SB Webinar | How Sustainable Portfolios Can Outperform Traditional Investing

Evolving Beyond Modern Portfolio Theory

How Higher Impact Portfolios Can Outperform

Traditional Investing

June 25, 2014

HIP = Human Impact + Profit

HIP

Solve Human Needs (Do Good)

Seek Higher Profits (Make Money)

CONFIDENTIAL © 2006-2014 HIP Investor Inc. 2


HIP

Solve Human Needs (Do Good)

Seek Higher Profits (Make Money)


HIP = Higher Impact Portfolios

HIP Investor Serves Investors, 401-k’s and Advisors


1. RATINGS on 7000+ investments + funds:

Research, analyze & score

4500 Corporate equities (80% of global value),

Corporate bonds ($24 Trillion),

2500+ muni bonds (half of $3.7 Trillion),

treasuries & agency bonds on

Future Risk & Upside Potential

2. SUBADVISE: Advisors, 401-k plans,

& fund managers seeking to be more HIP

3. ADVISE: License HIP investment indexes

and manage investable portfolios (including

FOSSIL-FREE)

Your HIP Guides for Today’s Discussion

© 2006-2014 HIP Investor Inc. 5

Shilpa Andalkar

SVP, Client

Solutions

Architects &

advises portfolios

Keith Green

SVP, Clients &

Partnerships

Alum of Citi,

Merrill Lynch

R. Paul Herman

Chief Investment

Officer and CEO

Int’l expert in

impact investing

Special Guest: Fund Manager


Garvin Jabusch

Fund Manager: NEXTX

Shelton “Green Alpha” Fund

Alum of Morgan Stanley;

Thunderbird MBA

Disclosure and Disclaimers


HIP Investor Ratings LLC is a California limited liability

company, providing 7000 ratings for investors, advisers,

fund managers and retirement plans.

Shilpa Andalkar and R. Paul Herman are registered

representatives of HIP Investor Inc., an investment

adviser registered in the States of California,

Washington, and Illinois, with clients across the USA.

This is not an offer of securities. All investing has risks.

Past results are not indicative of future performance.

Today’s Agenda: How Higher Impact Portfolios Can Outperform


1. Finance Foundations: Strong or Shaky?

2. The New Fundamentals of Investing

3. Evolving Into a Higher-Impact Portfolio







The Best of 1952


“State of the Art” THEN


“State of the Art” NOW


Dr. Harry Markowitz

• 1952: Created “Modern Portfolio Theory” (MPT)

• 1990: Awarded Nobel Prize for MPT

• 2014: MPT is 62 years old: time to retire MPT?



Every Portfolio Has a Risk & Return Profile

Source: Smart401k.com

Optimizing a Portfolio: Stocks + Bonds Together Can Lower Risk

CONFIDENTIAL © 2006-2014 HIP Investor Inc. 16 Source: SigmaInvesting.com

Nobel-Prize Winning Financial Theories Embed Assumptions

• “The markets are efficient”

• “All information is built into the prices immediately”

• “You cannot outperform the market”


BUT… • “The markets are

frequently IN-efficient”

• “All information is NOT built into the prices immediately”

• “Portfolios can outperform the market”



“Does the Stock Market Fully

Value Intangibles?

* * *

Employee Satisfaction and

Equity Prices”

Dr. Alex Edmans

Wharton School

Investing in “100 Best” to Work For Can Beat the Market (1998-2010)

Source: Russell Investment Group, via

© Great Places To Work® Institute

1998-2010, ANNUALIZED RETURNS

+11.1%

+6.7%

+ 3.9% + 4.3%


http://www.greatplacetowork.com/what_we_believe/graphs.php

Globally, Firms with More Diverse Boards Have Yielded Higher Return on Equity (ROE)

CONFIDENTIAL © 2006-2014 HIP Investor Inc. 21 Source: Credit Suisse

25% to 50% of Mutual Funds (Active Stock Picking) Can Beat a Benchmark (Index)

CONFIDENTIAL © 2006-2014 HIP Investor Inc. 22 Source: Lipper; Felix Salmon

More than 25% (1 in 4) generally

Less than 50% (2 in 4) generally

What’s My Exposure? Forward-Looking Investors + Advisors


Lara Coviello MA CFA

Managing Partner at Auctus

Wealth Management

Author of feature on investing

Jennifer Anderson, MPH, SCSP

Principal at Resonate,

Strategic Sustainability Management

http://www.marcumllp.com/publications-1/socially-responsible-investing-good-for-your-conscience-and-your-portfolio?_cldee=bC5jb3ZpZWxsb0BsaW5kZW5hbS5jb20=

Sustainable Cleaner-Energy Funds Have Outperformed

Many Fossil-Fuel Intensive Funds, Over 5 Years


Sustainable Cleaner-Energy Funds Have Outperformed

Many Fossil-Fuel Intensive Funds, Over 5 Years


Less Risk

Mo

re Retu

rn

Long-Term, Intelligent Investors Invest Across All Asset Classes

A Higher Impact Portfolio

Cash

Banks and credit unions that focus on sustainability e.g. 22 banks in the GABV

Fixed income

Bonds from impact-focused

corporates and Muni’s

(schools, hospitals) e.g.

SNW Asset Mgmt

Income Generating

Appreciation

Real Estate Investment

Trusts (REITs) who

implement resource efficiency

Equities

Individual firms , mutual funds and ETFs based in OECD

– rated on sustainability

International and

Emerging

Firms, funds ETFs – in emerging

growth areas: Europe, Asia,

Africa, Americas –

rated by impact

Venture Capital and

Private Equity

Ventures, angel funds, VC, private

equity –seeking impact

results

Alternatives

Commodity funds that

may include impact criteria


In 2013, a HIP-Focused PORTFOLIO Was More Optimal: Lowering RISK, Beating the RETURNS of MPT

Less Risk

Mo

re Retu

rn

* For annualized time period over the past 1 year ending December 31, 2013 (or for data since inception of strategy)

RETURNS:

Annualized

Returns*

RISK: Standard

Deviation of Returns*

PORTFOLIO: color of bubbles:

Green = HIP

Red = Vanguard

Blue = Going Fossil Free

Gray = MPT


1-Year Portfolio Performance (2013) HIP 24, HIP 10, MPT

18%

7%

2.5%

10%

14%

8%

1.8%

6%

11% 10%

1.1% 0%

0%

4%

8%

12%

16%

20%

Return Risk Sharpe Alpha

HIP24 HIP10 MPT


1-Year Portfolio Performance (2013) HIP 24, HIP 10, MPT

18%

7%

2.5%

10%

14%

8%

1.8%

6%

11% 10%

1.1% 0%

0%

4%

8%

12%

16%

20%


HIP24 HIP10 MPT


Less Risk M

ore

Retu

rn

Over 3 Years (2011-13), a HIP-Focused PORTFOLIO Was Also More Optimal: Lowering RISK Yet Exceeding MPT RETURNS


Less Risk

Mo

re Retu

rn

* For annualized time period over the past 3 years ending December 31, 2013 (or for data since inception of strategy)

RETURNS:

Annualized

Returns*

RISK: Standard



Green = HIP

Red = Vanguard


Gray = MPT

3-Year Portfolio Performance (2011-2013) HIP 24, HIP 10, MPT

11% 11%

0.9%

3%

10%

12%

0.9%

2%

9%

13%

0.7% 0%

0%

4%

8%

12%

16%


HIP24 HIP10 MPT


3-Year Portfolio Performance (2011-2013) HIP 24, HIP 10, MPT

11% 11%

0.9%

3%

10%

12%

0.9%

2%

9%

13%

0.7% 0%

0%

4%

8%

12%

16%


HIP24 HIP10 MPT


Less Risk M

ore

Retu

rn

Over 5 Years (2009-13), a HIP-Focused PORTFOLIO Proportionally Reduced RISK & RETURN vs. MPT


Less Risk

Higher Risk-Adj. Return

Higher Return


RETURNS:

Annualized

Returns*

RISK: Standard



Green = HIP

Red = Vanguard


Gray = MPT

HIP-Focused Portfolios Designed to Be More “Fossil-Free” than the “Efficient Market”

Portfolio Metric HIP 24 HIP 10 Vanguard 2025 Fund

MPT

TONS CO2 of Fossil Fuel Reserves*

731.08 2,669.14 5,179.99 7,306.48


7,306

5,180

2,669

731

0 2,500 5,000 7,500

MPT

Vanguard 2025 Fund

HIP 10

HIP 24

Tons of CO2 * Fossil Fuel Reserves of Top 200 fossil-fuel

producers; defined by Carbon Tracker

Initiative, in concert with 350.org, and applied

by HIP Investor to portfolio exposure

How to Go Fossil-Free? Forward-Looking Investors


Author of feature on “Going Fossil Free” investing – and aligning

NGO endowment portfolio with your organization’s mission

Dr. Onnie Byers, PhD

Chair, Conservation Breeding Specialist Group (CBSG)

Part of the Global Conservation Network (GCN)

http://www.csrwire.com/blog/posts/1252-conservation-organizations-time-to-align-financial-portfolio-goals-with-their-conservation-mission






Today, Investors Drive with 20% Visibility


80% of Market Value = Intangible

www.AgeOfVolatility.com


83% 68% 32% 20% 20%

17%

32%

68% 80% 80%

5 Key Drivers Can Measure Future Risk & Value Creation Potential

1. Customer Satisfaction

2. Employee Retention

3. Carbon Efficiency

4. Board Diversity

5. Legal Exposure


HIP’s Ratings Quantify & Measure the 80% that Is Ignored by Many Investors

• Physical Health

• Mental Agility Health

• Income Growth

• Asset Accumulation Wealth

• Carbon Neutrality

• Reusable Products Earth

• Gender Balance

• Ethnic Diversity Equality

• Transparent & Open

• Credible & Ethical Trust

Companies innovate to answer five human needs:

Innovative Products + Services

Inspired People + Teamwork

Increased Profits + Returns

Improved Planet + Society

Which can result in sustainable, profitable growth for all stakeholders:


Health

Wealth

Earth

Equality

Trust

HIP’s Factors Connect Directly to Cash Flow, Profit and Shareholder Value

Products

& Services

Operating

Metrics

Mgmt

Practices

I

M

P

A

C

T

“How HIP Is This Investment?”


Strategic Innovation &

Risk Mitigation

Higher Revenue potential

Lower Cost

potential

Category Segment

Growth

Segment

Share

Food 22% 2.5%

Electricity 17% 2%

Fuels 20% 2.6%

Health Care 17% >1%

Building

Products

23% 2.3%

Fiber

(Apparel)

50% 1%

Automotive 38% 2%

Fast GROWTH Markets Are

Gaining Share Across Industries

Source: Pegasus Capital CONFIDENTIAL © 2006-2014 HIP Investor Inc. 42

Category Market Size

(U.S. $Bil)

Sustainabili

ty Segment

Segment

Growth

Segment

Share

Food $550 Bil Organic 22% 2.5%

Electricity 400 Bil Renewable (excl. Hydro, Wood)

17% 2%

Fuels 1,000 Bil Alternative 20% 2.6%

Health Care 2,300 Bil CAM* 17% >1%

Building

Products

98 Bil Green 23% 2.3%

Fiber

(Apparel)

0.3 Bil Organic 50% 1%

Automotive 228 Bil Hybrids 38% 2%

Positive-Impact products are producing the FASTEST GROWTH categories across all sectors

Source: Pegasus Capital

* Complementary & Alternative Medicine CONFIDENTIAL © 2006-2014 HIP Investor Inc. 43

If People are the “Most Important Asset,” Where are People on the Financials?


Human Capital

People = Assets

The Gap in GAAP

People = Expenses

• HIP Ratings reveal Drivers of possible Higher Returns:

+ 5% to 33% premium



+ 5% to 33% premium

+with Lower Risk

– 10% less volatility



+ 5% to 33% premium

+with Lower Risk

– 10% less volatility


HIP Ratings cover $69 Trillion Mkt Value

HIP Investor Ratings

Are the GPS for Your Portfolio


HIP Investor Ratings

Are the GPS for Your Portfolio

And 401-k Plan CONFIDENTIAL © 2006-2014 HIP Investor Inc. 49

Millennials as Future Leaders: #1 Purpose of Business

Is Building a Better World


• 80 million Millennials in USA

• Inheriting $40 Trillion from Boomers

A Millennial View on Investing


“If I don’t know how sustainable this investment fund is, I am not going to invest”


Including Sustainability Ratings in 401(k) Plans Can Increase Employee Engagement + Education

14%

93%

0%

25%

50%

75%

100%

Before HIP Info *With* HIP Ratings

Participation Rate in 401(k) Plan

US Average = 76% to 88%


Sustainable Firms Are Aligning their 401-k Plans with their Business Goals + Employees


“We already see high-energy commitment and motivation

towards integrating sustainability into our 401(k), and team

members are excited to have the opportunity to advance

sustainability in their own portfolios in parity with the value that

they deliver to our clients every day.”

-- Burke Pemberton, Controller






At Most, 1 in 4 Fund Managers Apply these “New Fundamentals” to their Investing


Source: Mercer ratings

Special Guest: Fund Manager


Garvin Jabusch

Fund Manager: NEXTX

Shelton Green Alpha

Alum of Morgan Stanley;

Thunderbird MBA

Ariel Appreciation Investor

DFA Five-Year Global Fixed-Income I

iShares JPMorgan USD Emerg Markets Bond

iShares International Dev Rel Est

KKR & Co LP

2 INDEXES + Shelton Green Alpha

Pax World High Yield Bond Individual Inv

Pax World Global Envrnmntl Mkts Indv Inv

iShares Morningstar Small-Cap

Guggenheim Timber ETF

Pope Resources LP

First Trust S&P REIT Idx

Parnassus Fixed-Income

Pax World Small CapIndividual Inv

Parnassus Workplace

Calvert Global Alternative Energy A

Calvert Global Water A

iShares S&P 100

ETFS Physical Swiss Gold Shares

RidgeWorth US Gov Sec Ultra-Short Bd I

iShares TIPS Bond

Praxis Intermediate Income A

Guggenheim S&P Global Water Index

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

-5% 0% 5% 10% 15% 20% 25% 30% 35%

From 2011 to 2013, Many Funds in the HIP 24 Portfolio Realized Returns At or Above their Risk Level



IMPACT: color of bubbles:

Green = higher IMPACT

Yellow = medium IMPACT

Red = lower IMPACT

ALLOCATION: size of bubbles

is percent (%) allocated to fund

RISK: Standard


RETURNS:

Annualized

Returns*

WisdomTree Emerging Mkts SmallCap Div

TIAA-CREF Social Choice Eq Retail

2 INDEXES + TIAA-CREF Social Choice Bond Retail

Vanguard Small Cap ETF

Vanguard REIT Index ETF

Vanguard Global ex-US Real Estate ETF

Vanguard Mid-Cap ETF

Templeton Frontier Markets A



-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

-5% 0% 5% 10% 15% 20% 25% 30% 35%

From 2011 to 2013, Several Funds in the HIP 10 Portfolio Performed Strongly






Red = lower IMPACT



RISK: Standard


RETURNS:

Annualized

Returns*

Vanguard Total Bond Market II Idx Inv

2 INDEXES + Vanguard Total Intl Bd Idx Investor

Vanguard Total Intl Stock Index Inv

Vanguard Total Stock Mkt Idx Inv

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

-5% 0% 5% 10% 15% 20% 25% 30% 35%

From 2011-2013, the Funds Inside the Vanguard 2025 Target-Date Portfolio Delivered Returns Close to their Risk Level






Red = lower IMPACT



RISK: Standard


RETURNS:

Annualized

Returns*


iShares iBoxx $ Invst Grade Crp Bond

Vanguard FTSE Developed Markets ETF

Vanguard Dividend Apprec Idx ETF


Vanguard Total Stock Market ETF

Vanguard FTSE Emerging Markets ETF

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

-5% 0% 5% 10% 15% 20% 25% 30% 35%

From 2011 to 2013, Funds with Higher Risk in the MPT Portfolio Did Not Deliver the Expected Returns






Red = lower IMPACT



RISK: Standard


RETURNS:

Annualized

Returns*

How HIP Can Help Your Portfolio, 401-k or Advisor


1. RATINGS on 7000+ investments + funds:

Research, analyze & score

4500 Corporate equities (80% of global value),

Corporate bonds ($24 Trillion),

2500+ muni bonds (half of $3.7 Trillion),

treasuries & agency bonds on

Future Risk & Upside Potential

2. SUBADVISE: Advisors, 401-k plans,

& fund managers seeking to be more HIP

3. ADVISE: License HIP investment indexes

and manage investable portfolios (including

FOSSIL-FREE)

How to Contact HIP


Shilpa Andalkar Senior Vice President

[email protected] Direct: 415-857-2520

Keith Green

Senior Vice President

[email protected] Direct: 908-878-2144

R. Paul Herman CEO [email protected] Direct: 415-902-7741

Join SB’s NEW METRICS in Boston

September 24-26, 2014

mailto:[email protected]



• APPENDIX + DETAILS



Published 2010 (John Wiley & Sons)

Bestseller List

21 University +

MBA Curricula

Global Libraries

on 5 Continents

http://www.hipinvestor.com/the-hip-investor-book-pre-order-available-now/

1 Year (2013) Summary

Portfolio Criteria HIP 24 HIP 10 Vanguard 2025 Fund

MPT

TOTAL RETURN (trailing; annualized)

17.58% 14.19% 14.44% 10.74%

Projected Forward YIELD

1.86% 1.96% 1.87% 2.95%

RISK (annualized std deviation)

7.06% 8.10% 6.73% 9.59%

Alpha (to S&P500) -2.05% -8.40% -4.47% -12.57%

Alpha (to MPT) +10.26% +5.72% +7.26% 0

Beta (to S&P500) 0.75 0.87 0.73 0.90

Beta (to MPT) 0.68 0.79 0.67 1.00

Sharpe 2.49 1.75 2.14 1.12

FUND FEES: Expense Ratio (prospectus)

0.88% 0.53% 0.17% 0.13% CONFIDENTIAL © 2006-2014 HIP Investor Inc. 66

3 Year (2011-2013) Summary


MPT


10.52% 10.11% 9.58% 8.90%


1.86% 1.96% 1.87% 2.95%


11.29% 11.57% 9.63% 13.03%

Alpha (to S&P500) -3.09% -3.74% -2.24% -6.36%

Alpha (to MPT) +3.02% +2.37% +3.12% 0

Beta (to S&P500) 0.89 0.91 0.77 1.00

Beta (to MPT) 0.84 0.87 0.73 1.00

Sharpe 0.93 0.87 0.99 0.68



5 Year (2009-2013) Summary


MPT


17.18% 18.74% 15.33% 17.73%


1.86% 1.96% 1.87% 2.95%


13.97% 14.74% 12.72% 17.15%

Alpha (to S&P500) 0.23% 0.86% -0.57% -3.01%

Alpha (to MPT) +3.08% +3.77% +2.35% 0

Beta (to S&P500) 0.84 0.89 0.79 1.04

Beta (to MPT) 0.80 0.84 0.73 1.00

Sharpe 1.23 1.27 1.20 1.03



In the HIP 24 Portfolio, Most Funds Have More than 5 Years of History


0.8

10

10

10

5.8

10

5.8

8.7

10

3.5

10

10

9.5

6.0

6.1

6.1

6.6

6.6

4.3

10

5.3

6.6

10

0 1 2 3 4 5 6 7 8 9 10

Shelton Green Alpha

RidgeWorth US Gov Sec Ultra-Short Bd I

Praxis Intermediate Income A

Pope Resources LP

Pax World Small Cap Individual Inv


Pax World Global Envrnmntl Mkts Indv Inv

Parnassus Workplace

Parnassus Fixed-Income

KKR & Co LP

iShares TIPS Bond

iShares S&P 100

iShares Morningstar Small-Cap


iShares International Dev Rel Est

Guggenheim Timber ETF


First Trust S&P REIT Idx

ETFS Physical Swiss Gold Shares

DFA Five-Year Global Fixed-Income I

Calvert Global Water A

Calvert Global Alternative Energy A

Ariel Appreciation Investor

Years

S&P Global Clean Energy TR USD

S&P Global Water TR

S&P GSCI Gold Spot

S&P United States REIT TR USD

S&P Global Water TR

S&P Global Timber and Forestry TR USD

S&P Global REIT TR USD

JPM EMBI Global TR USD

Morningstar Small Core TR USD

Cambridge Associates US Private Equity

US OE Large Growth (50%) and Russell 1000 Growth TR USD (50%)

US OE World Stock (33.3%), S&P 500 Sub/Environmental Services TR (33.3%), and MSCI ACWI NR USD (33.3%)

US OE Small Blend (50%) and Russell 2000 TR USD (50%)

S&P Global Clean Energy TR USD (50%) and Russell Mid Cap Growth TR USD (50%)

12/31/2013 12/31/2003

In the HIP 10 Portfolio, Most Funds Have More than 5 Years of History


6.2

9.9

9.3

9.9

3.2

10

1.3

5.2

10

6.6

0 1 2 3 4 5 6 7 8 9 10

WisdomTree Emerging Mkts SmallCap Div

Vanguard Small Cap ETF


Vanguard Mid-Cap ETF

Vanguard Global ex-US Real Estate ETF

TIAA-CREF Social Choice Eq Retail

TIAA-CREF Social Choice Bond Retail

Templeton Frontier Markets A



Years

S&P Global Water TR

US OE Diversified Emerging Mkts (50%) and MSCI EM NR USD (50%)

US OE Intermediate-Term Bond (50%) and Barclays US Agg Bond TR USD (50%)

S&P Global Ex US Property TR USD

CRSP US Mid Cap TR USD

MSCI US REIT GR USD

Russell 2000 TR USD

US ETF Diversified Emerging Mkts (50%) and MSCI EM NR USD (50%)

12/31/2013 12/31/2003

In the MPT Portfolio, ALL Funds Have More than 5 Years of History


10

9.3

8.8

6.4

7.7

6.0

10

0 1 2 3 4 5 6 7 8 9 10

Vanguard Total Stock Market ETF


Vanguard FTSE Emerging Markets ETF

Vanguard FTSE Developed Markets ETF

Vanguard Dividend Apprec Idx ETF


iShares iBoxx $ Invst Grade Crp Bond

Years

JPM EMBI Global TR USD

NASDAQ US Broad Div Achievers TR USD

FTSE Developed ex North America NR USD

FTSE Emerging TR USD (50%) and FTSE Emerging PR USD (50%)

MSCI US REIT GR USD

12/31/2013 12/31/2003

The Vanguard 2025 Portfolio Combines 4 Index Funds,

One with Less than a Year of HIstory


10

10

0.6

4.9

0 1 2 3 4 5 6 7 8 9 10

Vanguard Total Stock Mkt Idx Inv

Vanguard Total Intl Stock Index Inv

Vanguard Total Intl Bd Idx Investor

Vanguard Total Bond Market II Idx Inv

Years

Barclays US Agg Bond TR USD

US OE World Bond (50%) and Citi WGBI NonUSD USD (50%)

12/31/2013 12/31/2003

How High Impact Portfolios Can Outperform:

Beating Traditional Investing, Wall Street and

Modern Portfolio Theory.

-- Garvin Jabusch 6.25.2014

Investing for the

Next Economy

Restricted & Confidential

Investing for the Next

Economy Important Information

This presentation is for informational purposes only and should not be construed as legal, tax, investment or other advice. This presentation does

not constitute an offer to sell or the solicitation of any offer to buy any security. An offer may only be made by means of a private placement

memorandum, prospectus and/or other governing documents, which should be read in their entirety. This information is not intended to be

complete or final. The information in this document is confidential, proprietary and a trade secret of Green Alpha Advisors, and is intended only for

the use of the person to whom it is given and may not be reproduced or redistributed. The presentation document does not purport to contain all of

the information that may be required to evaluate a transaction and any recipient hereof should conduct its own independent analysis of the

company and the date contained or referred to herein. By acceptance of this presentation, you (and your employees and affiliates) agree not to

release or reveal it (or any of the information in it) to any third party and, upon request from Green Alpha Advisors, will return or destroy such

information and all copies thereof.

Some of the information presented herein constitutes “forward-looking information.” Forward-looking information is based on numerous

assumptions and is speculative in nature and may vary significantly from actual results. There can be no assurance that estimated values or

returns based on those values can be realized or that actual returns or results will not be materially lower than those stated in this

presentation. Certain assumptions have been made to simplify the presentation and, accordingly, actual results may differ, perhaps materially,

from those presented. In furnishing this presentation, Green Alpha Advisors reserves the right to amend or replace this presentation at any time,

but undertake no obligation to update, correct or supplement any information contained herein or to provide the recipient with access to any

additional information.

Performance data quoted represent past performance. Past performance does not guarantee future results and current performance may be lower

or higher than the data quoted. All returns shown are total returns, net of fees unless otherwise noted. Investment returns and principal will

fluctuate with market and economic conditions and investors may have a gain or loss when you sell shares. Please refer to

www.greenalphaadvisors.com for more information.

The information in this presentation is intended to be current only as of the date of this presentation. For financial professional use only.

Green Alpha is a registered trademark of Green Alpha Advisors, LLC. SIERRA CLUB, the Sierra Club logos and “Explore, enjoy and protect the

planet.” are registered trademarks of the Sierra Club.

2


If two systems can’t coexist indefinitely, they won’t.

3

Legacy, Fossil Fuels Based Economics (BAU)

+ Economic Growth

+ Finite Planet

= Bad Quantum State



Economy Next Economy™ Defined

4

Mega-Trend Thesis

As we look to the future we envision the Next Economy; one that is ecologically efficient,

helps mitigate climate change, promotes both energy security and national security and, importantly,

helps produce high quality, enduring job growth. Companies in Green Alpha portfolios are selected

because they are in some way working toward these goals.

The world is becoming warmer and more populous, and demands on resources like

water, arable land and clean air are increasing dramatically.

These trends are threatening the planet’s ecosystem and world economies.

Forward thinking companies around the world are innovating to address these global changes.

Those that succeed will help solve civilization’s greatest challenges and stand to profit handsomely.

By 'Next Economy’ we mean an innovation-driven, global economy that allows humans

to thrive on earth indefinitely.


…Green Alpha’s Approach

5

Innovation Drives Financial Performance

• All-cap, multi-sector, global growth

• Environmentally conscious, financially pragmatic

• Driven by science, demography and innovation

• Fossil fuel free portfolios

• Bottom-up investment process built on fundamentals, value analysis and a mega-trend growth thesis

• Thesis Track Record Since 2008

“Sustainability is not a fad and it’s not a public relations exercise. It’s in the interest of

the business community to continue to innovate through technology and increased transparency.” 1

1 Sustainability Evolves from Fad to Force, CNBC editorial, June 30, 2009


Shock & Awe

February 2014 was the 348th

consecutive month of above-

average global temperatures.3

6

2.6 billion people or 39 percent of the world’s population live without access to improved sanitation.2

Projections are that by 2025, two thirds of the world’s population could be living in severe water stress conditions.1

Over 90 percent probability

that human activities over the

past 250 years have warmed

our planet.7

The world has quietly

transitioned into a situation

where water, not land, has

emerged as the principal constraint

on expanding food supplies. 8

The cost of adapting to the

impacts of a 2°C rise in global

average temperature could

range from US$70 to $100

billion per year between 2020

and 2050, according to the

World Bank.6

“If the world waits until

2020 to take action on global

climate change, it will

undoubtedly

be too late.” -- International

Energy Agency (IEA)5

1. USAID Water and Development Strategy, p.1, 20132018 | 2. WHO / UNICEF Joint Monitoring Programme (JMP) for Water Supply and Sanitation, Update Report, 2013 | 3. NCDC STATE of the GLOBAL CLIMATE REPORT, National

Oceanic Atmospheric Agency | 4. WHO / UNICEF Joint Monitoring Programme (JMP) for Water Supply and Sanitation, Update Report, 2013 | 5. IEA Executive Director, Maria van der Hoeven, Press Conference, London | 6. World Water

Development Report, UNESCO, 2012 | 7. Intergovernmental Panel on Climate Change, United Nations, Fourth Assessment Report, 2007 | The Guardian, The real threat to our future is peak water, Lester Brown, 7/6/13

1 in 8 people world wide do

not have access to safe and

clean drinking water.4


Investment Process

Key solutions to warming, resource scarcity, extreme weather, rising sea levels and increasing population.

• Inexpensive, indefinitely renewed energy

• Waste-to-value economics (near perfect recycling)

• Careful management of scarce resources, like water and farmland

Companies that deliver solutions most efficiently and profitably.

• Observable high EPS growth

• Proven management skill and execution

• Areas of current or expected high demand

7

The most feasible, promising, fastest growing sectors.

• Solar: cheap and efficient; fastest growing energy type in the world

• Water management, treatment and creation

• Advanced materials

• Production and information efficiency gains

1. Innovation

3. Growth 2. Profitability

Macro Economics

Traditional, bottom up research paired with a compelling,

macro-economic growth thesis based on

scientific, demographic and climate trends.

1. Innovation 3. Growth

Portfolio Candidates

2. Profitability Next

Economy Companies

Restricted & Confidential 8

Next Economy Portfolio Construction



Economy Next Economy Sector Map

9

The Next Economy must reflect the broad range of human needs and desires

• The Next Economy map

is an overlay of

sustainable principles

on traditional

investment sectors

• It reflects practical,

achievable and

innovative approaches

to population growth,

resource scarcity and

climate change



Economy

Waste to Value

Adding recycled

materials back into the

value chain for high-end

consumer goods;

minimizing the need to

source from the planet.

Natural & Organic

Foods

Addressing strong

consumer demand in

developed countries,

population growth in

developing countries

and soil/water health.

Agriculture

Organic agriculture is a

key means of stabilizing

soil, managing water,

mitigating pesticide risk

and feeding a growing

population.

Transportation

Zero emissions

transportation and

capacity to store power

from renewable sources

are both key to

decarbonizing the

economy.

Water

Fresh water scarcity is

one of the primary

systemic risks for the

economy as well as a

leading cause of

political instability.

Next Economy Means All Sectors


Next Economy Means All Sectors

11

Sector Diversification

of the Green Alpha

Next Economy

Universe (3/31/14)

We seek

opportunities in

sustainability

solutions across all

parts of the economy

Currently 29 sectors

represented


Next Economy Portfolio Construction



Economy NEXTX Accolades

13

Standout performance

Morningstar Rankings:

• #1 fund in Morningstar’s Large Growth category for Q2 2013

(1,821 funds)

• #1 fund in Mid Cap Growth category for Q4 2013

• Top 1% in Mid Cap Growth category 6 months ending 9/30/13,

12/31/13 and 3/31/14.

• Top 1% in Mid Cap Growth category for first full year (710

funds)

• Top 2% in Mid Cap Growth category for Q1 2014 (758 funds)

• 1-Year MStar Upside Capture Ratio: 149.96 (4/30/2014)

• 1-Year MStar Downside Capture Ratio: 69.71 (4/30/2014)

#1

Case Study and Fossil Free Thesis

Garvin Jabusch 6.10.2014

Investing for the

Next Economy



Economy

Price of Installed

Solar Capacity

1977-2013

Texas: From Legacy to Next

Economy Fuel Powerhouse

The sunshine that falls on Texas in

ONE month contains more energy

than all of the oil that has ever been

pumped in the state.2

Wattage Capacity, Cash Rich

Solar Power Just a bit further “offshore”

1977,

$76.67/watt1

1 Bloomberg New Energy Finance, 2014

2 http://www.sela.org/research-resources/solar-industry-data

3 The projected timing of climate departure from recent variability, Camilo Mora, Nature, October 10, 2013

2013, $0.46/watt

“We’re approaching irreversible warming as temperatures reach a ‘climate departure’

point from their historical averages” 3



Economy Case Study Ticker: FSLR

EPS: $4.052

Div/Yield: -

Market Cap: $ 6.02 billion2

Next Economy Solar Energy: PV, thin film

Category:

Overview:

Vertically integrated capabilities improving every

aspect of the solar value chain. One of the largest

solar project pipelines in the world (currently

nearly 3GW contracted.)

Strongest balance sheet in the industry, >$1billion

in cash. Key partnerships with industry leaders like

General Electric and Berkshire Hathaway.

Market leader with virtual monopoly of advanced thin

film PV IP and production, having recently acquired

GE’s thin film tech division and patent portfolio.

FSLR $60.101 Trailing 12 month performance versus the S&P500

First Solar, Inc.

16 1Yahoo Finance, accessed 5/15/14 2Trailing 12 month numbers, Google Finance , accessed 5/15/14



Economy Transition to the NEXT ^Economy

17

Solar and Wind will make up 90% of the power supply by 2050

Avoiding fossil fuels is

not about divesting

• Green Alpha’s model of

an indefinitely thriving

economy by definition

precludes the idea of

investing in fossil fuels

since they clearly

cannot be civilization's

primary energy source

for much longer.

Jacobson, Mark Z., et al., “A Roadmap for Repowering California for all Purposes with Wind, Water, and Sunlight.” Stanford University. March 11, 2014


Our Belief Green Alpha is Fossil Fuel Free

For us, avoiding fossil fuels was never about divesting.

Rather, our model of what an indefinitely thriving economy

could look like by definition precluded the idea of investing in

fossil fuels since they clearly cannot be civilization's primary

energy source for much longer.

“We’re approaching irreversible warming as temperatures reach a ‘climate

departure’ point from their historical averages” 1

1 The projected timing of climate departure from recent variability, Camilo Mora, Nature, October 10, 2013


Next Economy Portfolio Construction. The Eco-Efficient Frontier.


Contact Information

Facebook facebook.com/Green

AlphaAdvisors

Twitter Twitter.com/AlphaV

erde

LinkedIn Linkedin.com/company/

green-alpha-advisors

4760 Walnut Street, Suite 106, Boulder, CO 80301

303 993 7856

[email protected]

Blog sierraclub.typepad.com/ga

a

How High Impact Portfolios Can Outperform:

Beating Traditional Investing, Wall Street and

Modern Portfolio Theory.

Garvin Jabusch 6.10.2014.

Investing for the

Next Economy