Free Enterprise Action Fund (Ticker: FEAOX) Announces 2006 Accomplishments and 2007 Goals
For more info contact: Steve Milloy, 301-258-2852, steve@feafund.com
Washington DC, November 20, 2006 – Action Fund Management, LLC (AFM), investment advisor to the Free Enterprise Action Fund (Ticker: FEAOX) announces its 2006 accomplishments and 2007 goals.
Since launching in March 2005, the Free Enterprise Action Fund (www.FEAOX.com) has yielded a positive financial return while using its institutional shareholder status prod CEOs to focus on increasing shareholder value rather than promoting the anti-business agendas of social activists. By doing so, FEAOX delivered on its goal of providing its investors with an investment vehicle that simultaneously supports their philosophical values of free enterprise and capitalism. “In less than two years in operation we have compiled an impressive record of accomplishments, especially for a new mutual fund,” said AFM’s Steve Milloy.
FEAOX aims to continue its positive financial performance and expand its shareholder advocacy efforts. “Given the outcome in the recent election, it’s important that CEOs lead the charge for pro-growth public policies such as tax reform, Sarbanes Oxley reform and vigorous defense of the principles of capitalism and free enterprise, including property rights and the right to maximize profits,” said AFM’s Tom Borelli.
“Members of the newly elected Congressional Democrat majority have already announced their intention to hold hearings on executive pay, excessive profits and drug pricing. CEOs will need to step up to the plate and defend their companies’ rights. The FEAOX, as shareholder, intends to prod CEOs along if required,” said Milloy.
FEAOX’s 2005-2006 accomplishments include:
| As of 10-31-06 | As of 9-30-06 | |
| One Month | 2.70% | 1.70% |
| Three Months | 6.35% | 4.16% |
| Year-to-date | 8.44% | 5.59% |
| Annualized, Since Inception (3-1-05) | 6.43% | 5.01% |
| Annualized, 1-year | 11.18% | 7.39% |
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 www.FEAOX.com or call 1-800-766-3960.
Some of FEAOX’s advocacy accomplishments include:
- JPMorgan Chase. FEAOX’s shareholder proposal requesting that JPM justify its lobbying for global warming regulation garnered a remarkable 24 percent support from shareholders, prompting the CEO to commence a dialogue with us on the bank’s lobbying priorities.
- Goldman Sachs. Following the filing of the FEAOX-supported shareholder resolution alleging that former CEO Henry Paulson used shareholder assets to fund his personal environmental interests, CEO Henry Paulson announced that he was taking $100 million of his own Goldman Sachs stock to fund a charity to advance his personal environmental interests.
- Coca-Cola. At the Coca-Cola annual meeting, FEAOX defended the company from attack by environmental, labor and student activists. Coke CEO Robert Isdell publicly embraced FEAOX’s efforts at the meeting.
- PepsiCo, Citigroup and Boeing. The fund facilitated and supported shareholder resolutions for these companies to disclose corporate contributions to activist groups like Jesse Jackson’s Rainbow Push. The resolutions received enough votes to appear in the companies’ 2007 proxy statements. PepsiCoasked the U.S. Securities and Exchange Commission to allow the company to block FEAOX’s proposal from appearing in its proxy statement, but FEAOX persuaded the SEC to deny PepsiCo’s request.
- GE and FedEx. FEAOX’s proposal requesting that these companies justify their support for global warming laws and regulations garnered enough votes to allow us to pursue the issue at 2007 shareholder meetings. GE asked the U.S. Securities and Exchange Commission to allow the company to block. FEAOX’s proposal from appearing in its proxy statement, but FEAOX persuaded the SEC to deny GE’s request. FEAOX’s proposal forced FedEX CEO Frederick Smith to admit at the annual shareolder meeting that the company’s global warming efforts were not cost-effective.
- BP. The Fund petitioned the U.S. Securities and Exchange Commission to issue a rule (the “BP rule”) permitting U.S. investors in certain foreign companies (those that advocate on public policy issues or otherwise have significant social impacts) to have traditional shareholder rights including voting in director elections and submitting shareholder proposals.
FEAOX filed the following shareholder resolutions for next year’s shareholder meetings:
- Goldman Sachs. FEAOX’s proposal requests that the company prepare a “Sustainability Report” addressing shareholder concerns that Goldman Sachs 2004 donation of 680,000 acres of land in Chile was bad for shareholders and the environment. Prior to Goldman’s intervention, the land was a site of an innovative sustainable forestry plan that offered to provide jobs, to be environmentally sound and generate revenues up to $150 million/year in perpetuity.
- Citigroup. FEAOX’s proposal requests that the company prepare an “Equator Principles Right-to-Know Report” providing shareholders with an assessment of the costs and benefits of the company’s voluntary adoption of the Equator Principles (EQ). In its Citizenship Report 2005, the company disclosed it rejected 54 of the 74 project finance loans for developing countries because of its adherence to the EQ. Citigroup did not disclose, however, the potential revenue lost as well as the negative social impact of denying loans to the affected countries.
- Bear Stearns, Lehman Brothers, Merrill Lynch and Morgan Stanley. FEAOX’s proposal requests that the companies prepare a “Sarbanes-Oxley Right-to-Know Report” assessing the impact of the law on its operations including its investment banking business. SOX may be harming the companies through increased compliance costs and a significant reduction in the number of initial public offerings in the U.S.
- General Electric. FEAOX is supporting a proposal requesting the company prepare a “Business Social Responsibility” report describing the company’s effort to reduce the adverse impact of unmeritorious litigation (lawsuit/tort reform), regulations (e.g., Sarbanes-Oxley reform) and taxes (i.e., tax reform) on the company as well as its efforts to promote free-enterprise principles and public policies. The regulatory burdens of taxes and regulations harms shareholders and increased public understanding of the philosophical basis of capitalism will help defend the company from attacks from opportunistic politicians.
FEAOX has also re-filed its Global Warming Report proposal.
“We think FEAOX’s record of accomplishment is impressive given its youth and small size,” said Borelli. “But there’s a lot more that needs to be done,” Borelli added.
“We’re looking forward to a much-needed growth in assets under management so that we can fulfill the FEAOX’s goals,” said Milloy.
FEAOX is available exclusively through BISYS Fund Services Limited Partnership (applications may be obtained at http://www.FEAOX.com/how.html) and through HSBC.
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 click here. Please read the prospectus carefully before investing.
Mutual fund investing involves risk, including loss of principal.
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.
