Sustainable, Responsible &/or ESG Policy:

Objectives and Investment Policy

The aim of the Fund is to increase the value of an investment over a minimum of 5 years through a combination of capital growth - which is profit on investments held, and income received by the Fund - which is money paid out of investments, such as dividends from shares and interest from bonds. The Fund also aims to outperform, over any rolling 5 year period, inflation plus 3% per annum. Inflation is measured as the UK Consumer Prices Index for these purposes.

The Fund is actively managed which means the Investment Manager decides which investments to buy or sell and when. The Investment Manager uses a responsible investment selection process which consists of selecting assets that have a strong focus on Environmental, Social and Governance (“ESG”) considerations along with the potential to grow in value. The Fund aims to deliver a mixture of income and growth from a medium risk level of return.

The Fund will have exposure to ESG focused investments through a broad range of asset classes and investments across different industries and geographical regions, however not all asset classes may be held at all times. This will include:

• Between 40%and 70% in shares of companies.
• Between 10% and 40% in bonds.
• Up to 20% in investment trusts providing exposure to alternative assets such as, property and infrastructure.

Bonds, which are loans typically issued by companies, governments, and other institutions, may be either investment grade, where the issuer has a high and reliable capacity to repay the debt, or sub-investment grade, which can be more vulnerable to changing market conditions but typically pay a higher rate of interest.

The Investment Manager applies their own ESG rating mechanism to the investment selection process to identify assets that look to benefit from changes within the economy whilst offering robust management of ESG risks and opportunities. This process involves detailed research and analysis using both investment expertise combined with independent data. The responsible investment process initially involves negative screening to avoid investing in companies that generate more than a defined percentage of revenue from the following activities:

• Tobacco, gambling services and armaments (military weapons and equipment) and civilian firearms – maximum of 5% of revenue.
• Pornography – maximum of 3% of revenue.
• Predatory lending, cluster munitions and landmines – 0% of revenue.
• Coal, unconventional oil or gas extraction (e.g. tar sands and shale), or coal power generation – maximum of 5% of revenue.

Following this analysis and asset selection the Investment Manager will then use an independent ESG ratings agency to verify their conclusions to ensure an overall high quality ESG rating for the Fund which can be independently verified.

The Fund will not invest in other collective investment schemes. The Fund may hold up to 20% in cash to enable the ready settlement of liabilities, for the efficient management of the portfolio
or in pursuit of the Fund’s investment objective.

The Fund has similar characteristics to the ARC Sterling Steady Growth ACI. You may wish to compare the Fund’s performance to this index.

 The Fund currently uses MSCI for assessing its ESG credentials and a “high” ESG score should be considered as AA or AAA.

(Source: KIID, as at January 2025)