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Wellington Management Company LLP

PRI reporting framework 2018

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

In addition to our ESG integration process, we serve as the investment manager of various screened investment portfolios, where we invest in, or exclude certain types of companies based on pre-agreed guidelines and criteria from the client.

Screened by

Description

In addition to our ESG integration process, we serve as the investment manager of various screened investment portfolios, where we invest in, or exclude certain types of companies based on pre-agreed guidelines and criteria from the client.

04.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

We serve as the investment manager of various screened investment portfolios, where we invest in, or exclude certain types of companies based on pre-agreed guidelines and criteria from the client.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached

06.2. If breaches of fund screening criteria are identified - describe the process followed to correct those breaches.

Investment decisions, portfolio construction and related activities, including trading and trade reconciliation, are inherently complex processes. As a result, mistakes and imperfections occur, some of which cause losses in our clients’ portfolios. However, not all mistakes and imperfections are compensable errors. We generally consider something a compensable error when we determine that our actions did not meet the applicable standard of care for managing a client’s assets and that our client suffered a loss as a result. Our Error Resolution Council, a cross functional group of senior professionals, reviews the facts and circumstances underlying potential errors on a case-by-case basis in order to assess whether the events constitute a compensable error. In conducting the assessment, the Error Resolution Council often consults other relevant personnel, including the portfolio manager(s) for the client account and the client’s relationship manager.

If we determine that we have made an error in a client’s account, we will typically compensate the client for the direct monetary losses (if any) the error caused in the client’s account. Unless prohibited by applicable regulation or a specific agreement with the client, we net the client’s gains and losses from the error or a series of related errors with the same root cause and compensate the client for the net loss. We typically notify clients as soon as practical of any errors that violate client guidelines, or that result in a material loss in the client’s account. However, we generally do not notify clients about an event when we have determined that it does not constitute a compensable error.

06.3. Additional information.[Optional]

Our policies and procedures with respect to investment guidelines are defined in the firm’s Portfolio Guideline Monitoring Policy and Procedures. In its role as investment adviser or subadviser, the firm has responsibility for managing client portfolios in accordance with clients’ identified objectives, guidelines, and restrictions. We employ a variety of procedures and controls that are designed to assist investment professionals in complying with client guidelines. Primary responsibility for compliance with each client’s investment objectives and restrictions rests with the Portfolio Management Teams. We provide the Portfolio Management Teams with the appropriate professional support and infrastructure to ensure that they have the resources reasonably necessary to meet client guidelines.

Fidessa’s Sentinel contains the rules applied to each account that are tested by our compliance screening processes. Sentinel compliance screening can be performed on a pre-trade basis, in an overnight post-trade process, or both. Our proprietary investment and trading systems are linked to compliance screens, which enable most investment restrictions to be tested at the time an order is entered. Pre-trade overrides are reviewed throughout the day by Guideline Monitoring. Compliance tests are also applied to account holdings overnight, with results reviewed the next morning. Users throughout the firm have read-only access to the rules managed and maintained by Guideline Monitoring.

 


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