Investment Philosophy

Light Green Advisors has pioneered a new type of green, eco-friendly investment strategy, environmental leadership investing. Environmental leadership investing means LGA invests in companies that contribute to environmental progress throughout all sectors of the economy. Environmental leadership companies in LGA portfolios are progressively reducing their environmental footprint and saving money for shareholders.

The first generation of social investors simply excluded or underweighted high-impact industries like heavy manufacturing and natural resources. The second generation invested primarily in a handful of industries like pollution control and water treatment. exclusively in a few sectors like air pollution control and water treatment that were expected to benefit from new regulations.

Light Green Advisors focus is capturing the economic value of companies with the most effective pro-active environmental programs. How does it work?

Environmental challenges are, in LGA's opinion, unique among today's corporate challenges for several reasons:

• There are significant differences in corporate environmental performance trends
• Environmental performance is demonstrably relevant to corporate profitability, and
• Corporate environmental performance trends are amenable to LGA's use of quantitative analysis and indexing techniques.

Light Green Advisors is committed to providing environmentally friendly investments based upon financially sound corporations with industry average or better environmental performance trends. Light Green Advisors believes that companies with demonstrably better environmental performance trends are better positioned than their competitors to be profitable in the future. Why?

Companies that are most effective in progressively reducing the frequency and magnitude of their environmental problems are likely to have proportionally lower environmental overhead expenditures. As a consequence, LGA believes these companies are likely to have a profitability advantage that should provide investors with future investment performance benefits.

LGA's investment philosophy holds that corporate performance should be evaluated strictly within the context of industry peers. LGA believes that the economic and environmental value of successful corporate pollution reduction efforts are greatest in industries identified as direct polluters. Moreover, LGA always takes into account differences in company size in evaluating corporate environmental risk exposures to assure that it selects the best companies from a relative risk standpoint. LGA recognizes that every industry, including the financial sector, indirectly contributes to pollution and other environmental problems through the demand for resources from other sectors.

As a result of these considerations, LGA investment policy and products differ substantially from both earlier environmental 'clean-up' funds and from many 'social' funds that exclude entirely certain 'heavy' industry sectors that generate visible pollution. LGA believes that its investment approach is more environmentally pro-active in addition to more likely to control the long term financial risks to investors who select more exclusionary approaches.

Light Green Advisors is committed to basing its portfolio compositions on its best judgment of comparative corporate environmental performance on the basis of both corporate trends and historical environmental records. LGA is committed to using historical, third party information from sources such as the Environmental Protection Agency and the Department of Interior Fish and Wildlife Service -- rather than relying upon information from sources such as the news media or the companies themselves that LGA believes are less reliable. While interesting, LGA does not believe that green positioning or green spin is that important relative to the impact that companies have on the environment. LGA has adopted this policy because it has found that corporate information and the news media do not provide a solid, adequate, or size-neutral basis for making corporate environmental performance comparisons.

LGA is committed to continually updating and expanding its analysis of corporate environmental performance as the ability to incorporate new quantitative metrics is available. LGA employs the most robust statistical tools available and is continually seeking to improve the quality of third party information available in markets outside the United States.

LGA believes in providing its investors with good investment value, and will use the most cost effective investment management techniques (e.g., index investment) as appropriate to increase the investment benefits and reduce the effective cost to its investors.

By employing a combination of quantitative environmental analysis and cost effective investment management techniques, LGA believes its environmental leadership investors are well positioned to reap significant economic benefits throughout the first decade of the 21st century.

Light Green Advisors Inc. is a registered investment adviser.