ARK Innovation UCITS ETF

Sustainable, Responsible &/or ESG Policy:

The ARK Innovation UCITS ETF is an Article 8 financial product under SFDR, meaning it promotes environmental and/or social (E/S) characteristics, although it does not have sustainable investment as its primary objective. The fund's core investment thesis is centered on "disruptive innovation" – technologically enabled new products or services that can change how the world works. Its ESG approach is deeply integrated into this theme, aiming to align investments in disruptive innovation (AI, Robotics, Multiomic Sequencing, Public Blockchains and Energy Storage) with positive E/S outcomes. The specific E/S characteristics promoted are: contributing to the UN Sustainable Development Goals (UN SDGs), ensuring portfolio companies are not involved in business activities making a negative contribution to certain E/S characteristics, and ensuring compliance with international norms.

The fund employs an active investment management strategy where ESG considerations are evaluated in both "top-down" thematic research and "bottom-up" company analysis. The top-down approach explicitly selects technologies anticipated to have a high degree of impact on the UN SDGs, and the environmental and social objectives comprised therein. All disruptive technologies — as the Investment Manager defines them: (1) demonstrate steep cost declines; (2) cut across economic sectors; and (3) serve as platforms atop which other disruptive innovations can be built. A steep cost decline means that these technologies enable more economic output without requiring additional raw material input over time. Technologies that cut across sectors are more likely to have impact in breadth, they can diffuse across the world and across economies more meaningfully. Technologies that serve as innovation platforms not only have immediate impact potential but also serve as the substrate on top of which other impactful technologies are likely to be developed. The Investment Manager assesses the prospective impact of each identified disruptive technology on progress towards each of the 17 UN SDGs, using a qualitative scale (Zero, Modest, Moderate, Meaningful, Dramatic). A binding element of this strategy is that for a company to be eligible for selection, it must be involved in a technology platform that is determined by the Investment Manager to make a "meaningful" contribution to at least two UN SDGs. This thematic selection based on SDG impact is a core part of how the fund intends to deliver positive E/S outcomes.

The bottom-up ESG integration involves several screens and assessment policies. Firstly, the fund applies business involvement screens, meaning the Investment Manager will not invest in companies involved in certain business activities above defined thresholds. These excluded business activities include companies breaching the set thresholds for the production and/or distribution of thermal coal, oil & gas, tobacco, gambling, adult entertainment, and alcohol, as well as full exclusion of controversial weapons. If an existing holding is subsequently found to be involved in such activities, steps will be taken to remove it from the portfolio, potentially after further research or engagement. Secondly, a norms-based screening is applied, whereby the Investment Manager will not invest in companies deemed to be in breach of the principles of the UN Global Compact, the OECD Guidelines for Multinational Enterprises, and the UN Guiding Principles on Business and Human Rights. Suspected or identified violations in existing holdings may lead to engagement, further investigation, or divestment.

Beyond these exclusions, the Investment Manager considers controversy, environmental, and social risks through its "Company, People and Culture" and "Thesis Risk" assessment pillars. The aim is to avoid investing in companies where such risks are likely to impair their ability to innovate. Similarly, governance is assessed under the "Company, People and Culture" pillar, and the fund seeks to avoid investing in companies considered poorly governed. If an existing holding is subsequently determined to have high E/S risks, controversy risk, or poor governance, the Investment Manager may engage with the company to seek clarity or compel improvements, conduct further research, or divest the holding. The Investment Manager also considers principal adverse impacts (PAIs) on sustainability factors it believes are material through its screening processes, bottom-up analysis, and potential engagement or divestment, with PAI information to be reported in the Fund's annual report.

Process:

The ARK Innovation UCITS ETF will invest, under normal circumstances, primarily in global equity securities of artificial intelligence, autonomous technology and robotics companies that are relevant to the Fund’s investment theme of disruptive innovation. The Investment Manager defines “disruptive innovation” as the introduction of a technologically enabled new product or service that potentially changes the way the world works.

The Investment Manager believes that companies relevant to this theme are those that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of genomics1 (“Genomics Companies”); innovation in automation and manufacturing (“Automation Transformation Companies”), transportation, energy (“Energy Transformation Companies”), artificial intelligence (“Artificial Intelligence Companies”) and materials; the increased use of shared technology, infrastructure and services (“Next Generation Internet Companies”); and technologies that make financial services more efficient (“Fintech Innovation Companies”).

In selecting companies that the Investment Manager believes are relevant to a particular investment theme, the Investment Manager seeks to identify, using its own internal research and analysis, companies capitalising on disruptive innovation or that are enabling the further development of a theme in the markets in which they operate. The Investment Manager’s internal research and analysis leverages insights from diverse sources, including external research, to develop and refine its investment themes and identify and take advantage of trends that have ramifications for individual companies or entire industries. The types of companies that the Investment Manager believes are Genomic Revolution Companies, Automation Transformation Companies, Energy Transformation Companies, Artificial Intelligence Companies, Next Generation Internet Companies or Fintech Innovation Companies are described below:

Genomic Revolution Companies
Companies that the Investment Manager believes are substantially focused on and are expected to substantially benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments, improvements and advancements in genomics into their business, such as by offering new products or services that rely on genomic sequencing, analysis, synthesis or instrumentation. These companies may include ones across multiple sectors, such as healthcare, information technology, materials, energy and consumer discretionary. These companies may also develop, produce, manufacture or significantly rely on or enable bionic devices, bio-inspired computing, bioinformatics,3 molecular medicine and agricultural biotechnology.

Artificial Intelligence Companies
Companies that the Investment Manager considers to be artificial intelligence (“AI”) companies including companies that: (i) designs, creates, integrates, or delivers robotics, autonomous technology, and/or AI in the form of products, software, or systems; (ii) develops the building block components for robotics, autonomous technology, or AI, such as advanced machinery, semiconductors and databases used for machine learning; (iii) provides its own value-added services on top of such building block components, but are not core to the company’s product or service offering; and/or (iv) develops computer systems that are able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision making, and translation between languages.

Automation Transformation Companies
Companies that the Investment Manager believes are focused on society capitalising on the productivity of machines, such as through the automation of functions, processes or activities previously performed by human labour, such as transportation through an emphasis on mobility as a service, or the use of robotics to perform other functions, activities or processes.

Energy Transformation Companies
Companies that the Investment Manager believes seek to capitalize on innovations or evolutions in: (i) ways that energy is stored or used; (ii) the discovery, collection and/or implementation of new sources of energy; and/or (iii) the production or development of new materials for use in commercial applications of energy production, use or storage.

Next Generation Internet Companies
Companies that the Investment Manager believes are focused on and expected to benefit from shifting the bases of technology infrastructure from hardware and software to the cloud, enabling mobile and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services. These companies may include mail order houses which generate the entirety of their business through websites and which offer internet-based products and services, such as streaming media or cloud storage in addition to traditional physical goods. These companies may also include ones that develop, use or rely on innovative payment methodologies, big data, the “internet of things”, machine learning, and social distribution and media.

Fintech Innovation Companies
Companies that the Investment Manager believes are focused on and expected to benefit from the shifting of the financial sector and economic transactions to technology infrastructure platforms, and technological intermediaries. Fintech Innovation Companies may also develop, use or rely on innovative payment platforms and methodologies, point of sale providers, ecommerce, transactional innovations, business analytics, fraud reduction, frictionless funding platforms, peer-to-peer lending, blockchain technologies,5 intermediary exchanges, asset allocation technology, mobile payments, and risk pricing and pooling aggregators.

The Investment Manager will select investments for the Fund that represent its highest conviction investment ideas within the theme of disruptive innovation, as described above, in constructing the Fund’s portfolio.

The Investment Manager’s process for identifying Genomic Revolution Companies, Automation Transformation Companies, Energy Transformation Companies, Artificial Intelligence Companies, Next Generation Internet Companies and Fintech Innovation Companies uses both “top down” (thematic research sizing the potential total available market, and surfacing (i.e. identifying) the prime leaders (i.e. the companies leading the innovation in the foregoing technologies specifically), enablers (i.e. companies that are otherwise enabling innovation in the foregoing technologies by providing adjunctive and/or supportive products and services to companies involved in those technologies, for example, new gripping materials that might be adopted by companies focussed on developing mechanical robots and software that will utilise those gripping materials), and beneficiaries (i.e. companies that are anticipated to be best placed to benefit from the availability of the foregoing technologies, for example, manufacturers and distributors of physical goods that are early adopters of new AI and automation tools that are integrated into their existing logistics solutions and are, accordingly, able to increase efficiency and scale of output whilst reducing operational costs versus their competitors) and “bottom up” (valuation, fundamental and quantitative measures) approaches.

In both the Investment Manager’s “top down” and “bottom up” approaches, the Investment Manager evaluates environmental, social, and governance (“ESG”) considerations.

The Investment Manager’s top down approach explicitly selects for technologies that the Investment Manager anticipates will have high degrees of impact on the UN SDGs, and the environmental and social objectives comprised therein. All disruptive technologies — as the Investment Manager defines them: (1) demonstrate steep cost declines; (2) cut across economic sectors; and (3) serve as platforms atop which other disruptive innovations can be built. A steep cost decline means that these technologies enable more economic output without requiring additional raw material input over time. Technologies that cut across sectors are more likely to have impact in breadth, they can diffuse across the world and across economies more meaningfully. Technologies that serve as innovation platforms not only have immediate impact potential but also serve as the substrate on top of which other impactful technologies are likely to be developed. Amongst the technologies that the Investment Manager identifies as disruptive, the Investment Manager also assesses the prospective impact of each technology on progress towards each of the 17 UN SDGs. This yields a matrix of technologies of interest versus assessed SDG impact as follows:

• Zero: i.e. no assessed impact on any UN SDG.
• Modest: Modestly impacts the trajectory for at least one UN SDG with no deterrent impact on other UN SDGs. A modest impact is positive but potentially not significant relative to the overall pace of progress.
• Moderate: Moderately impacts the trajectory for at least one UN SDG with no deterrent impact on other UN SDGs. A moderate impact anticipates an increase in trajectory that could appear in aggregate statistics but the overall impact may be difficult to distinguish from other factors.
• Meaningful: Meaningfully impacts the trajectory for at least one UN SDG with no deterrent impact on other UN SDGs. A meaningful impact implies a change in trajectory that differs materially from the status quo ante; the change in trajectory should easily tie directly back to the diffusion of the associated technology.
• Dramatic: Dramatically impacts the trajectory for at least one UN SDG with no deterrent impact on other UN SDGs. A dramatic impact anticipates a discontinuous change in the pace of progress catalysed by the associated technology. Pace of achieving the associated SDG is likely directly tied to the diffusion of the associated technology.

For a company to be eligible for selection by the Fund, it must be involved in a technology platform that makes a “meaningful” contribution (per the above scale) to at least two UN SDGs, as determined by the Investment Manager.

In its “bottom up” approach to company selection, the Investment Manager makes its investment decisions primarily based on its analysis of the potential of individual companies, while integrating ESG considerations into that process, as described below. The Investment Manager’s highest-conviction investment ideas are those that it believes present the best risk reward opportunities.

• Business involvement – The Investment Manager will not invest in companies involved in certain business activities above certain involvement thresholds which include companies involved in the production and/or distribution of controversial weapons, thermal coal, oil & gas, tobacco, gambling, adult entertainment and alcohol. Where the Fund already holds a position in a company that the Investment Manager subsequently identifies as being involved in such activities, the Investment Manager will take steps to remove the company from the Fund’s portfolio. In order to make a final determination as to business involvement, it may be necessary for the Investment Manager to perform additional research to investigate the matter and evaluate, or engage with the company to seek clarity with respect to the level of involvement.
• Violations of international norms – The Investment Manager will not invest in companies that are in breach of the principles of the United Nations Global Compact (the “UN Global Compact”), the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises (the “OECD Guidelines”), and the United Nations Guiding Principles on Business and Human Rights (the “UN Guiding Principles”). The UN Global Compact, OECD Guidelines and UN Guiding Principles are significant international frameworks and initiatives (commonly referred to in ESG parlance as “international norms and/or standards”) comprised of guidelines and principles that aim to promote responsible business practices and corporate sustainability. While they have distinct objectives and focus areas, they share a common goal of encouraging businesses to operate ethically, sustainably, and in a manner that respects human rights. Where the Fund already holds a position in a company that the Investment Manager subsequently identifies as being in breach of any of the foregoing, the Investment Manager may take steps to remove the company from the Fund’s portfolio, perform additional research to investigate the matter and evaluate, or engage with the company to seek clarity with respect to, any identified or suspected violations whilst reserving the ability to remove the company from the Fund’s portfolio at any point following such engagement.
• Controversy, environmental and social risk - The Investment Manager’s bottom-up stock selection process includes two assessment pillars entitled “Company, People and Culture” and “Thesis Risk” respectively which are designed to capture, and ensure that consideration is given to, any material controversies or environmental or social risks identified in relation to any portfolio companies or prospective portfolio companies. The Investment Manager seeks to avoid investing in companies in respect of which it considers the controversy risk or the environmental or social risks are likely to impair a company’s ability to invest in and continue to produce innovative products and services. Companies that score well on “People, Management and Culture” espouse an open ethos, seek feedback from sustainability-focused shareholders, and elucidate a clear and concise mission statement. Companies that score well on “Thesis Risk” make sustainability focused supply chain decisions, are good partners to customers, suppliers and funders, and have low political and regulatory risks. Where the Fund already holds a position in a company in respect of which the Investment Manager subsequently determines the controversy risk or the environmental or social risks to be high, the Investment Manager may take steps to remove the company from the Fund’s portfolio, perform additional research to investigate and evaluate, and/or engage with the company to seek clarity with respect to, the relevant controversies or environmental or social matters and/or compel action or improvements at the company with respect to the resolution of such controversies or environmental or social matters and the management of controversy risk or environmental or social risks more generally whilst reserving the ability to remove the company from the Fund’s portfolio at any point following such engagement.
• Governance assessment – The Investment Manager’s bottom-up stock selection process includes a specific assessment pillar entitled “Company, People and Culture” which includes a corporate governance assessment. The Investment Manager seeks to avoid investing in companies which it considers to be poorly governed. Where the Fund already holds a position in a company in respect of which the Investment Manager subsequently determines the governance risk to be high, the Investment Manager may take steps to remove the company from the Fund’s portfolio, perform additional research, and/or engage with the company to seek clarity with respect to any identified governance challenges and/or compel action or improvements at the company with respect to the management of such governance challenges whilst reserving the ability to remove the company from the Fund’s portfolio at any point following such engagement.

Resources, Affiliations & Corporate Strategies:

ARK Invest Europe’s sustainability function is led by a dedicated in-house Sustainability Lead, who oversees ESG integration across portfolio construction, semi-annual rebalances, SFDR compliance, stewardship activity and impact reporting as a full-time equivalent role. ESG integration is overseen by the Sustainability Committee, which meets at least quarterly and comprises senior management of ARK Invest Europe (the “Promoter”) and IQ EQ Fund Management (the “Manager”), an external ESG professional and two independent directors. This Committee approves ESG-related policies and disclosures, reviews exclusion lists, stewardship priorities and escalation outcomes, monitors engagement activity, and helps ensure alignment with evolving regulatory standards and fiduciary responsibilities.

We also partner with specialist research firms, including Sustainable Market Strategies and Tematica Research, to develop bespoke thematic classifications and impact-scoring methodologies for our index funds, helping to ensure they focus on companies delivering measurable environmental and social benefits. On the external research side, we subscribe to MSCI ESG Manager for ESG business involvement screening, norms-based screens and EU Taxonomy alignment metrics, and we use ISS ProxyExchange for proxy voting execution, while retaining full authority and accountability for voting decisions.

Our RIZE Future First Policy underpins our sustainable-investment approach by combining rigorous exclusion screens, thematic classifications and proactive stewardship to ensure consistency and integrity across our sustainable thematic ETFs. This framework has now been complemented by the dedicated RIZE Future First Stewardship Policy, which sets out how stewardship is exercised across the RIZE suite through direct engagement, collaborative initiatives, proxy voting and escalation where material ESG risks remain insufficiently addressed. The policy also formalises record-keeping, annual review, and an escalation pathway that can ultimately lead to inclusion on the RIZE Future First Exclusion List and divestment at the next scheduled index rebalance where concerns remain material.

In addition, ARK Invest Europe has expanded its sustainability reporting capabilities through the launch of the RIZE Impact Calculator and a new suite of fund-level Impact Reports. The RIZE Impact Calculator is designed to translate an investment allocation into quantified environmental and social outputs, with underlying definitions, sources and calculation steps visible to investors. This framework underpins the annual Impact Reports, which provide fund-level reporting on tangible outcomes such as renewable energy enabled, emissions avoided, water saved, waste diverted and other theme-relevant indicators, using a consistent in-house impact methodology.

Throughout the organisation, ESG factors are incorporated into research, stewardship and risk-management processes, supported by internal training, shared reporting tools and cross-functional implementation by the sustainability, investment and compliance teams. ARK Invest Europe is also a signatory to the UN Principles for Responsible Investment (PRI), participates in collaborative initiatives such as CDP’s Non-Disclosure Campaign, and is a member of organisations including ShareAction, and FAIRR. These affiliations support our commitment to continuous improvement in stewardship, engagement and the delivery of measurable environmental and social outcomes.

SDR Labelling:

Not eligible to use label (out of scope)