EQUITY STRATEGY

TECHNOLOGY

Index constituents are selected due to having significant dealings in one of the 14 technologies the US Department of Defense (DoD) defines as dual-use, disruptive, emerging or critical to both national and economic security.

Given the DoD has significant interest in seeing these technologies grow and succeed in national territory, the US Government may deploy a variety of policy tools in support of their development, which could help selected companies outperform (i.e. tax incentives, research & development funding, protection of intellectual property).

PATRIOT

The Index is composed of US large & mid cap companies that align with national modernization priorities.

In response to rising geopolitical risk in the world today, the strategy features a stock selection methodology designed to reduce risk, by excluding companies that have a higher likelihood of being negatively impacted by geopolitics (i.e. economic sanctions, national industrial policy actions, national regulatory actions, and other economic and strategic competition actions taken by either the US or adversarial nations).

GEOSTRATEGIC RISK RATINGS (GRR)

J.H. WHITNEY’S* RISK MITIGATION APPROACH

A proprietary 10-factor model is employed to assess an entity’s vulnerability to geostrategic risk
This model uses publicly available company-reported and government data to measure thresholds, entanglement, or dependency across geopolitical borders
The model is scored 1 to 3, with 1 being the most risky (China, Russia, North Korea…) and 3 being the least risky (US, UK, Canada…)

THE 10 GRR COMPONENTS AND THEIR WEIGHT:

Governance (46%)

1. Country of Incorporation (11.5%)

2. Board Composition (11.5%)

3. Foreign Ownership (11.5%)

4. USG Exemption List (11.5%)

Commercial (27%)

5. Geographic Revenue (9%)

6. Joint Ventures (9%)

7. Strategic Alliances (9%)

Operational (27%)

8. Customers (9%)

9. Geographic Assets (9%)

10. Suppliers (9%)

The GRR score of a company is the weighted average of the above 10 GRR components

GRR SCALE

A higher GRR score usually indicates relatively lower vulnerability to geostrategic risk.

* J.H. Whitney is a geopolitical risk consulting firm whose proprietary geostrategic risk scoring methodology helps inform the equity portion of the Index.

Want to know more about the
Patriot Technology Index?

patriot.technology.index@us.bnpparibas.com

Important Information

The Patriot Technology Index (the “Index”) is the exclusive property of BNP Paribas or one of its affiliates (BNP Paribas and its affiliates are hereinafter called “BNPP”) and is determined, composed and calculated by BNPP. “BNP”, “BNPP”, “BNP Paribas” and “Patriot Technology Index ”(collectively, the “BNPP Marks”) are trademarks or service marks of BNPP.

The Patriot Technology Index methodology embeds certain costs which cover among other things, rebalancing and replication costs. Such costs (if any) may vary over time with market conditions.

BNP Paribas may license the Patriot Technology Index to one or more companies (each, a “Company”) for use in a product offered or issued by the Company. The products are not, in whole or in part, sponsored, structured, priced, endorsed, offered, sold, issued or promoted by BNP Paribas or any of its affiliates, or any third party licensor of information to BNP Paribas. BNP Paribas reserves the right to amend or adjust the Patriot Technology Index methodology from time to time and accepts no liability for any such amendment or adjustment. BNP Paribas is not under any obligation to continue the calculation, publication or dissemination of the Patriot Technology Index and accepts no liability for any suspension or interruption in the calculation thereof. Neither BNP Paribas nor any of its affiliates accepts any liability in connection with the publication or use of the level of the Patriot Technology Index at any given time.

BNP Paribas may enter into derivative transactions or issue financial instruments (the “Index Products”) linked to the Patriot Technology Index. The Patriot Technology Index Products are not in any way sponsored, endorsed, sold or promoted by the sponsor of any index component (or part thereof) which may comprise the Patriot Technology Index (the “Underlying Index”) that is not affiliated with BNP Paribas (each such sponsor, an “Underlying Index Sponsor”). The Underlying Index Sponsors make no representation whatsoever, whether express or implied, either as to the results to be obtained from the use of the relevant Underlying Index and/or the levels at which the relevant Underlying Index stands at any particular time on any particular date or otherwise. No Underlying Index Sponsor shall be liable (whether in negligence or otherwise) to any person for any error in the relevant Underlying Index and the relevant Underlying Index Sponsor is under no obligation to advise any person of any error therein. None of the Underlying Index Sponsors makes any representation whatsoever, whether express or implied, as to the advisability of purchasing or investing in, or assuming any risk in connection with, the Patriot Technology Index Products. BNP Paribas shall have no liability to any party for any act or failure to act by any Underlying Index Sponsor in connection with the calculation, adjustment or maintenance of the relevant Underlying Index and have no affiliation with or control over any Underlying Index or the relevant Underlying Index Sponsor or the computation, composition or dissemination of any Underlying Index. Although BNP Paribas will obtain information concerning each Underlying Index from publicly available sources that it believes reliable, it will not independently verify this information. Accordingly, no representation, warranty or undertaking (express or implied) is made and no responsibility is accepted by BNP Paribas as to the accuracy, completeness and timeliness of information concerning any Underlying Index.

BNP Paribas may act in a number of different capacities in relation to the Patriot Technology Index and/or products linked to the Patriot Technology Index, which may include, but not be limited to, acting as hedging counterparty, index sponsor and/or index calculation agent.