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<h2>Portfolio management –<em> </em>(Article 8)</h2>
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<div class="header"><span>What environmental and/or social characteristics are promoted by this financial product?</span></div>
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<p>This financial product promotes environmental and social characteristics as a majority of its assets is invested in funds that have a sustainable investment as their objective or in funds that promote, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices. These funds are classified under the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 as Articles 8 or 9.</p>
<p>Complementarily, the product can invest in funds that do not fall under Articles 8 or 9 of the afore mentioned regulation provided they do not represent more than 49% of the assets held in the portfolio. These include investment funds that do not directly promote environmental or social characteristics in their investments. Nevertheless, these funds may disclose how sustainability risks are integrated into their investment decisions and the results of the assessment of the likely impacts of sustainability risks on the returns of the fund and where those risks are deemed to be relevant.</p>
<p>No reference index has been designated for the purpose of attaining the environmental or social characteristics promoted by this product.</p>
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<div class="header"><span>What sustainability indicators are used to measure the attainment of each of the environmental or social characteristics promoted by this financial product?</span></div>
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<p>The sustainability indicators for companies (“Corporate Sustainability Score”) or governments (“Government Sustainability Score”) are weighed differently for each of the funds/investments, depending on their specific investment universe. These indicators are provided by Morningstar and are designed to measure, for each of the funds in which the product invests, the Environmental, Social and Governance (ESG) risk not managed by the companies or issuers that are part of their portfolios.</p>
<p>Unmanaged risk includes ESG risks that cannot be mitigated through the intervention of the company's management and those that are not properly managed by the companies, which include carbon emissions and the use of resources within the scope of the operation itself or in the production chain, business ethics, respect for human rights and governance at product and company level.</p>
<p>Sustainability risks are also assessed at the product level. The product's score corresponds to the weighted average of the score of the investment funds that compose it. The product aims to achieve a “Corporate Sustainability Score” above the average score of the Morningstar category comprised of products with a similar risk profile.</p>
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<div class="header"><span>Does this financial product consider principal adverse impacts on sustainability factors?</span></div>
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<p>[X] Yes</p>
<p>The product considers the principal adverse impacts on sustainability factors as it selects and invests in mutual funds that integrate in their decision-making process the analysis of the negative impact that a company or issuer has on environmental and social aspects.</p>
<p>The consideration of indicators such as greenhouse gas emissions, carbon footprint or diversity of the board of directors, by the investment funds is of particular importance since the emergence of sustainability risks can generate a material negative impact in the current or future value of investments.</p>
<p>Considering that, currently, it is possible to calculate sustainability indicators at the product level, based on the funds in which it is invested, it is expected that new information will be made available in a near future that will allow the calculation of metrics that validate that the product is not exposed to risks that cannot be identified from a qualitative analysis. </p>
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<div class="header"><span>What investment strategy does this financial product follow?</span></div>
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<p>The product invests in mutual funds (UCITS) on the basis of a detailed due diligence that is a key step of the fund selection process. The funds are managed by fund management companies specialized in each asset classes. The diversity of managers, investment geographies and asset classes encompassed by the product enhance its diversification and mitigates the financial and sustainability risks associated with the investments made by each of the funds. </p>
<p>The product is actively managed with the aim of achieving above benchmark results, strictly complying with defined risk parameters. The benchmark reflects a strategic allocation and translates the product's return and risk characteristics into the recommended investment horizon. The benchmark is contractually defined and encompass reference indices representative of the classes and subclasses of assets in which the product invests. Maximum and minimum exposure limits are identified in order to keep the portfolio consistent with the level of risk. These limits are defined in the pre-contractual and contractual information associated with the product.</p>
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<div class="header"><span>What are the binding elements of the investment strategy used to select the investments to attain each of the environmental or social characteristics promoted by this financial product? </span></div>
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<p>The investments made by this product are subject to the underlying fund selection process which includes, in several stages, the assessment of the environmental and social characteristics of the funds. Firstly, the process excludes funds that have, among other characteristics, a Low “Morningstar Sustainability Rating”, which implies that the funds are in the lowest decile of their category with respect to the sustainability of their investments.</p>
<p>Subsequently, the current and historical sustainability risks of the portfolios of the funds are assessed through the analysis of the "Corporate Sustainability Score" and "Sovereign Sustainability Score" provided by Morningstar. This may lead to the exclusion of funds that prove to be non-compliant within their universe. As part of the due diligence process, the fund management companies are formally requested to provide information that detail how sustainability risks are integrated into their investment decisions, as well as the method of assessing the main negative impacts of these decisions and the planned measures or objectives established with a view to reducing these impacts.</p>
<p>In the event the selected fund presents a “Corporate Sustainability Score” above 30, which means that its sustainability risk is considered high, it is required to substantiate the decision. The investment in these funds will be mitigated by the fact that the product aims to achieve a “Corporate Sustainability Score” better than the average score of the Morningstar category comprising products with a similar risk profile.</p>
<p>In the process of monitoring the funds in which the product is invested in, risk management and sustainability impacts are regularly assessed, and the management companies are asked to share their internal policies in this matter. Changes to the funds’ investment process or style, including to integration of risks and assessment of sustainability factors, may lead to the exclusion of a given fund.</p>
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<div class="header"><span>What is the policy to assess good governance practices of the investee companies? </span></div>
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<p>Not applicable at the product level given that the investments are made indirectly through mutual funds. </p>
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<div class="header"><span>What is the asset allocation planned for this financial products? </span></div>
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<p>The product will have most of its assets invested in funds that are classified as Articles 8 or 9 under EU regulation.</p>
<p><img width="546" height="136" alt="The product will have most of its assets invested in funds that are classified as Articles 8 or 9 under EU regulation" src="/en/Institucional/sustentabilidade/PublishingImages/2022/sustentabilidade-1-en-27122022.png"/></p>
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<div class="header"><span>How does the use of derivatives attain the environmental or social characteristics promoted by the financial product? </span></div>
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<p>The use of derivatives is limited to hedging market risks and doesn´t have any contribution to the attainment of the product’s environmental or social characteristics.</p>
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<div class="header"><span>To what minimum extent are sustainable investments with an environmental objective aligned with the EU Taxonomy? </span></div>
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<p>Some of the funds in which the product invests define minimum thresholds regarding their investments in environmentally sustainable economic activities as defined under the Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 which establishes the criteria for determining whether an economic activity qualifies as environmentally sustainable for the purposes of establishing the degree to which an investment is environmentally sustainable.</p>
<p>However, and with the information currently available, the calculation of this metric for the product is not yet possible. Notwithstanding, we may state that the product will have a minimum above 0% of Taxonomy-aligned investments. </p>
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<div class="header"><span>Is a specific index designated as a reference benchmark to determine whether this financial product is aligned with the environmental and/or social characteristics that it promotes? </span></div>
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<p>[X] No</p>
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<div class="header"><span>Where can I find more product specific information online? </span></div>
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<p>More product specific information can be found at: <br/>
<a href="/en/Private/Pages/gest_discricionaria.aspx">Discretionary Management - Millennium bcp</a><br/>
<em><a href="/en/Institucional/sustentabilidade/Pages/Disclosure-informacao-nao-financeira.aspx">Non-financial information disclosure (SFDR) – Millennium bcp</a></em> </p>
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<div class="header"><span>Annex II - Pre-contractual disclosure on Sustainability </span></div>
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<p> <a href="/en/Institucional/sustentabilidade/Documents/2023/Annex-II-Pre-contractual-disclosure-on-Sustainability.pdf" target="_blank">Annex II - Pre-contractual disclosure on Sustainability</a> </p>
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