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PGIM Quantitative Solutions' ESG Mission

PGIM Quantitative Solutions' goal is to meet client investment objectives by closely managing portfolio exposure to expected return and risk. When determining portfolio holdings, we evaluate the impact of many factors on meeting these objectives, including Environmental, Social and Governance (ESG) factors.

We are strongly committed to understanding both ESG’s present and future investment implications, as well as our clients’ particular ESG goals and priorities, which we see as being more nuanced than conventional wisdom has generally acknowledged.

We are also focused on promoting ESG investment principles within the investment industry, in particular on improving the quality, quantity and consistency of the data disclosed.

PGIM Quantitative Solutions' approach to integrating ESG in our investment portfolios is intended to address the challenges facing the responsible investor, without compromising long-term risk mitigation or expected returns.

PGIM Quantitative Solutions' ESG Investment Strategy

As a quantitative investor, PGIM Quantitative Solutions has a disciplined investment philosophy and robust investment processes in place across our investment platform. Our processes are anchored by extensive research into the use of quantitative factors intended to capture market inefficiencies and/or capitalize on investor biases in buying behavior. We believe this will translate into consistent long-term investment performance for our clients.

PGIM Quantitative Solutions offers all of our quantitative equity portfolios with varying degrees of ESG integration. Such differentiation allows clients to select their own levels of active ESG investment.

The majority of our quantitative equity portfolios have long included various quality signals, which we use as a proxy for governance. Our quality factors are broadly focused on companies we expect to be fundamentally stronger in the future. We can evaluate quality through a wide range of approaches, including non-financial quality (board and management quality), and direct measures of financial quality including earnings quality, company financing, and operating and financial stability, among others. Our research has shown that better management and boards generally make better decisions, leading to better investing, financing and operating outcomes, and thus better financial outcomes for shareholders.

For clients who wish to invest with a more direct emphasis on ESG, we can employ a quantitative technique that identifies exposure to material ESG attributes, based on industry materiality guidelines developed by SASB. We can also score companies on their level of carbon emissions, to directly address the issue of climate change. Where emissions data is not available, our proprietary data completion technique can proxy data based on known return patterns and risk factors. Our process reduces exposure to companies with significantly low ESG ratings within permissible risk bounds and investment restrictions, and increases exposure to companies that score well. Client-directed restrictions, which include negative screening, can also be implemented within the portfolio construction process. Our proprietary optimization algorithm can take into consideration any country, company or industry restrictions that our client may impose.

PGIM Quantitative Solutions will continue to research the best ways to use factors that capture ESG effects and combine them with other stock selection factors to identify attractive investment opportunities. Our firm-wide research agenda supports our commitment, with a current focus on:

• Updating the SASB materiality map
• Examination of company improvements on specific ESG measures
• Comparisons of ESG factors across sectors and countries

General Approach

Alignment with stewardship principles and codes

We believe that strong governance leads to improved management of social and environmental issues, and we exercise our views and monitor our influence on investee companies through the proxy voting process. We consider shareholder proposals in this area carefully with a focus on adding economic value. In addition, through our collective engagement with ESG-related organizations and data providers, we advocate for greater disclosure of ESG data, which we view as essential to identifying potential sources of risk that might not be reflected in market valuations, and to the further assimilation of ESG into mainstream investment practices.

Through our collective engagement and work with ESG-related and other stewardship and governance organizations and data providers, we also advocate for additional reporting and accountability of investee companies.

For example, PGIM Quantitative Solutions became a signatory to the United Nations-supported Principles of Responsible Investment (PRI) in 2015. In 2017, PGIM Quantitative Solutions accepted an invitation to join the Sustainability Accounting Standards Board (SASB) Alliance and Investor Advisory Group. Since that time, we have collaborated with the organization on research that we believe has important implications for practitioner applications of the SASB Materiality Map.^TM

In 2018, we began supporting the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), and in 2019, PGIM Quantitative Solutions became a signatory to the Investor Stewardship Group (ISG).

PGIM Quantitative Solutions also participates in various educational and collaborative events with other stewardship and governance organizations. We are members of the Council of Institutional Investors (CII) and the International Corporate Governance Network (ICGN). We also joined the Investor Network on Climate Risk (INCR)/CERES through memberships held by PGIM, the global investment management business of Prudential Financial, Inc. (PFI), as well as through PFI, our ultimate parent.

Expectations and objectives*

PGIM Quantitative Solutions' goal is to meet client investment objectives by closely managing portfolio exposure to expected return and risk. When determining portfolio holdings, we evaluate the impact of many factors on meeting these objectives, including Environmental, Social and Governance (ESG) factors.

The majority of our quantitative equity portfolios have long included various quality signals, which we use as a proxy for governance. Our quality factors are broadly focused on companies we expect to be fundamentally stronger in the future. We evaluate quality through a wide range of approaches, including non-financial quality (board and management quality), and direct measures of financial quality including earnings quality, company financing, and operating and financial stability, among others. Our research has shown that better management and boards generally make better decisions, leading to better investing, financing and operating outcomes, and thus better financial outcomes for shareholders.

For clients who wish to invest with a more direct emphasis on ESG, we can employ a quantitative technique that identifies exposure to material ESG attributes, based on industry materiality guidelines developed by SASB. We can also score companies on their level of carbon emissions, to directly address the issue of climate change. Where emissions data is not available, our proprietary data completion technique can proxy data based on known return patterns and risk factors. Our process reduces exposure to companies with significantly low ESG ratings within permissible risk bounds and investment restrictions, and increases exposure to companies that score well. Client-directed restrictions can also be implemented within the portfolio construction process. Our proprietary optimization algorithm can take into consideration any country, company or industry restrictions that our client may impose.

We believe that strong governance leads to improved management of social and environmental issues, and we exercise our views and monitor our influence on investee companies through the proxy voting process. We consider shareholder proposals in this area carefully with a focus on adding economic value. In addition, through our collective engagement with ESG-related organizations and data providers, we advocate for greater disclosure of ESG data, which we view as essential to identifying potential sources of risk that might not be reflected in market valuations, and to the further assimilation of ESG into mainstream investment practices.

* There is no guarantee these objectives will be achieved

Organizational Structure and Resources

PGIM Quantitative Solutions' ESG Steering Council, comprised of senior firm executives, oversees all of our ESG efforts. The Council advises on our ESG, Active Ownership and Responsible Investment policies, shapes our ESG research agenda and oversees our annual reporting as a signatory to and/or supporter of various principles and codes.

PGIM Quantitative Solutions' Senior Governance Officer works collaboratively across business lines to enhance PGIM Quantitative Solutions' capabilities to analyze the corporate governance of issuers of securities in which we invest, to monitor market and other developments relating to proxy voting, and to maintain oversight of data received and available in these areas including, but not limited to, data analytics and ballot issues relating to ESG matters. The Senior Governance Officer is also responsible for PGIM Quantitative Solutions' adherence and reporting relating to the United Nations-supported Principles for Responsible Investment, the Task Force on Climate-Related Financial Disclosures (TCFD) and Japan’s Stewardship Code.

In addition, PGIM Quantitative Solutions has a Proxy Voting Committee that includes representatives from our Investment, Operations, Compliance, Risk and Legal teams. This committee is responsible for updating and interpreting our proxy voting policy, identifying conflicts of interest, and periodically assessing the effectiveness of our policy and procedures. The committee also oversees the services provided by our third-party proxy voting facilitator by reviewing management reports and performing periodic reviews of the proxy vendor.

Conflicts of interest

The PGIM Quantitative Solutions Proxy Voting Committee also establishes criteria to identify any issuers which we believe there may pose a potential conflict between the respective interests of PGIM Quantitative Solutions and those of our clients. These proxies will be voted in accordance with the proxy vendor's policy.

Engagement

In general, we believe that strong governance leads to improved management of social and environmental issues, and as a shareholder, we exercise our views and monitor our influence through the proxy voting process. We consider shareholder proposals in this area carefully with a focus on adding economic value.

ESG issues

Through our collective engagement and work with ESG-related organizations and other stewardship and governance organizations and data providers, we advocate for greater disclosure of ESG data, which we view as essential to identifying potential sources of risk that might not be reflected in market valuations, and to the further assimilation of ESG into mainstream investment practices.

For clients who wish to invest with a more direct emphasis on ESG, we can employ a quantitative technique that identifies exposure to material ESG attributes, based on industry materiality guidelines developed by SASB. We can also score companies on their level of carbon emissions, to directly address the issue of climate change. Where emissions data is not available, our proprietary data completion technique can proxy data based on known return patterns and risk factors. Our process reduces exposure to companies with significantly low ESG ratings within permissible risk bounds and investment restrictions, and increases exposure to companies that score well. Client-directed restrictions can also be implemented within the portfolio construction process. Our proprietary optimization algorithm can take into consideration any country, company or industry restrictions that our client may impose.

Due diligence and monitoring process

When we rebalance our actively managed portfolios, we calculate our final ESG-adjusted stock selection, or expected return, for each stock. Consequently, we can actively monitor any changes, positive or negative, to a company’s individual score from one period to another over relatively short and longer time periods.

We may also monitor certain criteria that might trigger more due diligence for certain holdings. These could include lack of disclosures of SASB-related issues, material SASB scores, high carbon and other greenhouse emissions, or various controversies that could affect the overall financial outlook for various securities.

Prioritization of engagements

Our current engagement efforts focus on those companies that are unattractive based on their ESG scores, as determined by the proprietary weightings and ESG factors developed by PGIM Quantitative Solutions.

Methods of engagement

As stated above, through our collective engagement and work with ESG-related organizations and data providers, we advocate for greater disclosure of ESG data, which we view as essential to identifying potential sources of risk that might not be reflected in market valuations, and to the further assimilation of ESG into mainstream investment practices.

As part of our adherence to Japan’s Stewardship Code, we developed a proprietary questionnaire that covers a variety of ESG and profitability questions. This survey is then used as the basis for our annual engagement with companies that we identified as having poor or deteriorating ESG scores. The engagement takes the form of emails and two-way dialogues. PGIM Quantitative Solutions then monitors and reports on the results of the questionnaire it sent to these firms identified as having poor or deteriorating ESG scores. The results of this report show various metrics in the areas of 1) corporate governance (e.g., board structure, compensation), 2) environmental (e.g., emissions), 3) social (e.g., reporting, diversity) 4) vision and strategy, and 5) shareholder rights. The report also includes information on the efforts undertaken by PGIM Quantitative Solutions to engage in dialogue with selected companies. PGIM Quantitative Solutions will report on the results of this questionnaire to our clients upon their request.

PGIM Quantitative Solutions also periodically participates in “in-bound” calls with company management regarding various issues of concern to us relating to a current ballot. Such items can include ESG related issues.

Finally, we believe that strong governance leads to improved management of social and environmental issues, and we exercise our views and monitor our influence on investee companies through the proxy voting process. We consider shareholder proposals in this area carefully with a focus on adding economic value.

Insider information

PGIM Quantitative Solutions maintains a Code of Ethics as required by applicable SEC rules. Our Code of Ethics requires employees to conduct business in an honest and forthright manner in accordance with the highest of ethical standards. In addition, the Code of Ethics requires employees to put client interests ahead of our own and disclose actual and potential meaningful conflicts of interest. The Code of Ethics incorporates our information barrier and personal securities trading policies that are described in greater detail in Part 2A for our Form ADV. Employees are responsible for reporting any information that could be deemed material, non-public information, or “inside” information that may be directly or indirectly obtained from research or meetings with company representatives.

Escalation strategies

We believe that unsuccessful engagements will eventually be priced into our model. Our rationale is that better managed companies make better operating, investing, and financing decisions, which should result in stronger, more consistent returns. Companies that are subject to escalation following unsuccessful engagements are showing signs of poor operating, investing and financing decisions, which our model will capture as lower quality rankings.

Additionally, we can reduce the exposure of certain securities in our portfolios. To do so, we employ a quantitative technique that identifies exposure to material ESG attributes, based on industry materiality guidelines developed by SASB. We can also score companies on their level of carbon emissions, to directly address the issue of climate change. Where emissions data is not available, our proprietary data completion technique can proxy data based on known return patterns and risk factors. Our process reduces exposure to companies with significantly low ESG ratings within permissible risk bounds and investment restrictions, and increases exposure to companies that score well.

When voting proxies, our analysis of various Shareholder Proposals that deal with ESG issues also provides us with an opportunity to vote for those Shareholder Proposals that we believe will help support better overall corporate governance, as well as better disclosures of industry-specific and systematic risks. In situations where we believe there are no negative financial implications, we have voted, and will continue to vote against management in certain circumstances, including if they continue to demonstrate an inability to correct whatever issue(s) we view as deficient.

Transparency

As stated above, PGIM Quantitative Solutions monitors and reports on the results of the questionnaire it sent to these firms identified as having poor or deteriorating ESG scores as part of our adherence to the Japan Stewardship Code. The results of the report show various metrics in the areas of 1) corporate governance (e.g., board structure, compensation), 2) environmental (e.g., emissions), 3) social (e.g., reporting, diversity), 4) vision and strategy, and 5) shareholder rights. The report also includes information on the efforts undertaken by PGIM Quantitative Solutions to engage in dialogue with selected companies. PGIM Quantitative Solutions will report on the results of this questionnaire to our clients upon their request.

In general, we provide disclosure of our proxy voting policy, guidelines and procedures to our clients who authorize us to vote proxies, generally at the time that we are negotiating our investment management agreement. Any client may obtain a copy of these items, as well as the proxy voting records for that client’s securities, by contacting the client service representative responsible for the client’s account. We also make our proxy voting results available publicly in the Stewardship & Governance section of our website: www.pgimquantitativesolutions.com, along with our current Proxy Voting Overview statement.

Voting

ESG issues

As a responsible investor and fiduciary, PGIM Quantitative Solutions' policy is to vote proxies in the best long-term economic interests of our clients (the appreciation in value of an investment over time). In the case of pooled accounts, our policy is to vote proxies in the best long-term economic interest of the pooled account. We may consider the following factors when voting on various ballot issues that may arise: board quality, including diversity, tenure, and independence, executive compensation, industry-specific SASB materiality criteria, controversies, carbon and other greenhouse emissions, fair pay, gender equality and other social issues.

Decision-making process

PGIM Quantitative Solutions has adopted voting guidelines that reflect our general philosophy on corporate governance matters and our approach to governance and other issues that may commonly arise when voting ballots on the various securities held in client accounts. These guidelines are not intended to limit the analysis of individual issues at specific companies, nor do they indicate how we will vote in every instance.

Rather, they express our views about corporate governance and other issues generally, and provide insight into how we typically approach issues that often appear on corporate ballots. They are applied with discretion, taking into consideration the range of issues and facts specific to the company and the individual ballot items. Because the guidelines are not absolute, context matters and may drive different outcomes for different companies.

While governance is the focus of many ballot items, our detailed, customized voting guidelines address a wide variety of matters, including:

• Boards and directors
• Audit related issues
• Executive compensation
• Capital-related issues
• Mergers, acquisitions and other financial transactions
• Corporate governance issues
• Environmental and social issues
• Miscellaneous and routine matters

From time to time, ballot issues arise that are not addressed by our policy, or circumstances may suggest a vote not in accordance with our established guidelines. In these cases, our voting decisions are made on a case-by-case basis taking into consideration the potential economic impact of the proposal.

With respect to non-US holdings, we take into account additional restrictions in some countries that might impair our ability to trade those securities or have other potentially adverse economic consequences. Further, we may be unable to vote proxies in countries where clients or their custodians do not have the ability to cast votes due to lack of documentation, operational capacity, or otherwise. We generally vote non-US securities on a best-effort basis when we determine that voting is in the best economic interest of our clients. In addition, when voting on ballots for companies in global markets, we may consider various market-specific nuances, along with applicable regional rules and practices, including codes of conduct and other guides.

We seek to actively monitor developments in the proxy voting arena based on a historical analysis of proxy issues and a continuing review of new proposals and legislative changes. Our policy and guidelines are reviewed annually and are updated as needed to address new developments.

PGIM Quantitative Solutions' Senior Governance Officer works collaboratively across business lines to enhance our capabilities in the areas of corporate governance, proxy voting and data oversight, including, but not limited to, our efforts with respect to ESG issues. This individual is also responsible for the adherence and reporting relating to the United Nations-supported Principles for Responsible Investment (PRI), the Task Force on Climate-Related Financial Disclosures (TCFD) and Japan’s Stewardship Code.

PGIM Quantitative Solutions also has a Proxy Voting Committee that includes representatives from our Investment, Operations, Compliance, Risk and Legal teams. This committee is responsible for updating and interpreting our proxy voting policy, identifying conflicts of interest and periodically assessing the effectiveness of our policy and procedures. We currently use the services of a third-party proxy voting facilitator (proxy vendor). The committee also oversees the services provided by our proxy vendor by reviewing management reports and performing periodic reviews of the vendor.

We direct the proxy vendor, upon receipt of proxies, to vote in a manner consistent with our established proxy voting guidelines (assuming timely receipt of proxy materials from issuers and custodians). Our proxy vendor also makes available analyses of ballot issues and voting recommendations to its clients. Our voting guidelines include instructions to vote certain ballot issues consistent with recommendations made by the vendor. In these cases, we periodically assess the consistency of our view along with that of the vendor and retain ultimate responsibility for the voting decision.

Prioritization and scope of voting activities

PGIM Quantitative Solutions will generally refrain from voting on foreign securities in those countries that sequester (block) shares. We will also refrain from voting in countries where a Power of Attorney (POA) is required at a cost; unless a client specifically pursues the cost and implementation of such POA in order to vote proxies in the applicable country. In addition, when proxies are received dealing with issues not clearly addressed by PGIM Quantitative Solutions' proxy voting guidelines, the responsible portfolio managers will determine if, and how, to vote on these issues on a case-by-case basis. Finally, proxies with respect to conflict issuers will be voted in accordance with the proxy advisor’s policy as outlined in the Conflicts section.

Methods

PGIM Quantitative Solutions votes all ballots by proxy as outlined in prior sections.

Regional voting practices

With respect to non-US holdings, we take into account additional restrictions in some countries that might impair our ability to trade those securities or have other potentially adverse economic consequences. Further, we may be unable to vote proxies in countries where clients or their custodians do not have the ability to cast votes due to lack of documentation or operational capacity, or otherwise. We generally vote non-US securities on a best efforts basis if we determine that voting is in the best economic interest of our clients. In addition, when voting on ballots for companies in global markets, we may consider various market specific nuances, along with applicable regional rules and practices, including codes of conduct and other guides.

Filing or co-filing resolutions

Currently, PGIM Quantitative Solutions does not file or co-file ESG resolutions or vote on other investors’ ESG resolutions.

Company dialogue pre or post-vote

We have participated, and will continue to participate, in “in-bound” calls with company management to discuss prior votes or topics of current concern/interest. Such calls can occur either pre- or post-vote. In general, however, as a quantitative investment manager, PGIM Quantitative Solutions has not historically reached out directly to companies either pre or post-vote.

Conflicts of interest

Like other investment advisers, PGIM Quantitative Solutions is subject to various conflicts of interest in the ordinary course of its business. PGIM Quantitative Solutions strives to identify potential risks, including conflicts of interest, that are inherent in its business, and conducts annual conflict of interest reviews. When actual or potential conflicts of interest are identified, PGIM Quantitative Solutions seeks to address such conflicts through one or more of the following methods:

• Elimination of the conflict
• Disclosure of the conflict or
• Management of the conflict through the adoption of appropriate policies, procedures or other mitigants

PGIM Quantitative Solutions has developed policies and procedures designed to address various conflicts of interest. Additional information about conflict of interest issues may be found in Part 2A of PGIM Quantitative Solutions' Form ADV.

As a wholly-owned subsidiary, PGIM Quantitative Solutions is subject to PFI's Code of Conduct. The Code of Conduct outlines the identification of conflicts of interest, including outside business activities.

Proxy Voting Conflicts of Interest

The Proxy Voting Committee establishes the criteria to identify any issuers as to which we believe there may be a potential conflict between the respective interests of PGIM Quantitative Solutions and those of our clients (each, a "Conflict Issuer"). Proxies with respect to Conflict Issuers, including our ultimate parent company, PFI, will be voted in accordance with the proxy vendor's policy.

Securities lending

PGIM Quantitative Solutions does not perform securities lending on behalf of their clients, since we are not the legal owner of the funds. Rather, our firm subadvises certain funds that are managed, sponsored and distributed by affiliated and unaffiliated firms. Securities lending is conducted within many of these commingled funds and mutual funds of affiliates that PGIM Quantitative Solutions subadvises. PGIM Quantitative Solutions does not have the authority to decide which of these various pooled funds may participate in a securities lending program, or whether or not to recall shares for voting. There is a tangible economic benefit generated for clients in various pooled accounts from securities lending activities. The general practice is not to recall securities on loan so the underlying accounts/clients can receive the income from lending activities.

Additionally, certain PGIM Quantitative Solutions clients may participate in securities lending programs in their accounts. PGIM Quantitative Solutions does not control or participate in any way in these programs and does not know when or which securities in our clients’ accounts have been loaned. PGIM Quantitative Solutions cannot vote securities that are out of our clients’ portfolios on loan or are otherwise excluded from voting privileges. If a client who was responsible for voting their own proxies asked PGIM Quantitative Solutions for advice regarding a particular ballot issue for a specific holding, we could share our analysis of the issue based on our rankings of SASB materiality, carbon emissions, and other sources of data, including the comprehensive research reports compiled by our proxy advisor.