Mutual Satisfaction

Got money on the brain as tax time looms? Save the planet and make a profit.

Domini is extremely committed to shareholder activism. This year it is filing nine proxy resolutions, hoping to draw attention to the sweatshop practices of overseas contracted factories used by Disney and Sears.

Citizens Emerging Growth Fund

Jon Conrad

Heavily invested in "dynamic industries of the future"— technology and communications— the Emerging Growth Fund has outperformed similar nonscreened funds in the same category by 98 percent since its inception in February 1994. It is just one of five Citizens funds that have been kicking socially conscious ass.

Citizens has a tough screen for companies it invests with— reviewing issues like environmental policy and employment diversity within each company's industry, rather than within the overall market. This, it believes, ensures selection of the very best companies in each industry.

The criteria ensure it avoids companies with operations in Burma, those that appear on the AFL-CIO boycott list, and those that use sweatshop labor and animal testing. The downside is that Citizens requires $2500 to enter the fund, one of the largest initial investments among socially screened mutual funds.

"We believe that our rigorous social and environmental screening lets us know more about companies. We are able to identify the best companies, which in the long run produce better," says Keefe.

In 1998, the fund had a whopping 42.71 percent rate of return, and since 1994 it has produced at a rate of 24.18 percent. Top holdings consist of America Online, Tandy, and Maytag; it is a mid-cap, actively managed fund.

In 1997, Citizens put J.C. Penney in the hot seat by filing a shareholder resolution demanding a review of overseas contracts that may have been using sweatshop labor. J.C. Penney agreed to the review.

Pax World Fund

One of the greatest advantages of this, the original socially screened mutual fund, is the mere $250 needed for the initial investment. Luther Tyson founded it during the Vietnam War, wanting to provide a mutual fund that did not invest in war-related industries. Pax, which means peace in Latin, excludes companies that manufacture weapons-related products, or those that derive more than 5 percent of revenues from Defense Department contracts. In addition, Pax seeks out companies that are "producing goods and providing services that improve the quality of life."

Pax World Fund is a no-load, balanced, large-cap fund that received a Morningstar four-star rating in 1998. Yearly returns averaged 24.62 percent for one year, 19.83 percent for three years, and 17.94 percent for five years. Pax also offers money market funds and two equity funds.

Pax enables shareholders to donate dividends to Pax World Service/Mercy Corps, a nonprofit that focuses on community development in the Third World. One of the most recent projects of the nonprofit was supporting relief efforts for displaced persons in the war-torn region of Kosovo.

Shareholder activism at Pax, according to spokesperson Anita Green, "is along the lines of dialogue as opposed to sponsoring resolutions. We do not invest in companies with the purpose of becoming active, because we find our portfolios to be rather clean."

Calvert Capital Accumulation

"Our screening is extremely thorough," says spokesperson Elizabeth Laurienzo on what makes Calvert unique. A team of seven analysts with specialities in areas such as labor relations, human rights, and the environment actively reviews companies' practices, and expresses encouragement or concerns to companies regarding these issues.

The Calvert Group, which requires an initial investment of $2000, has a family of more than 26 mutual funds and currently manages $6 billion in assets. It seeks companies with allegiance to international human rights law, environmental and workplace standards that exceed government standards, and community investment. It does not invest in companies with 10 percent or more in annual sales from weapons contracts. A number of Calvert's funds have produced well over the last five years, gaining at least three-star ratings from Morningstar.

The Capital Accumulation fund has been the best performer of the batch. A mid-cap equity fund, it delivered twice as well as funds in that category, with a 1998 annual return of 29.35 percent. Since the fund's inception in October 1994, the average rate of return for mid-cap equity has been 22.09 percent, while Capital Accumulation has come in at an average of 23.52 percent. Largest holdings as of December 1998 were Sterling Commerce, Network Associates, Harley-Davidson, Alza Corp, and Catalina Marketing Corp.

Calvert participates in shareholder resolutions, most recently pressuring Home Depot to make public its hiring demographics and calling for more diversity in the company's workforce.

Green Century Equity Fund

Green Century, which is owned by nonprofit environmental advocacy groups, had a solid year for its equity fund in 1998, producing an annual average return of 32.32 percent. The equity fund, which uses the Domini portfolio, is the least green of the funds offered by Green Century— with top holdings in Microsoft, Coca-Cola, Intel, Wal-Mart, and Merck— but by far the most profitable. The company's balanced fund, with more rigorous environmental standards, had a rough year in 1998, with losses of 10 percent.

Green Century has a minimum investment of $2000 but offers an "automatic investment plan" that allows payment as small as $50 to be transferred from your bank account to a Green Century account on a monthly basis.

Green Century attempts to keep companies it holds on the green path through stockholder resolutions and consistent dialogue with corporate heads. The pressure this year is on Atlantic Richfield Company (ARCO), one of four oil companies pushing Congress to open the Arctic National Wildlife Refuge to drilling. Green Century has filed a shareholder resolution to cancel any plans for drilling that will be voted on at the next shareholder meeting in May. In the past, shareholder resolutions filed by Green Century have brought about changes in the environmental policies of Intel, PepsiCo, and Time Warner.

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