RARI invests in a portfolio of ASX Australian Shares and Trusts, weighted to companies that demonstrate positive environmental, social and governance (ESG) characteristics. The fund screens for companies that have significant involvement in a range of activities deemed by us to be inconsistent with widely recognised responsible investment considerations.

The Fund aims to provide a total return before costs and tax, in line with the Russell Australia ESG High Dividend Index (Index) over the long term.

Benefits of investing in the Russell Investments Australian Responsible Investment ETF

What are the benefits of ETFs in general? 

• Diversification: ETFs provide you with the ability to diversify your portfolio through holding a single security.

• Liquidity and transparency: As a traded security, an ETF enables you to enter and exit your investment on the ASX during trading hours. In addition, the assets held by the ETF are disclosed daily, enabling you to have full transparency to your holdings.

• Taxation advantages: An ETF will change in value as the underlying portfolio changes in value and may provide income for you through distributions and franking credits. The turnover of the underlying portfolio is generally low, this may reduce the level of capital gains incurred by you and tax paid. For further details on taxation, please see 'Tax' on page 12 of the PDS.

• Lower cost: Since ETFs are typically able to achieve lower operating costs, the management costs are generally lower compared to other forms of retail managed funds. However, brokerage or adviser fees may still apply when buying or selling an ETF.

What are the benefits specific to the Fund? 

• Targeted exposure: The Fund will predominantly invest in Australian listed shares and trusts. It is an outcome-focused ETF, which aims to provide investors with a simple, transparent and flexible means of accessing an ESG enhanced, responsible investment portfolio of Australian listed companies and trusts. To meet the needs of Australian investors, the Fund also seeks to improve expected future income (including franking credits) after meeting its desired responsible investment objectives.
• Future income: The Fund also seeks to improve expected future income (including franking credits) after meeting its desired responsible investment objectives.
• Income protection: There is an ‘income protection feature’ designed to ensure that the income entitlements of existing Fund investors is not diluted by new investors

Only available to stockbrokers acting as principal. That is, persons who have been authorised as trading participants under the ASX Operating Rules (Authorised Participants) and, where required, have entered into a relevant Authorised Participant Agreement.

About the Fund

The Russell Investments Australian Responsible Investment ETF (the 'Fund') seeks to track the Russell Australia ESG High Dividend Index ('the Index'), which is weighted towards companies that demonstrate positive environmental, social and governance (ESG) characteristics after negatively screening for companies that have significant involvement in a range of activities deemed inconsistent with widely recognised responsible investment considerations. The Fund invests in Australian shares and trusts listed on the Australian Securities Exchange (ASX), with the aim of providing investors with exposure to an ESG enhanced, responsible investment portfolio.

About the Index

The Russell Australia ESG High Dividend Index is an equity index provided by Frank Russell Company (the Index Provider). The Russell Australia ESG High Dividend Index uses a selective methodology to identify and weight Australian companies based on a demonstrated commitment to responsibility in the following categories: Environmental, Social and Governance (ESG) and high quality dividend income. It is designed to provide investors with exposure to Australian equities which have demonstrated consistent commitment to environmental and social responsibility and higher governance standards.

How we invest your money

The Fund seeks to track the performance of the Index by investing predominantly in Australian shares and trusts listed on the ASX. The Index is weighted to companies that demonstrate positive environmental, social and governance characteristics after negatively screening for companies that have significant involvement in a range of activities deemed by us to be inconsistent with widely recognised responsible investment considerations. The Index is also weighted to improve expected future income (including franking credits).

Derivatives may also be used to a limited extent to obtain or reduce exposure to such securities. We will not significantly change the Fund's investment strategy as described in the PDS unless the change has been approved by a resolution of Unitholders passed by at least 75% of the votes cast (referred to as a 'special resolution').

Eligible Securities

The Russell Australia ESG High Dividend Index starts with the members of the Russell Global Australia All Cap Index (a sub-index of the Russell Global Index) as the parent index. Since the Russell Australia ESG High Dividend Index is constructed for domestic use, foreign ownership limits are not applied.

Exclusions

The first step in constructing the Russell Australia ESG High Dividend Index is to exclude securities that are not listed on the ASX from the parent index. In addition, companies that are considered by the Responsible Investment Committee to be inconsistent with certain ESG objectives are also excluded from the Index. Such activities may include, but are not limited to, a material involvement in:

• the manufacture and distribution of tobacco, alcohol, gambling, pornography and armaments;
• the production or combustion of more carbon-intensive fossil fuels.

Companies which lag industry peers in approaching ESG risk such as involvement in activities causing environmental damage, violating human rights and businesses with questionable third-party transactions, and have a poor record of managing such ESG risk, may also be excluded.

For more information on the Responsible Investment Committee's guidelines for determining the list of exclusions from the Russell Australia ESG High Dividend Index, please refer to the Index Construction and Methodology, which is available on our website at russellinvestments.com.au/etfs. The list of exclusions will also be made available on our website.

For more information on the Index please see Pp 5-6 in the PDS.