CEOs May Mislead Shareholders By Not Disclosing Risks To Earnings From Global Warming Regulations, Says Free Enterprise Action Fund (Ticker: FEAOX) at Senate Hearing; Mutual Fund Demands Debate On Global Warming In Boardrooms
For more info contact: Steve Milloy, 301-258-2852, steve@feafund.com
Washington DC, June 28, 2007 - The Free Enterprise Action Fund (Ticker: FEAOX), a publicly traded mutual fund, announced today that it will challenge corporate support of global warming regulations at a U.S. Senate hearing this morning.
Tom Borelli PhD, portfolio manager for the Free Enterprise Action Fund, will testify before the Senate Environmental and Public Works Committee that Caterpillar, Dupont, General Electric and other corporations may be deceiving shareholders by not disclosing that the global warming regulations they are lobbying for may harm their customers and their future earnings.
Caterpillar, DuPont, GE and other major corporations have joined with environmental groups to form the U.S. Climate Action Partnership (USCAP) – a group that supports national legislation to reduce carbon dioxide emissions.
But government studies, including by the Energy Information Administration (EIA) and the Congressional Budget Office, have reported that the so-called cap-and-trade regulatory scheme sought by USCAP members would lead to significant increases in energy prices and would harm economic growth.
“We believe that Caterpillar is keeping its investors in the dark,” said Tom Borelli of Action Fund Management (AFM), the investment advisor to the Free Enterprise Action Fund. The company isn’t disclosing to its shareholders that laws capping carbon dioxide emissions will harm economic growth and its customers in the all-important coal industry,” Borelli added.
The CBO report found that coal production could decrease as much as 40 percent under a cap-and-trade system. The coal industry is an important customer for Caterpillar products.
Astonishingly, Caterpillar’s CEO James Owens admitted at its recent annual meeting that he had not conducted a cost-benefit analysis to determine the impact of these potential regulations on the company.
“I’m amazed that a CEO would support regulations that may transform the economy and not contemplate how they might impact his company,” said AFM’s Steve Milloy. “The I-didn’t-know defense didn’t work for Enron chief Ken Lay – I doubt it will work for CEOs who choose to remain ignorant of the economic harms of global warming regulation,” added Milloy.
“Our experience with Caterpillar justifies why we are demanding a debate in the boardroom about the impact of global warming regulations. Too many companies have joined the global warming bandwagon without a clue on how it’s going to affect their company,” said Milloy.
“At the very least, companies in the USCAP should disclose the potential impact of these regulations to investors in their 10-K reports filed with the U.S. Securities and Exchange Commission,” Borelli said. “How else can shareholders learn about the risk of global warming legislation to the companies in which they’ve invested their hard-earned money?,” added Borelli.
By investing in the FEAOX (http://www.FEAOX.com ), individuals can participate in the global warming debate while having an opportunity to earn a financial return through ownership of a large-cap mutual fund. With a minimum investment of $2,500, individuals can join FEAOX’s effort to make CEOs justify their positions on global warming.
| As of 5-31-07 | As of 3-31-06 | |
| One Month | 3.23% | 0.98% |
| Three Months | 8.57% | 0.18% |
| Year-to-date | 7.71% | 0.18% |
| Annualized, Since Inception (3-1-05) | 9.32% | 6.34% |
| Annualized, 1-year | 17.70% | 8.01% |
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. To obtain performance information current to the most recent month end, visit http://www.feaox.com or call 1-800-766-3960.
Performance represents share value at NAV, which includes a gross expense ratio of 5.79% (as of 12-31-06). These total return figures reflect the contractual waiver of a portion of the Fund's advisory fees for the period ending 12-31-06. Without such a waiver of fees, the total returns would have been lower. The net expenses paid by investors (after the contractual waiver) for the period ending 12-31-06 is 1.82%. Net expenses are currently capped at 1.75%. The advisory fee waiver will remain in effect until gross expense ratio declines to below the net expense ratio.
An investor should consider the fund's investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the Free Enterprise Action Fund can be found in the fund's prospectus. To obtain a prospectus, please call 1-800-766-3960 or visit http://www.FEAOX.com. Please read the prospectus carefully before investing.
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The Free Enterprise Action Fund is advised by Action Fund Management, LLC., which receives a fee for its services, and is distributed by BISYS Fund Services Limited Partnership, which is not affiliated with Action Fund Management, LLC.
