As at: 31/12/23

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Policy

Objectives and investment policy

To provide capital growth by investing in shares of UK companies that demonstrate ethical attributes and practices. The Fund is actively managed by the Fund Manager who chooses investments with the aim of outperforming the FTSE All-Share Index (the “Index”) by 3% per annum on a rolling 3 year basis, before deduction of fees. At least 90% of the Fund will invest in shares of UK companies, it may also include some international companies.

Scottish Widows Unit Trust Managers defines an ethical screen which means that the Fund will not invest, or investment is limited, in certain industries or companies. This approach is taken with companies whose products or services contribute to: social problems; destruction of human life; human rights or labour abuses; environmental damage; animal testing for cosmetic purposes and irresponsible corporate practice. After screening for ethical criteria the Fund Manager selects investments based on a company’s growth prospects, market valuation and business risks.

In addition the Fund Manager engages with investee companies to monitor their compliance with international standards and promote ethical practices. The Fund will also take into account  companies that demonstrate their involvement in the community and that have transparent and accountable corporate policies. The Fund retains a level of portfolio diversification and risk management by investing typically in 30 to 60 holdings across different sectors* of the Index and in different market sizes. As a result the Fund’s performance may differ substantially from the Index. The Fund will not invest in companies involved in:

• Alcohol – where the annual revenue from production is greater than 1%; where the annual revenue from supply, distribution and retail companies is greater than 10%;
• Animal testing within the Household and Personal products sectors - unless committed to the European Partnership for Alternative Approaches to Animal Testing or equivalent;
• Fossil Fuels – all thermal coal and tar sands extraction and production; oil and gas extraction, production and refining;
• Gambling and pornography - where annual revenue is greater than 5%;
• Military involvement and weapons – all controversial weapons; production of critical weapons’ components, manufacture or sale of firearms where the annual revenue is greater than 5%;
• UN Global Compact Violators - Companies in violation of UN Global Compact Human Rights or Workplace/Labour standards;
• Nuclear Energy – production or supply where the annual revenue is greater than 5%;
• Tobacco – where the annual revenue from production is greater than 1%; where the annual revenue from supply, distribution and retail companies is greater than 5%.

* A sector is a business area, industry or economy which shares the same characteristics. Company shares are typically grouped into different sectors depending on the company’s business.

The FTSE All-Share Index has been selected as an appropriate benchmark as it provides a representation of the returns of securities in the UK equity market. The Fund Manager selects shares that meet the Fund’s ethical criteria from a diverse range of UK shares including those outside of the FTSE All-Share Index. Derivatives and stock lending may be used for the purpose of managing the Fund in a way that is designed to reduce risk or cost and/or generate extra income or growth (often referred to as efficient portfolio management)

(Source: KIID, as at February 2024)

Process

Resources, Affiliations & Corporate Strategies

Literature

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Last amended: 08/02/24 12:17