Microsoft Called on to Reverse Phase-out of PVC Plastic; Mutual Fund Sees Move as Unwarranted and Harmful

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Free Enterprise Action Fund says Microsoft succumbed to activist pressure in stopping PVC use.

Action Fund Management LLC (AFM), investment adviser to the Free Enterprise Action Fund (http://www.FreeEnterpriseActionFund.com), requested that Microsoft (NYSE: MSFT) reverse its recently announced plan to stop using PVC plastic as a packaging material.

“Microsoft has allowed itself to be used by environmental activist groups which have failed to convince regulatory authorities that PVC plastics pose any danger to human health,” said Steve Milloy of AFM.

“This is a clear example of why we started the Free Enterprise Action Fund, “said AFM’s Tom Borelli. “As we see it, social activists who have failed to advance their agendas through traditional political and regulatory processes are now seeking to circumvent those public processes by pressuring corporations into implementing their agendas.”

The Free Enterprise Action Fund (FEAF) is a mutual fund seeking to provide investors with financial returns while defending and advocating for the American system of free enterprise. The FEAF owns less than one percent of the outstanding shares of Microsoft.

On Dec. 7, Microsoft announced on its web site that it would cease using PVC packaging. (1) Microsoft acknowledged the Center for Health, Environment and Justice as “partnering” with the company to help it phase-out PVC. CHEJ is an activist group that campaigns against PVC, claiming that chemicals released during the PVC life-cycle, such as dioxins and phthalates, pose risks to human health.”(2)

“We are not aware of any evidence whatsoever that Microsoft’s use of PVC in packaging has harmed anyone,” said AFM’s Steve Milloy. “Moreover, we don’t think that typical exposures to dioxins and phthalates in consumer products pose any health risk whatsoever, and the findings of federal regulatory agencies support this conclusion.”

Despite decades of research, the EPA still has not definitively linked dioxin with health effects in humans,(3) noted Milloy, “ and “despite more than 40 years of use in medical equipment such as IV bags and tubing, there have been no reports of such phthalate use causing adverse effects in humans, according to the Food and Drug Administration.”(4)

“The Consumer Product Safety Commission denied a 1998 petition by Greenpeace to ban PVC use in soft vinyl toys,” said Milloy. CPSC Commissioner Mary Sheila Gail stated, “Consumers may have a high level of assurance that soft plastic products pose no risk to children.”(5)

If exposure to PVC-related chemicals in food, medical equipment and children’s toys are considered safe, we doubt that PVC packaging of computer software products poses any danger,” concluded Milloy. “Based on our preliminary discussions with Microsoft, it appears the company failed to discuss any questions it may have had about PVC safety with any recognized expert scientific body, PVC manufacturers or the Vinyl Institute.”

“Corporations, like Microsoft, are in the business of creating shareholder value,” added Borelli, “not the business of submitting to pressure from external activists who see the publicly-owned corporation has a vehicle to implement their social and political agendas.”

“We find it interesting, observed AFM’s Tom Borelli, that federal regulators with lots of expertise on PVC say it’s safe, but Microsoft, with no known PVC expertise, says it’s not.”

The Free Enterprise Action Fund seeks long-term capital appreciation through investment and advocacy that promote the American system of free enterprise. 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.FreeEnterpriseActionFund.com. Please read the prospectus carefully before investing.

Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes. The Free Enterprise Action Fund is a new fund with limited investment history and there is no guarantee that it will achieve its investment objectives.

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.

References:

1. http://www.microsoft.com/presspass/features/2005/dec05/12-07Packaging.mspx.

2. http://www.chej.org.

3. US Environmental Protection Agency. Part III: Integrated Summary and Risk Characterization for 2,3,7,8-Tetrachlorodibenzo-p-Dioxin (TCDD) and Related Compounds (December 2003). http://www.epa.gov/ncea/pdfs/dioxin/nas-review/pdfs/part3/dioxin_pt3_ch06_oct2004.pdf
4. U.S. Food and Drug Administration, FDA Public Health Notification: PVC Devices Containing the Plasticizer DEHP (July 12, 2002).

5. CPSC Monitor. Finally, CPSC denies petition to ban phthalates; United States. Consumer Product Safety Commission (March 1, 2003).

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Steven Milloy