SFDR Disclosures

2.1. General consideration

To limit sustainability risks, DCP attempts to identify and, where possible, exclude investments in companies that have an increased risk potential. With specific exclusion criteria or by taking into account best-in-class ESG ratings, DCP is able to base investment decisions on environmental, social or company-related values. For this purpose, DCP generally uses valuation methods recognized in the market. The identification of suitable investments to limit sustainability risks consists, among other things, of using data from recognized rating agencies for investment decisions or applying actual exclusion criteria. DCP’s participation policy is characterized by the fact that no shareholder rights are exercised, no participation rights are exercised and no corresponding publications are made on the implementation of participation obligations.

DCP does not currently consider a formalized declaration of principal adverse impacts (PAI) pursuant to Art. 4 para. 1 lit. a SFDR. However, selected sustainability indicators are reviewed and taken into account on a voluntary basis as part of the investment process for fund products, where available and relevant.

Article 6 of the SFDR requires the disclosure of information on the sustainability risks and impacts of products and services, as well as the policies and processes for managing these risks. This includes information on how the products contribute to environmental or social objectives and what negative impacts they may have.

Article 8 aims to ensure that financial products and services offered to investors are consistent with the sustainability objectives of the SFDR and are marketed in a way that is transparent and accurate for investors. ESMA shall adopt guidelines and recommendations on the application of and compliance with SFDR.

2.2. Consideration as part of the investment decisions of the DCP fund with its underlying sub-funds DCP – Hybrid Income and DCP – Equity Income

2.2.1. DCP – Hybrid Income

The DCP – Hybrid Income sub-fund is designed as a sustainable bond fund that invests primarily in subordinated bonds. This means that the sub-fund invests in bonds issued by non-government issuers worldwide, with a focus on European issuers and a broad sector diversification. The sub-fund focuses on subordinated bonds from issuers with strong balance sheets, the sustainability of which is taken into account when making investment decisions. When assessing sustainability risks, the fund management follows a standards-based upstream ESG exclusion process. Issuers that violate the UN Global Compact criteria are excluded. In addition, the fund management takes into account the ESG rating of rating agencies and applies other hard exclusion criteria that are anchored in the investment policy. The investment objective of the sub-fund is to generate a higher return over the long term than can be expected from a pure first-class bond portfolio. The sub-fund is particularly suitable for investors who focus on sustainable investments, are looking for a high-yield addition to their bond portfolio and are prepared to bear the corresponding risks.

You can find out more about the strategy and allocation process of DCP – Hybrid Income here:

https://www.dcp-am.ch/fonds/1-dcp-hybrid-income-fund

https://www.axxion.lu/

The sub-fund observes the following Principal Adverse Impacts (PAIs):

• CO2-footprint
• Greenhouse gas intensity of portfolio companies
• Activities that have a negative impact on areas with sensitive biodiversity
• Violations of the principles of the UN Global Compact and the OECD Guidelines for Multinational Enterprises
• Exposure to controversial weapons (anti-personnel mines, cluster munitions, chemical weapons and biological weapons)

The sub-fund applies the following exclusion criteria:

• Companies that generate more than 5% of their turnover from the manufacture of tobacco products.
• Companies that generate more than 30% of their turnover from the production and sale of thermal coal.
• Companies that generate more than 10% of their turnover from the manufacture or sale of military equipment.
• The manufacture or sale of weapons outlawed under international law is completely excluded.
• Companies that generate more than 5% of their turnover from the production or distribution of pornographic material.
• Companies that generate more than 5% of their turnover from the operation of gaming facilities.
• Direct and indirect investments by companies that seriously violate the UN Global Compact criteria are excluded.

The fund management company classifies the DCP – Hybrid Income fund as a fund within the meaning of Art. 8 of the Disclosure Regulation (EU) 2019/2088. The sub-fund therefore advertises environmental or social characteristics, but does not aim to make sustainable investments.

2.2.2. DCP – Equity Income

DCP – Equity Income is designed as an equity fund. To achieve its investment objective, the sub-fund aims to invest in individual equities, equity indices (via ETFs and/or index options) from the USA, Europe (including Switzerland), money market instruments and derivatives. Income can be generated in particular from dividends and option premiums. Option premiums, which are collected through option writer transactions, form an important pillar of the sub-fund’s income concept. In conjunction with dividend payments, the aim is to generate regular, price-independent sources of income for the sub-fund’s investors. As an active equity fund, these are to be supplemented by price gains. In addition to direct investments and options on individual shares, options on common indices such as the S&P500, the EuroStoxx50 or the SMI can also provide regular premium income. Index options (call and put options) can also be purchased if the portfolio manager believes this is conducive to the sub-fund’s objective.

The sub-fund takes sustainability risks into account when making investment decisions in accordance with Article 6 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector.

Disclosure according to Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (“Taxonomy Regulation”): The investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.

As this sub-fund does not make any sustainable investments in accordance with Regulation (EU) 2019/2088 and does not promote any environmental or social characteristics, no adverse impacts on sustainability factors within the meaning of Article 7 (1) a) of Regulation (EU) 2019/2088 are taken into account. At company level, DCP does not currently consider any material adverse impacts of investment decisions on sustainability factors within the meaning of Art. 4 para. 1 lit. b SFDR.

More information on the strategy and allocation process of DCP – Equity Income can be found here:

https://www.axxion.lu/