U Ethical Diversified Income Trust (Wholesale)

Responsible Investing Approach

U Ethical takes labour standards, and environmental, social and governance considerations into account, as well as key financial criteria, when selecting, retaining or realising investments of the Trust. The application of the U Ethical's ethical investment policy varies according to the asset class. Fixed income applies Negative screening, however, Positive Screening, ESG Integration and Active Stewardship have limited application. Cash, cash equivalents and term deposits apply to a limited degree Negative Screening and Active Stewardship, they do not apply Positive Screening or ESG Integration.

The investment process integrates ESG considerations with the aim of both minimising investment risk exposure and identifying investment opportunities. A qualitative and quantitative ESG analysis is conducted across all new holdings prior to investment. U Ethical seeks to invest in companies that align with its ethical investment philosophy through positive screening, there is limited application for fixed income and it is not relevant for cash, cash equivalents and term deposits.

The Fund's negative screening approach means it does not invest in companies and issuers directly deriving revenue or earnings from the activities listed in the Information Memorandum. That is either zero tolerance or where revenue or earnings exceed a materiality threshold of 5% of the total of the activities.

Documents

Exclusions

U Ethical does not invest in companies or issuers that derive any revenue from manufacturing tobacco products, including e-cigarettes and inhalers, manufacturing or distributing controversial or nuclear weapons, or energy generation from nuclear fission. It may invest in the distribution and retailing of tobacco products or packaging. U Ethical avoids investing in companies or issuers that infringe on human rights, contravene international conventions, or exhibit non-compliance with environmental legislation, breaches and violations of regulatory and statutory frameworks leading to negative impacts resulting from environmental damage such as biodiversity and land use, toxic emissions and waste.

U Ethical does not invest in companies that derive more than 5% of their revenues directly from manufacturing of alcoholic products and beverages (This does not include the distribution and retailing of alcoholic products and beverages), manufacturing or distributing civilian or conventional weapons, thermal and metallurgical coal mining, conventional and unconventional oil and gas extraction and production, energy generation from coal, oil and gas, or equity ownership of the previously listed, animal cruelty and exploitation, such as animal testing for non-medical purposes, ownership and operation of gambling facilities, gambling or wagering products or services, and online gambling, uranium mining, making, distribution or retailing of products or services where the dominant theme is sexually explicit conduct.

Exclusions	Full/Partial Exclusion	Description
Tobacco	Full	The Fund does not invest in companies that derive any revenue from manufacturing tobacco products, including e-cigarettes and inhalers.
Tobacco	Partial	The Fund may invest in the distribution and retailing of tobacco products or packaging.
Alcohol	Partial	The Fund does not invest in companies that derive more than 5% of their revenues directly from manufacturing of alcoholic products and beverages. This does not include the distribution and retailing of alcoholic products and beverages.
Weapons	Full	The Fund does not invest in companies that derive any revenue from manufacturing or distributing controversial or nuclear weapons.
Weapons	Partial	The Fund does not invest in companies that derive more than 5% of their revenues from manufacturing or distributing civilian or conventional weapons.
Fossil fuel exploration, mining and production	Partial	The Fund does not invest in companies that derive more than 5% of their revenues from thermal and metallurgical coal mining, conventional and unconventional oil and gas extraction and production, energy generation from coal, oil and gas, or equity ownership of the previously listed.
Human rights abuses	Partial	U Ethical avoids investing in companies that infringe on human rights.
Labour rights violations	Partial	U Ethical avoids investing in companies that contravene international conventions.
Environmental damage	Partial	U Ethical avoids investing in companies that exhibit non-compliance with environmental legislation, breaches and violations of regulatory and statutory frameworks leading to negative impacts resulting from environmental damage such as biodiversity and land use, toxic emissions and waste.
Animal testing for non-medical purposes	Partial	The Fund does not invest in companies that derive more than 5% of their revenues from animal cruelty and exploitation, such as animal testing for non-medical purposes.
Gambling	Partial	The Fund does not invest in companies that derive more than 5% of their revenues from ownership and operation of gambling facilities, gambling or wagering products or services, and online gambling.
Nuclear power (including uranium mining)	Full	The Fund does not invest in companies that derive any revenue from energy generation from nuclear fission.
Nuclear power (including uranium mining)	Partial	The Fund does not invest in companies that derive more than 5% of their revenues from uranium mining.
Adult entertainment/pornography	Partial	The Fund does not invest in companies that derive more than 5% of their revenues from making, distribution or retailing of products or services where the dominant theme is sexually explicit conduct.

Inclusions

U Ethical's investment process integrates ESG considerations with the aim of both minimising investment risk exposure and identifying investment opportunities. A qualitative and quantitative ESG analysis is conducted across all new holdings prior to investment. Company controversies and overall ESG profiles are monitored on an ongoing basis. U Ethical seeks to invest in companies that align with its ethical investment philosophy through positive screening, there is limited application for fixed income and it is not relevant for cash, cash equivalents and term deposits.

Sustainable land & agricultural management

Biodiversity preservation & conservation

UN Sustainable Development Goals

Conventions & Treaties

U Ethical participates in various industry bodies such as the Responsible Investment Association Australasia (RIAA), including its Human Rights Working Group and Policy and Advocacy Technical Expert Group (TEG), as well as the United Nations Principles for Responsible Investment (UNPRI) and its Tax Reference Group and Global Policy Reference Group (GPRG). Additionally, U Ethical is a member of the Investor Group on Climate Change (IGCC)'s ClimateAction 100+.

Conventions & Treaties	Aligned	Description
UN Global Compact	Yes	U Ethical screens companies or issuers for breaches and violations that are inconsistent with its ethical position on the underlying principles of global norms and conventions, such as the United Nation Global Compact (UNGC).
UN Guiding Principles on Business & Human Rights	Yes	U Ethical screens companies or issuers for breaches and violations that are inconsistent with its ethical position on the underlying principles of global norms and conventions, such as the United Nations Guiding Principles on Business and Human Rights (UNGP).
Principles for Responsible Investment	Yes	United Nations Principles for Responsible Investment (UNPRI) and its Tax Reference Group and Global Policy Reference Group (GPRG).
OECD Guidelines for Multinational Enterprises	Yes	U Ethical screens companies or issuers for breaches and violations that are inconsistent with its ethical position on the underlying principles of global norms and conventions, such as the OECD Guidelines for Multinational Enterprises.
International Labour Organisation's Fundamental Conventions	Yes	U Ethical screens companies or issuers for breaches and violations that are inconsistent with its ethical position on the underlying principles of global norms and conventions, such as the International Labour Organisation (ILO) Conventions.

ESG Score

ESG Score
Does the portfolio have an ESG score?	Not disclosed
If so, who is responsible for calculating the score?	Not disclosed
If a score is calculated, is this publicly available; i.e. displayed in monthly reports, on your website, etc.?	Not disclosed
If the portfolio has an ESG score, how often is that score recalculated to account for changes to portfolio holdings?	Not disclosed

Impact Investing Score

Impact Investing Score
Does the portfolio have an Impact Investment score?	Not disclosed
If a score is calculated, is this publicly available; i.e. displayed in monthly reports, on your website, etc.?	Not disclosed
If the portfolio has an Impact Investment score, how often is that score recalculated to account for changes to portfolio holdings?	Not disclosed
Does the fund publish its holdings publicly?	Partial

Policies, Certification & Marketing

Policies, Certification & Marketing
Responsible investing policy	View Responsible investing policy document
Proxy voting policy	View Proxy voting policy document
Stewardship policy	View Stewardship policy document
Is the fund RIAA certified?	No

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