Exclusionary screen changes

Pendal Sustainable Conservative Fund (APIR: RFA0811AU)

(the “Fund”)

The following information contains an important update to the Fund’s exclusionary screens disclosed in the Product Disclosure Statement and Additional Information to the Product Disclosure Statement dated 15 April 2025 for the Pendal Sustainable Conservative Fund (PDS) and should be read in conjunction with the PDS.

The Fund applies exclusionary screens to its investments in the Australian and International shares, Australian and International fixed interest and part of its Alternative investments asset classes.

Effective from 30 June 2025, the exclusionary screens applied by the Fund to its International shares, Australian fixed interest and part of its Alternative investments asset classes will be changing, as outlined below:

• a new exclusionary screen will be added to the Fund’s International shares, Australian fixed interest and part of its Alternative investment’s asset classes. Within these asset classes the Fund will not invest in companies or issuers which directly supply goods or services specifically related to controversial weapons; and

• within the Fund’s Australian fixed interest asset class, the current screen for issuers that mine uranium for the purposes of weapons manufacturing will be removed as this will be captured under the new screen. Specifically, any issuer supplying uranium for the purposes for weapons manufacturing will now be captured under the supply of goods or services specifically related to controversial weapons exclusionary screen.

In our view, these changes ensure that the Fund remains true to label and is more closely aligned with investor expectations in relation to responsible investment funds. 

Further, we have clarified the definition of controversial weapons includes white phosphorus weapons for the Fund’s International shares, Australian fixed interest and part of the Fund’s Alternative investments asset classes.

Exclusionary Screens Effective 30 June 2025

Effective 30 June 2025, the section ‘Exclusionary Screens’ in section 5 of the Product Disclosure Statement is replaced with the following:

Exclusionary Screens

The Fund applies exclusionary screens to its investments in the Australian and International shares, Australian and International fixed interest and part of its Alternative investments asset classes. The Fund’s exclusionary screens aim to avoid exposure to companies and issuers with core business activities that Pendal considers to negatively impact the environment and/or society.[4]

In managing the Fund, the Australian and International shares, Australian and International fixed interest and part of the Alternative investments asset classes will not invest in companies and issuers which directly:

• Produce tobacco (including e-cigarettes and inhalers); or
• Manufacture controversial weapons (including landmines, biological weapons, blinding laser weapons, chemical weapons, cluster munitions, depleted uranium weapons, incendiary weapons, non-detectable fragments and nuclear weapons and except for International fixed interest, white phosphorus weapons).

Additional exclusionary screens are also applied across these asset classes.

Exclusionary screens are not applied to investments in the Fund’s Australian and International property securities, part of the Fund’s Alternative investments asset classes and certain financial instruments such as securities issued by government, semi-government or supranational entities, derivatives and cash. This is because such investments, financial instruments or issuers are not able to be reasonably screened for involvement in the activities that Pendal considers to negatively impact the environment and/or society.⁴

The use of derivatives may result in the Fund having indirect exposure to companies or issuers that would otherwise be excluded.

Further information on the Fund’s exclusionary screens can be found under the heading ‘Exclusionary Screens’ in the ‘Labour, environmental, social and ethical considerations’ section of the ‘Additional Information to the Product Disclosure Statement’.

Effective 30 June 2025, the section ‘Exclusionary Screens’ in section 4 of the Additional Information to the Product Disclosure Statement is replaced with the following:

Exclusionary Screens

The Fund applies exclusionary screens to its investments in the Australian and International shares, Australian and International fixed interest and part of its Alternative investments asset classes. The Fund’s exclusionary screens aim to avoid exposure to companies and issuers with core business activities that Pendal considers to negatively impact the environment and/or society.[2]

Exclusionary screens are not applied to investments in the Fund’s Australian and International property securities, part of the Fund’s Alternative investments asset classes and certain financial instruments such as securities issued by government, semi-government or supranational entities, derivatives and cash. This is because such investments, financial instruments or issuers are not able to be reasonably screened for involvement in activities that Pendal considers to negatively impact the environment and/or society.¹

The use of derivatives may result in the Fund having indirect exposure to companies or issuers that would otherwise be excluded.

The Fund’s Australian and International Shares, Australia and International fixed interest and part of the Alternative investments asset classes will not invest in companies and issuers which directly:

• Produce tobacco (including e-cigarettes and inhalers); or
• Manufacture controversial weapons (including landmines, biological weapons, blinding laser weapons, chemical weapons, cluster munitions, depleted uranium weapons, incendiary weapons, non-detectable fragments and nuclear weapons and except for International fixed interest, white phosphorus weapons).

Additional exclusionary screens are also applied across these asset classes as follows:

Exclusionary Screens – Australian Shares

The Fund’s Australian shares asset class will also not invest in companies which:

Fossil Fuels

• Directly extract or explore for fossil fuels (specifically, coal, oil and gas); or

• Derive 10% or more of their gross revenue from fossil fuel-based power generation (coal, oil and gas)*; or

• Derive 10% or more of their gross revenue from fossil fuel refinement (coal, oil and gas)*; or

• Derive 10% or more of their gross revenue from fossil fuel distribution (coal, oil and gas)*; or

• Derive 10% or more of their gross revenue from the provision of supplies or services which relate specifically to fossil fuel extraction or exploration (coal, oil and gas)*.

* Companies with a climate transition plan may be exempted from this exclusion, provided that they have in place a Paris Agreement aligned transition plan and produce climate-related financial disclosures annually, which in both cases we consider credible.

Uranium

• Derive 10% or more of their gross revenue from directly mining uranium for the purpose of nuclear power generation.

Logging

• Derive 10% or more of their gross revenue from unsustainable forestry or forest products, including non-Forest Stewardship Council certified forest products or non-Roundtable on Sustainable Palm Oil certified palm oil production.

Gambling

• Directly manufacture, own or operate gambling facilities, gaming services or other forms of wagering; or

• Derive 10% or more of their gross revenue from the indirect provision of gambling (for example, through telecommunications platforms).

Pornography

• Produce pornography; or

• Derive 10% or more of their gross revenue from the distribution or retailing of pornography.

Weapons

• Manufacture or distribute controversial weapons (including landmines, biological weapons, blinding laser weapons, chemical weapons, cluster munitions, depleted uranium weapons, incendiary weapons, non-detectable fragments, nuclear weapons and white phosphorus weapons); or

• Supply goods or services specifically related to controversial weapons; or

• Manufacture non-controversial weapons or armaments (including civilian firearms or military equipment); or

• Derive 10% or more of their gross revenue from the distribution or retailing of non-controversial weapons or armaments (including civilian firearms or military equipment); or

• Derive 10% or more of their gross revenue from the supply of goods or services specifically related to non-controversial weapons or armaments.

Alcohol

• Produce alcoholic beverages; or

• Derive 10% or more of their gross revenue from the distribution or retailing of alcoholic beverages.

Tobacco

• Produce tobacco (including e-cigarettes and inhalers); or

• Derive 10% or more of their gross revenue from the distribution of tobacco (including e-cigarettes and inhalers); or

• Derive 10% or more of their gross revenue from the supply of goods or services specifically related to the tobacco industry (for example, packaging or promotion).

Animal cruelty

• Directly undertake animal testing for cosmetic products; or

• Directly undertake live animal export.

Predatory lending

• Directly provide products or services with lending practices that are unfair or deceptive to ordinary borrowers, including small amount short term loans at higher than commercial rates of interest (for example, payday loans, pawn loans or the use of aggressive sales tactics).

Breaches and misconduct

• We consider to have been found to have significant breaches of social or environmental norms or regulations, or are subject to serious and substantiated allegations of unethical conduct, which we consider have not been remedied or adequately addressed.

Exclusionary Screens – International Shares

The Fund’s International shares asset class will also not invest in companies which directly:

• Supply goods or services specifically related to controversial weapons; or

• Extract or explore for fossil fuels (specifically, coal, oil and natural gas).

The Fund’s International shares asset class will also not invest in companies which derive 10% or more of their gross revenue directly from:

• Fossil fuel-based power generation, or fossil fuel distribution or refinement (coal, oil and natural gas)*; or

• The production of alcoholic beverages; or

• Manufacture, ownership or operation of gambling facilities, gaming services or other forms of wagering; or

• Manufacture of non-controversial weapons or armaments; or

• Manufacture or distribution of pornography; or

• Uranium mining for the purpose of nuclear power generation.

* Companies with a climate transition plan may be exempted from this exclusion, provided that they have in place a Paris Agreement aligned transition plan and produce climate-related financial disclosures annually, which in both cases we consider credible.

Exclusionary Screens – Australian Fixed Interest

The Fund’s Australian fixed interest asset class will also not invest in companies which directly:

• Supply goods or services specifically related to controversial weapons.

The Fund’s Australian fixed interest asset class will also not invest in issuers which derive 5% or more of their gross revenue directly from:

• Exploration, extraction or refinement of fossil fuels (specifically coal, oil and gas); or

• The production of alcohol; or

• Manufacture or provision of gaming facilities; or

• Manufacture of non-controversial weapons or armaments; or

• Manufacture or distribution of pornography.

Exclusionary Screens – International Fixed Interest

The Fund’s International fixed interest asset class will also not invest in issuers which derive 10% or more of their gross revenue directly from:

• The production of alcohol; or

• Manufacture or provision of gaming facilities; or

• Manufacture of non-controversial weapons or armaments; or

• Manufacture or distribution of pornography; or

• Direct mining of uranium for the purpose of weapons manufacturing; or

• Extraction of thermal coal and oil sands production.

Exclusionary Screens – Alternative Investments

Additional exclusionary screens are applied to only part of the Fund’s Alternative investments asset class. This is because some investments cannot be reasonably screened for involvement in activities that Pendal considers to negatively impact the environment and/or society.[3]

Where exclusionary screens can be applied to Alternative investments, the Fund’s Alternative investments asset class will also not invest in companies which directly:

• Supply goods or services specifically related to controversial weapons

Where exclusionary screens can be applied to Alternative investments, the Fund’s Alternative investments asset class will also not invest in companies or issuers which derive 10% or more of their gross revenue directly from:

• The production of alcoholic beverages; or

• Manufacture, ownership or operation of gambling facilities, gaming services or other forms of wagering; or

• Manufacture of non-controversial weapons or armaments; or

• Manufacture or distribution of pornography; or

• Direct mining of uranium for the purpose of nuclear power generation; or

• Extraction of thermal coal and oil sands production.

All reasonable care has been taken to implement the Fund’s exclusionary screens to meet the criteria described above. To determine whether an investment is subject to the Fund’s exclusionary screens, Pendal relies on internal and supplementary external research, believed to be accurate. However, as the nature and conduct of businesses may change over time, and publicly available financial or other information is not always comprehensive or up to date, we do not guarantee that the Fund’s investments will meet all of the Fund’s exclusionary screen criteria at all times.

Where the Fund invests in non-Pendal funds or non-Pendal ETFs, LICs or LITs, we do not guarantee that these investments will meet all of the Fund’s exclusionary screen criteria at all times. This is because Pendal does not control the exclusionary screening methodology applied by such funds, ETFs, LICs or LITs and relies on publicly available information to monitor their compliance with the Fund’s exclusionary screens.

Pendal reviews investments subject to the Fund’s exclusionary screens monthly, however some investments within the Fund’s Alternative investments asset class are reviewed quarterly. We monitor the Fund’s compliance with its exclusionary screens daily.

If we determine that an investment no longer meets our exclusionary screen criteria, we will divest the holding (usually within six months) having regard to the interests of investors. The time it takes to sell an investment depends on factors including, but not limited to, the size and liquidity of the investment (which may have an impact on the Fund’s performance returns), and the time it takes for Pendal to seek and assess suitable replacement investments that meet the Fund’s exclusionary screens and sustainability criteria.

---

[4] As defined by the Fund’s exclusionary screens and gross revenue thresholds. For further details, please refer to section 5 of this PDS and ‘Labour, environmental, social and ethical considerations’ in section 4 of the ‘Additional Information to the Product Disclosure Statement’.

1 As defined by the Fund’s exclusionary screens and gross revenue thresholds.

3 As defined by the Fund’s exclusionary screens and gross revenue thresholds.