Exclusionary screen changes

Exclusionary screen changes

Pendal Sustainable Australian Fixed Interest Fund – Class R (APIR: BTA0507AU)

Pendal Sustainable Australian Fixed Interest Fund – Class W (APIR: PDL3438AU)

(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 20 February 2025 for the Pendal Sustainable Australian Fixed Interest Fund (PDS) and should be read in conjunction with the PDS.

Effective from 30 June 2025, the exclusionary screens applied by the Fund will be changing, as outlined below:

• the definition of controversial weapons applied by the Fund will broaden to include white phosphorus weapons. As a result, the Fund will not invest in issuers involved in the manufacture of white phosphorus weapons;

• the Fund will introduce an additional exclusionary screen and not invest in issuers directly involved in the supply of goods or services specifically related to controversial weapons; and

• the Fund will remove its current screen for issuers that mine uranium for the purposes of weapons manufacturing 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. 

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 will not invest in issuers directly involved in any of the following business activities:

• tobacco production (including e-cigarettes and inhalers);

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

• supply of good or services specifically related to controversial weapons.

Additional exclusionary screens are applied differently across industries and business activities.

The Fund applies exclusionary screens to its investments in corporate debt securities. Exclusionary screens are not applied to government securities, semi-government securities, supranational securities, cash or derivatives. This is because it is not reasonably practicable to apply exclusionary screens to such securities or issuers. The use of derivatives may result in the Fund having indirect exposure to issuers that would otherwise be excluded.

For further information on the Fund’s exclusionary screens, go to the ‘Exclusionary Screens’ heading 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 3 of the Additional Information to the Product Disclosure Statement is replaced with the following:

The following text contains further information on the environmental, social (including labour standards) and ethical considerations that we take into account when selecting, retaining or realising investments in the Fund and should be read in conjunction with the PDS.

Exclusionary Screens

The Fund will not invest in issuers directly involved in any of the following business activities:

• tobacco production (including e-cigarettes and inhalers);

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

• supply of good or services specifically related to controversial weapons.

The Fund will also not invest in issuers directly involved in any of the following activities, where such activities account for 5% or more of an issuer’s gross revenue:

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

• the production of alcohol;

• manufacture or provision of gaming facilities;

• manufacture of non-controversial weapons or armaments; or

• manufacture or distribution of pornography.

The Fund applies exclusionary screens to its investments in corporate debt securities. Exclusionary screens are not applied to securities issued by government, semi-government or supranational entities, derivatives or cash. This is because it is not reasonably practicable to apply exclusionary screens to such securities or issuers. The use of derivatives may result in the Fund having indirect exposure to issuers that would otherwise be excluded.

All reasonable care has been taken to implement the Fund’s exclusionary screens to meet the criteria described above. We draw on internal and supplementary external research, believed to be accurate, to determine whether an issuer is subject to the exclusionary screens. 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 cannot guarantee that the Fund will meet all these criteria at all times.

We review issuers subject to the exclusionary screens monthly, and monitor the Fund’s compliance with its investment guidelines (including with the exclusionary screens) daily. If we discover an investment no longer meets our criteria, we will divest the holding as soon as we consider appropriate (usually sold within three months), having regard to the interests of investors.