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3.3

Disclosures

Definition and Terms Related to MSCI ESG Findings

Summary:

MSCI ESG Research is an independent provider of ESG data, reports and ratings based on published methodologies and is available to clients on a subscription basis. MSCI received subscription compensation from Riverbridge in connection with an MSCI ESG Portfolio Extended Summary prepared exclusively for Riverbridge and related findings. The findings selected for this report were explicitly chosen by Riverbridge and is, in no way, intended to represent all findings from the MSCI ESG Portfolio Extended Summary.

Riverbridge recognizes that others may approach ESG issues from a different perspective and ratings included in the MSCI ESG Portfolio Extended Summary, not otherwise reported herein, may be viewed as meaningful in the decision-making process.

MSCI ESG Research results were obtained 2/23/2021 and are based on the respective holdings of the Eco Leaders<super>®<super>, All Cap Growth, Small Cap Growth, and Smid Cap Growth Model Portfolios as of 12/31/2020. Holdings are subject to change without further notice.

Ratings:

ESG Quality Score measures the ability of underlying holdings to manage key medium to long-term risks and opportunities arising from environmental, social and governance factors. It is based on MSCI ESG Ratings and is measured on a scale of 0 to 10 (worst to best). Eco Leaders<super>®<super> Portfolio scored 5.86 while the S&P 500 (Benchmark) scored 5.25. All Cap Growth Portfolio scored 5.89 while the S&P 500 (Benchmark) scored 5.25. Small Cap Growth Portfolio scored 5.69 while the Russell 2000 Growth (Benchmark) scored 4.00. Smid Cap Growth Portfolio scored 6.04 while the Russell 2500 Growth (Benchmark) scored 4.64.

ESG Ratings Distribution represents the percentage of a portfolio’s market value coming from holdings classified as ESG Ratings Leaders (AAA and AA), Average (A, BBB, and BB) and Laggards (B and CCC). The distribution of scores is based on the universe of approximately 28,000 funds included in MSCI ESG Fund Metrics.  MSCI scored as follows based on the determined ESG Quality Score:

  • Eco Leaders<super>®<super> Portfolio received an A and the S&P 500 (Benchmark) received a BBB;
  • All Cap Growth Portfolio received an A and the S&P 500 (Benchmark) received a BBB;
  • Small Cap Growth Portfolio received a BBB and the Russell 2000 Growth (Benchmark) received a BB; and
  • Smid Cap Growth Portfolio received an A and the Russell 2500 Growth (Benchmark) received a BBB.

Carbon Risk measures exposures to carbon intensive companies. It is based on MSCI CarbonMetrics and is calculated as the portfolio weighted average of issuer carbon intensity.  At the issuer level, Carbon Intensity is the ratio of annual scope 1 and 2 carbon emissions to annual revenue (T CO2E/$M Sales). Carbon Risk is categorized as Very Low (0-<15), Low (15 to <70), Moderate (70-<250), High (250 to <525), and Very High (>=525). MSCI scored as follows:

  • Eco Leaders<super>®<super> Portfolio as 40.0 and the S&P 500 (Benchmark) as 138.6 resulting in 71.1% less than Benchmark;
  • All Cap Growth as 40.5 and the S&P 500 (Benchmark) as 138.6 resulting in 70.8% less than Benchmark.
  • Small Cap Growth as 30.5 and the Russell 2000 Growth (Benchmark) as 62.2 resulting in 51.0% less than Benchmark; and
  • Smid Cap Growth as 24.1 and the Russell 2500 Growth (Benchmark) as 59.3 resulting in 59.4% less than Benchmark.

Definitions:

Weighted Average Carbon Intensity measures a fund’s exposure to carbon intensive companies. The figure is the sum of security weight (normalized for corporate positions only) multiplied by the security Carbon Intensity.  

Carbon Intensity at the issuer level is the ratio of annual scope 1 and 2 carbon emissions to annual revenue.

Business Involvement Screening Research (BISR) metrics provide transparency to help identify holdings that align with ethical, religious or political views. MSCI reviewed the holdings of the Eco Leaders<super>®<super>, All Cap Growth, Small Cap Growth, and Smid Cap Growth Model Portfolios as of 12/31/2020 for business involvement in various ESG categories, e.g. Tobacco (%). Each restriction category is measured by the percentage of the portfolio’s market value exposed to companies as follows: Fossil Fuels companies that own fossil fuel reserves. Tobacco companies flagged for involvement in tobacco according to MSCI’s Highly Restrictive screen definition. This includes all tobacco producers as well as tobacco distributors, suppliers, and retailers if the combined revenue is =>5%. The full weight of each flagged company is included in the calculation. Gambling companies flagged for involvement in gambling according to MSCI’s Highly Restrictive screen definition. This includes all gambling facility operators as well as support products & services if the revenue is =>5%. The full weight of each flagged company is included in the calculation. Weapons companies with ties to the manufacture of conventional (including depleted uranium), biological/chemical, or nuclear weapons systems and components. This includes companies that provide support systems and services, as well as those with indirect ties to weapons production through ownership. Note: Involvement in the production of landmines and/or cluster bombs is not captured in this category but tracked separately. Civilian Firearms companies that manufacture or derive any amount of annual revenue from the distribution (wholesale or retail) of firearms and small arms ammunition for civilian markets or intended for civilian use. The research does not cover companies that cater to the military, government, and law enforcement markets.

About MSCI ESG Research, LLC

This report contains certain information (the “Information”) sourced from MSCI ESG Research LLC, or its affiliation or information providers (the “ESG Parties”). The information may only be used for your internal use, may not be reproduced or disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices.  Although they obtain information from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness, of any data herein and expressly disclaim all express or implied warranties, including those of merchantability and fitness for a particular purposes. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such, nor should it be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. None of the ESG Parties shall have any liability for any errors or omission in connection with any data herein, or any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

Performance Disclosures

Returns presented within this document are presented as gross-of-fee and net-of-fee performance figures. Gross-of-fee performance figures do not reflect the deduction of investment advisory fees. A client’s returns will be reduced by the advisory fees and other expenses incurred in the management of its account. For example, the deduction of a 1% advisory fee over a 10 year period would reduce a 10% gross return to an 8.9% net return. A description of Riverbridge Partners’ advisory fees are disclosed on Part 2 of its Form ADV, a copy of which is available upon request. 

Past performance does not guarantee future results. 

Performance results do not reflect the impact of taxes. 

It should not be assumed that account holdings will correspond directly to any such comparative benchmark index. 

Comparative indices may be more or less volatile than Riverbridge portfolios. 

Riverbridge performance results reflect the reinvestment of dividends and other account earnings, and are net of applicable account transaction charges. 

Information in this document is not intended to be used as investment advice.

Mention of companies/stocks herein is for illustrative purposes only and should not be interpreted as investment advice. 

The holdings included in this document are for illustrative purposes only and should not be considered a recommendation to purchase or sell any particular security. There is no guarantee that the same or similar holdings will be purchased or held in accounts in the future.

Eco Leaders<super>®<super> Composite

Firm Information: Riverbridge Partners, LLC is a Minnesota based investment advisor registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940. The firm provides investment management services to institutional and individual investors. The company offers growth-oriented investment services by investing in growth equity securities, which it believes will provide high returns over the long term. The firm’s standard fee schedule is an annual 1%.

Composite Characteristics: The Eco Leaders<super>®<super> Composite was created in June 2000 and its inception date was 05/31/2000. It is a growth portfolio invested in companies that benefit from having a positive impact on the environment. A complete list and description of all firm composites, including broad and limited distribution pooled funds, is available upon request. The composite benchmarks are the S&P 500<super>®<super> Index and the Russell 3000<super>®<super> Growth Index. The S&P 500<super>®<super> Index includes 500 industry leading companies measuring the performance of the large-cap U.S. equity universe. The Russell 3000<super>®<super> Growth Index includes the segment of securities within the Russell 3000<super>®<super> Index with higher price-to-book ratios and higher forecasted growth values. The Russell 3000<super>®<super> Index is an unmanaged index measuring the performance of the broad U.S. equity universe. Composite dispersion is not presented for years with 5 or fewer accounts. The benchmark returns are gross of all fees and taxes. The composite minimum value is $100,000.

Material risks of the strategy include stock market, business and economic development, liquidity, and foreign security risk. Leverage, derivatives, short positions and illiquid investments are not used in the strategy. As with any investment, an investor may lose money, and the strategy can underperform its benchmark. Investment in strategies is not insured by the FDIC or any other government agency.  

Calculation Methodology: Individual portfolios are revalued daily starting 1/1/2009. Prior to that, individual portfolios were revalued monthly and intra-month when large cash flows (defined at 10%) occurred. Gross-of-fee returns are calculated net of transaction costs and gross of management fees. Until 12/31/2007, net performance was calculated by applying the maximum annual management fee of 1% to gross performance on a monthly basis. Starting 1/1/2008, net-of-fee returns are calculated net of actual investment management fees. Both gross-of-fee and net-of-fee returns are calculated gross of all withholding taxes on foreign dividends. Accruals are included in calculations. The dispersion measure is the equal-weighted standard deviation of accounts in the composite for the entire year. Dispersion and Ex-Post standard deviation is calculated using gross-of-fees returns. Policies for valuing investments, calculating performance, and preparing GIPS Reports are available upon request.

Other Disclosures: Riverbridge claims compliance with the Global Investment Performance Standards (GIPS<super>®<super>) and has prepared and presented this report in compliance with the GIPS standards. Riverbridge has been independently verified for the period 12/31/1989–12/31/2020.  A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. The Eco Leaders Composite has had a performance examination for the periods 06/01/2000–12/31/2020. The verification and performance examination reports are available upon request.

The benchmark returns are not covered by the report of the independent verifiers. Past performance does not guarantee future results. This performance report should not be construed as a recommendation to purchase or sell any particular securities held in composite accounts. Market conditions can vary widely over time and can result in a loss of portfolio value.

GIPS<super>®<super> is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

All Cap Growth Composite

Firm Information: Riverbridge Partners, LLC is a Minnesota based investment advisor registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940. The firm provides investment management services to institutional and individual investors. The company offers growth-oriented investment services by investing in growth equity securities, which it believes will provide high returns over the long term. The firm’s standard fee schedule is an annual 1%.

Composite Characteristics: The All Cap Growth Composite was created in October 1987 and its inception date was 09/30/1987. It is a diversified growth stock portfolio invested in growth companies of all market capitalization ranges. A complete list and description of all firm composites, including broad and limited distribution pooled funds, is available upon request. The composite benchmark is the Russell 3000<super>®<super> Growth Index. The Russell 3000<super>®<super> Growth Index includes the segment of securities within the Russell 3000<super>®<super> Index with higher price-to-book ratios and higher forecasted growth values. The Russell 3000<super>®<super> Index is an unmanaged index measuring the performance of the broad U.S. equity universe. The benchmark returns are gross of all fees and taxes. The composite minimum value is $100,000.

Material risks of the strategy include stock market, business and economic development, liquidity, and foreign security risk. Leverage, derivatives, short positions and illiquid investments are not used in the strategy. As with any investment, an investor may lose money, and the strategy can underperform its benchmark. Investment in strategies is not insured by the FDIC or any other government agency.  

Calculation Methodology: Individual portfolios are revalued daily starting 1/1/2009. Prior to that, individual portfolios were revalued monthly and intra-month when large cash flows (defined at 10%) occurred. Gross-of-fee returns are calculated net of transaction costs and gross of management fees. Until 12/31/2007, net performance was calculated by applying the maximum annual management fee of 1% to gross performance on a monthly basis. Starting 1/1/2008, net-of-fee returns are calculated net of actual investment management fees. Both gross-of-fee and net-of-fee returns are calculated gross of all withholding taxes on foreign dividends. Accruals are included in calculations. The dispersion measure is the equal-weighted standard deviation of accounts in the composite for the entire year. Dispersion and Ex-Post standard deviation is calculated using gross-of-fees returns. Policies for valuing investments, calculating performance, and preparing GIPS Reports are available upon request.

Other Disclosures: Riverbridge claims compliance with the Global Investment Performance Standards (GIPS<super>®<super>) and has prepared and presented this report in compliance with the GIPS standards. Riverbridge has been independently verified for the period 12/31/1989–12/31/2020.  A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. The All Cap Growth Composite has had a performance examination for the periods 10/01/1987–12/31/2020. The verification and performance examination reports are available upon request.

The benchmark returns are not covered by the report of the independent verifiers. Past performance does not guarantee future results. This performance report should not be construed as a recommendation to purchase or sell any particular securities held in composite accounts. Market conditions can vary widely over time and can result in a loss of portfolio value.

GIPS<super>®<super> is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

Small Cap Growth Composite

Firm Information: Riverbridge Partners, LLC is a Minnesota based investment advisor registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940. The firm provides investment management services to institutional and individual investors. The company offers growth-oriented investment services by investing in growth equity securities, which it believes will provide high returns over the long term. The firm’s standard fee schedule is an annual 1%.

Composite Characteristics: The Small Cap Growth Composite was created in July 1988 and its inception date was 06/30/1988. It is a growth stock portfolio invested in small to medium sized growth companies. Effective 8/1/2019, this strategy generally invests in companies with market capitalizations of less than $7 billion.  Prior to that the general guideline was less than $5 billion.  The general market cap guideline was redefined in 2019 due to market appreciation. A complete list and description of all firm composites, including broad and limited distribution pooled funds, is available upon request. The composite benchmark is the Russell 2000<super>®<super> Growth Index. The Russell 2000<super>®<super> Growth Index includes the segment of securities within the Russell 2000<super>®<super> Index with higher price-to-book ratios and higher forecasted growth values. The Russell 2000<super>®<super> Index is an unmanaged index measuring the performance of the small-cap U.S. equity universe. The benchmark returns are gross of all fees and taxes. The composite minimum value is $100,000.

Material risks of the strategy include stock market, business and economic development, liquidity, and foreign security risk. Leverage, derivatives, short positions and illiquid investments are not used in the strategy. As with any investment, an investor may lose money, and the strategy can underperform its benchmark. Investment in strategies is not insured by the FDIC or any other government agency.  

Calculation Methodology: Individual portfolios are revalued daily starting 1/1/2009. Prior to that, individual portfolios were revalued monthly and intra-month when large cash flows (defined at 10%) occurred. Gross-of-fee returns are calculated net of transaction costs and gross of management fees. Until 12/31/2007, net performance was calculated by applying the maximum annual management fee of 1% to gross performance on a monthly basis. Starting 1/1/2008, net-of-fee returns are calculated net of actual investment management fees. Both gross-of-fee and net-of-fee returns are calculated gross of all withholding taxes on foreign dividends. Accruals are included in calculations. The dispersion measure is the equal-weighted standard deviation of accounts in the composite for the entire year. Dispersion and Ex-Post standard deviation is calculated using gross-of-fees returns. Policies for valuing investments, calculating performance, and preparing GIPS Reports are available upon request.

Other Disclosures: Riverbridge claims compliance with the Global Investment Performance Standards (GIPS<super>®<super>) and has prepared and presented this report in compliance with the GIPS standards. Riverbridge has been independently verified for the period 12/31/1989–12/31/2020.  A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. The Small Cap Growth Composite has had a performance examination for the periods 07/01/1988–12/31/2020. The verification and performance examination reports are available upon request.

The benchmark returns are not covered by the report of the independent verifiers. Past performance does not guarantee future results. This performance report should not be construed as a recommendation to purchase or sell any particular securities held in composite accounts. Market conditions can vary widely over time and can result in a loss of portfolio value.

GIPS<super>®<super> is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

Smid Cap Growth

Firm Information: Riverbridge Partners, LLC is a Minnesota based investment advisor registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940. The firm provides investment management services to institutional and individual investors. The company offers growth-oriented investment services by investing in growth equity securities, which it believes will provide high returns over the long term. The firm’s standard fee schedule is an annual 1%.

Composite Characteristics: The Smid Cap Growth Composite was created in January 2007 and its inception date was 12/31/2006. It is a growth stock portfolio invested in small to medium sized growth companies. Effective 8/1/2019, this strategy generally invests in companies with market capitalizations of less than $30 billion. Prior to that the general guideline was less than $15 billion.  The general market cap guideline was redefined in 2019 due to market appreciation. A complete list and description of all firm composites, including broad and limited distribution pooled funds, is available upon request. The composite benchmark is the Russell 2500™ Growth Index. The Russell 2500™ Growth Index includes the segment of securities within the Russell 2500™ Index with higher price-to-book ratios and higher forecasted growth values. The Russell 2500™ Index is an unmanaged index measuring the performance of the small to mid-cap U.S. equity universe. Composite dispersion is not presented for years with 5 or fewer accounts. The benchmark returns are gross of all fees and taxes. The composite minimum value is $100,000. Prior to January 1, 2016, the composite minimum value was $50,000.

Material risks of the strategy include stock market, business and economic development, liquidity, and foreign security risk. Leverage, derivatives, short positions and illiquid investments are not used in the strategy. As with any investment, an investor may lose money, and the strategy can underperform its benchmark. Investment in strategies is not insured by the FDIC or any other government agency.  

Calculation Methodology: Individual portfolios are revalued daily starting 1/1/2009. Prior to that, individual portfolios were revalued monthly and intra-month when large cash flows (defined at 10%) occurred. Gross-of-fee returns are calculated net of transaction costs and gross of management fees. Until 12/31/2007, net performance was calculated by applying the maximum annual management fee of 1% to gross performance on a monthly basis. Starting 1/1/2008, net-of-fee returns are calculated net of actual investment management fees. Both gross-of-fee and net-of-fee returns are calculated gross of all withholding taxes on foreign dividends. Accruals are included in calculations. The dispersion measure is the equal-weighted standard deviation of accounts in the composite for the entire year. Dispersion and Ex-Post standard deviation is calculated using gross-of-fees returns. Policies for valuing investments, calculating performance, and preparing GIPS Reports are available upon request.

Other Disclosures: Riverbridge claims compliance with the Global Investment Performance Standards (GIPS<super>®<super>) and has prepared and presented this report in compliance with the GIPS standards. Riverbridge has been independently verified for the period 12/31/1989–12/31/2020.  A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. The Smid Cap Growth Composite has had a performance examination for the periods 01/01/2007–12/31/2020. The verification and performance examination reports are available upon request.

The benchmark returns are not covered by the report of the independent verifiers. Past performance does not guarantee future results. This performance report should not be construed as a recommendation to purchase or sell any particular securities held in composite accounts. Market conditions can vary widely over time and can result in a loss of portfolio value.

GIPS<super>®<super> is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

Riverbridge Responsible Investing Report 2020