MORPHIC ETHICAL EQUITIES FUND LIMITED — Fund Information / Factsheet 2021

May 17, 2021

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----- Start of picture text ----- M o r p h i cE t h i c a lE q u i t i e sF u n dMonthly ReportApril 2021----- End of picture text -----

FundObjective

The Morphic Ethical Equities Fund Limited (the Fund) seeks to provide investors a way to grow their wealth and feel confident they do so without investing in businesses that harm the environment, people,and society.

The Fund excludes direct investments in entities involved in environmental destruction, including coal and uranium mining, oil and gas, intensive animal farming and aquaculture, tobacco and alcohol,armaments, gambling and rainforest and old growth logging.

	1 Month3 Months6 Months1 Year3 Years (p.a.)ITD (p.a.)1.02%4.80%20.45%30.70%10.73%10.76%2.91%8.90%16.63%23.53%12.46%12.62%Investment returns*indication of future performance	1 Month3 Months6 Months1 Year3 Years (p.a.)ITD (p.a.)1.02%4.80%20.45%30.70%10.73%10.76%2.91%8.90%16.63%23.53%12.46%12.62%Investment returns*indication of future performance	1 Month3 Months6 Months1 Year3 Years (p.a.)ITD (p.a.)1.02%4.80%20.45%30.70%10.73%10.76%2.91%8.90%16.63%23.53%12.46%12.62%Investment returns*indication of future performance	1 Month3 Months6 Months1 Year3 Years (p.a.)ITD (p.a.)1.02%4.80%20.45%30.70%10.73%10.76%2.91%8.90%16.63%23.53%12.46%12.62%Investment returns*indication of future performance	1 Month3 Months6 Months1 Year3 Years (p.a.)ITD (p.a.)1.02%4.80%20.45%30.70%10.73%10.76%2.91%8.90%16.63%23.53%12.46%12.62%Investment returns*indication of future performance	1 Month3 Months6 Months1 Year3 Years (p.a.)ITD (p.a.)1.02%4.80%20.45%30.70%10.73%10.76%2.91%8.90%16.63%23.53%12.46%12.62%Investment returns*indication of future performance
Morphic Ethical EquitiesFund1	1 Month	3 Months	6 Months	1 Year	3 Years (p.a.)	ITD (p.a.)
	1.02%	4.80%	20.45%	30.70%	10.73%	10.76%
Index2	2.91%	8.90%	16.63%	23.53%	12.46%	12.62%
* Past Performance is not an

• Past Performance is not an indication of future performance.

Ethical Investing in Focus

In early March, the UN Environment Programme released its 2021 Food Waste Index Report and while I think we all know that there is substantial leakage in our food supply chain, the enormity will likely come as a surprise. To put it in context, the report highlights that if food loss and wastage were a country, it would be the third largest source of greenhouse gas emissions globally and is “a major contributor to the three planetary crises of climate change, nature and biodiversity loss, and pollutionand waste”.

The UN report estimates that food waste from households, retail establishments and the food service industry totals 931 million tonnes each year. Nearly 570 million tonnes of this waste occurs at the household level and the global food wastage per capita is around 74kg – that’s a lot of meat and veg going into the bin!

Sustainable Development Goal 12.3 (SDG 12.3) captures a commitment to halve food waste at the retail and consumer level and to reduce food loss across supply chains. This is incredibly important when you consider approximately 17% of all globalfoodproduction is wasted each year.

Portfolio review

The Morphic Ethical Equities Fund increased 1.02% net during the month with positive equity performance of 1.12% impacted by a stronger Aussie dollar. The MSCI All Countries World Daily Total Return Net Index (AUD) Index increased by 2.91% over the same period.

The portfolio’s top three contributors XPO Logistics, AZEK and MIPS added 98 bps to performance while Bed, Bath & Beyond, PTC and Anritsu detracted 101 bps. The Fund had 17 portfolio companies reporting quarterly results, or trading updates, in April and while in aggregate we noted substantial earnings beats and upgraded guidance, the subsequent share price performance was generally muted on the day of release.

			Net Tangible Assets (NTA)
NTA	value	before tax3		$ 1.3963
NTA	value	after tax3		$ 1.3094

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----- Start of picture text ----- Investment Returns since inception [4]----- End of picture text -----

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Our regional banks in the US (Comerica, BankUnited and Webster Group) kicked off reporting season with significant earnings beats driven by loan loss reserve releases as the US economy rebounded convincingly. Cumulatively, our banks provisioned >USD $850m in the first quarter of last year representing over 9% of September 2020 market value when we bought them. We are now seeing this reverse with book values and potential capital returns increasing.

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Global Responsible Investors

Groupe SEB is one of the largest small domestic appliance and cookware companies globally owning international brands such as Tefal and Moulinex. In its Q121 trading update it highlighted 39% organic growth in its consumer business with total EBIT increasing to €198m compared with a pandemic impacted €18m in the same period last year. On the back of continued solid demand, Management now expects 10% revenue growth this year which compared well with market expectations closer to 6.0%. Despite a nice bounce since reporting, the business still only trades on forward PE and EBITDA multiples of 15.0 and 8.1x respectively.

Bureau Veritas is one of the larger testing, inspection and certification businesses globally and while it is still being impacted by pandemic limitations, the business grew >6% organically this quarter which was well ahead of market expectations at just over 1%. Bureau Veritas Assurance of CSR and Sustainability reporting services grew by more than 20%, driven by a strong demand for greenhouse gas emission verification and Wood Management Systems certification. Sustainability is at the heart of Bureau Veritas and is a key underlying driver to the group's future goals.

STOCKIN FOCUS: Corbion (CRBN NA, €2.9b Market Cap)

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Corbion is an ingredients solution business listed in Amsterdam with over 90 years experience in the fermentation industry primarily focused on the production and end use cases of lactic acid. It has over 40% market share in lactic acid production globally and as the lowest cost producer it is the only player with plants spread across all continents. Lactic acid is an incredibly versatile product used in natural food preservation, salt reduction, medical/pharma applications as well as a replacement for fossil fuel based plastics. Lactic acid is derived from the fermentation of renewable feedstock and in the case of Corbion, this is predominately sustainably sourced sugar cane.

The business is organised into three main segments:

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Sustainable Food Solutions is primarily targeted at natural perservation of the food supply chain while also providing consumers label transparency and traceability. With better preservation techniques delivered by natural ingredients based on lactic acid, food shelf life extension can really impact the problem of global food waste. People want to understand what they eat therefore traceability is also incredibly important. There is a big move from fossil-based synthetic preservatives in our food to natural alternatives such as fermentation-based products like lactic acid. As a result, the natural portion or the fermentation-based portion is growing at twice the market rate of the overall preservation market.

Lactic Acid and Specialties basically feeds the rest of the group as it houses the lactic acid production assets however it also contains a couple of other interesting growth arms. The main growth angle here is its joint venture with oil giant Total in PLA. The JV is the #2 player globally in the production of PLA, an alternative to fossil fuel based plastics, however it is targeting the #1 position with the construction of a new 100k tonne plant in France. It also has a strong biopolymer play here with 50% globalshare in resorbable polymers such as biodegradablesutures and screws used in hospitals.

A new market segment opening up for Corbion is in the green solvent market, again underpinned by the natural properties of lactic acid as customers look for more sustainablealternatives in antimicrobialand hygiene applications.

Based on strong core demand from food preservation, increasing demand from its PLA JV and nascent opportunities in other categories such as sustainable hygiene, Corbion is expanding on its existing market leading lactic acid footprint with a 125k tonne facility to be built over the next few years.The Incubator includes a few initiatives which will graduate into one of the other divisions or standalone if size warrants. The main near term opportunity is around DHA omega-3 from algae, this solution is already in the market.

In its trading update released on the last day of April, Management indicated that it is benefiting from strong demand in Sustainable Food Solutions which delivered >12% organic growth. Lactic acid demand is expected to ramp through the year and will no doubt be driven by its PLA JV (which utilises internal lactic acid capacity) which grew revenues and EBITDA by 20% and 69%, respectively. On the back of the strong start to the year, Management upgraded its organic growth expectations which are now expected to come in between 7-10% comparedwith its earlier forecast of close to 7%.

We see Corbion as a strong global player in natural food preservation, fossil-fuel based plastic replacement along with nascent optionality as it leverages its market leading capabilitiesinto other verticals over the long term.

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Global Responsible Investors

Top 10 Active Positions

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----- Start of picture text ----- Stocks (Shorts) Industry Region Position WeightingCellnex Telecom Communication Services Europe 5.26SensataIndustrials North America 5.01TechnologiesPTC Information Technology North America 4.87Option CareHealth Care North America 4.48HealthFlex Information Technology Asia Pacific 4.40Bureau Veritas Industrials Europe 4.22SEB Consumer Discretionary Europe 3.82Tempur SealyConsumer Discretionary North America 3.76InternationalComerica Financials North America 3.57TechtronicIndustrials Asia Pacific 3.57Industries----- End of picture text -----

	Risk Measures
Net Exposure5		88.64%
Gross Exposure6		95.35%
VAR7		2.09%
Best Month		8.60%
Worst MonthAverage Gain in Up Months		-6.49%2..31%
Average Loss in Down Months		-1.47%
Annual Volatility		9.56%
Index Volatility		10.58%

Top three alpha contributors[8 ] (bps)

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----- Start of picture text ----- XPO Logistics 35 bpsAZEK 34 bpsMIPS 29 bps----- End of picture text -----

Top three alpha detractors[8 ] (bps)

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----- Start of picture text ----- Bed, Bath & Beyond -37 bpsPTC -33bpsAnritsu -31bps----- End of picture text -----

	Key Facts
ASX code / share price		MEC / 1.135
Listing Date		3 May 2017
Profit Reserve9		$ 0.271
Management Fee		1.25%
Performance Fee10		15%
Market Capitalisation		$ 58m
Shares Outstanding		52,953,469
Dividend per share11		$0.025

Equity Exposure Summary By region

Equity Exposure Summary By sector

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----- Start of picture text ----- North America 52.6% Industrials 28.8%Information Technology 17.6%Western Europe 27.0% Consumer Discretionary 14.1%Financials 12.2%Asia Pacific 9.1%Communication Services 4.6%Central Asia 0.0% Morphic EthicalEquities Fund Consumer Staples 1.7% Morphic Ethical EquitiesFundHealth Care 4.3%South & Central America 0.0% Benchmark BenchmarkReal Estate 2.4%Africa / Middle East 0.0% Materials 3.1%Utilities 0.0%Eastern Europe 0.0% Energy 0.0%-10.0% 10.0% 30.0% 50.0% 70.0% -5.0% 5.0% 15.0% 25.0% 35.0%----- End of picture text -----

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Global Responsible Investors

Contact us

Morphic Asset Management Pty Ltd Level 11, 179 Elizabeth St Sydney 2000 New South Wales Australia www.morphicasset.com

Investor Relations Phone: +61 2 9021 7701 Email: info@ellerstoncapital.com

This communication has been prepared by Morphic Ethical Equities Fund Limited (“MEC”) (ACN 617 345 123) and its Manager, Morphic Asset Management Pty Ltd (“Morphic”) (ACN 155 937 901) (AFSL 419916). The information contained in this communication is for information purposes only and is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. Please note that, in providing this communication, MEC and Morphic have not considered the objectives, financial position or needs of any particular recipient. MEC and Morphic strongly suggest that investors consult a financial advisor prior to making an investment decision. No warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this communication. To the maximum extent permitted by law, none of MEC, its related bodies corporate, shareholders or respective directors, officers, employees, agents or advisors, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence for any loss arising from the use of information contained in this communication. If this communication includes “forward looking statements”, such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of MEC and its officers, employees, agents or associates that may cause actual results to differ materially from those expressed or implied in such statement. Actual results, performance or achievements may vary materially from any projections and forward-looking statements and the assumptions on which those statements are based. MEC and Morphic assume no obligation to update such information. This communication is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities and neither this communication nor anything contained in it forms the basis of any contract or commitment.The CertificationSymbol signifiesthat a product or service offers an investment style that takes into account environmental,social, governance or ethical considerations. The Symbol also signifies that Morphic Ethical Equities Fund adheres to the strict disclosure practices required under the Responsible Investment Certification Program for the category of Product Provider. The Certification Symbol is a Registered Trade Mark of the Responsible Investment Association Australasia (RIAA). Detailed information about RIAA, the Symbol and Morphic Ethical Equities Fund’s methodology, performance and stock holdings can be found at www.responsibleinvestment.org, together with details about other responsible investment products certified by RIAA. The Responsible Investment Certification Program does not constitute financial product advice. Neither the Certification Symbol nor RIAA recommends to any person that any financial product is a suitable investment or that returns are guaranteed.

1 Performance is net of investment management fees, before company admin costs and taxes; 2 The Index is the MSCI All Countries World Daily Total Return Net Index (Bloomberg code NDUEACWF) in AUD;[3] The figures are estimated and unaudited;[4] Performance is net of investment management fees, before dividends, company admin costs and taxes. Fund listing on the ASX 3 May 2017. Past performance is not an indication of future performance;[5] Includes Equities and Commodities - longs and shorts are netted;[6] Includes Equities, Commodities and 10 year equivalent Credit and Bonds - longs and shorts are not netted;[7] Based on gross returns since Fund’s inception;[8] Attribution; relative returns against the Index excluding the effect of hedges;[9] The reserve is made up of amounts transferred from current and retained earnings that are preserved for future dividend payments. The payment of franked dividends depends on the rate the Fund realises taxable profits and generates franking credits;[10] The Performance Fee is payable annually in respect of the Fund’s out-performance of the Index. Performance Fees are only payable when the Fund achieves positive absolute performance and is subject to a high water mark;[11] Annual dividend per share.

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Global Responsible Investors