SRIs Under President Bush

Let's focus on how the leader among classic SRIs, the Domini Social Index Fund, will fare under the Bush administration. Domini is

classic SRI. Domini has a great track record for doing well by doing good--until recently. Following five consecutive years of strong double-digit growth (never growing by less than 21% since 1995), Domini dropped 15% in 2000, plunging hard in the last quarter.

Domini and peers like Green Century, Pax, the Calvert Funds, and Dreyfus Third Century, to name a few, apply negative screens. They avoid investing in companies like defense contractors, nuclear power companies, tobacco firms, or gambling casinos. And those very screens may mean these types of funds will not share in the profits created by some of the incoming administration's likely spending priorities. For instance:

Defense Spending

President Bush wants to increase spending on America's military. Contradictorily, however, Bush is a neo-isolationist who will bring our troops back from the Balkans, ignoring European protests that America's military presence is essential to Kosovo peacekeeping. Although he'd buy more high-tech weaponry and hike military pay, President Bush won't be in a hurry to dispatch American troops overseas for "peacekeeping" operations. On the other hand, if Saddam Hussein threatens the Arabian Peninsula, tune in to CNN immediately, 'cause the rockets will be flying over Baghdad. In any case, funds that shun defense and military industries will not share in the increased government spending--which may be considerable.

Energy, Environment

Bush, an ex-oilman from an oil-producing state, is the son of an oilman. And Vice President Cheney formerly ran Halliburton, a big energy company. Bush wants the U.S. to develop stronger oil and gas capacity and become more self-sufficient as an energy producer. He supports an Alaskan pipeline, for instance, an idea that Al Gore strongly opposed during the presidential campaign. Here again, funds that filter out old-fashioned energy giants like oil producers will be left out of the party--and may find their investments in alternative-energy ideas temporarily out of favor.

Continued on page 2: »