We have observed for at least a few years now that about 80% of S&P 500 stock market valuation is driven by factors that are not accurately captured and valued on financial statements – like people (human capital), natural resources (ecological capital) and trust (social capital). In a breakthrough new research project, HIP Investor shows how sustainability considerations can lower risk and enhance potential financial returns for investment portfolios, all while creating net benefit for society. Join Paul Herman as he reveals how sustainability-driven investment portfolios can outperform Wall Street, and what the implications of that may be for Modern Portfolio Theory.

1. How High Impact Portfolios Can Outperform Wall
Street – and Modern Portfolio Theory
Paul Herman, HIP Investor @HIPInvestor

2. CONFIDENTIAL © 2006-2014 HIP Investor Inc. 2

3. VISIBLE -vs- INVISIBLE
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 3

4. Knowable
But
Ignored
CONFIDENTIAL © 2006-2013 HIP Investor Inc. 4

6. FUTURE
RISK
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 6

7. FUTURE
RISK +
UPSIDECONFIDENTIAL © 2006-2014 HIP Investor Inc. 7

8. CONFIDENTIAL © 2006-2014 HIP Investor Inc. 8

9. #NewMetrics
How High Impact Portfolios
Can Outperform Wall Street
(& Modern Portfolio Theory)
September 25, 2014

10. Disclosure and Disclaimers
© 2006-2014 HIP Investor Inc. 10
HIP Investor Ratings LLC is a California limited liability
company, providing 8500 ratings for investors, advisers,
fund managers and retirement plans.
R. Paul Herman and Shilpa Andalkar 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.

11. HIP Investor = the “Morningstar”
of New Metrics for Investors
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 11
1. Produce RATINGS on
8500 investments + funds:
Research, analyze & score
4500 Corporate equities (80% of global value) & bonds
4000+ muni bonds (half of $3.7 Trillion),
treasuries & agency bonds on
Future Risk & Upside Potential
2. SERVE Investors, Advisors, 401-k plans
& Fund Managers seeking to be more HIP
3. Manage HIP indexes & portfolios
(including FOSSIL-FREE)

12. Sustainable  Profit
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 12

13. Today, Investors Drive with
20% Visibility
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 13

14. 80% of Market Value = Intangible
www.AgeOfVolatility.com
© 2006-2014 HIP Investor Inc. 14
83% 68% 32% 20% 20%
17%
32%
68%
80% 80%

15. 15
MIT Sloan Review and BCG:
New Metrics Drive Shareholder Value
A study by Boston Consulting Group and MIT Sloan Management Review discusses how sustainability is
changing the competitive landscape and reshaping the opportunities and threats that companies face.

16. Category Market Size
(U.S. $Bil)
Sustainability
Segment
Segment
Growth
Food $550 Bil Organic 22%
Electricity 400 Bil Renewable
(excl. Hydro, Wood)
17%
Fuels 1,000 Bil Alternative 20%
Health Care 2,300 Bil CAM* 17%
Building
Products
98 Bil Green 23%
Fiber (Apparel) 0.3 Bil Organic 50%
Automotive 228 Bil Hybrids 38%
High-Impact Products Can Tap
Double-Digit GROWTH Rates
Source: Pegasus Capital
* Complementary & Alternative Medicine
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 16

17. 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%
© 2006-2013 HIP Investor Inc. 17

18. Globally, Firms with More Diverse Boards
Have Yielded Higher Return on Equity (ROE)
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 18
Source: Credit Suisse
+33%
more

19. In 2011-2013,
CDP Leaders in
S&P500 Had
Higher Returns
+ Lower Risk
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 19
Source: CDP (9/24/2014)

20. S&P-TruCost’s Carbon-Efficient Index of
Firms Has Outperformed since Launching
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 20
Source: Google Finance, Mar 11, 2011 – Sept 24, 2014
Cumulative Net Total Return
Carbon
Efficient
Firms
+61.5%
S&P 500
+50.8%

21. Harvard Professors:
Sustainability
Can Benefit
Shareholder Value
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 21
+30%
more
+15%
more

22. NewMetrics reveal Drivers
of possible Higher Returns:
+ 5% to 33% premium
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 22

23. NewMetrics reveal Drivers
of possible Higher Returns:
+ 5% to 33% premium
+with Lower Risk
– 10% less volatility
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 23

24. New Metrics:
Peanut Butter AND Chocolate
HIP
Solve
Human
Needs
Seek
Higher
Profits
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 24
HIP = Higher Impact Portfolios

25. Sustainable  Profit
High Impact Portfolios
can beat Wall St
(MPT)
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 25

26. The Best of 1952
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 26

27. “State of the Art” THEN
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 27

28. “State of the Art” NOW
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 28

29. 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?
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 29

30. CONFIDENTIAL © 2006-2014 HIP Investor Inc. 30
Every Portfolio Has a Risk & Return Profile
Source: Smart401k.com

31. New Metrics Can Rate
Future Risk + Return Potential…
• Physical Health
• Mental AgilityHealth
• Income Growth
• Asset AccumulationWealth
• Carbon Neutrality
• Reusable ProductsEarth
• Gender Balance
• Ethnic DiversityEquality
• Transparent & Open
• Credible & EthicalTrust
Companies innovate to
answer five human needs:
Companies
Funds
Asset Classes
PORTFOLIO
Which can result in sustainable,
profitable growth for all stakeholders:
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 31

32. Health
Wealth
Earth
Equality
Trust
…and 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?”
HIP = Human Impact + Profit
Strategic
Innovation &
Risk
Mitigation
Higher
Revenue
potential
Lower
Cost
potential

33. At Most, 1 in 4 Fund Managers Apply
New Metrics to Investing
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 33
Source: Mercer ratings

34. Using New Metrics in Portfolios:
Forward-Looking Investors + Advisors
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 34
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

35. Sustainable Funds Outperformed
Many Fossil-Fuel Intensive Funds (2009-2013)
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 35
Less RiskMoreReturn

36. 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
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 36

37. 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%
Funds In the Vanguard 2025 Target-Date
Portfolio Are Stocks & Bonds – US and Global
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 37
* For annualized time period over the past 3 years ending December 31, 2013 (or for data since inception of strategy)
IMPACT: color of bubbles:
Green = higher IMPACT
Yellow = medium IMPACT
Red = lower IMPACT
ALLOCATION: size of bubbles
is percent (%) allocated to fund
RISK: Standard
Deviation of Returns*
RETURNS:
Annualized
Returns*

38. iShares JPMorgan USD Emerg
Markets Bond
iShares iBoxx $
Invst Grade Crp Bond
Vanguard FTSE Developed
Markets ETF
Vanguard Dividend
Apprec Idx ETF
Vanguard REIT Index 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%
Funds in an MPT Portfolio Add Real Estate,
Dividend Stocks & Emerging Markets
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 38
* For annualized time period over the past 3 years ending December 31, 2013 (or for data since inception of strategy)
IMPACT: color of bubbles:
Green = higher IMPACT
Yellow = medium IMPACT
Red = lower IMPACT
ALLOCATION: size of bubbles
is percent (%) allocated to fund
RISK: Standard
Deviation of Returns*
RETURNS:
Annualized
Returns*

39. 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
Guggenheim S&P
Global Water Index
Pax World High Yield Bond
Individual Inv
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
-5% 0% 5% 10% 15% 20% 25% 30% 35%
The HIP 10 Portfolio Is Globally Diversified
and Focused on Sustainability
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 39
* For annualized time period over the past 3 years ending December 31, 2013 (or for data since inception of strategy)
IMPACT: color of bubbles:
Green = higher IMPACT
Yellow = medium IMPACT
Red = lower IMPACT
ALLOCATION: size of bubbles
is percent (%) allocated to fund
RISK: Standard
Deviation of Returns*
RETURNS:
Annualized
Returns*

40. 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 Cap
Individual 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%
The HIP 24 Portfolio Is Well Diversified
With Funds Rating Highly on Sustainability
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 40
* For annualized time period over the past 3 years ending December 31, 2013 (or for data since inception of strategy)
IMPACT: color of bubbles:
Green = higher IMPACT
Yellow = medium IMPACT
Red = lower IMPACT
ALLOCATION: size of bubbles
is percent (%) allocated to fund
RISK: Standard
Deviation of Returns*
RETURNS:
Annualized
Returns*

41. In 2013, a HIP-Focused PORTFOLIO Was More
Optimal: Lowering RISK, Beating the RETURNS of MPT
Less Risk
MoreReturn
* 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
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 41

42. 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
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 42
Less Risk
More
Return

43. Over 3 Years (2011-13), a HIP-Focused PORTFOLIO Was Also
More Optimal: Lowering RISK Yet Exceeding MPT RETURNS
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 43
Less Risk
MoreReturn
* 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
Deviation of Returns*
PORTFOLIO: color of bubbles:
Green = HIP
Red = Vanguard
Blue = Going Fossil Free
Gray = MPT

44. 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%
Return Risk Sharpe Alpha
HIP24 HIP10 MPT
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 44
Less Risk
More
Return

45. Over 5 Years (2009-13), a HIP-Focused PORTFOLIO
Proportionally Reduced RISK & RETURN vs. MPT
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 45
Less Risk
Higher Risk-Adj. Return
Higher Return
* For annualized time period over the past 5 years 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

46. HIP-Focused Portfolios Are 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
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 46
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
85% less carbon exposure

47. New Metrics: Going Fossil-Free
Forward-Looking Investors
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 47
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)

48. Since late 2011, Global Energy & Big Oil have
diverged from, and dramatically lagged, the S&P500
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 48
S&P 500
+35.4%
Source: Google Finance, DJan 4, 2008– Sep 24, 2014
Cumulative Return
Big Oil (BGR)
-21.6%
Global Energy
(IXC)
-6.0%

49. For 2+ Years, Indexes for Coal,
Oil & Gas Have Lagged the S&P500
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 49
Source: Google Finance, Jan 6, 2012 – Sep 24, 2014
Cumulative Return
S&P 500
+59.0%
Big Oil (BGR)
-0.5%
Energy (IXC)
+17.1%
Coal
(KOL)
-45.2%

50. FUTURE
RISK
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 50

51. FUTURE
RISK +
UPSIDECONFIDENTIAL © 2006-2014 HIP Investor Inc. 51

52. Sustainable  Profit
High Impact Portfolios
can beat Wall St (MPT)
401(k) as Lever
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 52

53. Millennials as Future Leaders:
#1 Purpose of Business
Is Building a Better World
© 2006-2014 HIP Investor Inc. 53
• 80 million Millennials in USA
• Inheriting $40 Trillion from Boomers

54. A Millennial View on Investing
© 2006-2014 HIP Investor Inc. 54
“If I don’t know how
sustainable this
investment fund is,
I am not going to invest”

55. Sustainable Firms Using 401(k) Plans
for Deeper Employee Engagement
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 55
“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.”
-- Burke Pemberton, Controller

56. CONFIDENTIAL © 2006-2014 HIP Investor Inc. 56

57. Increase Employee Engagement via 401(k)
14%
93%
0%
25%
50%
75%
100%
Before HIP Info *With* HIP Ratings
Participation Rate
in 401(k) Plan
US Average = 76% to 88%
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 57

58. Increase Millennial Engagement via 401(k)
9%
91%
0%
25%
50%
75%
100%
Before HIP Info *With* HIP Ratings
MILENNIALS (age 20-34)
Participation Rate
in 401(k) Plan
Millennials US Average = 21%
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 58
Source: analysis of HIP-rated
401k plan participation

59. New Metrics on 401(k) Can Help Employees
Save More for the Future
1.6%
5.1%
0.0%
2.0%
4.0%
6.0%
8.0%
Before HIP Info *With* HIP Ratings
Contribution Rate (No-Match)
in 401(k) Plan
US Average (w/match)
= 6.8% to 8%
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 59
Source: analysis of HIP-rated
401k plan contributions

60. New Metrics on 401(k) Can Help Millennials
Save More for the Future
2.1%
5.4%
0.0%
2.0%
4.0%
6.0%
8.0%
Before HIP Info *With* HIP Ratings
MILLENNIALS
Contribution Rate (No-Match)
in 401(k) Plan
Millennials US Average
(w/match) = 5.9%
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 60
Source: analysis of HIP-rated
401k plan contributions

61. How Can Your 401(k)
Integrate New Metrics?
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 61

62. New Metrics:
Peanut Butter AND Chocolate
HIP
Solve
Human
Needs
Seek
Higher
Profits
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 62
HIP = Higher Impact Portfolios

63. CONFIDENTIAL © 2006-2014 HIP Investor Inc. 63
Published 2010
(John Wiley & Sons)
Bestseller List
21 University +
MBA Curricula
Global Libraries
on 5 Continents

64. Sustainable  Profit
High Impact Portfolios
can beat Wall St (MPT)
401(k) as Lever
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 64

65. CONFIDENTIAL © 2006-2014 HIP Investor Inc. 65

66. How to Contact HIP
CONFIDENTIAL © 2006-2014 HIP Investor Inc. 66
Shilpa Andalkar Senior Vice
President
Shilpa@HIPinvestor.com
Direct: 415-857-2520
Keith Green Senior Vice
President
Keith@HIPinvestor.com
Direct: 908-878-2144
R. Paul Herman CEO Paul@HIPinvestor.com
Direct: 415-902-7741
SB NEW METRICS in Boston
September 24-26, 2014

67. www.SustainableBrands.com