Myths and Truths about Socially Responsible Investing Lincoln Pain, CFP ®, AIF ® Effective Assets Invest to Change the World

What is Socially Responsible Investing? Every time you invest, your money is doing two things - It is working for you financially. - It is capitalizing the corporations that are creating your future in which you, your children, and your grandchildren will be spending your investments. There is no avoiding the fact : All investments are doing both all the time. Socially Responsible Investing is the process of taking responsibility for both effects of investing.

THREE LEGS OF SRI THREE LEGS OF SRI 1. Positive & Negative Social Screening Or Best-In-Class (more popular approach in Europe) 2. Shareholder Engagement / Proxy Activism 3.Community Development Investing / Lending / Micro-Lending

MYTH #1 Socially Responsible Investing Underperforms.

MYTH #1 Why the myth? Stories in WSJ, Forbes & Fortune compare performance of all SRI funds with Equity Index. Does SRI underperform? Index history Manager history, apples-to-apples Mutual Fund History Morningstar Analysis.

Indexes are unmanaged groups of securities and are not directly available for investment.

During Wartime Indexes are unmanaged groups of securities and are not directly available for investment.

Boston Trust & Investment Management Company (as of December 31, 2007) YearUnrestrictedSocialDifference QTD-0.1%0.4%-0.5% 1 Year14.3%12.4%1.9% 3 Year9.3%8.0%1.3% 5 Year13.0%12.2%0.8% 7 Year6.3%5.1%1.2% 10 Year7.4%7.8%-0.4%

"The Impact of Social Screening on Growth-Oriented Investment Strategies“ * - Compares returns of screened and unscreened portfolios for eight growth managers, and finds no statistically significant performance difference. Time periods vary between nine and 23 quarters, all ending in December Lloyd asserts that until 2004, while he was collecting these data, they continued virtually the same. * Kurtz, Lloyd. "The Impact of Social Screening on Growth-Oriented Investment Strategies," The Journal of Performance Measurement, Spring 1997.

MYTH #1 SRI does not underperform in long-term but has underperformed during certain periods. During what periods does SRI underperform? - Wartime No weapons manufacturers – no taxpayer subsidy for industries. - High oil prices No Exxon Mobil, Sun Oil, etc. Conventional investors can also invest in alternatives. - Tangible Assets cycles Few Commodities, Limited Real Estate, No Mining.

MYTH #1 What are performance advantages of SRI? Studies on Go to “Research,” then “Moskowitz Prize” Some advantages to treating workers well Some advantages to taking care of environmental liabilities early Some advantages to performance of shareholder action, especially around governance.

MYTH #2 Performance “Myth” #2 : Invest conventionally ; Afterwards give your outperformance to charities that make a difference. Problem : Some problems cannot be cleaned up, such as malformed babies or drowning and starving polar bears. Problem : Most cleanups cost more than doing it right in the first place. How much outperformance will it take to clean up mess?

If we capitalize pollution and abuse, how much will the cleanup cost our children?

Myth #3 SRI cannot be effective.

Effectiveness Which SRI techniques are socially effective? - Screening (Negative & Positive) When has screening been effective in the past? Why? Various Arguments regarding screening. - Shareholder Activism - Community Development Investing

SRI RESOURCES - Social Investment Forum / SRI Trade Association Research / Trends Report / Advocacy & Public Policy - The Largest Personal Finance Site Devoted to SRI Full List of SRI Mutual Funds, Links to Fundsites - Non-Profit support for social Consumer, Business & Investor - SRI World Group & SRI Professionals Directory - Greenmoney Journal - Only magazine for SRI non-professional investors - Interfaith Center on Corporate Responsibility - Top Resource for Shareholder Activism by Religious Organizations. - Non-Profit Shareholder Activism - SRI Management Firm - Leader in Shareholder Activism - Walden - SRI Management Firm - Leader in Shareholder Activism - One of the largest SRI RIAs / Co-Producer of Nat'l SRI Conference - Progressive Asset Management

FIDUCIARY + SRI

UN PRINCIPLES

ISSUES WITH SCREENING AND BEST-OF-CLASS Screening - Harder to Index - Not available to Indexers - Eliminates worst corporations from shareholder influence Best-In-Class Includes some industries/countries that are objectionable to some SRI investors - Extraction - Genocide - Slave Labor - Weapons of Mass Destruction GE might make BOC list, but is still major weapons manufacturer

IT'S A COMPLEX WORLD OUT THERE Corporate Good Guys? Bad Guys? Who Decides? How? Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer member, FINRA & SIPC. Effective Assets is an Independent Registered Investment Advisor registered with the State of California. Effective Assets is supervised from the following Cambridge Branch office : 1751 Old Pecos Trail, Suite D, Santa Fe, New Mexico ; Phone : Lincoln Pain is a registered investment advisor representative of First Affirmative Financial Network, LLC (FAFN) an independent Registered Investment Advisor registered with the Securities and Exchange Commission. Effective Assets, FAFN and Cambridge Investment Research are not subsidiaries or affiliates.