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SRI Investing at Perkins, Wolf, McDonnell and Company, LLC

SRI Investing at Perkins, Wolf, McDonnell and Company, LLC. Alec Perkins University of California, Berkeley Haas School of Business May, 2007. A History of Investment Excellence…. 15% annual returns over last 20 yrs S & P “Excellence in Fund Management Award” for Mid Cap Value, 2006

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SRI Investing at Perkins, Wolf, McDonnell and Company, LLC

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  1. SRI Investing at Perkins, Wolf, McDonnell and Company, LLC Alec Perkins University of California, Berkeley Haas School of Business May, 2007

  2. A History of Investment Excellence… 15% annual returns over last 20 yrs S & P “Excellence in Fund Management Award” for Mid Cap Value, 2006 Beat the S&P 500 in 7 of last 8 yrs. Small Cap Value in Top 20 best performing funds in US over last 15 yrs Articles in NY Times, Barron’s, Money, Rukeyser Report, etc for exceptional performance

  3. Huge SRI Market in the U.S. $2.3 Tril in SRI assets 1% annual fee = a $24 Bil market. Source: National Underwriter Source: Social Investment Annual Report, 2004

  4. SRI outperforms the S&P 500 As of 3/31/07 Source: www.kld.com

  5. Competitive Analysis Source: Wells Fargo Project 2003 / Trust & Estates

  6. What investors want… • Environment, Human Rights, and Hand Guns were the most desired screens.

  7. Portfolio Backtesting : KLD Screen • “Contrib” column tells us what impact the stock had on the portfolio. • Bold Names would be excluded based on KLD’s screen • Screen results vary widely based on SRI choices

  8. Portfolio Impact Removing those 15 companies decreased performance 4bps from 18.45% to 18.41% in 2006

  9. Halliburton • Violated human-trafficking laws on U.S. bases in Iraq via 3 major contractors employing 1000s of workers. • Provided substandard living conditions to laborers. • Used deceptive hiring practices. • Paid fees to job brokers to lure workers into Iraq. • Failed to provide mandatory "awareness training" on U.S. bases concerning human trafficking. – KLD Report 2007 Stock Specific Attribution

  10. 2002 report: 284,000 children worked in hazardous conditions in West Africa's cocoa industry, and many may have been trafficked. Ghana, Nigeria and Cameroon produce 70% of the world's cocoa and they are a main Hershey supplier. Walden Asset Management, a SRI focused firm, submitted a resolution in 2007 requesting that Hershey include a monitoring system to help prevent slave labor. Hershey Stock Specific Attribution (We own 3% of the float of 22 different companies. We could have a real impact)

  11. Some of the organizations they support….

  12. Aligning Foundation w/ Screens Int’l Issues Education Health Environment • Acumen Fund • Global Alliance for Women • Technoserve • Oxfam • Engender Health • Partner’s Ending Domestic Violence • League of Conservation Voters • One Northwest • Teach for America • Human Rights Watch • Tipping Point • SF Ed Fund Screen: Screen: Screen: Screen: • Environment • Tobacco • Fire Arms • Human Rights • Burma • Child Labor

  13. Possible Partner: RBC Dain Rauscher

  14. Recommendations Present testing and SMA results to firm Attend “SRI in the Rockies”1 Continue back testing May 07 Arrange RBC Dain meeting w/ partner June 07 Start first SMA w/ firm $$ 6/07- 9/07 Learn SRI Marketing Meet w/ Trillium and others 9/07- 12/08 Hire SRI specialist/ PM Start a SRI Mutual Fund 2008 Launch Fund Move away from RBC? 2010 Role out to other Janus products w/ PWM expertise 1 “SRI in the Rockies”: Nov 3rd- 6th

  15. Offering SRI aligns profit with positive social change! • Benefits • Huge market • Minimal expense • Ideals alignment • Improved morale • Positive PR • Early Mover Advantage • Even if you question efficacy of SRI, LOHAS and institutions demand it. • It’s a WIN / WIN!

  16. Questions? Slave Laborers

  17. Company Overview • $10 bil in AUM • 20 employees • 25 years of value investing • Partnership w/ Janus Capital • Small cap and mid cap value • Smaller brokerage with $400m in assets. No SRI offering.

  18. Agenda • Perkins, Wolf 3-4 • The SRI Market and Performance 5-7 • SRI Strategy: Screening 8-10 • Portfolio Analysis 11-14 • Philanthropic Alignment 15-17 • Potential Partners 18 • Recommendations 19-20

  19. The SRI Spectrum D: Least Integrated C B A: Most Integrated • Philanthropy • Negative screens only • One SRI mutual fund • Outsourced SRI research • Positive and negative screens • Broad product offering w/ SMAs • Simple KLD shareholder advocacy • All products focused on SRI • Internal SRI research • Aggressive Shareholder advocacy • SRI Core to business and brand

  20. Placeholder Strategy Analysis for PWM Mutual Fund SMAs Activist Screen Time Expense Customization Alignment Impact Demand Performance

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