PERSONAL VALUES INVESTING (PVI)

For Advisor Use Only

Aligning Clients’ Values & Finances

Joni Clark, Chief Investment Officer

Sheldon McFarland, VP Portfolio Strategy & Research

The material in this communication is provided solely as background information for registered investment advisors and is not intended for public use. Unauthorized copying, reproducing, duplicating, or transmitting of this material prohibited.

LWI Financial Inc. (“Loring Ward”) is an investment adviser registered with the Securities and Exchange Commission. Securities transactions may be offered through Loring Ward Securities Inc., an affiliate, member FINRA/SIPC. B 13-019 (Exp 2/15)

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Today’s Topics…

• Personal Values Investing (PVI)

• Growing trend of PVI options

• Three hurdles to PVI

• Loring Ward Offerings & Resources

For Advisor Use Only

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What is Personal Values Investing?

An investment strategy

that maximizes the

potential for both financial

returns and social or

environmental good

For Advisor Use Only

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Socially Responsible

Investing

Loring Ward SRI Models

Sustainability Investing

Loring Ward Sustainability

Models

The PVI Umbrella

Investment strategies that incorporate:

• Socially responsible investing

• Sustainability or environmentally-responsible investing

Personal Values Investing

For Advisor Use Only

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Social Screens

Socially-responsible investments use social screens to exclude companies with business revenues related to:

• Production and/or sale of military weapons

• Business activities in or with the Republic of the Sudan

• Production and/or sale of tobacco or alcohol products

• Gambling activities

• Pharmaceuticals, abortive agents, or contraceptives

• Publishing or selling pornographic materials

• For-profit health care providers

• Child labor infractions in the U.S. or abroad

For Advisor Use Only

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Sustainability Screens

Sustainability investments generally overweight companies with high ratings for sustainable practices and reduces or eliminates exposure to companies with low ratings based on:

• Reducing resource consumption: efficient in their use of natural resources

• Reducing emissions of toxics and pollutants

• Implementing proactive environmental management systems and initiatives

• Helping customers achieve sustainability

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A Growing Trend in the United States

Personal Values Mutual Funds 2001-2010

Source: US SIF Foundation

For Advisor Use Only

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Three Hurdles to PVI

• Active-management risk

• Concentration risk

• High management fees and turnover

For Advisor Use Only

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Overcoming The Hurdles with Asset Class Investing

 FUNDS EXPENSES TURNOVER HOLDINGS

U.S. PVI Funds (Excluding DFA) Average

1.20 61.48 133

Intl PVI Funds (Excluding DFA) Average

1.40 55.32 188

DFA US Social Core Equity 2

0.35 13.00 2,387

DFA International Social Core Equity

0.58  NA  2,098

DFA Emerging Markets Social Core Equity

0.70 44.00 2,744

DFA US Sustainability Core 1

0.37 9.00 2,278

DFA International Sustainability Core 1

0.57 11.00 2,359

For Advisor Use Only

Source: Morningstar Direct

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Loring Ward Socially Responsible Investing Models

For illustrative purposes only. Downside risk is the likelihood that an investment will decline in value, or the amount of loss that could result from that potential decline. These portfolio models reflect asset class components, not actual securities.

SRI Portfolio Models

For Advisor Use Only

Defensive

Conservative

Moderate

EquityCap

Appreciation

Balanced

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Recent Changes to SRI Portfolios

• Removed One-Year Fixed Income Fund (DFIHX)

– No screening for commercial paper

– Bonds not covered in USCCB guidelines1

• Added DFA International Social Core Equity (DSCLX)

– Increased international diversification from average of 6% of equity allocation to 40%

– Increased number of securities held by 2000

1Source: United States Conference of Catholic Bishops Socially Responsible Investment Guidelines: http://www.usccb.org/about/financial-reporting/socially-responsible-investment-guidelines.cfm

For Advisor Use Only

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Loring Ward Sustainability Models

For illustrative purposes only. Downside risk is the likelihood that an investment will decline in value, or the amount of loss that could result from that potential decline. These portfolio models reflect asset class components, not actual securities.

Sustainability Portfolio Models

Defensive

Conservative

Moderate

EquityCap

Appreciation

Balanced

For Advisor Use Only

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Loring Ward PVI Resources

For Advisor Use Only

PERSONAL VALUES INVESTING