Legg Mason Martin Currie Asia Pacific Ex Japan Real Income Fund

The environmental and social characteristics of the product include the binding considerations of sustainability risks which may include; supply chain, data protection, pollution/hazardous waste policies, water usage, and climate change policies.

The product is also bound to consider governance characteristics such as: ownership structure, shareholder rights, board structure, remuneration policy and accounting standards.

The Fund is designed for investors looking for a sustainable income stream.  The Fund focuses on infrastructure, REITs and utilities, which form the tangible building blocks of the economy. By focussing on established brownfield assets that can provide high, recurring cash flow, the Fund seeks to avoid inappropriate or unnecessary development risk inherent in greenfield real asset projects.  The disciplined and repeatable investment approach is based on four distinct research lenses, Valuation, Quality, Direction and Sustainable Dividend. which should provide a better perspective of security expected returns. This also applies to the way the investment manager looks at ESG factors. Specifically, the investment manager incorporates all material and relevant ESG factors that they have uncovered through their fundamental research and engagement activities directly into the investment process.

The investment manager uses an established proprietary process to assess ESG factors/characteristics. These factors/characteristics are assessed both quantitatively and qualitatively, through its proprietary ESG rating system and its direct research and engagement process. The manager’s proprietary ESG ratings capture the forward-looking analysis with companies assigned a risk rating on each of Governance and Sustainability from 1 (low risk) to 5 (high risk) following consideration of environment, social affairs and corporate governance sustainability factors. Companies that have a sustainability risk rating of 5 will not be included in this strategy.

The Fund will not invest in companies which generate more than 5% of revenue from tobacco production or those companies with over 5% of revenue from the production of weapons. The Fund will not invest in companies which are part of the GICs Industry classification of Oil, Gas and Consumable Fuels. The Fund will not invest in companies involved in the production, sale or distribution of dedicated and key components of antipersonnel mines and cluster munitions. The Fund will not invest in companies that are assessed as ‘fail’ under the UN Global Compact.

A combination of internal and external sources is deployed:

• Internal Scoring – Governance Risk rating and Sustainability Risk rating
• Engagement activity and tracking – Environmental, Social or Governance topics and stages of engagement
• External Data Metrics (e.g. MSCI) – Carbon footprint and ESG scoring
• Other measures include carbon Intensity, SDG alignment and Carbon VAR.

No index has been designated as a reference benchmark for sustainability.