Effective Date: January 1, 2018

I. Executive Summary

This policy adopted by Brown Brothers Harriman & Co. (BBH) sets forth the requirements for the execution of securities lending transactions by BBH in its capacity as agent for its Clients.

Under the contractual arrangements that BBH and its Clients have agreed, BBH lends Clients’ securities on an over-the-counter basis or on a trading venue specializing in securities lending transactions to borrowers approved by BBH’s Clients.

When executing securities loan transactions in the standard course, in its capacity as securities lending agent, BBH will take all sufficient steps to obtain the best possible result for its Clients on a consistent basis across lending portfolios, rather than in respect of each individual transaction.

BBH’s Securities Lending Program does not lend securities on BBH’s own account or arrange loans to or from affiliates.

II. Objective/Purpose

This policy is designed to ensure consistent execution practices are adhered to across BBH’s Securities Lending Program. While BBH is not a regulated MiFID firm, this policy is intended to comply with MiFID II execution requirements.

III. Scope

This policy applies where BBH, in its capacity as a securities lending agent, executes securities lending transactions on behalf of Clients in its Securities Lending Program.

Should BBH become aware of any divergence from this Policy, BBH will review the circumstances and may make adjustments to practices, as appropriate, at its discretion.

In the event of systems failures or other circumstances which are unavoidable or beyond BBH’s reasonable control, BBH may from time to time execute orders in a manner that differs from the normal process established by this Policy. In the event of such a circumstance, BBH will still endeavor to execute orders on the best terms available in the relevant circumstances.

Where at specific Client direction BBH enters a securities loan transaction, the policy requirements outlined herein shall not apply.

IV. Policy Requirements

General Requirements for Securities Lending Trade Execution

When executing securities loan transactions in the standard course, in its capacity as securities lending agent, BBH will take all sufficient steps to obtain the best possible result for its Clients on a consistent basis across lending portfolios, rather than in respect of each individual transaction.

BBH’s Clients have given BBH authority within defined parameters to execute securities lending transactions on their behalf. BBH will not delegate execution of client orders to a party who is not affiliated with BBH (a “third party”).

Where BBH enters into securities loans of Client securities, achievement of optimal lending fee throughout the term of the securities loan is the overarching, but not sole, objective. Securities Loan execution may entail the exercise by BBH Traders, of commercial judgement informed by available market information and professional experience. Borrower demand and available supply of a security for loan are significant determinants of lending fee; however, other factors, as outlined below, may influence decision making with respect to securities loan execution.

(i) Likelihood of execution and settlement

Certain factors in respect of security status may impact loan pricing and/or borrow demand. These may include but are not limited to dividend entitlement status and voting intent with respect to voluntary corporate actions. Further, where BBH is aware of any factor that may impair settlement or affect likelihood of recall (e.g., BBH is aware of an upcoming Client sale), BBH may not pursue securities loans of impacted securities.

(ii) Loan Size

Size of positions available for loan may impact loan pricing.

(iii) Costs

BBH may consider costs associated with a transaction, including but not limited to capital costs to BBH, custodian costs, and other fees incurred in the execution of transactions.

(iv) Other factors

Other relevant considerations may include but are not limited to duration of loans, collateral parameters, liquidity considerations, and counterparty restrictions and any other restrictions or parameters imposed by a Client.

The above listed execution factors will not generally be of equal importance. The priority of any one of these factors over the others may depend upon any specific Client mandated parameters and market conditions. BBH will use its commercial judgment and experience in light of available market information to achieve the best balance across a range of sometimes conflicting factors.

Further, the fee level for a securities loan may change over the life time of that loan. BBH will seek to identify, assign relative prioritization, and endeavor to re-price securities loans that are deemed to be out of tolerance with current market fee levels or prevailing fee levels across BBH’s loan book.

Requirements for Securities Lending Trading Venues

Client securities available for loan may be offered for loan via trading venues that facilitate securities lending transactions. Securities loans executed on a trading venue are subject to similar execution standards as in OTC transactions, with commercial judgement exercised over codified parameters. Information on trading conducted over a trading venue will be provided to Clients by BBH upon request.

When selecting an execution venue, BBH will consider factors including the following to the extent relevant and as applicable:

1. Effectiveness of its execution processes;
   
2. Specific advantages of the execution venue;
   
3. Commercial positioning;
   
4. General order handling;
   
5. Integrity, Reputation, Resiliency, Reliability;
   
6. Pricing analysis; and
   
7. Fees charged.

V. Governance

BBH has established mechanisms to provide reasonable assurance that all sufficient steps to achieve the best result for Clients are taken.

i. Fair Allocation Algorithm

BBH follows a fair allocation process with the objective of reasonably allocating loans among Clients as feasible. The process will guide the order in which securities loan opportunities are allocated among Clients.

ii. Execution Oversight

BBH has an execution oversight forum to review and assess the overall quality and appropriateness of execution. The forum includes senior level management from BBH’s Securities Lending Program and other areas of BBH. The forum convenes periodically for the purpose evaluating our business activities against this policy and determining whether there are any deficiencies or recommended changes and if so, whether any action is required to address such deficiencies or recommended changes.

iii. Compliance Oversight

BBH’s Compliance department conducts independent monitoring of the Securities Lending Program.

iv. Management Reporting

Management reporting, providing program oversight inclusive of execution related data, is produced and distributed to management on regular basis.