management of ESG risks compared to companies with better ESG risk ratings. The Sub-Fund also promotes human health and wellbeing and climate change mitigation by applying binding exclusions seeking to avoid investments in certain activities. In addition, the Sub-Fund invests a minimum of 15% of its net asset value in sustainable investments. The Sub-Fund does not use a reference benchmark to attain its environmental or social characteristics.

The Sub-Fund aims to outperform its Index Benchmark (MSCI World Index) over the long term by investing in an actively managed portfolio of equity securities and/or depositary receipts issued by global companies. This may include investing up to 15% of the Sub-Fund’s assets in equity securities and/or depositary receipts of emerging market companies. The Sub-Investment Managers select and weight securities using the research and recommendations of the Sub-Investment Manager’s equity analysts, some quantitative inputs, and ESG exclusions and constraints (as described in this document). The portfolio is constructed so as to emphasise stock selection and minimise unintended risks. The resulting portfolio will typically have between 125 and 275 holdings. The Sub-Investment Manager will also seek to manage the Sub-Fund’s risk profile relative to the Index Benchmark. Investors should read this section in conjunction with the Sub-Fund’s investment strategy (as set out in the supplement for the Sub-Fund under the heading “Investment Objective and Policy”). The binding elements of the investment strategy described below that are implemented as screens are coded into the compliance module of an order management system utilising third-party data provider(s) on an ongoing basis. The exclusionary screens are implemented on both a pre and post trade basis enabling any proposed transactions in an excluded security to be blocked and to identify any changes to the status of holdings when third-party data is periodically updated.

The Sub-Investment Manager will:

• Apply screens to exclude companies with a UNGC status of “fail”
• Apply screens to ensure that, of the portfolio invested in corporate issuers of equities, at least 80% have an ESG risk rating of BB or higher (by MSCI – https://www.msci.com/, or equivalent).
• Consider companies with a MSCI ESG risk rating of B or CCC to be ESG laggards. It will engage with such issuers where the weighting of the issuer in the portfolio is greater than or equal to 0.3%.
• Apply screens to exclude companies with 10% or more revenue generated from thermal coal and tobacco.

Further, the Sub-Investment Manager uses a pass/fail test to determine investments which are deemed sustainable investments, meaning that each holding must meet all three of the requirements below:

1. it positively contributes to an environmental or social objective;
2. it does not cause significant harm to any environmental or social sustainable investment objective; and
3. it follows good governance practices.

The Sub-Fund also applies the Sub-Investment Manager’s Firmwide Exclusions Policy (the “Firmwide Exclusions Policy”), which includes controversial weapons, as detailed below.

Classification of issuers is primarily based on activity identification fields supplied by the Sub-Investment Manager’s third-party ESG data providers. This classification is subject to an investment research override in cases where sufficient evidence exists that the third-party data field is not accurate or appropriate. In any scenario where a portfolio position is identified as not meeting this exclusion criteria for any reason (legacy holding, transition holding, etc.) the Sub-Investment Manager shall be granted 90 days to review or challenge the classification of the issuer if appropriate. After this period, in the event an investment research override is not granted divestment is required immediately under normal market trading circumstances.

For the purposes of the AMF doctrine, the extra-financial analysis or rating is higher than:

1. 90% for equities issued by large capitalisation companies whose registered office is located in "developed" countries, debt securities and money market instruments with an investment grade credit rating, sovereign debt issued by developed countries;
2. 75% for equities issued by large capitalisations whose registered office is located in "emerging" countries, equities issued by small and medium capitalisations, debt securities and money market instruments with a high yield credit rating and sovereign debt issued by "emerging" countries.

The Sub-Investment Manager may only invest in companies that would be excluded by the screens described above if the Sub-Investment Manager believes, based on its own research and as approved by its ESG Oversight Committee, that the third-party data used to apply the exclusions is insufficient or inaccurate.

The Sub-Investment Manager may consider that the data is insufficient or inaccurate if, for example, the third- party data provider research is historic, vague, based on out of date sources, or the investment manager has other information to make them doubt the accuracy of the research.

If the Sub-Investment Manager wishes to challenge the third-party data, then the challenge is presented to a cross-functional ESG Oversight Committee who must sign off on the “override” of the third-party data.

If a third-party data provider does not provide research on a specific issuer or excluded activity, the SubInvestment Manager may invest if, through its own research, it is satisfied that the issuer is not involved in the excluded activities.

JHI has chosen MSCI as its primary data source for ESG (Environmental, Social and Governance) research.

Where coverage gaps are identified, specialist ESG Data vendors or inhouse research may be used to complement the ESG research. This helps ensure that consistent data and methodologies are used given an ESG measure per security type and hence can be compared correctly in the portfolio construction process.

The JHI Responsible Investment Policy, which incorporates JHI’s Sustainability Risk Policy, sets out the firmwide approach to ESG Integration Principles, including JHI’s Responsible Investment Principles for long-term investment success, our approaches to Stewardship and Engagement and Baseline Exclusions applied to investee companies.