Common use of EQUITY STRATEGIES Clause in Contracts

EQUITY STRATEGIES. Value Equity Strategies Confluence’s Value Equity strategies include All Cap Value, Equity Income, Increasing Dividend Equity Account (“IDEA”), IDEA Plus, Large Cap Value, Small Cap Value, Large Cap IDEA, Large Cap Equity Income, Small-Mid Cap Value and Value Opportunities. Value Equity portfolios consist primarily of equity securities of U.S. issuers and U.S.-listed securities of non-U.S. issuers. The IDEA Plus strategy utilizes, in addition to such equity securities, broad-based equity index ETFs and covered call options thereon. Confluence utilizes a team-based approach in which all equity investment committee members are fundamental analysts first and foremost. Each analyst is responsible for companies within specific industries and brings ideas to the Value Equities Investment Committee for vetting of investment theses and analyzing new developments with the goal of ensuring that each security in a portfolio has the attributes Confluence looks for in its equity investments (e.g., sustainable competitive advantage, free cash flow, capable management, trading at a discount to intrinsic value, among other considerations) Confluence analysts begin by compiling data, including independent and Wall Street research, on individual securities. Data gathering includes reviews of specific company and SEC documents, company visits, management interviews, newspaper and other media stories, industry publications, competitors’ information and research reports. Much of the analysts’ time is spent qualitatively analyzing this information to determine if a company possesses a sustainable competitive advantage that allows for product pricing flexibility, with additional time spent on a quantitative cash flow analysis to determine estimates of fair value of the company’s equity securities. Typically, the process begins with an equity analyst or portfolio manager analyzing and writing a report on a proposed company (or recommendation) in his or her respective industry coverage. The information is disseminated to the Value Equities Investment Committee and subsequently vetted by the Committee. The vetting process is thorough, often requiring additional information or analysis. If investment in that company is approved, the Portfolio Management Committee decides placement into a portfolio based on weighting/contribution. Each portfolio has an established target number of holdings. The portfolio will become fully invested over time as targeted investments become available within the stated pricing discipline. Before investing in any equity security of a company, Confluence conducts a rigorous investment review to: • Determine if the company’s business has a sustainable competitive advantage. This advantage usually protects its business or allows it to maintain market share leadership over time. • Examine a company’s free cash flow. Free cash flow is the amount of cash available after paying expenses and making necessary capital expenditures. Free cash flow can be used to build shareholder value through such things as dividends, stock buybacks and/or acquisitions. Confluence analyzes each business and forecasts cash flows, including future free cash flows to approximate the intrinsic value. Confluence then invests in those companies whose stocks trade below our estimates of intrinsic value. • Review a company’s return on invested capital. A well-managed company should be able to reinvest capital to improve or grow its business. A company with high or increasing return on capital meets Confluence’s criteria. • Analyze a company’s management team. Focused, passionate management teams are likely to make decisions in the best interests of shareholders with the goal of capital appreciation. Confluence has particular interest in the level of a management team’s capital allocation skills. Confluence also values corporate managers with large personal investments in their companies’ stocks. Buy Discipline Confluence generally invests in companies whose stocks trade below our estimates of intrinsic or fair value, which we determine by analyzing historical and forecasted cash flow, including free cash flow, in an attempt to estimate what a knowledgeable buyer would pay to purchase 100% of the company in an all-cash transaction. Buy limits generally are set at a 25% - 50% discount to Confluence’s estimate of intrinsic value. We do not use buy limits in IDEA or IDEA Plus portfolios; however, we seek to invest in high-quality companies when they are trading at a reasonable discount to our internal estimates of intrinsic value. Sell Discipline In seeking to preserve capital, portfolio positions are reviewed continually. A company’s stock may be sold if any of the following occurs: • The share price reaches our estimates of full valuation. • The business underperforms relative to its peer group or new market entrants. • The company’s fundamentals deteriorate. There are other circumstances that can cause all or part of a stock position to be sold. Such instances may include a stock’s value in the portfolio becoming disproportionately large or a more attractive investment opportunity presenting itself.

EQUITY STRATEGIES. Value Equity Strategies Confluence’s Value Equity strategies include All Cap Value, Equity Income, Increasing Dividend Equity Account (“IDEA”), IDEA Plus, Large Cap Value, Small Cap Value, Large Cap IDEA, Large Cap Equity Income, Small-Mid Cap Value and Value Opportunities. Value Equity portfolios consist primarily of equity securities of U.S. issuers and U.S.-listed securities of non-U.S. issuers. The IDEA Plus strategy utilizes, in addition to such equity securities, broad-based equity index ETFs and covered call options thereon. Confluence utilizes a team-based approach in which all equity investment committee members are fundamental analysts first and foremost. Each analyst is responsible for companies within specific industries and brings ideas to the Value Equities Investment Committee for vetting of investment theses and analyzing new developments with the goal of ensuring that each security in a portfolio has the attributes Confluence looks for in its equity investments (e.g., sustainable competitive advantage, free cash flow, capable management, trading at a discount to intrinsic value, among other considerations) Confluence analysts begin by compiling data, including independent and Wall Street research, on individual securities. Data gathering includes reviews of specific company and SEC documents, company visits, management interviews, newspaper and other media stories, industry publications, competitors’ information and research reports. Much of the analysts’ time is spent qualitatively analyzing this information to determine if a company possesses a sustainable competitive advantage that allows for product pricing flexibility, with additional time spent on a quantitative cash flow analysis to determine estimates of fair value of the company’s equity securities. Typically, the process begins with an equity analyst or portfolio manager analyzing and writing a report on up a proposed company (or recommendation) in his or her respective industry coverage. The information is disseminated to the Value Equities Investment Committee and subsequently vetted by the Committee. The vetting process is thorough, often requiring additional information or analysis. If investment in that company is approved, the Portfolio Management Committee decides placement into a portfolio based on weighting/contribution. Each portfolio has an established target number of holdings. The portfolio will become fully invested over time as targeted investments become available within the stated pricing discipline. Before investing in any equity security of a company, Confluence conducts a rigorous investment review to: • Determine if the company’s business has a sustainable competitive advantage. This advantage usually protects its business or allows it to maintain market share leadership over time. • Examine a company’s free cash flow. Free cash flow is the amount of cash available after paying expenses and making necessary capital expenditures. Free cash flow can be used to build shareholder value through such things as dividends, stock buybacks and/or acquisitions. Confluence analyzes each business and forecasts cash flows, including future free cash flows to approximate the intrinsic value. Confluence then invests in those companies whose stocks trade below our estimates of intrinsic value. • Review a company’s return on invested capital. A well-managed company should be able to reinvest capital to improve or grow its business. A company with high or increasing return on capital meets Confluence’s criteria. • Analyze a company’s management team. Focused, passionate management teams are likely to make decisions in the best interests interest of shareholders with the goal of capital appreciation. Confluence has particular interest in the level of a management team’s capital allocation skills. Confluence also values corporate managers with large personal investments in their companies’ stocks. Buy Discipline Confluence generally invests in companies whose stocks trade below our estimates of intrinsic or fair value, which we determine by analyzing historical and forecasted cash flow, including free cash flow, in an attempt to estimate what a knowledgeable buyer would pay to purchase 100% of the company in an all-cash transaction. Buy limits generally are set at a 25% - 50% discount to Confluence’s estimate of intrinsic value. We do not use buy limits in IDEA or IDEA Plus portfolios; however, we seek to invest in high-quality companies when they are trading at a reasonable discount to our internal estimates of intrinsic value. Sell Discipline In seeking to preserve capital, portfolio positions are reviewed continually. A company’s stock may be sold if any of the following occurs: • The share price reaches our estimates of full valuation. • The business underperforms relative to its peer group or new market entrants. • The company’s fundamentals deteriorate. There are other circumstances that can may cause all or part of a stock position to be sold. Such instances may include a stock’s value in the portfolio becoming disproportionately large or a more attractive investment opportunity presenting itself.. International and Global Equity Strategies Confluence offers four International Equity strategies—International Developed (developed countries only), International Growth*, International Opportunities * (a concentrated strategy), Emerging Markets**, and three Global strategies – Global Developed, Global Growth* and Global Large Cap. The Global Large Cap strategy is managed in conjunction with the Value Equity team; the two other global strategies are closed to new investors. *These strategies may include emerging markets exposure. ** Strategy will include emerging and may include frontier markets exposure. The investment process for the International and Global Equity strategies blends a macro (top- down) approach to country and sector allocations with both a macro and micro (bottom-up) approach to security selection. These macro and micro analyses are conducted simultaneously, and neither takes precedence over the other. Macro analysis begins with a macro-economic review of the principal economies in the strategy universe by grading a country’s economic performance on a scale of above-average to below- average. On an ongoing basis, we evaluate trends in three primary factors: 1) macro-economic;

EQUITY STRATEGIES. Value Equity Strategies Confluence’s Value Equity strategies include All Cap Value, Equity Income, Increasing Dividend Equity Account (“IDEA”), IDEA Plus, Large Cap Value, Small Cap Value, IDEA Large Cap IDEACap, Equity Income Large Cap Equity IncomeCap, Small-Mid Cap Value and Value Opportunities. Value Equity portfolios consist primarily of equity securities of U.S. issuers and U.S.-listed securities of non-U.S. issuers. The IDEA Plus strategy utilizes, in addition to such equity securities, broad-based equity index ETFs and covered call options thereon. Confluence utilizes a team-based approach in which all equity investment committee members are fundamental analysts first and foremost. Each analyst is responsible for companies within specific industries and brings ideas to the Value Equities Investment Committee for vetting of investment theses and analyzing new developments with the goal of ensuring that each security in a portfolio has the attributes Confluence looks for in its equity investments (e.g., sustainable competitive advantage, free cash flow, capable management, trading at a discount to intrinsic value, among other considerations) ). Confluence analysts begin by compiling data, including independent and Wall Street research, on individual securities. Data gathering includes reviews of specific company and SEC documents, company visits, management interviews, newspaper and other media stories, industry publications, competitors’ information and research reports. Much of the analysts’ time is spent qualitatively analyzing this information to determine if a company possesses a sustainable competitive advantage that allows for product pricing flexibility, with additional time spent on a quantitative cash flow analysis to determine estimates of fair value of the company’s equity securities. Typically, the process begins with an equity analyst or portfolio manager analyzing and writing a report on a proposed company (or recommendation) in his or her respective industry coverage. The information is disseminated to the Value Equities Investment Committee and subsequently vetted by the Committee. The vetting process is thorough, often requiring additional information or analysis. If investment in that company is approved, the Portfolio Management Committee decides placement into a portfolio based on weighting/contribution. Each portfolio has an established target number of holdings. The portfolio will become fully invested over time as targeted investments become available within the stated pricing discipline. Before investing in any equity security of a company, Confluence conducts a rigorous investment review to: •  Determine if the company’s business has a sustainable competitive advantage. This advantage usually protects its business or allows it to maintain market share leadership over time. •  Examine a company’s free cash flow. Free cash flow is the amount of cash available after paying expenses and making necessary capital expenditures. Free cash flow can be used to build shareholder value through such things as dividends, stock buybacks and/or acquisitions. Confluence analyzes each business and forecasts cash flows, including future free cash flows to approximate the intrinsic value. Confluence then invests in those companies whose stocks trade below our estimates of intrinsic value. •  Review a company’s return on invested capital. A well-managed company should be able to reinvest capital to improve or grow its business. A company with high or increasing return on capital meets Confluence’s criteria. •  Analyze a company’s management team. Focused, passionate management teams are likely to make decisions in the best interests of shareholders with the goal of capital appreciation. Confluence has particular interest in the level of a management team’s capital allocation skills. Confluence also values corporate managers with large personal investments in their companies’ stocks. Buy Discipline Confluence generally invests in companies whose stocks trade below our estimates of intrinsic or fair value, which we determine by analyzing historical and forecasted cash flow, including free cash flow, in an attempt to estimate what a knowledgeable buyer would pay to purchase 100% of the company in an all-cash transaction. Buy limits generally are set at a 25% - 50% discount to Confluence’s estimate of intrinsic value. We do not use buy limits in IDEA or IDEA Plus portfolios; however, we seek to invest in high-quality companies when they are trading at a reasonable discount to our internal estimates of intrinsic value. Sell Discipline In seeking to preserve capital, portfolio positions are reviewed continually. A company’s stock may be sold if any of the following occurs: •  The share price reaches our estimates of full valuation. •  The business underperforms relative to its peer group or new market entrants. •  The company’s fundamentals deteriorate. There are other circumstances that can cause all or part of a stock position to be sold. Such instances may include a stock’s value in the portfolio becoming disproportionately large or a more attractive investment opportunity presenting itself.

EQUITY STRATEGIES. Value Equity Strategies Confluence’s Value Equity strategies include All Cap Value, Equity Income, Select Equity Income, Increasing Dividend Equity Account (“IDEA”), IDEA Plus, Large Cap Value, Small Cap Value, Large Cap IDEA, Large Cap Equity Income, ,Small-Mid Cap Value Value, and Value Opportunities. Value Equity portfolios consist primarily of equity securities of U.S. issuers and U.S.-listed securities of non-U.S. issuers. The IDEA Plus strategy utilizes, in addition to such equity securities, broad-based equity index ETFs and covered call options thereon. Confluence utilizes a team-based approach in which all equity investment committee members are fundamental analysts first and foremost. Each analyst is responsible for companies within specific industries and brings ideas to the Value Equities Investment Committee for vetting of investment theses and analyzing new developments with the goal of ensuring that each security in a portfolio has the attributes Confluence looks for in its equity investments (e.g., sustainable competitive advantageadvantages, free cash flow, capable management, trading at a discount to intrinsic value, among other considerations) ). Confluence analysts begin by compiling data, including independent and Wall Street research, on individual securities. Data gathering includes reviews of specific company and SEC documents, company visits, management interviews, newspaper and other media stories, industry publications, competitors’ information information, and research reports. Much of the analysts’ time is spent qualitatively analyzing this information to determine if a company possesses a sustainable competitive advantage that allows for product pricing flexibility, with additional time spent on a quantitative cash flow analysis to determine estimates of fair value of the company’s equity securities. Typically, the process begins with an equity analyst or portfolio manager analyzing and writing a report on a proposed company (or recommendation) in his or her respective industry coverage. The information is disseminated to the Value Equities Investment Committee and subsequently vetted by the Committee. The vetting process is thorough, often requiring additional information or analysis. If investment in that company is approved, the Portfolio Management Committee decides placement into a portfolio based on weighting/contribution. Each portfolio has an established target number of holdings. The portfolio will become fully invested over time as targeted investments become available within the stated pricing discipline. Before investing in any equity security of a company, Confluence conducts a rigorous investment review to: •  Determine if the company’s business has a sustainable competitive advantage. This advantage usually protects its business or allows it to maintain market share leadership over time. •  Examine a company’s free cash flow. Free cash flow is the amount of cash available after paying expenses and making necessary capital expenditures. Free cash flow can be used to build shareholder value through such things as dividends, stock buybacks and/or acquisitions. Confluence analyzes each business and forecasts cash flows, including future free cash flows flows, to approximate the intrinsic value. Confluence then invests in those companies whose stocks trade below our estimates of intrinsic value. •  Review a company’s return on invested capital. A well-managed company should be able to reinvest capital to improve or grow its business. A company with high or increasing return on capital meets Confluence’s criteria. •  Analyze a company’s management team. Focused, passionate management teams are likely to make decisions in the best interests of shareholders with the goal of capital appreciation. Confluence has particular interest in the level of a management team’s capital allocation skills. Confluence also values corporate managers with large personal investments in their companies’ stocks. Buy Discipline Confluence generally invests in companies whose stocks trade below our estimates of intrinsic or fair value, which we determine by analyzing historical and forecasted cash flow, including free cash flow, in an attempt to estimate what a knowledgeable buyer would pay to purchase 100% of the company in an all-cash transaction. Buy limits generally are set at a 25% - 50% discount to Confluence’s estimate of intrinsic value. We do not use buy limits in IDEA or IDEA Plus portfolios; however, we seek to invest in high-quality companies when they are trading at a reasonable discount to our internal estimates of intrinsic value. Sell Discipline In seeking to preserve capital, portfolio positions are reviewed continually. A company’s stock may be sold if any of the following occurs: •  The share price reaches our estimates of full valuation. •  The business underperforms relative to its peer group or new market entrants. •  The company’s fundamentals deteriorate. There are other circumstances that can cause all or part of a stock position to be sold. Such instances may include a stock’s value in the portfolio becoming disproportionately large or a more attractive investment opportunity presenting itself.