I. Introduction

The Global Defense & Security Fund (the 'Fund') was created to offer investors a vehicle that invests only in the global defense and security (including homeland and cyber security) sectors. The fund will be available to the general public, but is well suited for defense and security personnel who may wish to invest in their own industry.

The purpose of this Policy Statement (the 'Statement') is to establish guidelines for the Fund's investment portfolio (the 'Portfolio') with respect to company screening and evaluation for all companies to determine the degree of exposure to controversial weapons and how to controversial weapons are viewed by the international community. We define controversial weapons as those that have an indiscriminate and disproportionate humanitarian impact on civilian populations and whose effects can be felt long after military conflict. Such weapons include anti-personnel landmines, cluster munitions, chemical and biological weapons, depleted uranium and nuclear weapons. In all instances There are a number of international conventions and treaties that have been developed with a view to prohibit or limit the use and availability of these weapons and, where these conventions and treaties have been ratified by the key NATO and OECD member nations, they will thus determine the Statement.

The Statement incorporates accountability standards that will be used for monitoring the ongoing progress of countries as new directives are in international law and companies must amend their business practices to ensure ongoing compliance with screening criteria.

The screening policy is an integral component that permits the company analysis to proceed to the fundamental, technical and global intelligence stage. Companies that do not pass the screening policy for further analysis.

II. Role of the Portfolio Manager & the Investment Team

The Portfolio Manager (the 'Manager') is responsible for evaluating and monitoring the potential and existing companies in an ongoing capacity. Together with the Investment Team (the 'Team') the Manager is jointly responsible for ensuring that the Fund invests in companies that follow international laws and guidelines and refrains from investing in companies that are in breach of international laws. This policy outlines the necessary steps that must be met for any investment object to proceed beyond the ethical and compliance screening to the fundamental analysis stage.

III. Role of the Investment Committee

The Investment Committee (the Committee) is acting in a supervisory capacity with respect to the Portfolio and its investors. The Committee is responsible for overseeing the investment of all assets owned by the Fund. The Investment Committee is responsible for ensuring that the company screening follows the steps outlined in this policy and that any potential investment passes all the criteria. The Committee is responsible for ensuring that investments are made into companies not only pass screening criteria but continue to meet those same criteria, and where applicable, with new requirements as passed into law.

Any company where there are indications of involvement in Nuclear Weapons Production or Depleted Uranium must be submitted for consideration and review to the Investment Committee where no decision can be made at least 30 days. It is only Nuclear Weapons Production and Depleted Uranium involvement that can still lead to an investment in the company as screening for other factors is a binary pass or fail result. At thirty-day grace, the investment committee can review the material and request further documentation from the Team and Manager and to prevent a hasty decision being made.

IV. Role of External Body or Provider

The External Body or Provider (the 'Body') is acting in an independent capacity to ensure the Statement is followed accordingly and verifies the process so that company screening accurately captures and categorises companies accordingly to their activities. The Body may call upon the Statement at any time but will conduct a review of the Statement at intervals no greater than six months.

V. Controversial Weapons

The Fund invests in the defense industry with exposure to companies that are involved in the manufacture of equipment that may have extensive negative impact. The focus of the fund is on NATO and OECD member nations and is aligned with the view that larger defense budgets are necessary to replace outdated equipment but also to modernize defense in this new technological era. The Manager, Team and Committee firmly believe in defense spending by NATO and OECD is necessary for defensive purposes.
The Manager, Team and Committee recognize the indiscriminate and disproportionate humanitarian impact of controversial weapons on civilian populations and with this statute six to screen away companies that do not comply with recognized international law, where recognized law is defined as international treaties or conventions that have been signed and ratified by the majority of NATO and OECD member nations. Instances where signatories to treaties and conventions are customers of the said companies help provide support that the company is not in breach of the treaty or convention.

Treaties and conventions are international without borders. Meaning once they have been adopted there is no exception where this does not apply. That is, no new manufacture shall be sold by any company.

There are several international conventions and treaties that are followed closely by the Statement and in many cases determine if a screen should proceed or terminate. They include;

Prohibition of Nuclear Weapons: This is followed closely, but currently not relevant in our screening process given it has been signed by 69 nations and only ratified by 19. None or which include NATO member nations.

2008 Convention on Cluster Munitions: The international treaty of more than 100 states that addresses the humanitarian and unacceptable harm caused by civilians by cluster munitions, through a categorical prohibition and a framework for action. The Convention on Cluster Munitions has been widely adopted by NATO member nations and although the USA has not signed this convention, the Statement views negatively any company involvement in cluster munitions and any company found to produce cluster munitions will result in a screen fail.

The Anti-Personnel Mine Ban Convention (Ottawa Treaty): The convention on the prohibition of the use, stockpiling, production and transfer of anti-personnel mines and on their destruction that aims to eliminate anti-personnel landmines around the world. The Convention has been widely signed and ratified by most NATO member nations, but not the USA. The Statement views negatively any company's involvement in land mines and any company found to produce land mines will result in a screen fail.

The Chemical Weapons Convention: Addresses the prohibition of development, production, stockpiling and use of chemical weapons and their destruction. The Convention has been widely signed and adopted by all NATO member countries and any company found to be involved in chemical weapons production will result in a screen fail.

The Biological and Toxin Weapons Convention: The Convention on Prohibition of Development, Production, stockpiling of bacteriological and toxic weapons and on their destruction is covered under the Biological and Toxin Weapons Convention and any company found to be involved in the production of biological and toxin weapons will result in a screen fail.

WE. Company Screening
Defense companies are controversial and require tough screening criteria that formalize screening and exclude companies that meet the necessary ethical guidelines.

A. Domicile
The Fund will focus on NATO and OECD member nations and will therefore explicitly exclude any companies whose domicile is in Russia or China.

B. Nuclear Weapons Production
The Treaty on the Prohibition of Nuclear Weapons has been signed by 69 nations and ratified by only 19. No NATO members have signed this Treaty and as such there is no unanimous agreement against the production of Nuclear Weapons.

Exclusion of Non-Core, Fringe Nuclear Weapon Producing Nations. The United Nations recognizes five nuclear-armed state parties - the United States, Russia, Britain, France and China. Beyond these are a further four countries that are armed with nuclear weapons, India, Democratic People's Republic of Korea, Israel and Pakistan. The fund will refrain from investing in any company listed on an exchange that is domiciled in a nuclear-weapons producing nation outside of the United Nations recognized five nuclear-armed state parties. As clause IV. A prevents investments in China and Russia, the Fund excludes 6 or 9 nuclear weapons producing nations.
b. Describing Company's Involvement in Nuclear Weapons Production. Any company that is listed on an exchange domiciled in any one of the three permissible nuclear weapons producing nations and is also involved in nuclear weapons production must have complete documentation detailing the extent to the nuclear weapons involvement.
c. Listing Percentage of Turnover that is from Nuclear Weapons Production. Any company that is listed on an exchange domiciled in any one of the three permissible nuclear weapons producing nations and is also involved in nuclear weapons production must show the extent of nuclear weapons involvement relative to the company's non-nuclear weapons producing operations. extend of involvement relative to the percentage of the company's turnover. A company whose primary source of income is from nuclear weapons production will be eliminated from the portfolio.
d. Trading History with Europe or Sweden. Any company that is listed on an exchange domiciled in any one of the three permissible nuclear weapons producing nations and is also involved in nuclear weapons production and whose turnover is not primarily from nuclear weapons involvement must exhibit a history of trading with Europe or Sweden. Any company that has a history of trading with Sweden or Europe has passed the ethical and security requirements placed on defense companies by Sweden and / or Europe.
e. Describe Trading History with Europe or Sweden. Any company that is listed on an exchange domiciled in any one of the three permissible nuclear weapons producing nations and is also involved in nuclear weapons production and whose turnover is not primarily from nuclear weapons involvement and which can demonstrate a history of trading with Europe or Sweden must include a description of that relationship.

C. Depleted Uranium
There is no treaty or convention against the use of depleted uranium. The United Nations Scientific Committee on the Effects of Atomic Radiation (UNSCEAR) which continues to review the latest information in scientific literature on the effects of internal exposure to inhalation or ingestion of uranium, including DU, concluded that clinically significant pathology related to radiation exposure to depleted uranium was found. In studies in which the International Atomic Energy Agency (IAEA) was involved, the resulting radiological risk to the public and the environment was not significant in situations where depleted uranium was observed in the form of localized contamination of the environment by small particles resulting from the impacts. On the other hand, in the situations where fragments of, or complete, depleted uranium ammunition were found, there is a potential risk of radiation effects for individuals who come into direct contact with such fragments or ammunitions.
a. Company Involvement in Depleted Uranium (DU). Any company that is involved in the production of or includes DU in any equipment must be submitted for review to the Investment Committee following the completion of the initial screening policy.
D. Cluster Munitions
The 2008 Convention on Cluster Munitions is the international treaty of more than 100 states that addresses the humanitarian and unacceptable harm caused by civilians by cluster munitions, through a categorical prohibition and a framework for action. The Convention on Cluster Munitions has been widely adopted by NATO member nations and although the USA has not signed this convention, the Statement views negatively any company's involvement in cluster munitions and applies the following rule (s):
a. Company Involvement in Cluster Munitions. Any company that is involved in the production of cluster munitions will be excluded from the portfolio selection.
E. Land Mines
The Anti-Personnel Mine Ban Convention (Ottawa Treaty) is a convention on the prohibition of the use, stockpiling, production and transfer of anti-personnel mines and on their destruction that aims to eliminate anti-personnel landmines around the world. The Convention has been widely signed and ratified by most NATO member nations, but not the USA. The Statement views negatively any company's involvement in land mines and applies the following rule (s):
a. International treaty banning anti-personnel landmines. Is the domiciled country in compliance with the international treaty banning anti-personnel landmines?
b. Company Involvement in anti-personnel landmines. Any company involved in the production of landmines will be excluded from the portfolio and with the single exception of the United States, no investment will occur in any country that does not support the banning or anti-personnel landmines.
F. Proliferation, Terrorist Financing & Money Laundering
The Statement actively supports and follows the Financial Action Task Force (FATF) to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. To ensure compliance with FATF standards the Statement follows a set of procedures for each screening.
Is Domiciled Country a Member of FATF. Any company listed in a country that is not a member of FATF will be excluded from the portfolio selection.
b. Does the Domiciled Country Place Requirements on Companies comply with FATF Requirements and Guidelines? Any company listed in a country that may be outdated by FATF as failing to follow its requirements and guidelines and where that may pose to breach of FATF guidelines will be excluded from the portfolio selection.
c. Does the Company Receive Financing from a National Bank, Pension Fund, etc? Banks and other financial institutions are subject to extensive compliance and anti-money laundering regulations and any financing by local banks to the company provides confirmation that the company is compliant with local and international laws relating to FATF. Failure for any local banks or other institution to offer services or finance to the company will raise alarms and cause the company to be excluded from the portfolio.
List Banks. Any company that is domiciled in a country of a member FATF and that complies with FATF regulations and receives financing or services from a local bank must list those banks.
G. Company Code of Conduct
Company Code of Ethics. Any company considered as an investment must have a publicly available code of conduct and ethics that addresses legal responsibilities and ethics.
b. Explicit Reference to Compliance with International Law. Any company considered as an investment must have a publicly available code of conduct and ethics that explicitly lists how it complies with international laws.
H. Chemical Weapons
The Chemical Weapons Convention addresses the prohibition of development, production, stockpiling and use of chemical weapons and on their destruction. The Convention has been widely signed and adopted by all NATO member countries and the following rules apply:
a. Company Signatory to Chemical Weapons Convention. The domiciled country must be a signatory to the Chemical Weapons Convention.
b. No Company Involvement in Chemical Weapons. The company must not be involved in any chemical weapons manufacturing or supplying any material to other companies where there may be involvement with chemical weapons.
I. Biological Weapons
The Convention on Prohibition of Development, Production, stockpiling of bacteriological and toxic weapons and on their destruction is covered during the Biological and Toxin Weapons Convention. It has been widely signed and adopted by NATO member nations and the following rule applies:
a. Country of domicile signatory to Biological Weapons Convention. The company's country of origin must be a signatory to the Biological Weapons Convention.
b. Company involvement in Biological Weapons. Production of biological weapons is prohibited and any company involved will be excluded.
J. Absent from International Sanctions
The company and country must be absent from:
a. United Nations Sanctions (UN)
b. EU Financial Sanctions
c. UK Financial Sanctions
d. US Consolidated Sanctions
e. Department of State, AECA Debarred List (US)
f. Department of State, Non-Proliferation Sanctions (US)
g. Switzerland Sanctions List

VII. Exclusion list

The Statement maintains an exclusion list (the 'List') of un-investable companies. The List contains defense and security companies that fail the screening process.

Companies placed on an exclusion list should be identified prior to sourcing international sanctions, but publications offered by government and non-governmental organizations introduce a cross reference.

The list is screened and updated every six months. Any company that is placed on an exclusion list is prohibited from investment and if placed on the exclusion list during the investment holding period will follow the disinvestment process.

VIII. Controversial Companies

The Statement maintains a controversial companies list that includes companies that operate within the boundaries of the United Nations, international laws, treaties and conventions, but are involved in weapons production that is legal yet highly controversial, where controversial is defined. as involvement in Nuclear Weapons Production or Depleted Uranium as involvement in other controversial weapons will result in being placed on an exclusion list. The companies in this list are the primary suppliers for NATO and OECD member nations and are approved by NATO and OECD state governments. Any company on the Controversial Companies list may not have an individual investment exceeding 8 percent of the total portfolio value and the total holdings of the Controversial Companies may not exceed 50 percent of the total portfolio value.

IX. Disinvestment Process

Any company holding that, during the investment holding period, is placed on the exclusion list will be liquidated as per the disinvestment process. The disinvestment process states that any holding must be liquidated within 90 days following the submission of the exclusion list updates and supporting documentation to the committee.