James Nixon
Director of Community Investments and Communications
Progressive Asset Management

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You're an investor.

You want to get good financial returns from your portfolio, yet you don't want to make money in a way that harms your health, or your community's, or the planet's.

In fact, if possible, you would really like to be able to make your community and the world significantly healthier and better places through your investments.

What do you do?

A group of social activist/securities brokers left major national brokerage firms and formed Progressive Asset Management, Inc. to provide an answer to this question.

Progressive Asset Management

Established in 1987, Progressive is the first full service investment brokerage that specializes in socially responsible investments. Progressive now handles more than $600 million in investments for over 4,000 clients in the United States and abroad. The client list includes foundations, churches, labor unions, non-profits, and individuals who request social screening for their portfolios on issues ranging from environmental protection to employment policies.

Progressive believes that socially responsible investing is for everyone from modest investors to individuals and institutions with substantial wealth. Experienced investment consultants provide access to all major markets and exchanges, and offer a complete range of investment services.

Based in Oakland, California, Progressive is expanding dramatically, recently opening new offices, in New York City, just three blocks from the New York Stock Exchange, and in Traverse City, Michigan and Wellesley, Massachusetts. Progressive is actively looking for securities brokers in other parts of the country to join its network and help meet the rapidly expanding demand for socially responsible investing.

Financial Return?

But what about financial return? Some commentators have compared the average financial performance of socially screened mutual funds with non-socially screened funds and suggested that socially responsible investing costs investors money.

Peter Camejo, Progressive's Chair and CEO disagrees, "Anyone who tells you that you can't make a competitive financial return investing in a socially responsible manner is wrong. We believe businesses that combine positive financial and social performance make the best long term investments."

For example, Mr. Camejo's model account portfolios have out-performed the relevant indices for the last three years (figures shown in percentage).

Year	Aggressive Approach	NASDAQ
1993	+21.20	+15.70
1994	+88.24	-2.42
1995	+44.44	+40.70
1996 (Q1)	+12.32	+4.79

Note: These returns come from real accounts for which all the statements have been retained. The returns are net of all fees and commissions. Performance returns are based on AMIR standards. Past financial performance is, of course, not necessarily an indication of future performance.

Year	Moderated Approach	Balanced Index
1993	+12.12	+9.55
1994	+8.95	0.07
1995	+30.67	+28.22
1996 (Q1)	+9.42	+2.90

Note: Balanced Index comprised of 60% S&P; 500, 40% Lehman Brothers Government/Corporate Index.

How does Progressive do it?

Progressive has established a financial consulting division called Progressive Portfolio Services (PPS) to combine its social research techniques with the financial acumen of many of the top performing investment managers in the U.S.

When institutional or individual investors begin working with PPS, they complete a financial and a social questionnaire to establish financial and social objectives for their portfolios. Then PPS assists in investment manager evaluations, searches, and selection based on compatibility of portfolio financial and social objectives with manager styles and track records.

PPS identifies investment managers who have out-performed the relevant indices, including managers who practice the full range investment styles. PPS then connects these managers with Progressive's cutting edge Social Research Department to provide for the social and environmental evaluation of companies.

Progressive's Social Research Department tracks the social performance of 1200 corporations on a regular basis, as well as initiating coverage of newer, smaller companies at the request of clients and/or investment managers. Most frequently requested social screens include: the environment, employee issues, community relations, nuclear weapons/nuclear power, and quality of products/services.

Keley Petersen, Director of PPS, maintains, "PPS is demonstrating that investment managers can obtain competitive returns for socially and environmentally screened portfolios. We hold that financial return is a result of the quality of investment management. All of our top performing investment managers have found that social screening doesn't hamper and often assists in investment selection."

(Investment manager's net performance is compared to an appropriate benchmark such as the S&P; 500 or the NASDAQ index for a comparable period. It is important to keep in mind that past performance is not necessarily indicative of future performance.

The Impact of Social Performance on Financial Performance

There is an expanding body of research looking at the impact of a company's social performance on their financial performance. Thomas Van Dyck, President of PPS, asserts that, "Good companies really do make for good investments. Look at the Domini 400 Social Index – a socially responsible alternative to the Standard and Poors 500, the most widely used broad market index. The Domini Social Index has outperformed the S&P; 500 by an average of 1.5% per year since it was established in 1990."

According to the independent investment research firm BARRA, "the performance of the Domini Social Index to date suggests that socially responsible investing does not necessarily preclude above average returns."

The Domini results are not an isolated occurrence.

A recent study by the Investor Responsibility Research Center (IRRC) and Vanderbilt University's Owen School of Management examined the performance of corporations listed in the Standard and Poor's 500 index. The study found that, "Low pollution portfolios performed better than high pollution' portfolios more than 80% of the time."

The study goes on to affirm, "The data suggest that firms which comply with environmental laws and firms that have relatively cleaner processes than their competitors, also do well in the stock market."

An Ernst & Young study conducted for the Department of Labor asserts that: "A central message of this report is that workplace practices can yield financial returns and that measures of workplace and customer outcomes can serve as leading indicators of future financial performance."

Mr. Van Dyck concludes, "It makes sense that there tends to be a relationship between high performance workplaces and financial performance. Knowing how a corporation treats their employees, their customers, their communities, and the environment has become an important part of Progressive's approach to fundamental analysis."

Community Impact Investments

In addition to more traditional investments, many investors seek sound investments that actually produce positive impacts in inner-city and rural communities. In a recent forum in Berkeley, California, Progressive featured five alternatives.

The Community Bank of the Bay (In Organization) will be the first FDIC insured commercial bank specializing in community development lending in the San Francisco Bay Area. The Bank will make loans to small businesses, non-profit, and affordable housing in low and moderate income areas in San Francisco, Oakland and adjacent cities. Progressive is a placement agent for the Bank's equity offering.

EarthTrade, Inc. promotes sustainable development by marketing organic seeds, beans, grains, and herbs from Central America, the U.S. and Canada. EarthTrade's strategy of partnership with local farmers has opened markets for over 2,500 small farmers and farm cooperatives from Nicaragua, El Salvador, Guatemala and Mexico. EarthTrade also works with family farmers in the U.S. and Canada who supply organic wheat and corn for the company's gourmet flours and quick-cooking cereals.

Ecumenical Development Cooperative Society, U.A., (EDCS), the international community development financial institution, receives investments through "Notes for Sustainable Development," an investment offering coordinated by Progressive. These Notes enable U.S. investors to invest in EDCS who, in turn, reinvests funds in businesses that assist people to move from poverty to economic self reliance in 60 countries through-out the developing world.

The Calvert Foundation Targeted Community Investments is a new Calvert offering of 1, 3, and 5 year notes. The Calvert Foundation has introduced this unique opportunity to invest in a fund which will reinvest the proceeds in many different loan programs that develop local economies, promote work related opportunities, and support healthy communities domestically and abroad.

The Northern California Community Development Loan Fund serves as a bridge between socially concerned investors and community-based organizations. The Fund finances affordable housing, human service agencies, and economic development projects.

Progressive CEO Peter Camejo indicates, "One of the reasons we created Progressive Asset Management was to be able to access capital for financially sound businesses that also offer the highest possible social and environmental returns."

(This discussion is neither an offer to sell or solicitation of an offer to buy securities. Offers are made by prospectus or offering circular).

Shareholder Activism

Progressive also specializes in shareholder activism – the use of shareholder influence to produce positive change on the part of corporations. As owners of corporations shareholders have substantial power to shape and influence corporate policies.

Progressive President, Eric Leenson, notes that, "Investors can retain the stock of a company with problems and use the shareholder resolution as a tool to promote positive corporate change. In 1995 more than 3 million Safeway company shares were voted in favor of a shareholder resolution we introduced on equal employment opportunity. Now Safeway has agreed to make the information available."

In 1996 more than 25 million shareholders of Pacific Telesis (9%) voted in favor of a Progressive and Rainforest Action Network-sponsored shareholder resolution to get Pac Tel's subsidiary, Pacific Bell, to stop making its phonebooks out of paper produced by clear-cutting old growth rainforest in British Columbia.

At the request of the democratically elected Burmese government in exile, Progressive has been a leader in the campaign to encourage cities and counties to pass selective purchasing ordinances to stop doing business with companies supporting the repressive military dictatorship in Burma. Berkeley, Oakland, and Alameda County in California all passed such ordinances at the request of Progressive and the Burma Roundtable.

So, judging from the various aspects of the work of Progressive Asset Management, it may in fact turn out to be possible to make communities significantly healthier and better places through your investments.

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