T H E U R B A N M O N K

sustainablefundssustainablefunds

THE IMPACT OF SUSTAINABLE, RESPONSIBLE, AND IMPACT INVESTING[Click the brown titles in this General Info section to access the corresponding webpage. All other links on the following pages are denoted by the colors blue and green.]

HOW DO I SRI?The US SIF Foundation has published four handbooks under its “How Do I SRI” series. Each handbook in the series provides a brief background on an issue, explores how SRI can be employed to address it and provides informational resources for the reader.

INVESTING TO ADVANCE WOMEN: A GUIDE FOR INDIVIDUAL & INSTITUTIONAL INVESTORS

INVESTING TO CURB CLIMATE CHANGE: A GUIDE FOR THE INSTITUTIONAL INVESTOR

INVESTING TO CURB CLIMATE CHANGE: A GUIDE FOR THE INDIVIDUAL INVESTOR

CONFRONTING CORPORATE MONEY IN POLITICS

THE MUTUAL FUND PERFORMANCE CHARTThis chart displays all sustainable and responsible mutual funds offered by US SIF’s institution-al member firms. This public tool is meant for individual investors to compare cost, financial performance, screens and voting records of competing funds. All listed funds are open to new investors.

PERFORMANCE & SRISustainable, responsible, and impact investing (SRI) spans a wide range of products and asset classes, embracing not only public equity investments (stocks), but also cash, fixed income and alternative investments, such as private equity, venture capital and real estate. Sustain-able and responsible investors are like other investors in seeking a competitive financial re-turn on their investments. The evidence is clear that sustainable and responsible investors do not have to pay more to align their investments with their values, or to avoid companies with poor environmental, social or governance practices.

The Forum for Sustainable and Responsible InvestmentGeneral Info

SRIs

A concentrated ETF focused solely on companies involved in green or renewable energy. The ETF invests in solar and wind energy companies and even the electric car company Tesla. Funds like PBW that focus on one area of the market can be very volatile so I suggest taking smaller positions in these funds.

The PowerShares WilderHill Clean Energy Portfolio (Fund) is based on the WilderHill Clean Energy Index (Index). The Fund will normally invest at least 90% of its total assets in com-mon stocks that comprise the Index. The Index is composed of stocks of companies that are publicly traded in the United States and engaged in the business of advancement of cleaner energy and conservation. The Fund and the Index are rebalanced and reconstituted quarterly.

This low-cost fund seeks to track a benchmark of large- and mid-capitalization stocks that have been screened for certain social, human rights, and environmental criteria. In addition to stock market volatility, one of the fund’s other key risks is that this socially conscious approach may produce returns that diverge from those of the broad market.

VFTSX tracks the FTSE4Good U.S. Select Index, an index of large- and mid-cap U.S. stocks that have been screened for social (human rights, labor standards) environmental (climate change) and corporate governance (risk of bribery) indicators. The index excludes invest-ments in tobacco, alcohol, gambling, adult entertainment, guns and nuclear power.

The iShares MSCI USA ESG Select ETF seeks to track the investment results of an index com-posed of U.S. companies that have positive environmental, social and governance character-istics as identified by the index provider.

KEY POINTS• Exposure to socially responsible U.S. companies (excludes tobacco companies)

• Access to 100+ large- and mid-cap stocks that have been screened for positive environ-mental, social, and governance characteristics

• Over the past five years, the fund returned an annualized 2.3%, compared with 1.7% for Standard & Poor’s 500-stock index.

PowerShares WilderHill Clean Energy

Vanguard FTSE Social Index

iShares MSCI USA ESG Select Index

PBW

VFTSX

KLD

An SRI balanced fund like PAX World Balanced is typically less volatile than those that are fully invested in equities. Incepted in 1971, PAX World Balanced was one of the first SRI funds. The fund invests in companies that meet its environmental, social and governance (ESG) criteria. While it can invest globally, its portfolio is currently focused on U.S. stocks and a mix of corpo-rate bonds and Treasurys.

STRATEGY• The assets of the Fund are invested in equity and fixed-income securities in a balanced

approach that ranges from 60% to 75% for equities and from 25% to 40% for fixed in-come.

• The portfolio managers use both qualitative and quantitative analysis to assess market conditions and make allocation decisions.

• The Fund may invest in equity securities of companies of any market capitalization. The large cap portion of the portfolio, in which the portfolio management team intends to in-vest a majority of the Fund’s equity assets, is focused on core growth stocks. The Fund also holds a smaller portion of its equity assets in mid- and small-cap securities.

• Debt securities may include mortgage-related bonds issued or guaranteed by the U.S. government, its agencies and instrumentalities, with short- to intermediate-term ma-turities. They may also include corporate bonds rated investment grade at the time of purchase or, if unrated, judged by the manager to be of comparable quality.

• The Fund uses a sustainable investing approach that combines rigorous, fundamental financial analysis with equally rigorous environmental, social and governance (ESG) anal-ysis.

Pax World Balanced PAXWX

Over the past five years the fund returned an annualized 5.5%. The tight portfolio of 31 stocks is headed by Finisar, which makes sophisticated telecom gear, Cisco Systems and Intel. Like many SRI funds, Parnassus is technology-heavy, with 47% of its assets in the sector, compared with 18% for the S&P as a whole.

STRATEGYThe Parnassus Fund invests across the capitalization spectrum with high conviction in approxi-mately 40 holdings. The Fund focuses on identifying companies with:

• Wide moats or strong competitive advantages that protect market share and profitability

• Relevancy over the long term, which provides a compounding growth component

• Quality management teams that will act in the best interest of shareholders

• Stocks trading at a significant discount to their intrinsic value

The Fund’s contrarian approach seeks to invest in companies that are currently out of favor with the majority of investors. The Fund strives to outperform the S&P 500 index with a high active share. The Fund avoids companies engaged in the production, manufacturing, or refin-ing of fossil fuels.

Its five-year return has lagged the S&P by just 0.2 point per year. So, giving up practically noth-ing, you can get a warm feeling that your money is serving a useful purpose—even if the fund manager or index composer is deciding what that purpose should be. Not a bad deal.

The iShares MSCI KLD 400 Social ETF seeks to track the investment results of an index com-posed of U.S. companies that have positive environmental, social and governance character-istics as identified by the index provider.

KEY POINTS• Exposure to socially responsible U.S. companies

• Access to a broad range of stocks that have been screened for positive environmental, social, and governance characteristics

• Use to invest based on your personal values

Parnassus Fund

iShares KLD 400 Social Index

PARNX

DSI

Its holdings include McDonald’s, energy giant ConocoPhillips and Nike, which has had its own labor problems. Walden bars weapons, nuclear power, alcohol and tobacco, and otherwise seeks companies with a positive record for social responsibility. Walden, which charges 1.0% per year, has beaten the S&P 500 by 2.8 points a year over the past five years.

PRINCIPAL INVESTMENT STRATEGIES

The Fund invests, under normal circumstances, at least 80% of its assets in a diversified portfolio of domestic equity securities, such as common stock. The Fund may invest in compa-nies of any size, but generally focuses on large capitalization companies. “Assets” means net assets, plus the amount of borrowing for investment purposes. Shareholders will be given 60 days’ advance notice of any change to this policy.

The Walden Equity Fund incorporates comprehensive environmental, social and governance (ESG) guidelines in portfolio construction. The Fund also seeks to strengthen ESG perfor-mance and accountability of portfolio companies through proxy voting, shareholder engage-ment and public policy advocacy. In selecting stocks, Walden Asset Management (“Walden”), an affiliate of the Adviser, favors investment in companies and institutions it deems to have relatively strong ESG records and seeks to avoid those with inferior ESG performance relative to peers. After investing in a company, Walden may also choose to pursue shareholder advo-cacy to encourage stronger corporate responsibility and accountability.

Walden researches, evaluates and seeks to promote corporate responsibility in five broad ar-eas of concern: products and services, workplace conditions, community impact, environmen-tal impact and corporate governance. Hence, in each of the five broad areas identified above, and notwithstanding other investment considerations, Walden favors companies judged to demonstrate best practices relative to peers, improvement over time, robust management systems, and accountability through standardized public reporting and responsiveness to shareholders.

Walden EquityWSEFX

The fund seeks a favorable long-term total return that reflects the investment performance of the overall U.S. stock market while giving special consideration to certain social criteria. It nor-mally invests at least 80% of its assets in equity securities. The fund’s investments are subject to certain environmental, social and governance criteria. The evaluation process favors com-panies that are strong stewards of the environment; devoted to serving local communities; committed to higher labor standards; dedicated to producing high-quality and safe products; and those managed in an exemplary or ethical manner. The fund may also invest in U.S. Gov-ernment securities and may hold up to 15% of its assets in foreign investments.

KEY POINTS• Competitive return potential. The Fund seeks returns consistent with a broad U.S. core

equity benchmark* and a portfolio that has higher ESG performance quality relative to the benchmark.

• ESG leadership focus. The Fund leverages in-house expertise and independent third-party ESG research, applying industry-specific ESG criteria to identify best-in-class leaders within each sector.

• A core equity portfolio allocation with lower fees than its peers. Long-term investors who recognize the importance of a diversified equity allocation can use this Fund as a core equity holding. A proprietary quantitative process, coupled with an industry recognized risk model, allows us to capture the long-term performance of the benchmark. Its fees are among the lowest in the category.**

*Russell 3000 Index.**The average and median expense ratio for the Morningstar Large Blend category was 1.09% and 1.06%, respectively as of June 30, 2015.

TIAA-CREF Social Choice Equity Fund TICRX

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