Meritas Approach to the Three Components of SRI

Screening
We have a zero tolerance level for income derived from the following areas:

• Military and weapons contracting
• Alcohol & Tobacco manufacturing
• Pornography & Gambling
• Nuclear power

We also screen the companies that supply excluded companies and industries to ensure that we are not buying a company that manufactures and distributes products that are for use exclusively within these industries.

In addition, we screen companies based on the following positive criteria:

• International labour standards
• Environmental impact
• Employee relations
• Gender and cultural equity policies

Shareholder Advocacy
We intend to use all of the available means of shareholder advocacy to encourage companies to become better social performers.

We intend to employ an active shareholder approach, in conjunction with other socially responsible investors, including corporate engagement over controversial issues.
With respect to proxy voting, we will post our voting intentions on our website approximately two weeks prior to each companies vote so that both the company and our unit holders are aware of our votes. These votes will be cast in line with our social investing criteria.

Community Investments
Meritas policy is that up to 2% of the assets in each of our portfolios is directed towards Community Development Initiatives both domestically and internationally. These investments will favour opportunities with government guarantees and may have the effect of lowering the overall return to an investor should the policy have not been in place. However, we believe that the effect of this decision on an investor's returns should be insignificant but the effect on the lives of the individuals receiving this money could be very significant.
However, unlike others who define their approach to SRI in terms of their screens, we prefer to talk about the positive change that we believe SRI can have and paint a picture of the future after these effects. So, our Criteria for Socially Responsible Investing are disclosed as follows:


Respect the dignity and value of all people.

All issuing companies should:

• respect and support the basic human rights of all people to live free of fear, violence and intimidation; to lead healthy, well nourished lives; and to have access to adequate shelter and sanitation.
• treat all people fairly, avoiding discrimination and stereotyping, and seek to benefit from and nurture diversity in all aspects of corporate activity.
• respect the dignity of individuals and ethnic/cultural groups.
• not attempt to benefit from the misfortunes that befall disadvantaged individuals or communities or from relationships with oppressive political regimes and leaders.

Build a world at peace and free from violence.

All issuing companies should:

• be engaged in products and services that support life not those designed to kill, maim, or injure directly or through the promotion or growth of the world's military establishments. We will avoid those companies where weapons production and military contracting is a focus of their energy, resources, and market development.
• profit from activities and practices that contribute to peaceful and healthy relationships between individuals, communities, nations and within society in general.
• commit to efforts that reduce violence and aggression in our culture and that promote alternative, non-violent forms of conflict resolution.

Internalize a concern for justice in a global society.

All issuing companies should:

• provide fair, sustainable compensation for all employees and subcontractors.
• extend opportunities to the disabled, those who are disadvantaged, and to marginalized communities.
• offer products and services with honesty and without discrimination or undue preference.
• affirm that individuals and communities deserve appropriate involvement in issues and decisions that affect their lives.
• act on a basis of shared prosperity recognizing the value and contributions of all stakeholders in creating and sustaining lasting success.

Exhibit responsible management practices.

All issuing companies should:

• operate in an honest, trustworthy, compassionate, and responsible manner with as much transparency and openness about company policies, finances, and behaviour as is feasible.
• value and empower employees and take all reasonable steps to ensure their health and safety.
• respect workers' rights to communicate with management, organize, and collectively bargain. We expect the company to negotiate and communicate in good faith and deal fairly and respectfully with all stakeholders.
• engage in responsible resource management and obey or exceed all relevant laws for environmental concerns, safety, public disclosure, etc.
• employ sound practices of corporate governance, including issues of board independence, board and executive compensation, and structural integrity.
• avoid unnecessary litigation and pursue alternatives where possible.
• be aggressively engaged in the competitive marketplace but in a manner that is respectful of its competitors and values-centred in its decision-making.

Support and involve communities.

All issuing companies should:

• recognize that communities - within a workforce, around company facilities, or representing various ethnic/cultural groups - contribute directly and indirectly to the success of corporate endeavours.
• be responsible, within reason, to contribute its people, expertise and resources to the support and development of these same communities. We expect companies to actively, creatively, and aggressively engage in practices of corporate charitable giving. Employee voluntarism, community involvement, and personal charitable giving should also be encouraged.
• include communities, where appropriate, in decision-making on issues that affect them.
• make investments that add value to local workforces, living environments, and community infrastructures. We expect companies to monitor, evaluate and take into consideration the impact their products and production methods can have on efforts to build healthy, productive communities. To this end, we will avoid companies materially engaged in alcohol and tobacco production and in the gaming and pornography industry.

Practice environmental stewardship.

All issuing companies should:

• recognize that the natural environment is a finite resource, the inheritance of future generations and a gift from God.
• employ policies that acknowledge and respect the real limits of natural resources and work toward practices and models of environmental sustainability. We expect companies to "reduce, reuse, and recycle" and to pursue ever cleaner and more efficient production methodologies.
• engage in honest, transparent environmental reporting, to support respected environmental principles and to publicly promote the value of the environment in our world.
• bear a deep concern for the welfare of animals and the minimization of animal testing, wherever possible.

This goes far beyond the approach of others who may employ only negative or positive screens and recognizes that, if SRI is to accomplish what it can, it needs to be an active investment style used to create positive change rather than just a method of punishing "bad" companies.